American/USAir-why not now?

[WorldTraveler]

Alaska has done a really good job of being great at what they choose to do.

Their example blows a big hole in the argument that US and AA can't stay separate and still compete. Alaska basically forced United out of the west coast north-south market in the last five years. UA flies all RJ's now where it used to fly 757s SEA-LAX. So I don't buy the argument that a merger is necessary for success.

UA has really focused its west coast efforts on SFO where it is still the dominant carrier. And as a result of the merger with CO, UA is once again the dominant revenue carrier at LAX although LAX is much more focused on the local market for UA than SFO which is a more fully developed hub.

A merger may not be necessary but outside of LAX, AA is number 3 or 4 in most west coast markets. That's probably why the AS codeshare is necessary to help boost their position where they can and where even US' position would help add enough mass to move AA to a large enough position to help them compete with UA, AS, and WN on the west coast.

From a strategic standpoint, there is more to be gained on the west coast from an AA-US merger than there is on the east coast since AA and US both have fairly significant positions on the east coast, even if neither one creates the size that other larger east coast carriers have.

 

[signals]

http://money.cnn.com/2012/10/17/news/companies/american-airline-losses/index.html

American management has said it prefers to emerge from bankruptcy as an independent airline, but it has entered into a nondisclosure agreement with US Airways as it explores a possible deal. Tuesday it asked the bankruptcy court for an extension until March 28 to present a reorganization plan to the court. It said one of the reasons it needs more time is to consider "strategic alternatives," which frequently refers to mergers.

AA seems to be considering a merger, so merger-wolf will be prolonged until March. It doesn't necessarily mean that there will be a merger, but seems like AA is buying time.

The plot thickens

 

[PITbull]

Pit,
You and I agree on the background facts as we often do but we take very different paths on the outcome because you have adopted the fatalistic mindset of unionized labor at legacy airlines who see only failure at the hands of a number of mgmt teams that have outsmarted labor at their own game. You WRONGLY conclude that no airline employees can win when it is obvious that you come to that conclusion by focusing only on the group of employees that fit your theory.

The simple reality is that labor and mgmt effectively worked together at CO, DL, and WN to build those companies into leaders and continue to do so…. DL and WN continue to outperform their peers and provide more reliable transportation for consumers, better returns for stockholders, and better employment experiences for its employees because labor and mgmt work together; WN does it largely within a union model while DL does it in a predominantly non-union model, but even the unionized pilots at DL have cooperated with mgmt better than unionized pilots have at other carriers. The employees of BOTH companies benefit, regardless of their union status.
That benefit is attributable to the fact that both DL and WN know how to grow revenues, something that LCC has done less than some of its peers, including DL and WN. Consequently even the lowest costs have not translated into superior financial results. Yet, it is PRECISELY the “lowest paid employees held at those levels for the longest period of time possible” strategy that AA is using that allows AA mgmt’s HR strategies to mesh perfectly with Parker’s strategy for his employees.

Thankfully, not all airlines buy that strategy and your failure to focus on who is actually providing positive wage growth and increased employment is why your theory is flawed.

So, from what credible experience with managements and/or labor do you garner any experience?? You cant rely on airline blogs to formulate any real opinion.

I lived it; I was in the arena, and I have contact with many labor groups from different airlines currently. What is your claim to real facts,and how is what you convey credible from either a labor or managment perspective? And if you are neither, than that would really put you behind the curtain of true reality.

Having some earning growth from a profit sharing language from a BK contract does not restore faith, loyalty, trust in an airline, or its management. (WN being the anomoly as they have never entered BK).

 

[WorldTraveler]

I was schooled and employed in the airline industry... my experience and education is just as valuable as yours.

What you really don't like is that I have an opinion that doesn't agree w/ yours so you would rather attempt to pull rank.

Your conclusions are based on your experiences but are not reflective of the entire industry.

You really don't want anyone providing evidence that counters the theory that you have espoused that the legacy-carrier model is broken. In fact, the model that MOST legacy carriers use is broken... but not all carriers use the same model and are thus their models are not broken.

Of course, profit sharing does not restore faith, loyalty etc.
Perhaps it is precisely because no Delta employees are working under BK-imposed contracts that your statement does have validity - but doesn't happen to applly to DL employees.

DL pilots - the only large unionized group at DL - is on their 2nd post BK contract. DL emerged from BK April 30, 2007.

