AAR to hire 200 mechanics, thanks to Delta

[WorldTraveler]

Bob,
I am very much aware that trickle down economics and a global economy have fallen far short of delivering what was promised but I think you are a tad jaded to not appreciate that there are still well-run businesses and business principles that really do positively affect average workers. But you also fail to look at the overall productivity improvements in the larger US economy; all US workers are producing more than ever.... much of that is the necessity of protecting their jobs against foreign workers but airline employees are far from the only ones who have been affected.

First, I disagree that the bankruptcy courts alone and not market forces have set airline wages rates. The data on compensation for airline employees clearly shows that those employees lost about 20% of their compensation during the period their airlines were in bankruptcy - but it was a pretty consistent percentage that was taken off of existing wage rates. In the 3 years or so since all of the network airlines have been out of bankruptcy, average compensation per employee has returned to about 90% of what was being made prior to bankruptcy. Granted, there is a loss because of a lack of cost of living adjustments but the largest component of inflation in the US has been healthcare costs... The notion that market forces were lost in the bankruptcy process is simply not accurate. Airline wage levels were established prior to bankruptcy largely from the regulated period of the industry and there have been percentage adjustments to airline wages but the system of compensation is still intact and actually not that far from pre-BK levels.
It is also worth noting that AA employees ON AVERAGE (total compensation per employee) make almost the identical amount as their network peers that did go through BK- except for CO employees who make about 10% less in total compensation. What AA did not gain is workrule changes that other airlines obtained in BK.

Second, it is not at all supportable to say that pushing wages down is the goal of business or that profits go up when wages go down. That statement is no more valid than to say that if you buy the cheapest machines, your profits will go up. There are companies who pay above average wages because their employees produce above average results for the company -no different than it would be for a company to buy the top of the line XYZ machine because it can produce XYZs faster than other machines. Among airlines, you need only look at WN and its employees to see this principle in aciton.

Despite what you would like to believe, there are executives that get TERMINATED for not performing.

And finally, yes, DL's philosophy has long been that they will attempt to treat their employees as good as employees at airlines who have unions - such that DL employees in many ways have the benefits of a union without having a union.
Obviously there are alot of PMNW people who are not convinced that strategy will work given that nearly 50% of frontline employee groups that have released voting results still want a union including a number of PMDL people, but the majority of DL employees still say they prefer DL's traditional employee-employer relationship.

 

[Bob Owens]

Bob,
I am very much aware that trickle down economics and a global economy have fallen far short of delivering what was promised but I think you are a tad jaded to not appreciate that there are still well-run businesses and business principles that really do positively affect average workers. But you also fail to look at the overall productivity improvements in the larger US economy; all US workers are producing more than ever.... much of that is the necessity of protecting their jobs against foreign workers but airline employees are far from the only ones who have been affected.

Well its a fact that as our productivity has increased so has unemployment. Obviously since most of what we produce(not consume) is consumed locally the more effecient we are the fewer workers are needed. We are also the biggest consumer, tarriffs can level the playing field with those countries that have lower wages. I know thats a bad word now-a-adays but taffiffs have been used for hundreds of years.

First, I disagree that the bankruptcy courts alone and not market forces have set airline wages rates. The data on compensation for airline employees clearly shows that those employees lost about 20% of their compensation during the period their airlines were in bankruptcy - but it was a pretty consistent percentage that was taken off of existing wage rates. In the 3 years or so since all of the network airlines have been out of bankruptcy, average compensation per employee has returned to about 90% of what was being made prior to bankruptcy. Granted, there is a loss because of a lack of cost of living adjustments but the largest component of inflation in the US has been healthcare costs... The notion that market forces were lost in the bankruptcy process is simply not accurate. Airline wage levels were established prior to bankruptcy largely from the regulated period of the industry and there have been percentage adjustments to airline wages but the system of compensation is still intact and actually not that far from pre-BK levels.

