Additional widebody aircraft

[eolesen]

When a NEW labor cost structure across the board is introduced, AA will grow substantially. If AA orders significant numbers of new aircraft with their present labor contracts/costs, let me know and I will happily admit I was wrong.... but AA is following the history of other network carriers in similar positions before - so I am reasonably confident in my prediction.

I disagree that AA will grow substantially. They'll grow marginally from productivity gains (assuming AA comes up to industry averages for scheduled crew hours). Maybe if AA recovers some of the flying now done by RJ's (which I find unlikely but stranger things have happened) there would be substantial growth, but it would only be shifting capacity from regional to mainline, so there's no net growth.

Aside from maybe building up some frequencies and maybe a few international routes, there's not a lot missing from the network. And no, most of the places that the foamers like Josh and the Airliners.Net crowd think an airline should fly to simply aren't needed or justified.


IIRC, the baby boomer pilots that Mach mentions were mostly hired during the "B" scale era of the early & mid 1980's. Assuming they were in their 30's then, that means they're now approaching their 60's, and will be coming due for retirements in a few years.

The age-out curve will help out with AA's costs in due time, but will also create a hiring curve which will limit some of the growth you might otherwise expect.

Same thing will happen with mechanics and flight attendants, but as they're not forced to retire at a certain age, it's a lot harder to predict when the curves will shift in those workgroups...

 

[czerny]

AA flight 183 LAX-PVG is in non-rev travel planner for April. So, it should be in the system if it's already in the non-rev travel planner schedule. It leaves at 3.10pm.

 

[WorldTraveler]

I disagree that AA will grow substantially. They'll grow marginally from productivity gains (assuming AA comes up to industry averages for scheduled crew hours). Maybe if AA recovers some of the flying now done by RJ's (which I find unlikely but stranger things have happened) there would be substantial growth, but it would only be shifting capacity from regional to mainline, so there's no net growth.

Aside from maybe building up some frequencies and maybe a few international routes, there's not a lot missing from the network. And no, most of the places that the foamers like Josh and the Airliners.Net crowd think an airline should fly to simply aren't needed or justified.


IIRC, the baby boomer pilots that Mach mentions were mostly hired during the "B" scale era of the early & mid 1980's. Assuming they were in their 30's then, that means they're now approaching their 60's, and will be coming due for retirements in a few years.

The age-out curve will help out with AA's costs in due time, but will also create a hiring curve which will limit some of the growth you might otherwise expect.

Same thing will happen with mechanics and flight attendants, but as they're not forced to retire at a certain age, it's a lot harder to predict when the curves will shift in those workgroups...

E,
I think we are on the same page except that AA has no choice BUt to grow substantially IF they ever get a significant labor cost advantage... the only way you keep costs down is by growing faster than your competitors.

It doesn't take much to realize that UA intends to allow its costs to go up because it is not growing next year - a key integration year.... while DL which has completed its merger continues to grow several percent per year.

While you and others argue that AA's network is large enough, the simple reality is that it is based on funnelling passengers onto its partner planes - a completely different strategy from DL and UA which have strong partnerships AND have six continent networks. Other than Latin America, AA's network is substantially smaller than DL and UA... it is very hard to argue that AA will remain a viable option for corporate and negotiated business when other carriers have strong networks to Europe and Asia including LHR and NRT and still serve a whole lot of other destinations nonstop from the US. Further, DL and UA/CO have larger networks to Latin America as a percentage of the size of AA's network than AA has in Europe or Asia compared to DL.

I AM NOT A FAN of holding onto routes solely for the purpose of putting dots on the map nor do I think there are dozens of cities that every carrier must serve - but I equally find it hard to argue that AA will compete effectively with DL or UA when AA doesn't serve any destinations with its own metal (nonstop from the US) to Africa, the Middle East, or Southeast Asia or HKG - large and growing regions of the world which ARE driving many of the profit growth that DL and UA are seeing. Further, AA's much smaller size even in markets like China.

