Doug Parker decries profit sharing....

[700UW]

In my group so far at least all I'm feeling is like I work for El Cheapo Air.

Disappointing.

Welcome to America West reincarnated to US Airways and further evolved into the New AA.

 

[WeAAsles]

Welcome to America West reincarnated to US Airways and further evolved into the New AA.

Yea I see that now. They should have kept the ticker symbol (LCC) Low Cost Carrier.

 

[1AA]

LCC = Low Cost CrAAp!

 

[chris perry]

It's the worst I've seen it in 25 years of service.

 

[jimntx]

Oh dear.  I hope this doesn't mean a return of the "deep-dish" barbecued chicken pizza on First Class lunch menu.  Truly nasty.  

 

[FWAAA]

Debatable E. SWA also only had one quarter in their entire existence where they didn't make a profit. That has to be factored in to the idea of doing things their way. Plus of course it's a very different operation and I'm sure always will be.

Not even close. Southwest has had 43 years of consecutive profitability, but it has suffered at least 10 quarterly losses since it began flying in June, 1971. Southwest posted quarterly losses in its first seven quarters, from the third quarter of 1971 thru the first quarter of 1973. 1973 marked the beginning of its 43 year unbroken string of annual profits. But there were quarterly losses along the way. Here are three of those losses:

Southwest lost money in the first quarter of 1991 during Desert Storm. Other airlines, of course, lost money and some filed for bankruptcy.

In 2008, Southwest suffered quarterly losses in the third and fourth quarters but earned a profit for the full year:

http://www.nytimes.com/2008/10/17/business/17air.html

http://www.nytimes.com/2009/01/23/business/23air.html
 

But please let me know when Parker declares that his workforce has a value outside of what's agreed to on paper. It's always nice to feel just a little appreciated.

In early 2008, following AMR's second consecutive annual post-September 11 net profit ($504 million, excl special items), the AA board decided to pay out $800 per employee even though AA's mainline profit did not break the $500 million threshold for profit-sharing under the 2003 revisions to the profit-sharing formula. Here's the language from the earnings release:
 

"Our employees overcame enormous challenges from unprecedented weather disruptions, air traffic control problems and record fuel prices to help our company take another important step forward in 2007. We earned our second straight annual profit, achieving our first back-to-back profitable years since 1999-2000, and made progress in many areas, including strengthening our balance sheet, focusing on customers, renewing our fleet, bolstering our network and investing in products and services," said AMR Chairman and CEO Gerard Arpey. "While record fuel prices contributed significantly to our fourth quarter loss -- our first quarterly loss after six straight profitable quarters -- they are a reminder of the challenges we must continue to overcome as we strive for consistent and adequate profitability. As we thank our employees for their efforts in 2007, it is also clear that we have more work ahead as we seek to maintain momentum in 2008 and beyond."

<snip>

Excluding fuel and special items, mainline unit costs in the fourth quarter increased by 0.6 percent year over year, largely reflecting a $44 million accrual in the fourth quarter for a one-time payment to eligible employees under the Company's broad-based variable compensation plans. For the full year, the accrual for the one-time payment totaled $67 million.

Arpey said the Company's Board of Directors had approved the one-time payment "in recognition of the collective effort of our employees and the special circumstances that existed in 2007." Each eligible American Airlines employee is expected to receive a payment of $800 under the Customer Service Component of the Company's Annual Incentive Plan (AIP). "This is a tangible way of saying 'thank you' for all that our employees did for our company in a challenging year," he said.

http://hub.aa.com/en/nr/pressrelease/amr-corporation-reports-2007-net-profit-of-504-million-companys-second-consecutive-annual-profit-and-a-273-million-improvement-over-2006-results

AA had no contractual obligation to pay that $800 to each employee, as AA did not earn $500 million, the threshold for profit-sharing. And the invective directed at Arpey posted here and elsewhere in January, 2008, was astounding. I'm too lazy to search this clunky website looking for the posts, but dozens of AA employees posted various forms of "Eff You, Arpey" on this website in the days following that earnings announcement. He never made that mistake again. There were posters saying that since it wasn't "restore and more," Arpey could "shove it."

Your bargaining agent gave away your post-bankruptcy profit sharing (offered to employees in the restructuring plan in February, 2012) by selling it cheaply to Horton before the merger, and now you want Parker to give a gift to you and all other employees?

Never say never, but I doubt Parker ever agrees to it. He's on record saying that he doesn't believe that airline employees should have a stake in the profits, and it looks to me like even Delta wants to reduce the profit share its employees get. Now that profits are high, some workers suddenly want profit sharing and management wants to eliminate it. Isn't that a little like waiting until your neighbor's house catches fire to try to buy fire insurance for your house?
 

The best thing I ever received from American Airlines when considering the time it happened was two $50 AMEX gift checks from Bob Crandall, 1985?

