Representing the Flight Attendants
of American Airlines

Representing the Flight Attendants of American Airlines

5.22.12 – (LAA) – Bankruptcy Hotline, Twitter Transcript from Company’s Rebuttal Case

This is Leslie Mayo, National Communications Coordinator, with a Bankruptcy Hotline update for May 22, 2012.

Tuesday saw the continuance of the company’s rebuttal case in the 1113 hearings in New York. You can read these tweets by clicking on the link from the front page of www.www.apfa.org. To follow APFA on Twitter, click here and select follow.

The tweets in this Hotline read from the bottom, up. Several comments include a link. This is because those tweets were too long to fit within Twitter’s 140-character limit. In that case, simply click on the link to read the comment in its entirety. Also, this is not meant to represent a transcript of the hearings. It is simply a casual summary of the testimony and should not be construed as anything but an unofficial account.

Please note:†These tweets are by no means meant as an official record of the testimony. They are intended as a summary of the proceedings and likely contain typos and even an error or two!

People and Entities involved in Tuesday’s proceedings:
Rob Clayman, APFA Attorney
Carmen Parcelli, APFA Attorney
APA Attorneys
TWU Attorneys
AA Attorneys
Hon. Sean Lane

Monday’s Witnesses, AA’s Rebuttal Case:
Daniel Kasper, Senior Consultant for Compass Lexecon, (AA)

Jeff Brundage, AA Senior Advisor,†(AA)

Tuesday’s Witnesses, AA’s Rebuttal Case:
Jerrold Glass, President of F&H Solutions Group,†(AA)

Dennis Newgren, Managing Director of Flight, (AA)
Bruce Richards, Partner and Chief Actuary, Mercer Health and Benefits, (AA)
David Resnick, Managing Director, Chairman, Rothschild, Inc,†(AA)

Rebuttal Witness Scheduled for Wednesday:
Alex Dichter, Director, McKinsey & Company (AA)

Beverley Goulet, AA Chief Restructuring Officer, VP Corporate Development, Treasurer (AA)

Read from the bottom, up.

Holly Hegeman ‏‪@PlaneBusiness‬
Heads up! @APFAUnity is live tweeting from bankruptcy court in New York again today. Some interesting comments from Dennis Newgren, AA.†Retweeted by APFA

APFA ‏‪@APFAunity‬
Court is adjourned. Tomorrow’s day starts with Alex Dichter, director at McKinsey, then Beverley Goulet-AA’s chief restructuring officer.

APFA ‏‪@APFAunity‬
Five minute break before AA decides if they’re going to redirect.

APFA ‏‪@APFAunity‬
And that shoots the argument about the analysts offering their opinion of our plan. It’s nothing new. It’s what they do.

APFA ‏‪@APFAunity‬
Carmen Parcelli, APFA att’y, asks Resnick if it’s typical to give Wall Street Analysts a confidential copy of the biz plan? Resnick says No

APFA ‏‪@APFAunity‬
Sharon Lowenstein, TWU, is driving home that in the other airline bankruptcy proceedings, no union had expert witnesses. He doesn’t recall.

APFA ‏‪@APFAunity‬
Suddenly he’s unsure of his world. Instead of a certain comment, he’s responding “possibly, maybe, I don’t recall,” or just silence…

APFA ‏‪@APFAunity‬
David Resnick hesitatingly agreed. And seems to have forgotten the rest.

APFA ‏‪@APFAunity‬
Isn’t it true that the Standalone business plans for the other airline bankruptcies were supported by the creditors committees?

APFA ‏‪@APFAunity‬
Sharon just pointed out the difference between all the other bankruptcies and ours – that we are NOT operating under DIP financing

APFA ‏‪@APFAunity‬
Sharon Lowenstein, TWU Attorney. Their turn to cross. David Resnick with Rothschild.

APFA ‏‪@APFAunity‬
For the first time that I’ve seen, the Judge looks exhausted.

APFA ‏‪@APFAunity‬
Everyone has at least one electronic wireless device in their hand or lap. Their heads are moving up to the witness, down to their lap, up..

APFA ‏‪@APFAunity‬
So back to the room description: 3 pews facing the judge Filled with dark suits and some casual clothes from members who joined us today.

APFA ‏‪@APFAunity‬
Cross of Resnick by APA has begun.