In the absence of signfiicant changes in AA's cost structure, I suspect we will return to a situation where AA and UA maintain a similar cost/revenue structure as they have had for years although UA's greater size, esp. in NYC will make it harder for AA to hold onto contracts that it has held because AA - honestly has had one of the best historical presences in the largest business markets. Meanwhile, DL will be a lower cost producer but will no longer be limited to the secondary US and global markets that were once typical of DL; do you realize that in the 3rd quarter, DL was actually larger than UA between the US and East Asia and the only reason UA is holding onto the title as the largest transpac airline is because of the CO merger? DL is now the 2nd largest airline in NYC as well as many other other airline hub markets and is moving into the number one network in BOS and other key competitive markets? The point is that DL now is flying key global and US markets like AA and UA but has and likely will retain lower costs than AA and UA.

in that scenario of 3 carriers, I have a hard time being comfortable that AA's network position and strategy of very slow growth is or will be sufficient.

 

[Ken MacTiernan]

E,
I think we are on the same page except that AA has no choice BUt to grow substantially IF they ever get a significant labor cost advantage... the only way you keep costs down is by growing faster than your competitors.



world,

What are you talking about? "significant labor cost advantage"? EIGHT years ago I, along with every other labor group at AA, took a 28 1/2% cut in pay and benefits only to watch upper management take million dollars in bonuses. In EIGHT years if AA can not operate with the BILLIONS of dollars robbed from us then labor is NOT the problem. Please peddle your snake oil else where.

As another poster pointed out there is no trust between labor and management and there never will be while those now sitting in the Ivory Towers remain there. The t/a AMTs voted down was a career killer. I'm to trust someone who wants to ruin my profession?

You want AA to grow fast? Well a HUGE part of that scenario is having a happy and respected work force. Neither of which exists now from where I sit.

 

[FWAAA]

world,

What are you talking about? "significant labor cost advantage"? EIGHT years ago I, along with every other labor group at AA, took a 28 1/2% cut in pay and benefits only to watch upper management take million dollars in bonuses. In EIGHT years if AA can not operate with the BILLIONS of dollars robbed from us then labor is NOT the problem. Please peddle your snake oil else where.

More revisionist history masquerading as fact. 28.5% cut in pay and benefits? Absolutely false.

You may have taken a 28.5% hit, but on average, AA employees (the ones not furloughed) took pay cuts of about half that amount.

In 2002, AA's mainline wage, salary and benefits expense item was $7.954 billion. In 2004 (after the concessions were fully implemented), AA's mainline salary, wage and benefit expense was $6.224 billion, and that included about $800 million saved through job losses (the furloughed). The $1.0 billion in pay and benefit cuts amounted to an average paycut of about 12.6% from 2002's wages. Let's not forget that those 2002 wages contained raises the mechanics agreed to in June, 2001 and that fleet agreed to in October, 2001. The FAs agreed to raises in their new contract within days of the September 11 terror attacks. The 2003 concessions were large and painful, but a portion of the concessions merely represented a giveback of the 2001 raises.

Constantly exaggerating the size of the concessions forced upon you does not reflect well on you. Like they say, a man's only as good as his word.

AA management has taken no bonuses since 2000 and in the past decade, the executives have been paid only about 65% of the amount the board targeted for them, resulting in average concessions of about 35%, far larger than the average concessions imposed on the rank and file. For 2005, 2006 and 2007, when AA stock vastly outperformed that of every other airline, the executives were paid nearly all of their targeted compensation, as their contracts provided. Nevertheless, the typical AA employee ignorantly believed that management was receiving "bonuses" and many ignorantly continue to this day to complain about management pay instead of working on ways to increase their own pay.

Do you see the same correlation that I do? Employees who have long been unable to negotiate enough pay to satisfy themselves and who complain endlessly about the union they refuse to decertify are unable to accurately represent the size of their concessionary paycuts. Further, they work themselves into a lather over inaccurate and misleading summaries of executive compensation instead of working to increase their meager pay.

I disagree with almost everything WT posts but the one thing he's right about is that AA suffers a labor cost disadvantage to the rest of the legacy industry. The company knows it. Wall Street analysts who can read the financial statements know it. Anyone willing to look at the numbers can see it. Repeating fabricated wage cut percentages does not change that fact.