Don't forget the golden era of the late 1990s, when AA had six consecutive profitable years. For example, exactly 17 years ago, AA paid out $341 million on year 1998 profits of $1.3 billion. That was equal to about one month's pay for most employees. Exactly 18 years ago, AA paid out $250 million on year 1997 profits of $985 million. Those are fairly large percentages of the total annual profits. Between 1984, when the profit sharing program began, and early 1999, AA paid out over $1 billion in profit sharing to the employees.

 

[jimntx]

Now FWAAA, there you go again trying to confuse us with facts.

 

[WeAAsles]

Not even close. Southwest has had 43 years of consecutive profitability, but it has suffered at least 10 quarterly losses since it began flying in June, 1971. Southwest posted quarterly losses in its first seven quarters, from the third quarter of 1971 thru the first quarter of 1973. 1973 marked the beginning of its 43 year unbroken string of annual profits. But there were quarterly losses along the way. Here are three of those losses:

Southwest lost money in the first quarter of 1991 during Desert Storm. Other airlines, of course, lost money and some filed for bankruptcy.

In 2008, Southwest suffered quarterly losses in the third and fourth quarters but earned a profit for the full year:

http://www.nytimes.com/2008/10/17/business/17air.html

http://www.nytimes.com/2009/01/23/business/23air.html
 

In early 2008, following AMR's second consecutive annual post-September 11 net profit ($504 million, excl special items), the AA board decided to pay out $800 per employee even though AA's mainline profit did not break the $500 million threshold for profit-sharing under the 2003 revisions to the profit-sharing formula. Here's the language from the earnings release:
 

http://hub.aa.com/en/nr/pressrelease/amr-corporation-reports-2007-net-profit-of-504-million-companys-second-consecutive-annual-profit-and-a-273-million-improvement-over-2006-results

AA had no contractual obligation to pay that $800 to each employee, as AA did not earn $500 million, the threshold for profit-sharing. And the invective directed at Arpey posted here and elsewhere in January, 2008, was astounding. I'm too lazy to search this clunky website looking for the posts, but dozens of AA employees posted various forms of "Eff You, Arpey" on this website in the days following that earnings announcement. He never made that mistake again. There were posters saying that since it wasn't "restore and more," Arpey could "shove it."

Your bargaining agent gave away your post-bankruptcy profit sharing (offered to employees in the restructuring plan in February, 2012) by selling it cheaply to Horton before the merger, and now you want Parker to give a gift to you and all other employees?

Never say never, but I doubt Parker ever agrees to it. He's on record saying that he doesn't believe that airline employees should have a stake in the profits, and it looks to me like even Delta wants to reduce the profit share its employees get. Now that profits are high, some workers suddenly want profit sharing and management wants to eliminate it. Isn't that a little like waiting until your neighbor's house catches fire to try to buy fire insurance for your house?
 


Don't forget the golden era of the late 1990s, when AA had six consecutive profitable years. For example, exactly 17 years ago, AA paid out $341 million on year 1998 profits of $1.3 billion. That was equal to about one month's pay for most employees. Exactly 18 years ago, AA paid out $250 million on year 1997 profits of $985 million. Those are fairly large percentages of the total annual profits. Between 1984, when the profit sharing program began, and early 1999, AA paid out over $1 billion in profit sharing to the employees.

Too much to go through tonight cause I'm getting a little tired. But one thanks for the history on SWA. I went off my head on their talking points and could have sworn they said 1 quarter in their history. I obviously got it confused with yearly.

On the $800.00 I know what you're talking about. Although there was a lot going on psychologically back then and management/ employee relations were completely irreparable by then. The toxicity by then I think was permanent. (Making us come to collect our AIP bonus and shake their hand and giving us a 100 Grand bar to go with it one time) mocking people who were having a hard enough time paying their bills just wasn't cool. I think the animosity though built up over years from both sides and it was mutual hatred in the end?

And i knew a guy who ripped up that $800.00 check on principle. I told him he was a moron and went and cashed mine.  

 

[Overspeed]

FWAAA,
DId you say the TWU sold the profit sharing plan away to Horton before the merger? They gave it away to Parker not Horton in exhange for the 4.3% pay raise.

 

[WeAAsles]

FWAAA,
DId you say the TWU sold the profit sharing plan away to Horton before the merger? They gave it away to Parker not Horton in exhange for the 4.3% pay raise.

I had to be reminded of this but the TWU agreed to give up the first 10% of 15 in exchange for improvements in the BK agreement. First the Pilots agreed to go from a 20% ask down to a 17% which triggered me too and also exchange the 10% for improvements.

Before that happened we were going to take a small pay cut, our medical was going to be higher and PTers were going to pay double and we didn't have the 2014 wage adjuster. Also our yearly raises were brought up and we earned the 401K match on every hour worked instead of just a base 40.