The fact is that under regulation only fares and routes were regulated, (and fares were declining under the CAB for 50 years). Wages were never regulated, until 2002 when the courts imposed new rates on USAIR and said they could not strike. There were a lot moire strikes under the CAB than there have been since the fares and routes were deregulated, if wages were regulated there would not have been any strikes, a strike is an example of the market in action. Your arguement against my assertion that todays rates are the result of Command forces simpy doesnt hold any water. Your claim is that basically under regulation, which only governed routes and fares, that market forces for wages didnt exist. thats false, wages were never regulated.
What you are really saying is that unions need to dissapear so that large employers can bargain against individual workers, that unions regulate wages. Unions dont eliminate market forces, it simply shifts the balance of power. Just as corporations are a collective of Capital, unions are collectives of labor. The fact is that unions or not there are market forces, unions simply level the playing field.

While I dispute your claim that wage levels were intact from the regulated period the explaination would be thats because thats where "the market" put them before the government "commanded" them to their present levels. Proof of the fact that the current levels are not market driven is that outfits like Jet Blue and even post BK Delta have raised their wages in order to attract or retain talent,companies like AAR are having trouble finding mechanics and AA is seeing most of their recalls decline recall. The government continues its interfereance by holding the entire airline labor movement hostage through the NMB. Look at all the open contracts and how long they have been open, its unprecidented. Its the Comand forces of the Federal Government that are holding airline workers wages back, with 15 million unemployed why wouldnt the NMB simply release everyone? You would think the market would favor the airlines with 15 million unemployed right?

It is also worth noting that AA employees ON AVERAGE (total compensation per employee) make almost the identical amount as their network peers that did go through BK- except for CO employees who make about 10% less in total compensation. What AA did not gain is workrule changes that other airlines obtained in BK.

Because they had compliant unions and they used the threat of BK and court imposed concessions(command forces backed up by the Federal government) , where the right to strike is denied, to get slight majorities to accept. If you recall the TWU M&R vote was tainted with a faulty ballotting system (Anne McNamara, former AA exec sat on the board of AAA) and the Flight Atendants rejected the deal only to be forced to vote again after knowing they would be on their own. AA was able to use the command forces of a BK court without going BK. Had that not been there AA would not have won those concessions.

Second, it is not at all supportable to say that pushing wages down is the goal of business or that profits go up when wages go down. That statement is no more valid than to say that if you buy the cheapest machines, your profits will go up. There are companies who pay above average wages because their employees produce above average results for the company -no different than it would be for a company to buy the top of the line XYZ machine because it can produce XYZs faster than other machines. Among airlines, you need only look at WN and its employees to see this principle in aciton.

Different companies have different business strategies, Southwest is not the predominent buisness strategy these days. Slashing wages to increase profits is.

Despite what you would like to believe, there are executives that get TERMINATED for not performing.

How do you know what I would like to believe? You said part of their compensation was at risk if they didnt meet objectives, not me.

Obviously there are alot of PMNW people who are not convinced that strategy will work given that nearly 50% of frontline employee groups that have released voting results still want a union including a number of PMDL people, but the majority of DL employees still say they prefer DL's traditional employee-employer relationship.

Perhaps but Reverend Jim Jones had a followers as well. "Come drink the cool-ade".

 

[FWAAA]

Well its a fact that as our productivity has increased so has unemployment. Obviously since most of what we produce(not consume) is consumed locally the more effecient we are the fewer workers are needed. We are also the biggest consumer, tarriffs can level the playing field with those countries that have lower wages. I know thats a bad word now-a-adays but taffiffs have been used for hundreds of years.

Tariffs? Seriously? I was under the mistaken impression that most Americans realized that import duties and tariffs were discredited following the Tariff Act of 1930 (Smoot-Hawley Tariff Act) that many believe contributed to the deep economic pain of the Great Depression. Smoot and Hawley were Republicans, Bob, and despite Herbert Hoover's opposition to the bill, he gave into his party and did not veto the legislation. If ever there existed government policies that tend to make the pie smaller, punitive import tariffs are it.

Fortunately, the Democrats tend to believe in free trade, as evidenced by FDR's criticism of Smoot-Hawley and Clinton's support for NAFTA.

Those who don't remember (or ever learn) history are doomed to repeat it.

About productivity: By some measures, AA's mainline employees are more productive than in the past. As load factors have increased and have set records in recent times, the Revenue Passenger Miles flown per employee have increased dramatically. As yields have recovered from their post-September 11, 2001 lows, AA's mainline revenue per employee has increased. Does that mean AA's mainline employees are more productive?