APFA ‏‪@APFAunity‬
break…

APFA ‏‪@APFAunity‬
so the company can go forward and have a dialogue with its stakeholders.

APFA ‏‪@APFAunity‬
the biz plan that the co. presents to its stakeholders which it did in feb. must be detailed, thorough, responsive to the key assumptions..

APFA ‏‪@APFAunity‬
this is a document we feel very comfortable with. we feel it’s thorough 4 the progression of AA’s restructuring.<What’s he supposed to say?>

APFA ‏‪@APFAunity‬
the diligence process has been extensive. one of the most substantial diligence processes – appropriate for a case of this significance

 

APFA ‏‪@APFAunity‬
The analysts haven’t seen the biz plan. The supporting data is confidential so they don’t have the appropriate amy of info to say either way

 

APFA ‏‪@APFAunity‬
AA: there have been many criticisms about the plan by Wall Street Analysts. How do you respond to that?

APFA ‏‪@APFAunity‬
AA’s att’y asked him why he believes in this plan. Instead of talking about the strengths of the plan, he talked about the tests it “survived”

APFA ‏‪@APFAunity‬
<it’s the best plan EVER!>

APFA ‏‪@APFAunity‬
yes of course he does. it’s the prettiest baby ever in the world. aka the biz plan has sustained due diligence, the appropriate processes…

APFA ‏‪@APFAunity‬
short quick question about the plan. Response to whether this guy thinks his baby is pretty/aka the biz plan he created is perfect…

APFA ‏‪@APFAunity‬
objection sustained.

APFA ‏‪@APFAunity‬
Rob Clayman objected – the statement was like a closing or something – referencing how the unions have unfairly attacked the biz plan…

APFA ‏‪@APFAunity‬
Resnick is with Rothschild who took part in American’s business plan. The company’s att’y began his question by making a long statement…

APFA ‏‪@APFAunity‬
Next witness being called by AA – David Resnick

APFA ‏‪@APFAunity‬
Redirect by AA – asking about what costs are included in the 5% that sparks the Rush Hush Crush philosophy. Answer = both employee and company costs

APFA ‏‪@APFAunity‬
… including out-of-pocket changes, deductible, etc… This would bring the increases to above 5%.†The actuary agreed.†

APFA ‏‪@APFAunity‬
APA att’y is asking if the proposed changes to our benefits (labor groups) is beyond 5%. He said he thought it was 3.5%. APA asked him if…

APFA ‏‪@APFAunity‬
He’s clarifying whether the Rush Hush Crush theory is used once an increase of 5% in benefits is proposed. BR doesn’t know how to say yes/no

APFA ‏‪@APFAunity‬
Court back in session. APA is questioning the witness.

APFA ‏‪@APFAunity‬
Turning into a 20″ break.

APFA ‏‪@APFAunity‬
APFA rests with this witness. APA wants to cross. 5″ break.

APFA ‏‪@APFAunity‬
After several roundabout answers, BR says that Mercer’s proposal has a claim cost increase of 7% embedded for the duration of the contract.

APFA ‏‪@APFAunity‬
I believe Carmen is trying to clarify what Mercer estimated the remaining part of the contract to be after the Rush Hush Crush period ended

APFA ‏‪@APFAunity‬
CP And it’s your understanding that the contract is for a 6-year period. BR: yes.

APFA ‏‪@APFAunity‬
BR: 1 year is standard because it’s easiest to evaluate CP: So you did use 1 year for Hush? BR: yes

APFA ‏‪@APFAunity‬
CP: You think the hush period will be somewhat shorter than 1 year, correct?

APFA ‏‪@APFAunity‬
CP: Because you don’t know an assumed implementation date, you don’t know when the Crush begins. BR: correct

APFA ‏‪@APFAunity‬
BR gives another roundabout explanation for how he doesn’t have an exact date for the Rush

APFA ‏‪@APFAunity‬
CP: Don’t the valuations you gave AA assume an actual date these will occur? We don’t know when the rush period occurs?

APFA ‏‪@APFAunity‬
BR: the rush occurs after you announce and before it’s implemented.