Again I did have to be reminded of all of this.

  http://www.twu.org/home/tabid/55/vw/1/itemid/363/amr-bankruptcy-update--american-airlines---special-update-%E2%80%9Cme-too%E2%80%9D-clause.aspx

The last 5% PS was exchanged for the 4.3% wage increase to Parker.

 

[FWAAA]

On the $800.00 I know what you're talking about. Although there was a lot going on psychologically back then and management/ employee relations were completely irreparable by then. The toxicity by then I think was permanent. (Making us come to collect our AIP bonus and shake their hand and giving us a 100 Grand bar to go with it one time) mocking people who were having a hard enough time paying their bills just wasn't cool. I think the animosity though built up over years from both sides and it was mutual hatred in the end?

I'd forgotten the requirement to pick up the check in person - that was a low-class, tone-deaf move by management.
 

FWAAA,
DId you say the TWU sold the profit sharing plan away to Horton before the merger? They gave it away to Parker not Horton in exhange for the 4.3% pay raise.

True, the final 5% of the profit-sharing was traded to Parker, but as WeAAsles correctly posted, the first 10% (2/3 of the profit sharing) was traded to Horton thanks to your union's stupidity in accepting the "me-too" clause instead of negotiating and representing the TWU-represented employees. The pilots traded away that first 2/3 (10%) to Horton and since the APFA and TWU had no self-confidence that they could negotiate their own agreement, those unions consented to the loss of the first 2/3 of their profit sharing.

And then, the TWU gave up the last 5% as WeAAsles detailed.

 

[WeAAsles]

I'd forgotten the requirement to pick up the check in person - that was a low-class, tone-deaf move by management.
 

True, the final 5% of the profit-sharing was traded to Parker, but as WeAAsles correctly posted, the first 10% (2/3 of the profit sharing) was traded to Horton thanks to your union's stupidity in accepting the "me-too" clause instead of negotiating and representing the TWU-represented employees. The pilots traded away that first 2/3 (10%) to Horton and since the APFA and TWU had no self-confidence that they could negotiate their own agreement, those unions consented to the loss of the first 2/3 of their profit sharing.

And then, the TWU gave up the last 5% as WeAAsles detailed.

You're not forgetting that we were in a Bankruptcy court again I hope? And the "Me Too" was an irrelevant language anyway until the company emerged from BK.

"Fair and Equitable" under the BK law provided that everyone not just Unions had to take the same percentage cut. So when it went down from 20% to 17% all other Unsecured creditors were treated the same. Remember also that AA had to ask permission of the Judge to continue to make payments on everything all the way down to maybe buying Horton a new coffee mug for his desk if it came from the company finances. 

And I'm not sure if the guy who was going to have to pay double for his medical would have called the exchange stupid?

 

[700UW]

 

[Overspeed]

FWAAA and W,
The way the the 15% PS plan was explained to me was the old PS plan was back loaded in that there was no pay out until thresholds were met and the larger the profit, the larger the payout. In the new PS plan (that we gave away for 4.3%) the first dollar of profit triggered a distribution to all employees equally.

 

[WeAAsles]

FWAAA and W,
The way the the 15% PS plan was explained to me was the old PS plan was back loaded in that there was no pay out until thresholds were met and the larger the profit, the larger the payout. In the new PS plan (that we gave away for 4.3%) the first dollar of profit triggered a distribution to all employees equally.

– Under the AMR-TWU formula, 5% of pretax profit will first be placed in a pool for distribution to all AMR employees as a lump sum. If the company earns a billion dollars, for example, 5% of that profit ($50 million) would be put into a profit sharing pool to be divided among all company employees. Since the TWU represents about 25% of the company payroll, our share would be $12.5 million. For the average TWU member this would mean about $625 as a onetime payment. By comparison, a 4.3% pay increase for an AMT is $1.20 per hour, or over $2500 per year in his paycheck, guaranteed. This 4.3% will also compound every year with other pay increases, so has a permanent and increasing value that profit sharing does not.

http://aviationblog.dallasnews.com/2013/02/twu-defends-decision-to-give-up-profit-sharing.html/

I'm not going to try and do the math on this one OS. But if someone wants to I'd really appreciate it. On the basics of it though it looks like if we had kept the 5% we would have received more this year than the 4.3% not counting any extra hours or compounding to the 401k?

The question still has to come back to when the decision was made would anyone have believed that AA would earn over 6 Billion last year? And if oil had not dropped like a stone absolutely they wouldn't have.

This comment is kind of silly though.

– The TWU did not “trade” profit sharing for the pay increase. US Airways was adamant that an MOU that contained any money for our members would require removal of the profit sharing provision. Let me know if you have any questions.

If we hadn't agreed to the MOU giving us the 4.3% increase then we would still have the 5% instead. Again silly comment.