It's difficult to make FAs more productive due to the federal law that requires one per each 50 seats. FAs could agree to reduced staffing on flights that are staffed with more than the FAA minimum, but that would probably impact the customer experience in First and Business Classes, eventually causing revenues to decline. Recall that FAs successfully grieved AA's decision to reduce 777 staffing early in the past decade and AA had to pay the FAs back pay for understaffing. FAs could agree to fly more hours per month (which would reduce the number of them needed, saving AA money on insurance and other benefits) which would certainly increase their productivity.

Pilots can become more productive if they fly bigger planes that carry more passengers or if they agree to fly more hours per month. Mechanics can become more productive if they fix airplanes faster than before with fewer mechanics on the payroll. Do you change tires or engines faster than you used to? Do you diagnose and repair hydraulic leaks faster than several years ago? Do you replace burned out light bulbs faster than before? Those are also measures of your productivity.

In late 2001, all of 2002, 2003, and much of 2004, AA's mainline employees were not very productive (in terms of $$$ per employee) because yields had collapsed in the wake of September 11, 2001. Yields finally recovered in 2005 up until late 2008, when the recession again caused yields to fall. AA's mainline fleet has shrunk substantially since early 2001 - has the number of AA's mainline AMTs shrunk by the same percentage?

 

[Bob Owens]

About productivity: By some measures, AA's mainline employees are more productive than in the past. As load factors have increased and have set records in recent times, the Revenue Passenger Miles flown per employee have increased dramatically. As yields have recovered from their post-September 11, 2001 lows, AA's mainline revenue per employee has increased. Does that mean AA's mainline employees are more productive?

Mechanics can become more productive if they fix airplanes faster than before with fewer mechanics on the payroll. Do you change tires or engines faster than you used to? Do you diagnose and repair hydraulic leaks faster than several years ago? Do you replace burned out light bulbs faster than before? Those are also measures of your productivity.

In late 2001, all of 2002, 2003, and much of 2004, AA's mainline employees were not very productive (in terms of $$$ per employee) because yields had collapsed in the wake of September 11, 2001. Yields finally recovered in 2005 up until late 2008, when the recession again caused yields to fall. AA's mainline fleet has shrunk substantially since early 2001 - has the number of AA's mainline AMTs shrunk by the same percentage?

Yes we have increased productivity over the past without changes that just alter the figures such as sending work out, in fact we have insourced even more. which means we are in fact being more productive than the numbers indicate.

How fast we do a tire, fix a leak or change a bulb isnt a good way to measure productivity in our line of work, since often an effort to cut time would compromise safety. Speed may be a performance indicator but thats a little differnt than productivity. A Corvettte is a lot faster than a Van but when it comes to producing ASMs its a lot less productive. How many tasks we do is a fairly decent way to measure productivity but it too has its limitation. Productivity isnt always the most important aspect when it comes to Line maintenance. If I go out and change a tire in ten minutes or two hours and thats it am I more productive than changing three tires over the course of a shift? The company would love the 10 minute change especially if the aircraft is on a delay and could care less about a two hour tire change or that I changed three tires if the plane was in the hangar for the shift. Line maintenance is not an assembly line, you can not precisely predict the workload but you have to staff for what you feel will be the workload based on historical trends. There will always be down time, or there will be planes out of service with nobody working on them.

No, the number of mechanics has not shrunk the same percentage as the fleet, it shrank more than the percentage of the fleet and as I mentioned earlier we brought more work in house, plus 3P work. This compounded the productivity gains for the company.

Yeilds have recovered, our compensation has not. That goes for Delta and all the other carriers as well.

 

[WorldTraveler]

Well its a fact that as our productivity has increased so has unemployment. Obviously since most of what we produce(not consume) is consumed locally the more effecient we are the fewer workers are needed. We are also the biggest consumer, tarriffs can level the playing field with those countries that have lower wages. I know thats a bad word now-a-adays but taffiffs have been used for hundreds of years.

You want check on that statement that most of what Americans consume is produced locally? Very few consumer products are made in the US anymore and even much of the food is imported... and even if it is made in the US, it could hardly be called locally produced.

The whole concept of free markets is that tariffs are supposed to be level - and low. I'm not at all arguing that it is fair but that is the philosophy that the US government has taken - and I believe it has been detrminental to American workers. The notion that the employees in the largest and richest economy in the world are going to benefit by opening their markets to foreign workers who make a fraction of what Americans make is pure fantasy.