When did US emerge and how many workgroups have moved beyond BK-imposed contracts?

The answer will probably provide a great deal of insight as to why most of us believe an AA-US merger will be a death sentence for compensation growth for AA employees.

 

[PITbull]

I was schooled and employed in the airline industry... my experience and education is just as valuable as yours.

What you really don't like is that I have an opinion that doesn't agree w/ yours so you would rather attempt to pull rank.

Your conclusions are based on your experiences but are not reflective of the entire industry.

You really don't want anyone providing evidence that counters the theory that you have espoused that the legacy-carrier model is broken. In fact, the model that MOST legacy carriers use is broken... but not all carriers use the same model and are thus their models are not broken.

Of course, profit sharing does not restore faith, loyalty etc.
Perhaps it is precisely because no Delta employees are working under BK-imposed contracts that your statement does have validity - but doesn't happen to applly to DL employees.

DL pilots - the only large unionized group at DL - is on their 2nd post BK contract. DL emerged from BK April 30, 2007.

When did US emerge and how many workgroups have moved beyond BK-imposed contracts?

The answer will probably provide a great deal of insight as to why most of us believe an AA-US merger will be a death sentence for compensation growth for AA employees.

I'm not speaking about DL contracts, as I know only the pilots are unionized. I am inquiring about post BK wages for the non union employees, have their hourly rates gone up yearly and by how much since emerging? In 5 years have they increased by 50% post BK?
OR by now, are they back to their pre BK wages? Did the pilots keep their pensions or were they frozen?

Have the pilots negotiated another contract post BK besides a Joint NW agreement? If so, when did they ratify?

 

[AANOTOK]

http://money.cnn.com...sses/index.html

American management has said it prefers to emerge from bankruptcy as an independent airline, but it has entered into a nondisclosure agreement with US Airways as it explores a possible deal. Tuesday it asked the bankruptcy court for an extension until March 28 to present a reorganization plan to the court. It said one of the reasons it needs more time is to consider "strategic alternatives," which frequently refers to mergers.

AA seems to be considering a merger, so merger-wolf will be prolonged until March. It doesn't necessarily mean that there will be a merger, but seems like AA is buying time.

The plot thickens

Well, I guess even CNN can make mistakes.
AMR and UCC Request Extension of Exclusivity Period Summary
AMR today announced the company and the Unsecured Creditors' Committee (UCC) have jointly requested that the United States Bankruptcy Court for the Southern District of New York extend the exclusive period during which only AMR may file a Plan of Reorganization to Jan. 28, 2013.

 

[PITbull]

Well, I guess even CNN can make mistakes.
AMR and UCC Request Extension of Exclusivity Period Summary
AMR today announced the company and the Unsecured Creditors' Committee (UCC) have jointly requested that the United States Bankruptcy Court for the Southern District of New York extend the exclusive period during which only AMR may file a Plan of Reorganization to Jan. 28, 2013.

Well, I guess even CNN can make mistakes.
AMR and UCC Request Extension of Exclusivity Period Summary
AMR today announced the company and the Unsecured Creditors' Committee (UCC) have jointly requested that the United States Bankruptcy Court for the Southern District of New York extend the exclusive period during which only AMR may file a Plan of Reorganization to Jan. 28, 2013.

That's a 30 day extension request; from December 28th 2012.

 

[FWAAA]

CNN did make an error; if the extension is approved, then AA will have exclusivity until 1/28 to present a plan and will have another 60 days (until 3/28) to obtain votes in favor of the plan.

 

[WorldTraveler]

I'm not speaking about DL contracts, as I know only the pilots are unionized. I am inquiring about post BK wages for the non union employees, have their hourly rates gone up yearly and by how much since emerging? In 5 years have they increased by 50% post BK?
OR by now, are they back to their pre BK wages? Did the pilots keep their pensions or were they frozen?

Have the pilots negotiated another contract post BK besides a Joint NW agreement? If so, when did they ratify?

DL pilot AND non-pilot personnel will receive at LEAST their 3rd post-BK payraise on Jan 1, 2013. For pilots, it will be 8.5%, largely as a result of allowing the company to add large RJs and the 717, but also remove a couple hundred 50 seaters.

DL pilot pensions were terminated due to the lump sum payout.... hopefully, the PBGC and AA will have figured out a way for AA pilots to give up the lump sum distribution clause and freeze but that option wasn't avaialble when DL filed BK.
The DL pilots received $2B in stock for the termination on DL's emergence.
All other DL and PMNW employees have frozen pensions.