APFA ‏‪@APFAunity‬
BR: Yes CP: Does the valuations given to the unions show changes before 2013? According to the valuations u gave AA, when is the Rush:

APFA ‏‪@APFAunity‬
…and the Crush is in the 2nd year after the implementation of the changes”

APFA ‏‪@APFAunity‬
Carmen: “So the Rush is when the benefit changes are announced until they occur. The Hush is the decreased usage in the following year….

APFA ‏‪@APFAunity‬
Does Mercer always employ the Rush Hush Crush to every scenario? BR: Every time we have a value change of 5% or more, we employ the scenario

APFA ‏‪@APFAunity‬
CP: she basically uses herself as anecdotal evidence to qualify her statement. BR: yes that’s correct.

APFA ‏‪@APFAunity‬
CP: Are there any references in this article to show the author (she) is relying on statistical survey? BR: <long story short> No

APFA ‏‪@APFAunity‬
BR: yes. CP: Does it reference any type of survey data, statistical data…?

APFA ‏‪@APFAunity‬
CP: asking about rush, hush, crush (RHC). referring to an article called “Timing is Everything.” Is there only this one article that address RHC?

APFA ‏‪@APFAunity‬
…changes, deductibles, out-of-pocket increases, etc… BR: Yes.

APFA ‏‪@APFAunity‬
Okay please hold… Carmen Parcelli, att’y for APFA is up for Cross Examination. She’s asking him if he’s done work on the proposed benefit…

APFA ‏‪@APFAunity‬
I’m in the very back on what is like a church pew. There are 3 pews across the width of the courtroom where people step over each other to come and go.

APFA ‏‪@APFAunity‬
So while Mr. Richards is testifying about actuarial processes, “Rush, Hush, Crush,” and asking how it’s used by Mercer, I’ll scour the room

APFA ‏‪@APFAunity‬
This is some seriously dry stuff I can’t wrap my brain around.

APFA ‏‪@APFAunity‬
He’s got quite a commanding presence this fella.

APFA ‏‪@APFAunity‬
Educational background – actuarial science degree from U of Penn… going through all the quails to establish Richards as an expert witness

APFA ‏‪@APFAunity‬
Bruce Richards has just been called to the stand.

APFA ‏‪@APFAunity‬
tomorrow: Alex Dichter, director at McKinsey & Co, and finally Beverley Goulet-AA’s chief restructuring officer, VP of corporate development

APFA ‏‪@APFAunity‬
After Bruce Richards, David Resnick, managing director and chairman of global financing advisory of Rothschild will testify.

APFA ‏‪@APFAunity‬
Next witness today will be: Bruce Richards, partner and chief actuary at Mercer Health and Benefits LLC;

APFA ‏‪@APFAunity‬
Next witness for AA on rebuttal yesterday was Jeff Brundage.

APFA ‏‪@APFAunity‬
Then rebuttal began – 1st witness was Daniel Kaspar – a consultant for Compass Lexecon http://bit.ly/dwZ6Tw

APFA ‏‪@APFAunity‬
yesterday, TWU wrapped up their case on behalf of M&R (mechanics and related) and Stores – the two unions who voted down the last best offer)

APFA ‏‪@APFAunity‬
BTW: it is lunchtime but I’m catching up – court should be back in session around 2:15-2:30 NY time.

APFA ‏‪@APFAunity‬
AA has not provided inputs APA asked 4. Instead, it created other scenarios that likely appear to have a “kinder” outcome 4 the court’s eyes

APFA ‏‪@APFAunity‬
Further to the point APA was trying to make – there were 2 charts of the AMPLE model in exhibit – very similar, yet, to date…

APFA ‏‪@APFAunity‬
Apparently you don’t have to be efficient or forthright to earn a really good living.

APFA ‏‪@APFAunity‬
DN: “Well, we didn’t receive any further requests after we identified it last week so we didn’t forward it.” wow.