 

[eolesen]

FWAAA, totally agree that the base pay cuts were indeed lower. But I suspect the W-2 losses were bigger for those who depended on overtime, which was largely cut out after the RPA.

I learned a long time ago never to live on anything more than my base pay. Others weren't so smart.


WT... I remember when AA had an 900 mainline aircraft fleet. That's simply not sustainable.

There is such a thing as being too damn big for your own good. AA found that out the hard way. So will DL and UA. It's just a matter of time.

 

[Ken MacTiernan]

fwaaa,

"More revisionist history masquerading as fact. 28.5% cut in pay and benefits? Absolutely false."

Really now. I guess then that the 5th week of vacation which I, and thousands of other AMTs earned, was to enjoy was robbed from me means nothing towards the % lost. Or the 1/2 days pay lost for each of the first 2 days I called in sick in a row mean nothing towards the % lost. By the way, AMTs were the only work group to enjoy this half pay benefit.

"Nevertheless, the typical AA employee ignorantly believed that management was receiving "bonuses" and many ignorantly continue to this day to complain about management pay instead of working on ways to increase their own pay."

Your vision allows you to see what you want but FACTS are what I go on.

I was told SHARED SACRIFICE to SAVE the company. Against my will the twu gave these sacrifices with NO SNAP-BACKS! But management accepted MILLIONS while we burdened the sacrifices. I will NEVER forget these actions from management.

We were lied to then disrespected with another concessionary contract with the company saying that labor is at fault. That we are BRICKS!!! The worse part is my union, twu, peddled the shared sacrifice mantra. I believe the only ignorance is that of those who continue to believe labor is to blame.

 

[jersey777]

More revisionist history masquerading as fact. 28.5% cut in pay and benefits? Absolutely false.

You may have taken a 28.5% hit, but on average, AA employees (the ones not furloughed) took pay cuts of about half that amount.

In 2002, AA's mainline wage, salary and benefits expense item was $7.954 billion. In 2004 (after the concessions were fully implemented), AA's mainline salary, wage and benefit expense was $6.224 billion, and that included about $800 million saved through job losses (the furloughed). The $1.0 billion in pay and benefit cuts amounted to an average paycut of about 12.6% from 2002's wages. Let's not forget that those 2002 wages contained raises the mechanics agreed to in June, 2001 and that fleet agreed to in October, 2001. The FAs agreed to raises in their new contract within days of the September 11 terror attacks. The 2003 concessions were large and painful, but a portion of the concessions merely represented a giveback of the 2001 raises.

Constantly exaggerating the size of the concessions forced upon you does not reflect well on you. Like they say, a man's only as good as his word.

AA management has taken no bonuses since 2000 and in the past decade, the executives have been paid only about 65% of the amount the board targeted for them, resulting in average concessions of about 35%, far larger than the average concessions imposed on the rank and file. For 2005, 2006 and 2007, when AA stock vastly outperformed that of every other airline, the executives were paid nearly all of their targeted compensation, as their contracts provided. Nevertheless, the typical AA employee ignorantly believed that management was receiving "bonuses" and many ignorantly continue to this day to complain about management pay instead of working on ways to increase their own pay.

Do you see the same correlation that I do? Employees who have long been unable to negotiate enough pay to satisfy themselves and who complain endlessly about the union they refuse to decertify are unable to accurately represent the size of their concessionary paycuts. Further, they work themselves into a lather over inaccurate and misleading summaries of executive compensation instead of working to increase their meager pay.

I disagree with almost everything WT posts but the one thing he's right about is that AA suffers a labor cost disadvantage to the rest of the legacy industry. The company knows it. Wall Street analysts who can read the financial statements know it. Anyone willing to look at the numbers can see it. Repeating fabricated wage cut percentages does not change that fact.

