AA headed for bankruptcy?

[AANOTOK]

AA was given the concessions it needed but failed to use them to build long-term stability for the company or its employees.

Bravo. bravo, bravo! 🙄

 

[commavia]

Bravo. bravo, bravo! 🙄

I realize that is what AA's unions want to hear, but I don't think it's realistic.

AA's union contracts have prevented AA from outsourcing more flying to regionals, and from expanding domestic codesharing, and from having the flexibility to quickly add more longhaul flying. Those are just three examples of areas where the 2003 concessions did not, in fact, give AA the flexibility that competitors now have to rapidly adapt to market changes, and AA is - for better or worse - at a competitive disadvantage because of it.

 

[AANOTOK]

I realize that is what AA's unions want to hear, but I don't think it's realistic.

AA's union contracts have prevented AA from outsourcing more flying to regionals, and from expanding domestic codesharing, and from having the flexibility to quickly add more longhaul flying. Those are just three examples of areas where the 2003 concessions did not, in fact, give AA the flexibility that competitors now have to rapidly adapt to market changes, and AA is - for better or worse - at a competitive disadvantage because of it.

My union contract at AA in Fleet has prevented AA from nothing. My concessions to AA in 2003 that they still realize today has prevented me from a lot. That commavia is reality! <_<

 

[TWU informer]

My My, the last 7 days has to be a record for the number of business editors stories and talking heads pumping the Bankruptcy word.

Either a filing is near, or this is the best media fear campaign ever ran by AA Management.

Which to you think it is?

 

[Jacobin777]

My union contract at AA in Fleet has prevented AA from nothing. My concessions to AA in 2003 that they still realize today has prevented me from a lot. That commavia is reality! <_<

So are you trying to tell us that AA could start flying Embraer E195's from ORD-JFK at market competing rates? (I'm being rhetorical). We all know that the answer is. "NO." It has to be flown with mainline AA pilots which makes it uncompetitive. If Eagle pilots were able to fly E195-sized jets you can bet AA would have a nice-sized fleet of them and expand in cities such as ORD, etc.

As I've incessantly mentioned, union's version of reality and planet earth-based reality aren't even remotely close...

Now, besides some union spiel, how about finding me ONE independent analyst which states that AA's labor cost is competitive against its peers. Even if you can find me one, I can find a half a dozen of them which prove my points. In fact, I've probably already posted a 1/2 dozen of them.

 

[Buck]

except that you can't seem to grasp that AA's labor cost disadvantage has nothing to do with what individual AA employees make and everything to do with the fact that AA has used its labor inefficiently.
Aside from AA's uncompetitive medical costs driven by 8 year old labor contracts, AA labor has similar or lower pay rates than its peers, have contracts that allow AA to work more efficiently than they do, and which give AA the freedom to adapt as much as any other carrier. As much as this board focuses on outsourcing overhaul, it is a pretty small part of AA's labor cost problem and one which could be used to AA's benefit if they insourced like they once did.
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AA's labor cost disadvantage is due to AA's failure to manage the enterprise effectively. The primary cause of AA's labor cost disadvantage is a more senior workforce - which is directly related to the fact that AA has not grown the company - and too many people for too small of a network. AA set the size of its workforce years ago based on the flawed assumption that a competitor would fail and AA would be able to grow; no competitor has failed and AA now has a significant cost disadvantage of its own - and it can no longer grow because its costs are so much higher than its competitors that they would rapidly undercut AA.

AA was given the concessions it needed but failed to use them to build long-term stability for the company or its employees.

As much as this board focuses on outsourcing overhaul, it is a pretty small part of AA's labor cost problem and one which could be used to AA's benefit if they insourced like they once did.

I tis my understanding that the company is insourcing more than usual, but only in the back shops including Landing Gear overhauls. Airframes are a different picture because the companies paid analyst has determined that it would only be equitable if the company could accomplish their own checks first. TUL does not have the space at this time to accomplish any airframe insourcing. However I believe that the discussions are in progress with the city to convert Hangar 3&4 to take the 737 and possibly the Airbus.

 

[commavia]

My union contract at AA in Fleet has prevented AA from nothing. My concessions to AA in 2003 that they still realize today has prevented me from a lot. That commavia is reality! <_<

I can't argue with that. The 2003 concessions were difficult and painful, and helped the company immensely in surviving and staying solvent post-9/11 where every one of their legacy peers (except one) failed in that regard. But, alas, the bankruptcy processes at AA's competitors meant that those carriers emerged from reorganization leaner and with lower labor costs and/or more efficient labor contracts that have positioned them with a competitive advantage vs AA.

And yes, I further agree, the majority of this union-contract-driven inefficiency and structural inflexibility that AA has to contend with today are driven primarily by the pilots contract, some by the mechanics, and virtually none by the flight attendants. Now, I fully realize that what to the company is "inefficiency and structural inflexibility" to the workforce means jobs, and pay. I get that - totally. And, as I have repeatedly said, I also totally get that AA management has made multiple stupid decisions and harmful mistakes that have been counterproductive to long-term success. I get all of that. But, again, it still doesn't mitigate that when AA's competitors have successfully used bankruptcy to become more efficient and nimble than AA, AA will ultimately have no choice but to compete on those terms.

That may well mean that AA has no choice, ultimately, but to follow the path that every one of their legacy peers has now taken at least once, and that will mean even more severe pain for AA's employees: more layoffs, more productivity, frozen and/or dumped pensions, relaxation of SCOPE and codesharing restrictions, more outsourcing, etc. When every one of AA's competitors has done all of those things, and AA hasn't, or hasn't to the same extent, it becomes, unfortunately, perhaps inevitable.

