AA needs $1 billion more in savings!

[Hopeful]

Now how much $$$ did the execs just get?


AMR needs more than $1 billion in costs cuts - CEO
Wed May 10, 2006 10:54 AM ET
CHICAGO, May 10 (Reuters) - American Airlines needs to cut costs by more than $1 billion to keep its expenses in line with 2005 levels, the No. 1 U.S. airline's chief executive said on Wednesday.

American, a unit of AMR Corp. (AMR.N: Quote, Profile, Research), is "looking under every rock" for cost-cutting opportunities to offset record high fuel prices, said Gerard Arpey on a Webcast of a Bear Stearns Global Transportation Conference.

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AMR needs more than $1 billion in costs cuts - CEO
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"We need more than a billion dollars in savings just to keep our costs even with last year," Arpey said.

The airline currently has a plan to trim costs by $700 million a year through such measures as fuel conservation, lowering ticket distribution costs and direct airplane routing. But rising fuel prices threaten to undermine the airline's cost-cutting progress, Arpey said.

The price of crude oil <CLc1>, which relates directly to the price of jet fuel, notched a record high above $75 a barrel last month. High fuel costs have forced some airlines to raise fares defensively. American also has tried to cushion the blow by hedging its oil exposure.

Shares of AMR were up 14 cents at $28.90 on the New York Stock Exchange.

© Reuters 2006. All Rights Reserved.

NYSE and AMEX quotes delayed by at least 20 minutes. Nasdaq and all other quotes delayed by at least 15 minutes.
Reuters does not endorse the views or opinions given by any third party content provider.

 

[FWAAA]

It's long past time for the cost-cutting Bull#### to end.

Employees have given enough. Passengers have given up enough (anyone check out the silly meal cuts onboard?).

The problem is revenue, and that will go up when someone goes out of business or is acquired and downsized.

Yeah, AA needed to slash expenses in 2003, when it was running low on cash.

Now, it's time to focus on revenue.

 

[Connected1]

It's long past time for the cost-cutting Bull#### to end.

Employees have given enough. Passengers have given up enough (anyone check out the silly meal cuts onboard?).

Three reasons not to get worked up about this:

1. Arpey said that $700M of the $1B are already identified (i.e. old news).

2. He did not say that the company is going to recover the remaining $300M in cost savings initiatives.

3. Even if he did, not all cost-cutting comes at the expense of passengers and employees.

 

[TWU informer]

I found $5 more dollars under a rock in my backyard that the rain washed over.

Where can I send it to insure million dollar bonuses continue?

 

[flyboymd8]

Three reasons not to get worked up about this:

1. Arpey said that $700M of the $1B are already identified (i.e. old news).

2. He did not say that the company is going to recover the remaining $300M in cost savings initiatives.

3. Even if he did, not all cost-cutting comes at the expense of passengers and employees.

Want to make a bet. AA has been pushing the pilots for productivity enhancements. I'm willing to make a bet that Arpey is also looking at other work groups for productivity gains. The bottom line is that both sides of the equation have to be addressed, cost cutting AND revenue. Airline managers have historically lacked pricing discipline. At some point the cost of doing business has to be passed onto the passenger. Look at the cargo industry, there is a lot of competition there as well, but cargo companies have been able to deal with increased fuel costs because they have pricing discipline. They implement fuel surcharges, they don't come back to the employees to subsidize the cost of an increase in fuel. At some point enough is enough.

 

[TWskyliner]

Well, I'm not giving another penny...lol

 

[Hackman]

Just call up twu's top sell-outs, Jimmy Do-little and Gary Yingst.

I am sure they would help with another 500 million or so from the membership without further ratification. :unsure:

 

[Wretched Wrench]

revenue.... will go up when someone ...is acquired and downsized.

Oh NO! Don't even think of that!

 

[flyhigh]

Flyboy,

Have you been living under informer's rocks? AA has sucessfully raised fares pretty significantly over the past year to year and a half. The opposite of what is being said here also holds true. You can't let cost spiral out of control just because you've been raising revenue. That's a plan just as destined for failure...

 

[eolesen]

Sorry, FWAAA, but there are still inefficiencies in scheduling/staffing/procedures that need to be eliminated. FA Mikey has pointed out countless examples where FA's aren't being optimized, and AA routinely carries more employees than necessary in some cities for no other reason than to keep peace with the union local.

The perfect example of waste for the sake of stupidity is cabin cleaning: flight attendents pick up the cabin on most thru trips, regardless if they're staying with the aircraft or not, yet they won't/can't pick up the cabin on a turn flight in a spoke city when they're staying with the aircraft...

Common sense (something lacking in both management and labor with regard to this specific item) would be to have the flight attendants pick up the cabin regardless of the turn/thru status, and to have fleet service do the lavs and take off the galley trash (as opposed to paying Skythieves to do it).

I'd bet that if they were responsible for cleaning prior to deplaning, flight attendants would do a lot better job at collecting trash prior to landing.

Changing just this one thing won't drive any incremental expense as far as flight attendants go, and it probably wouldn't drive any significant headcount savings with fleet service. It would, however, allow ground times to be shorter, and it would also eliminate an expense item with regard to paying the caterer to remove galley trash.

 

[Nor'Easta]

If we keep ranking low in the DOT and SAM, they will save money not paying our AIP!! LOL!

 

[CapnCockroach]

But....

in today's new reality....you AA people are pretty much overpaid. You can afford to give a bit back.

For the love of American Airlines.

 

[Wretched Wrench]

But....

in today's new reality....you AA people are pretty much overpaid.

Yeah, the law of supply and demand is a ####, especially without a union.

 

[Skymess]

I'd bet that if they were responsible for cleaning prior to deplaning, flight attendants would do a lot better job at collecting trash prior to landing.

Changing just this one thing won't drive any incremental expense as far as flight attendants go, and it probably wouldn't drive any significant headcount savings with fleet service. It would, however, allow ground times to be shorter, and it would also eliminate an expense item with regard to paying the caterer to remove galley trash.

Have you ever seen a FA cleaned airplane at AA?
If AA management wants to drive customers away, they just have to make the FAs clean more.

 

[jimntx]

The perfect example of waste for the sake of stupidity is cabin cleaning: flight attendents pick up the cabin on most thru trips, regardless if they're staying with the aircraft or not, yet they won't/can't pick up the cabin on a turn flight in a spoke city when they're staying with the aircraft...

Common sense (something lacking in both management and labor with regard to this specific item) would be to have the flight attendants pick up the cabin regardless of the turn/thru status, and to have fleet service do the lavs and take off the galley trash (as opposed to paying Skythieves to do it).

I'd bet that if they were responsible for cleaning prior to deplaning, flight attendants would do a lot better job at collecting trash prior to landing.

Yeah, well I worked a 4-leg day over the weekend. The longest time the a/c was on the ground was 42 minutes in a 12 hour day. If the captain had not been willing to get off the plane and get us something to eat, we wouldn't have had anything in 12 hours. No, I couldn't bring it from home, this was the 2nd day of a 2-day trip.

Why don't you try working 12-13 hours with nothing to eat? Oh, by the way, the last time I attempted to help fold blankets at a turn station (LGA), I got my a** chewed by the ramper crew chief for "taking jobs away from union guys." Of course, the rampers walked through the cabin without picking up one piece of trash and threw the blankets in the o/h bin without even wadding them up--like they usually do.

You go fight the turf wars. I'm not interested. But, thanks for the suggestion. There's always someone who wouldn't do the job on a bet who knows how to do it better. I spent over 20 years in the consulting business. Why don't I come observe your job for an hour or so and then have the company change your job duties according to "common sense?"