The fact is that under regulation only fares and routes were regulated, (and fares were declining under the CAB for 50 years). Wages were never regulated, until 2002 when the courts imposed new rates on USAIR and said they could not strike. There were a lot moire strikes under the CAB than there have been since the fares and routes were deregulated, if wages were regulated there would not have been any strikes, a strike is an example of the market in action. Your arguement against my assertion that todays rates are the result of Command forces simpy doesnt hold any water. Your claim is that basically under regulation, which only governed routes and fares, that market forces for wages didnt exist. thats false, wages were never regulated.
What you are really saying is that unions need to dissapear so that large employers can bargain against individual workers, that unions regulate wages. Unions dont eliminate market forces, it simply shifts the balance of power. Just as corporations are a collective of Capital, unions are collectives of labor. The fact is that unions or not there are market forces, unions simply level the playing field.

While I dispute your claim that wage levels were intact from the regulated period the explaination would be thats because thats where "the market" put them before the government "commanded" them to their present levels. Proof of the fact that the current levels are not market driven is that outfits like Jet Blue and even post BK Delta have raised their wages in order to attract or retain talent,companies like AAR are having trouble finding mechanics and AA is seeing most of their recalls decline recall. The government continues its interfereance by holding the entire airline labor movement hostage through the NMB. Look at all the open contracts and how long they have been open, its unprecidented. Its the Comand forces of the Federal Government that are holding airline workers wages back, with 15 million unemployed why wouldnt the NMB simply release everyone? You would think the market would favor the airlines with 15 million unemployed right?

Because they had compliant unions and they used the threat of BK and court imposed concessions(command forces backed up by the Federal government) , where the right to strike is denied, to get slight majorities to accept. If you recall the TWU M&R vote was tainted with a faulty ballotting system (Anne McNamara, former AA exec sat on the board of AAA) and the Flight Atendants rejected the deal only to be forced to vote again after knowing they would be on their own. AA was able to use the command forces of a BK court without going BK. Had that not been there AA would not have won those concessions.

You are absolutely right that labor was not regulated under the CAB but utilities (which the airline industry was) always have higher labor costs than industries which are subject solely to market forces to set labor rates. When you can ask for permission to pass on your costs to consumers, it is a given that labor costs will be hgiher than in industries that have numerous competitors.

I also did not say anything about unions needing to disappear - that is a misinterpretation on your part.
Unions do not, however, and never will regulate wages. They NEGOTIATE to try to obtain higher wage rates, benefits, and working conditions. Problem in the airline industry that you have a very hard time justifying that labor unions have had much effect, esp. since the domestic industry was deregulated 32 years ago.
The reason why the NMB has tried to protect airline employees from the full "wrath" of open markets is because the airline industry has been very effective at getting what it wants from labor regardless of the efforts of labor. If you can demonstrate where labor unions since deregulation in 1978 have had any long-term effect on wage rates, I would like to see it.
The simple fact is that US laws are far more tilted toward business than labor and even when you look at the world as a whole, the notion of open markets is not conducive to the labor movement.

I didn't dream up the notion of open markets or deregulation of key industries... I just deliver the bad news of what has happened.

Different companies have different business strategies, Southwest is not the predominent buisness strategy these days. Slashing wages to increase profits is.

WN never has been the dominant or predominant business strategy in the industry; they have been and still are - from a strategy perspective - a niche player but that doesn't change the fact that they have a successful strategy... and more companies are recognizing that WN's strategy works. CO and DL both have pushed toward more "at risk" compensation for even frontline employees.

 

[Bob Owens]

You want check on that statement that most of what Americans consume is produced locally? Very few consumer products are made in the US anymore and even much of the food is imported... and even if it is made in the US, it could hardly be called locally produced.

Read it again. I couldnt be more explicit. I said most of what we "produce" we consume, not most of what we consume we produce.
Now you know why I say you are on the side of FWAAA and Eoleson, if I dont actually write what you want me to say you say I wrote it anyway and build a whole arguement against it.

You are absolutely right that labor was not regulated under the CAB but utilities (which the airline industry was) always have higher labor costs than industries which are subject solely to market forces to set labor rates. When you can ask for permission to pass on your costs to consumers, it is a given that labor costs will be hgiher than in industries that have numerous competitors.