 

[AANOTOK]

So are you trying to tell us that AA could start flying Embraer E195's from ORD-JFK at market competing rates? (I'm being rhetorical). We all know that the answer is. "NO." It has to be flown with mainline AA pilots which makes it uncompetitive. If Eagle pilots were able to fly E195-sized jets you can bet AA would have a nice-sized fleet of them and expand in cities such as ORD, etc.

As I've incessantly mentioned, union's version of reality and planet earth-based reality aren't even remotely close...

Now, besides some union spiel, how about finding me ONE independent analyst which states that AA's labor cost is competitive against its peers. Even if you can find me one, I can find a half a dozen of them which prove my points. In fact, I've probably already posted a 1/2 dozen of them.

Jacob, please post what I made an hour in 2003 and what I make now. Then if you will post what the other legacy airline employess that do my job made in 2003 and what they make today. Thanks!

 

[WorldTraveler]

good to hear, Buck.
Again, AA has enormous maintenance capabilities and they should be used to the greatest extent possible to increase revenues for the company and increase the efficiency of AA's own maintenance operations.
Understandably, AA doesn't have the space to insource airframe overhauls but according to some in the US industry, component maintenance is far more profitable than airframe maintenance insourcing anyway.

So are you trying to tell us that AA could start flying Embraer E195's from ORD-JFK at market competing rates? (I'm being rhetorical). We all know that the answer is. "NO." It has to be flown with mainline AA pilots which makes it uncompetitive. If Eagle pilots were able to fly E195-sized jets you can bet AA would have a nice-sized fleet of them and expand in cities such as ORD, etc.

As I've incessantly mentioned, union's version of reality and planet earth-based reality aren't even remotely close...

Now, besides some union spiel, how about finding me ONE independent analyst which states that AA's labor cost is competitive against its peers. Even if you can find me one, I can find a half a dozen of them which prove my points. In fact, I've probably already posted a 1/2 dozen of them.

Except that AA doesn't need to fly the route with E195s in order to be able to successfully serve the market. Neither DL or UA have aircraft above 76 seats in their regional carrier fleets; those carriers manage to make money with 2 class RJs flown by regional carriers with less than 76 seats or on mainline with aircraft seating greater than 120 seats.
Despite the fascination with the E195, DL and UA (AA's closest matched network competitors) don't have and are not asking for the ability to fly a 100 seat jet. AA wants to fly aircraft with up to 130 seats but pay the pilots US rates...understandably, the APA is saying "NO"
And while you talk about the flexibility to fly international rates, you do realize that DL staffs its 4 person very long haul flights with 2 captains and 2 FOs and has for several years? The difference in cockpit costs PER HOUR by replacing one of the US industry accepted FOs with a captain adds $69/hr to DL's costs for a 777 or 744 flight - or a 10% increase in the total cockpit costs per hour. And yet DL pilots have given the company almost carte blanche authority to open any route the company wants to the benefit of the pilots.
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WN has a similar philosophy with respect to labor and their labor groups have almost never said "NO" to a WN request that is in the best interest of the company - because that is also in the best interest of labor.
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It's amazing how much more freedom a company has when paying people at the top of the industry instead of shooting for the bottom.

 

[wrencher]

good to hear, Buck.
Again, AA has enormous maintenance capabilities and they should be used to the greatest extent possible to increase revenues for the company and increase the efficiency of AA's own maintenance operations.
Understandably, AA doesn't have the space to insource airframe overhauls but according to some in the US industry, component maintenance is far more profitable than airframe maintenance insourcing anyway.

Yes we use to do contract work at MCIE as well as AA work then they shut us down moved us all over the system then farm out the work and now you say they don't have the space man try pushing your bullsh????? some where else.

 

[Hopeful]

Yes we use to do contract work at MCIE as well as AA work then they shut us down moved us all over the system then farm out the work and now you say they don't have the space man try pushing your bullsh????? some where else.

When they spin off OH in BK, would you be happy if they reopen MCIE with a $25 an hour top pay? Will that satisfy you?

 

[wrencher]

When they spin off OH in BK, would you be happy if they reopen MCIE with a $25 an hour top pay? Will that satisfy you?

Hell if they reopened MCI and I did recieve 25.00 an hour that would be a pay raise when you consider my commuteing expenses and not seeing my family. So do the math. Let me ask you, all I heard the whole 10years after the asset purchase was how the membership wanted MCI shutdown well did that fix all your problems? Just hang on for the ride now. And no I would not vote for anything that gets rid of our or I mean your retire medical.

 

[Hopeful]

Hell if they reopened MCI and I did recieve 25.00 an hour that would be a pay raise when you consider my commuteing expenses and not seeing my family. So do the math. Let me ask you, all I heard the whole 10years after the asset purchase was how the membership wanted MCI shutdown well did that fix all your problems? Just hang on for the ride now. And no I would not vote for anything that gets rid of our or I mean your retire medical.

One could argue that buying TWA was the beginning of AA's decline financially...

 

[Hopeful]

Hell if they reopened MCI and I did recieve 25.00 an hour that would be a pay raise when you consider my commuteing expenses and not seeing my family. So do the math. Let me ask you, all I heard the whole 10years after the asset purchase was how the membership wanted MCI shutdown well did that fix all your problems? Just hang on for the ride now. And no I would not vote for anything that gets rid of our or I mean your retire medical.

One could argue that buying TWA was the beginning of AA's decline financially...

 

[WorldTraveler]

One could argue that buying TWA was the beginning of AA's decline financially...

or more correctly stated, attemping to consummate a merger while at the same time not finishing the restructuring that AA began and was necessary even before 9/11 but was even more necessary given the excess capacity that came w/ TW but which was largely no longer needed post 9/11.