So again how many post-BK pay raises have US and UA employees received, keeping in mind both companies emerged from BK BEFORE DL and NW?

 

[Kev3188]

... In 5 years have they increased by 50% post BK?

No.

OR by now, are they back to their pre BK wages? Did the pilots keep their pensions or were they frozen?

Some are almost there, but other employee-borne costs have off set that. Pretty sure the F/A's have not yet hit the pre-BK mark- all the more so if one factors in pay-overrides that NW had, that do not exist at DL.

Have the pilots negotiated another contract post BK besides a Joint NW agreement? If so, when did they ratify?

Yes. Just ratified not too long ago.

 

[WorldTraveler]

Some are almost there, but other employee-borne costs have off set that. Pretty sure the F/A's have not yet hit the pre-BK mark- all the more so if one factors in pay-overrides that NW had, that do not exist at DL.

the largest of which is health care costs that all Americans have had to deal with... the only difference being that some companies absorb a higher percentage of healthcare as a part of the total compensation package.

As for FAs, remember that DL FAs now staff 100% of all onboard customer-facing positions to/from the US now that the PMNW language 'FAs" work only intra-Asia flights.

DL FAs also don't pay union dues.

 

[Kev3188]

the largest of which is health care costs that all Americans have had to deal with... the only difference being that some companies absorb a higher percentage of healthcare as a part of the total compensation package.

Like I said; employee borne costs are have increased, which offsets a lot of base rate restoration.

DL FAs also don't pay union dues.

Another pat company talking point. You can do better than that. Are you doing that as a wind up, a bit of subversive humor, or have you just gotten lazy?

 

[WorldTraveler]

It's quite factual that DL non-union employees don't pay union rates and that does add several hundred dollars in additional take home pay... and, as you know, DL cut off the union dues as soon as the first election results came in, requiring the unions to conduct the appeals process w/o the support of union dues.

Neither you or I can fully calculate the impact of all of the changes in the way DL FAs are paid relative to NW FAs but the MIT airline data project has enough data that it is very easy to note that as of the date of the merger, DL FAs had average salaries about 3% higher than NW FAs. Since DL emerged from BK until today, DL FA average salaries have increased about 10% or about $3000 per year. The MIT data does not break out benefit costs for non-pilot benefit costs but DL's benefit costs for all non-pilot personnel has risen by about $3000 per year since DL emerged from BK and NW benefit costs post BK for non-pilot personnel were never as high as it was for DL employees post BK.

So, yes, DL FAs are better compensated than they were post BK - by about 10% and their benefits have cost DL about 20% more since emerging from BK.

In contrast, UA FA salaries have increased about 4.5% since emergence and are actually lower on average in 2011 than they were in the previous two years... not sure why but this is all AVERAGE salary information and obviously includes step increases which most airline personnel have continued to gain even w/o contractual raises. US FA salaries have increased about 7% since emerging but the real compensation difference between US employees and all others comes in benefit costs; non-pilot employees at all of the formerly BK airlines receive benefits packages worth about 80%- or about $10,000 per year- more than what US employees receive.

It is absolutely accurate to say that DL FAs have seen their salaries increase faster than any other formerly BK airline FAs and that DL's benefits packages have also become more costly. DL's FA average salary was higher at the time of the merger and DL's non-pilot benefits package was also higher than NW's at the time of the merger.

As has been well known, AA's employees have the most expensive benefits package among US network airlines although benefits costs at ALL of the formerly BK airlines are growing faster than they have grown at AA, even before AA entered BK.

 

[Kev3188]

Neither you or I can fully calculate the impact of all of the changes in the way DL FAs are paid relative to NW FAs

Sure you can...

 

[WorldTraveler]

I just posted data that shows that DL FA salary and benefit (absent taxes) compensation has increased by about $6000 per year since emergence. As I have noted, benefits are used differently by different employees so the total value of a compensation package is different for different employees... but average compensation data can very much be used to understand how the average employee is doing... plus come up w/ total compensation for each workgroup that is broken out. FA data is broken out; other ground based workgroups are not based on DOT reporting requirements.

The data is public... you and anyone else can look.

Note also that DL has hired alot of FAs since emerging and those FAs are not topped out. The actual rate of salary increase for senior FAs is higher than at carriers that have not hired and therefore the average and the actual rates are much closer.