Once again, airfares went down more under the CAB than under deregulation. Just because the airlines could ask for permission to pass higher labor costs on that doesnt mean they just doled it out to the employees, the fact is that there were more strikes under the CAB era than the deregulated era.

Unions do not, however, and never will regulate wages. They NEGOTIATE to try to obtain higher wage rates, benefits, and working conditions. Problem in the airline industry that you have a very hard time justifying that labor unions have had much effect, esp. since the domestic industry was deregulated 32 years ago.

Thtas because Labor Unions are regulated by the RLA, the act effectively eliminates the leverage we have as far as getting the maximumum wage we could get it we were under the NLRA and could strike as soon as our agreemments become amendable, instead companys are enabled by the government to either rewrite agreements to their liking under BK law or simply hold us in limbo for years with the NMB and let inflation get them further concessions.

The reason why the NMB has tried to protect airline employees from the full "wrath" of open markets is because the airline industry has been very effective at getting what it wants from labor regardless of the efforts of labor. If you can demonstrate where labor unions since deregulation in 1978 have had any long-term effect on wage rates, I would like to see it.
The simple fact is that US laws are far more tilted toward business than labor and even when you look at the world as a whole, the notion of open markets is not conducive to the labor movement.

The first part is dead wrong as far as the NMB, the second part is more on target. I feel like two differnt people wrote that paragraph. The airlines have been able to get what they want because the government helps them get what they want. Airline workers would be far better off if there was no RLA. The only thing the RLA does is provide some protections to the Unions, but at the expense of its members.

WN never has been the dominant or predominant business strategy in the industry; they have been and still are - from a strategy perspective - a niche player but that doesn't change the fact that they have a successful strategy... and more companies are recognizing that WN's strategy works. CO and DL both have pushed toward more "at risk" compensation for even frontline employees.

Agreed, but there are those who post on these boards that SWA sets the fares and that other must match.

Back on topic, AAR is looking to hire 200 mechanics in Indianapolis, and they are also looking for 100 mechanics in OKC. They have gone to the press citing they are having trouble filling the spots. AAR is a provider of OH services, Delta is one of their customers, if AAR cant find the workers Delta either has to find another provider, or hire the workers themselves and find a place to do the work. Its been reported here that Delta doesnt have enough workers, even though they aquired more workers with the purchase of NWA and that many of their recalls are saying "Thanks but no thanks". Delta will soon likely be looking to hire off the streets.They used to have a big base in DFW, thats gone AA now owns it, AA does most of its work in house and now they need the facility for their own stuff after abandoning the ancient Kansas City Base they aquired with TWA. AA has more work than they can handle, they are looking at adding 900 heads in 2011, their recall list has about half that number but so far the number of people accepting recall has been at record lows. So AA wont be looking to do Deltas work. AA may be setting down a few planes next year because they dont have the capacity to do the work, now it looks like AAR may not have the capacity to do Deltas work, let alone AAs extra work. SWA is also said to be doing more heavy work in house, meaning they will have to hire additional mechanics as well because (90 was the number given) with the purchase of AirTran the number of aircraft goes up past a contractually defined number that mandates they must start another heavy line.

The FAA has been looking into the issue of mechanic fatigue. While the limits for duty time for mechanics is very liberal there are still problems. Some mechanics violate the Duty times and the only way thats caught is if they violate it with a single employer, if they work for more than one aviation employer, which is common, there is no way for the FAA to enforce it. Many carriers permit mechanics to work double shifts by swapping with other employeees. In fact Continental even has it written into their contract that they can work several double shifts, even back to back per week. This allows workers to put in their 40 hours in three days, and frees up 4 days to work elsewhere so they can make ends meet. They may work several 16 hour shifts at one carrier and then work several 16 hour shifts at another carrier. This is what we have been forced to do since the courts and the NMB have helped the industry slash our wages by over 40%, the FAA wont do anything about it because if they put strict Duty time limits on mechanics, like they do pilots, mechanics would simply be forced to get a second job outside the industry and the industry would experience a shortage of available mechanics. To date the FAAs program against mechanic fatigue is to put out posters telling mechanics they should get 8 hours slepp a day, its laughable. What we are seeing now is one mechanic supplying the labor of two. How much longer this can go on isnt known, probably until it kills a bunch of passengers instead of just a few mechanics.