100,000+ Employees for the new AA/US

[SRQRoadWarrior]

From the Ft. Worth Star-Telegram:
 
http://www.star-telegram.com/2013/11/23/v-print/5362316/how-the-new-american-stacks-up.html
 
The new American will have more than $38 billion in annual revenue, 1,500 aircraft, 6,500 daily flights and more than 100,000 employees, making it bigger than rivals United Airlines and Delta Air Lines, which currently occupy the top two positions.
 
Isn't 100,000+ employees overkill, considering DL is about the same size with only 80,000 employees.  What am I missing here?

 

[FWAAA]

The combined airline will have about 90,800 fte employees;   AA has about 59,600 and US has about 31,200.   Only if the wholly-owned airlines -  American Eagle, PSA and Peidmont are included does the total exceed 100k employees.
 
Although DL has one small wholly-owned regional, Pinnacle (now Endeavor Air), new AA has 13,200 employees at Eagle and the two US wholly-owned regionals employ 5,300 more, so new AA has a combined 18,500 regional employees that UA does not have.   That boosts the number substantially as none of UA's outsourced regional flying is done by wholly-owned subsidiaries, keeping the UA number down. 
 
Another factor is that AA hasn't outsourced maintenance or fleet service as heavily as some of its peers.   The combined airline will employ more than twice as many mechanics and related as either UA or DL.   I believe that both UA and DL outsource more fleet service work as does current AA. 

 

[WorldTraveler]

You can't argue that 460 new narrowbodies and a couple score new widebodies are going to reduce costs including in maintenance unless you accept that part of the reason for buying them is to gut maintenance.

Even among AA's existing aircraft, more and more work is being done overseas.

AA and US agreed to a merger without making the necessary employee cuts (in number of employees) because they would have lost the support of labor to do so.

AA didn't cut deep enough in employee numbers in 2003 and they didn't do it in 2013 and will only compound the problem thru the merger.

UA has the same problem with inflated headcount as a result of their merger and it is costing them hundreds of millions of dollars per year in inefficiencies.

AA is flying many routes that couldn't support themselves financially because AA has to keep their CASM down even if the revenue isn't there.

It won't take long after the merger before AA and US have no choice but to start cutting employees and poor performing routes or they will never come close to paying the bills which the creditors expect them to pay.

 

[AA-MRO.COM]

There will be cuts its inevitable. As soon as they retire the 767 and the 757 and MD-80 Tulsa will be a ghost town. But you voted for it...

 

[AdAstraPerAspera]

Not to mention all the ground handling contracts AA and Eagle have to service other airlines

 

[IORFA]

There will be reductions with the F/A's as well. At least with us we will have the early out on both sides to take care of that issue.

 

[AdAstraPerAspera]

There will be reductions with the F/A's as well. At least with us we will have the early out on both sides to take care of that issue.

 
And our bridge agreement gives us furlough protections, I am told

 

[jimntx]

And our bridge agreement gives us furlough protections, I am told

Well, if that is true, you've been able to find out more about the vaunted "agreement" than I have. I was told a couple of things by one of the union reps, but when I asked if it was in writing, the answer was "We've agreed to it." I said, "Yes, I understand that. Is it in writing?" Reply: "Well, you can be negative about the merger if you want, but it's still going to happen." I just wanted to know if anything was in writing.

As far as the VEOP, it seems like the first one has been almost cancelled out by the new hires. When I got my transfer back to DFW in Feb. 2011, I was about 400 from the bottom of the base seniority list, and about 300 of those junior to me were former TW f/as. There's still about the same number of former TW below me, but, there are almost 1000 f/as below me on the base roster--somewhere in the neighborhood of 500-550 new hires, and that's just in DFW-D.

I just don't think this is going to be as smooth and painless as we were told. Whether there are 15,000 or 30,000 more employees in the combined company than are at DL or UA, that is still a significant payroll/benefits burden and financial disadvantage to us versus the other two. And, approx. 11,000 of the f/as at current AA are at or soon to be top of scale. Another VEOP or 2500 or so won't make that much difference in the total payroll.