For the flight attendants: 15.6% instant pay cut
20% reduction in expense money
33% reduction in vacation
40% reduction in sick accrual
50% reduction in holding/ground time
50% reduction in purser pay
50% reduction in understaffing
50% reduction in uniform points
100% loss in: crew meals
longevity pay
reserve override
galley pay for 757
holiday pay
increased medical contributions
base pay rates reduced from 67 hours to 70 hours
loss of pre vacation 48
FAA minimums for crew rest
loss of e time from 1:1.75 to 1:2
increase of duty day limitation for domestic from 12:5 hours to 13 hours


I'm sure I left our a few things...but you get the picture. THAT sir, is a total compensation loss of around 30%! Hardly revisionist history! Don't try to tell me what I did and did not give up in 2003! I live it everyday!

 

[eolesen]

a total compensation loss of around 30%!

Didn't AA's flight attendants remain one of the highest compensated even after a 30% cut?...

If so, while I fully understand the pain and suffering of living with that much of a loss of income (and it's nowhere near the 40% our household endured), it just underscores the fact that AA's labor costs are higher than the rest of the industry.

And things like guarantee being reduced to 67 hours, the loss of pre vacation 48, and working day going up to 13 hours... Expecting FA's to be available to work isn't a pay cut. Those who didn't bid more than 67 hours, or didn't go after makeup flying probably lost money, but that's self imposed more often than not. And bidding a line you know will encroach on vacation, just to have it dropped with pay? That's gaming the system.

Being paid not to work is probably the biggest part of the productivity imbalance when comparing AA's FA's against other airlines.

And Ken... I know the loss of the vacation week sucks, but losing a week of vacation didn't by itself reduce your take home pay. It simply meant you weren't getting any extra paid time off.

And lost sick time? Yes, it's a loss of pay, but only if you're calling in sick. Did you really call in sick for five days, or are you like the majority of employees who never use their sick time? If you don't call in sick, you don't lose any money.

Even after perfect attendance passes were eliminated, I seem to recall the number of fleet service & agents not having an occurrence during the previous 12M being upward of 70%.

 

[FWAAA]

I'm sure I left our a few things...but you get the picture. THAT sir, is a total compensation loss of around 30%! Hardly revisionist history! Don't try to tell me what I did and did not give up in 2003! I live it everyday!

I wouldn't be so presumptuous as to conclusively allege what you individually gave up nor would I take one employee's W-2 and then make outrageous allegations that 90,000 employees suffered the same paycuts. You may very well have lost 30%. Ken may have lost 28.5%. My issue is with Ken's ridiculous assertion that he, "along with every other labor group at AA, took a 28 1/2% cut in pay and benefits" (his exact words).

Including the pay cuts of 100% for the furloughed, AA's mainline 2004 total wage expense was 21.8% less than it was in 2002. It's mathematically impossible for the average pay and benefit cuts for those who remained employed to be greater than that 21.8%. In fact, the average employee's pay and benefit cut was substantially less than 21.8%.

You, Jersey777, may have made 30% less in 2004 than you did in 2002. Ken may have made 28.5% less in 2004 than in 2002. If so, then I suspect that much of your loss of pay resulted from less flying and for Ken, less overtime.

If AA had actually cut the average employee's pay and benefits by 28.5% (or 30% in your case), then AA would have spent over a billion dollars less on labor in each of the past eight years and would have reported a healthy profit in 2010.

 

[Mr Red]

I wouldn't be so presumptuous as to conclusively allege what you individually gave up nor would I take one employee's W-2 and then make outrageous allegations that 90,000 employees suffered the same paycuts. You may very well have lost 30%. Ken may have lost 28.5%. My issue is with Ken's ridiculous assertion that he, "along with every other labor group at AA, took a 28 1/2% cut in pay and benefits" (his exact words).

Including the pay cuts of 100% for the furloughed, AA's mainline 2004 total wage expense was 21.8% less than it was in 2002. It's mathematically impossible for the average pay and benefit cuts for those who remained employed to be greater than that 21.8%. In fact, the average employee's pay and benefit cut was substantially less than 21.8%.

You, Jersey777, may have made 30% less in 2004 than you did in 2002. Ken may have made 28.5% less in 2004 than in 2002. If so, then I suspect that much of your loss of pay resulted from less flying and for Ken, less overtime.