APFA ‏‪@APFAunity‬
APA Att’y asked if, since he realized the error, has the doc been provided to APA yet? <wait for it…>

APFA ‏‪@APFAunity‬
APA was unable to locate the doc. Finally “just last week” Mr. Newgren realized there had been an error and this document hadn’t been uploaded

APFA ‏‪@APFAunity‬
Finally Dennis Newgren said it was document #2271 and could be downloaded on the Intralinks network where the company provides documents…

APFA ‏‪@APFAunity‬
APA asked for copies of the screen shots. AA said okay. APA asked on several different occasions for this document since March 27th…

APFA ‏‪@APFAunity‬
.. be plugged into the AMPLE model. Company agreed. Eventually, company put on a power point 4 APA showing them the outputs of APA requests-

APFA ‏‪@APFAunity‬
APA att’y asks DN if the inputs have ever been shared with APA. he says no. That it’s proprietary. APA requested different input scenarios…

APFA ‏‪@APFAunity‬
… wasn’t shared with APA until early March despite the fact that they had been negotiating for so long.

APFA ‏‪@APFAunity‬
APA attorney is trying to stress that this software, which appears to be efficiency software for pilot scheduling,…

APFA ‏‪@APFAunity‬
APA Atty:Before March 6th, have you referenced the term AMPLE model to APA during negotiations over the past 6 years? Doug Newgren (DN): No

APFA ‏‪@APFAunity‬
Turning to the “Ample Model” it’s complicated right? Takes a lot of different inputs, right. And some have changed, right? Newgren – yes.

APFA ‏‪@APFAunity‬
Dennis Newgren is the managing director of flight for AA

APFA ‏‪@APFAunity‬
Asking him about the Supplemental Declaration he submitted.

APFA ‏‪@APFAunity‬
Dennis Newgren – being cross examined by APA. No direct. APA Attorney – Daniel Rosenthal is the att’y.

APFA ‏‪@APFAunity‬
TWU questions 1762. Hard to hear but I think she is objecting to numbers and whether they related solely to M&R and Stores or all 7 unions

APFA ‏‪@APFAunity‬
Judge is back on the stand. AA has nothing further for Mr. Glass. Offering new exhibits – AA 1761-66, 1771-2, 1774-5. Judge-any objections? None.

APFA ‏‪@APFAunity‬
Mr. Glass is on the stand and we are waiting for the judge. Then we’ll find out whether AA wants to redirect or if Glass can go.

APFA ‏‪@APFAunity‬
Remember, Jerry Glass is an industry expert in Human Resources and focuses on helping companies with unions negotiate contracts

APFA ‏‪@APFAunity‬
Sharon is finished crossing. AA asked for a 5″ break to consider redirect testimony. granted.

APFA ‏‪@APFAunity‬
TWU is asking about US Airways negotiations during their bankruptcy and the value of their concessions.

APFA ‏‪@APFAunity‬
Sharon (TWU att’y) is asking about number of jobs lost and getting clarification from him.

APFA ‏‪@APFAunity‬
TWU/Sharon – And with newer A/C there will be a need for less maintenance because of newer planes? Glass – yes.

APFA ‏‪@APFAunity‬
Sharon – are you aware that AA’s fleet is the oldest in the industry right now and they’re looking to upgrade? Glass – yes.

APFA ‏‪@APFAunity‬
Rob Clayman, APFA’s attorney is finished with his cross. Now TWU’s attorney Sharon (forgot her last name sorry)

APFA ‏‪@APFAunity‬
Glass: You just generalize, take an average, get a ballpark figure <that sounds real accurate>

APFA ‏‪@APFAunity‬
how can you calculate what a 10% wage increase for United FAS is when you don’t know the entire payroll of the UAL FAs?

APFA ‏‪@APFAunity‬
Rob – turn to exhibit 1762 – are you aware in the increase of sked max in AA’s term sheet goes from 77/82 hours (cont) http://tl.gd/hh4nkp

APFA ‏‪@APFAunity‬
Rob Clayman: asking about an exhibit Mr. Glass and his staff prepared. “On an individual basis have (cont) http://tl.gd/hh4mn7

APFA ‏‪@APFAunity‬
Rob Clayman: are you aware of Akins’ testimony that the proposed decrease in the term sheet would be a $17% reduction in pay? Glass: yes

APFA ‏‪@APFAunity‬
APFA’s attorney Rob Clayman is now crossing

APFA ‏‪@APFAunity‬
He spent the past two hours on direct and is now being cross examined by Ed James, APA’s attorney. Lots of SCOPE and codeshare questions

APFA ‏‪@APFAunity‬
Jerry Glass, AA’s Human Resources expert witness and president of F&H Solutions Group is testifying in AA’s rebuttal case.

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