AA reports 4Q2012 and FY results

[CactUS4Ever]

Read my post again. Nowhere did I say that "all of the US people" would get huge raises. Since it's common knowledge (even among non-employees) that the US pilots and FAs are severely underpaid compared to the rest of the industry, I figured that the employees would realize that.

Estimates of the raises necessary to bring the US pilots up to the AA levels vary, but it could easily be $40k per pilot (or more). Plus the extra 4% 401(k) contribution on what they already earn (AA is 14% v 10% at US) plus 14% of the raise. With benefits, each US pilot could become $50k more costly on average. With 5,000 pilots, that's $250 million. Add to that the contract improvements that Parker offered to the APA of $87 million per year, or another $10k per pilot, on average. So add another $50 million to the US pilot tally. Now they're $300 million more expensive each year.

Parker offered the FAs $40 million per year (which they rejected) and that would not have brought them up to AA's payscale. To bring them up to AA's payscale plus the anticipated contract improvements that APFA will get could end up costing $75 million or more per year across the 6,800 US FAs. FAs make a lot less than the social security cap (unlike pilots), so raises increase their costs by the additional FICA their employer must pay.

Even if US fleet, agents and maintenance already make as much as AA, the pilots and FAs could be in line for raises that increases their cost by $300 million to $400 million per year. That soaks up the annual profits at US, and then some.

How is it that Parker has reported some profits since the merger? Pilots and FAs who are willing to work for regional airline pay.

Is it possible that the Pilots and FA at AA are Overpaid and this is why AA is bankrupt. Maybe Uas Air is paying the correct wages so they don't go CH 7 like AA will if they don't get there costs inline.

 

[FWAAA]

Is it possible that the Pilots and FA at AA are Overpaid and this is why AA is bankrupt. Maybe Uas Air is paying the correct wages so they don't go CH 7 like AA will if they don't get there costs inline.

If that helps you rationalize the "harm to the profession" caused by the willingness of the HP and US employees to work for far less than at UA, DL and AA, then have at it.

Seriously, the AA pilots and FAs weren't "overpaid," there were simply too many of them and on average, they weren't flying enough hours for the pay they were getting. And yes, that's part of the reason that AA ended up in Ch 11 (just like US did twice and UA and DL and NW and CO twice and even HP).

If you're correct and US is paying "the correct wages," then why is the CEO (Parker) handing out promises of even more money to the AA employees unions?

HP and US pilots and FAs may very well be paid all that can be justified given the low revenue that the US hubs generate compared to AA, DL and UA. Parker has said that's why US can't pay industry-standard wages. If that's true, then he has no business tying high-wage AA together with low-wage (and lower revenue) US. Mathematically, it doesn't work.

 

[CactUS4Ever]

Well said. I was just asking. No pun intended

 

[jimntx]

Seriously, the AA pilots and FAs weren't "overpaid," there were simply too many of them and on average, they weren't flying enough hours for the pay they were getting. And yes, that's part of the reason that AA ended up in Ch 11 (just like US did twice and UA and DL and NW and CO twice and even HP).

???? We only get paid for the hours we actually fly. Remember, "no pay until the door is closed and the brake is released, and pay stops the instant the door opens at the destination." Granted there were a number of very senior f/as that were never flying, but where is the cost? Most of them didn't even fly enough hours to qualify for company-paid benefits. The recurring question among those of us actually working as flight attendants has always been...what do they get out of hanging on other than travel benefits? And, with the exception of the ability to sit on the jumpseat, those same benefits were always available to them in retirement as well.

One bright spot that came out of the LBFO is a new "minimum hours to maintain employment" requirement which I completely agree with. Call me old-fashioned, but if you want to call yourself a flight attendant, you should be required to fly on occasion.

The company always says that the flight attendants are not as productive as they could be while on duty. However, they then turn around and continue scheduling 2-4 hour unpaid sits in airports around the country. We have no control over that.

 

[WorldTraveler]

They do say a broken clock is also correct twice a day, and that even a blind squirrel will find a nut from time to time.

That said, all three of us are in agreement on the merger's business case. I also don't see it.

As UA continues to struggle, AA has made gains without needing US, but there's more that AA could have done on the economic front. They chose peace vs. pissing off the employees more than they already were, and ignoring the vocal/bitter minority of employees here, the fact still remains that relatively few employees have been fed up enough with the changes to leave over the past 10, 11, 12 years that things have been dragging on.

Maybe the announcement in 90 minutes will be the merger, but I suspect it's just the branding.

the great convergence is happening. Forget the alignment of the stars.
next round of coffee, tea, or something stronger (before we all wake up and realize what we are doing to the aviation internet chat world) is on me.

AA has an enormous climb to get back in the game and hold its own against much tougher competitors.

I'm quite curious to see UA's results - but it is very possible that AA's profits might outshine UA's.....the real danger is the two of them beating each other up for several more years - while other carriers continue to target them both.

AA employees individually DO NOT make too much. They have been inefficiently used - in some cases because of labor contracts - but to a much larger degree because AA did not lay off enough people in 2003 based on the size of the airline that AA ended up becoming. Of course, mgmt believed some other airline would die and AA could absorb their business so AA never did the hard work of restructuring in 2003 behind cutting employee pay..... and the real fear that I - and apparently some of my drinking buds have - is that we are on the verge of seeing the same thing all over again, driven in part by AA's desire to stay independent and prove that a merger doesn't solve enough of the problems that AA faces or create enough revenue.

 

[700UW]

http://finance.yahoo.com/news/us-airways-reports-highest-annual-130000776.html

US Airways Reports Highest Annual Profit In Company History

 

[WorldTraveler]

yes, 700, US has done a great job of creating a stable, profitable airline.... which begs the question of whether US is really better off engaging in a merger that will distract them from the work they have done. It also says that US' employees should be seeing some significant pay raises based on the company's success since US would not be reporting finances like they are if employees were paid at levels comparable to the big 3. Good work by US and its people, nonetheless.

 

[swamt]

http://finance.yahoo...-130000776.html

US Airways Reports Highest Annual Profit In Company History

Nice! Congrats on the record profits. Came at a really good time, US needs all the money it can get to buy AA.

 

[700UW]

US wont be using any of its own money, it will be stock and money borrowed, not current funds.

 

[WorldTraveler]

of course the creditors are now going to have to decide which plan really provides the greatest return... AA and US have both significantly improved their finances but both honestly have shown that they could exist as standalone companies. The real challenge for the creditors is to determine if the cost and distraction of a merger is worth it compared w/ AA continuing as a standalone company.

 

[robbedagain]

wt: is it possible given the size of US profits for the full yr profits as well as quarterly that that would play a big role in helping the creditors decide? for example, given that the merger proposal is an all stock the creditors are demanding what they have to get in return does it make sense that a new AA led by doug w the merger would more than likely give them the return vs a stand alone plan from AA

 

[WorldTraveler]

sure does. and that is precisely why US and AA are both trying hard to show how well they can exist standalone... of course every company wants to show profits but this is an esp. critical period for both companies... see the caveat that one analysts (yes, the world has plenty of them) made about US profits using the link I posted on the US forum... bottom line is that US' higher profits might not be as certain given the low pay US employees have and the likelihood that US will have to increase pay for its employees one way or the other..... exactly what has been discussed here for years. But it still comes down to the creditors' need to figure out who can generate the best profits and whether a merger will really help given that mergers are notorious for destroying or at least long-term delaying the creation of stockholder value in the airline industry.

 

[robbedagain]

I would imagine that the stockholder creditors would want it for the long term value rather than short term... which is in my opinion why i think they would support a merger of US/AA the question is what will they say at end of january