If AA had actually cut the average employee's pay and benefits by 28.5% (or 30% in your case), then AA would have spent over a billion dollars less on labor in each of the past eight years and would have reported a healthy profit in 2010.

The money went to the MIDDLE EAST SCUMBAGS !!

 

[FWAAA]

Didn't AA's flight attendants remain one of the highest compensated even after a 30% cut?...

Regardless of the exact percentage, AA's FAs were, on average, the highest paid in 2003-2006 before being overtaken by WN, according to Bob Herbst of www.airlinefinancials.com See Chart #64 of the following:

http://www.airlinefinancials.com/airline_data_comparisons.html

Wasn't Bob Herbst flying for AA prior to his retirement? I don't see any reason for him to misrepresent the facts.

In 2009, AA's FAs were again the highest paid, on average, along with CO's FAs. WN's FA average dropped as a result of the voluntary early out programs that enticed some senior FAs to retire.

What's remarkable about that chart is just how low the average pay has been for UA, DL, NW and US FAs over the past eight years compared to FAs at AA.

 

[Frank Szabo]

To those who are tired of being told by the elite that our condition is not as it really is (and that black is really white), I suggest using the "ignore" function. It works rather nicely and still will allow one to receive executive-level abuse if desired, although to do so requires an extra mouse click or shows up as a post someone else replied to.

While I cannot speak for everyone posting here, we are "blessed" with tolerating corporate and union lies during our time at work on a daily basis and personally, I'll be damned if I am willing to tolerate them away from work when I have the option to do otherwise and not being paid to exihibit said tolerance.

 

[jersey777]

Didn't AA's flight attendants remain one of the highest compensated even after a 30% cut?...

If so, while I fully understand the pain and suffering of living with that much of a loss of income (and it's nowhere near the 40% our household endured), it just underscores the fact that AA's labor costs are higher than the rest of the industry.

And things like guarantee being reduced to 67 hours, the loss of pre vacation 48, and working day going up to 13 hours... Expecting FA's to be available to work isn't a pay cut. Those who didn't bid more than 67 hours, or didn't go after makeup flying probably lost money, but that's self imposed more often than not. And bidding a line you know will encroach on vacation, just to have it dropped with pay? That's gaming the system.

Being paid not to work is probably the biggest part of the productivity imbalance when comparing AA's FA's against other airlines.

And Ken... I know the loss of the vacation week sucks, but losing a week of vacation didn't by itself reduce your take home pay. It simply meant you weren't getting any extra paid time off.

And lost sick time? Yes, it's a loss of pay, but only if you're calling in sick. Did you really call in sick for five days, or are you like the majority of employees who never use their sick time? If you don't call in sick, you don't lose any money.

Even after perfect attendance passes were eliminated, I seem to recall the number of fleet service & agents not having an occurrence during the previous 12M being upward of 70%.

You've got to be joking me! You are trying to diminish each and every benefit we receive as not applying to 100% of the work force so it doesn't really count. You know, I am sick of you guys trying to tell us what we did and didn't endure. I will tell you one thing. We as a work group will fight tooth and nail to return as much of our lost pay and benefits because in business you don't get what you deserve .....you get what you negotiate. And we are not going to let American Airlines steamroll us like they did in 2003 when they had a gun to our head. The playing field has leveled.



That is all I am going to say on this thread because we have gotten off track. Sorry...folks!

 

[Frank Szabo]

You've got to be joking me! You are trying to diminish each and every benefit we receive as not applying to 100% of the work force so it doesn't really count. You know, I am sick of you guys trying to tell us what we did and didn't endure. I will tell you one thing. We as a work group will fight tooth and nail to return as much of our lost pay and benefits because in business you don't get what you deserve .....you get what you negotiate. And we are not going to let American Airlines steamroll us like they did in 2003 when they had a gun to our head. The playing field has leveled.

That is all I am going to say on this thread because we have gotten off track. Sorry...folks!

Jersey - see my post above your last one - if we ignore these lovers, they might go away. The only way to win their game is to not play.