 

[jimntx]

That last sentence was supposed to be Another VEOP of 2500 or so. Typo and then when I tried to edit it, I got a popup that I do not have permission to edit my own post!!!

 

[USFlyer]

It won't take long after the merger before AA and US have no choice but to start cutting employees and poor performing routes or they will never come close to paying the bills which the creditors expect them to pay.

Agreed.  And, Parker is not the type to keep operating a route for emotional or historical reasons.  He will not hesitate to adjust the network schedule to maximize revenue.

 

[IORFA]

Dont forget the since quiet, but announced additional seats on the 737will require more F/A's. Also, something like 2250-2500 F/A's left in the VEOP or the travel separation. As far as i know only 1500ish new hires are planned for the year. Although, i was told permission was given for new hires at least through the second quarter 2014.

 

[AdAstraPerAspera]

As far as the VEOP, it seems like the first one has been almost cancelled out by the new hires. When I got my transfer back to DFW in Feb. 2011, I was about 400 from the bottom of the base seniority list, and about 300 of those junior to me were former TW f/as. There's still about the same number of former TW below me, but, there are almost 1000 f/as below me on the base roster--somewhere in the neighborhood of 500-550 new hires, and that's just in DFW-D.

 
I'm surprised that more TW weren't interested in the VEOP…? You'd think they would love to leave.
 

I just don't think this is going to be as smooth and painless as we were told. Whether there are 15,000 or 30,000 more employees in the combined company than are at DL or UA, that is still a significant payroll/benefits burden and financial disadvantage to us versus the other two. And, approx. 11,000 of the f/as at current AA are at or soon to be top of scale. Another VEOP or 2500 or so won't make that much difference in the total payroll.

 
I don't think it is going to be as smooth and painless either, but I thing you and I are pretty good at reading between the lines of what they say. It is important to note tho, a simple apples to apples employee number comparison between AA and other carriers may not be fair, when you consider the extra services AA is involved in (ground handing contracts, mx, overhaul, etc). I would be interested to see if our revenue per employee is competitive to other carriers, however

 

[jimntx]

My numbers were taken from the June master seniority list. A number of the VEOP/travel separation folk were already accounted for. If you have 2500 leave, but you then turn around and hire 1500, you haven't made a significant reduction in staff. And, even though those 1500 are making substantially less per hour than the 2500 who left, by contract they get more expensive every year for the first 15 years. Plus, the cost of other benefits may or may not be less for new hires than for senior people. Group health costs are averaged; so, a new hire "costs" the company the same as a senior person.

I'm not saying you are wrong, I'm just saying that a lot of my questions about this merger are still not answered. I just got that email yesterday about all that is going to be restored/added the first month after the merger is signed, sealed and delivered. (The CLA--whatever that means--Implementation Update--for instance, that because I am over 50 (way over), I will get a 9.9% contribution to my 401K starting immediately.) And, do the current US Airways employees stand idly by with only a match to their contributions--assuming they have a matched 401K? I still ask, where is the money coming from?

 

[jimntx]

I'm surprised that more TW weren't interested in the VEOP…? You'd think they would love to leave.

Their paychecks are issued by AA, and they pay dues to the APFA, I believe that makes them AA employees. Former TW employees would be more accurate. As far as your "surprise", you have to remember that they have almost no pension to collect from AA. Yes, their "company" seniority includes their TW years and therefore makes them eligible for a pension, but by law the size of that pension is still calculated based on actual contributions to the plan which didn't start until they joined the AA payroll, and it ended when the plan was frozen on the first day of bankruptcy. IIRC, their TW pension was dumped on the PBGC; so, there won't be much coming from there, either. For many of them, retirement income will be predominantly Social Security. I double-dog dare ya to try and live on that.

 

[AdAstraPerAspera]

Their paychecks are issued by AA, and they pay dues to the APFA, I believe that makes them AA employees. Former TW employees would be more accurate. 

 
Hey, no need to be pedantic, it was no dis on anyone, I was just goin for a lil brevity there.