American Airlines and Labor Negotiations

[CremaDiLimone]

They were one of the first if not the first to stop hedging on fuel and it save them millions as oil prices fell. Most others airlines followed suit.

They also bought new planes that burn less fuel which also saves them on maintenance.

Crandall also brought regionals, Eagle Ground Services, A&B scales, Jr. FSC, brought in PTers, eliminated building cleaners, shuttered BNA, RDU and SJC, took the APA to the brink of bankruptcy, eliminated a F/A on flights, ect., ect.... He has years that made money and lost money mostly on the backs of Labor when he made money.

today is a way different era. i remember an airline such as continental...in bk, during the mid 90s, starting fare wars under bk protection. no such hurdles in today's airline world, just listen to doug, he'll tell us. you're arguing from the point of view of employees, i'm arguing from a point of view of a shareholder. the biggest advocate of the shareholder, the BOD.

what i'm saying is that generation of top execs had to roll up their sleeves and earn their hundreds of thousands & millions. this generation at aa earning in the tens of millions...dropped the ball on the airline's 2nd largest expense. it was right there. it's not only me that feels this way, ask the analysts about dl's business model and southwest's execs (earned more money than aa in 1q'18, despite aa generating double the revenue) compared to our 'team'.

if you believe that aa timed and was fully aware that oil would close under $30/barrel..and dl & southwest had no clue of this, well, that's just wrong. i'd say that american airlines mr. magooed their way to huge jet fuel windfall profits because they didn't hedge, then sat in paralyzed amazement and didn't hedge as oil would predictably move back up.

this is not inspirational, cutting-edge management. it's also not hindsight at all. this was discussed, as in aa can really play this masterfully. they chose to do nothing and now southwest earned more (hedged and got back .5 cents a gallon) than aa...despite 50+% less revenue.

 

[CremaDiLimone]

Hedging is no panacea, as it is expensive, especially if the bet goes the wrong way. Parker has stated he would prefer to increase fares with fuel price increases and avoid the overhead costs of hedges and wrong bets. Not sure about Delta's refinery as rumor has been the investment to be a money loser during most of its ownership, especially as it floods the NYC market with cheap(er) jet fuel which benefits other airlines who are "free riders" without their investment in the facilities. https://www.reuters.com/article/us-...rofits-for-lower-fuel-cost-memo-idUSKCN10E0EZ

My preference would be AA having a "Black Swan" hedging strategy in future options should there be a huge exogenous shock in the oil markets causing jet fuel prices to double in short order... but what do I know, as I just toss bags for a living.

absolutely. in fact, when oil was $30/barrel, how much was dl spending on maintenance for this refinery?

all things being equal - the issue here is that aa flies the most miles and will pay the most of all other airlines for jet fuel. jet fuel is the aa's 2nd largest expense.

ok, we saw dl hedge & purchase a refinery. we saw southwest hedge.

where were our captains of the airline industry? proactive? inspirational? no and no.

if i was on the BOD, it would occur to me that;

- parker's grand plan ($12 billion to date and $2 more billion committed) for the stock is flopping.
- mr. magoo could have been our CFO and we would have received billions in jet fuel windfall.
- labor strife is currently on the boil.

 

[CremaDiLimone]

 

[LuvnTheSky]

Given the time spent on your contract is their any reason to believe that these people deserve their company salaries AND also your dues salaries? This is insane!
https://www.unionfacts.com/lu/43711/TWU/501#leaders-tab
https://www.unionfacts.com/lu/32965/TWU/502#leaders-tab
https://www.unionfacts.com/lu/32995/TWU/505#leaders-tab
https://www.unionfacts.com/lu/9258/TWU/507#leaders-tab
https://www.unionfacts.com/lu/29126/TWU/510#leaders-tab
https://www.unionfacts.com/lu/4011/TWU/512#leaders-tab
https://www.unionfacts.com/lu/26077/TWU/513#leaders-tab
https://www.unionfacts.com/lu/36291/TWU/514#leaders-tab
https://www.unionfacts.com/lu/542440/TWU/529#leaders-tab
https://www.unionfacts.com/lu/529395/TWU/567#leaders-tab
https://www.unionfacts.com/lu/528240/TWU/568#leaders-tab
https://www.unionfacts.com/lu/545100/TWU/591#leaders-tab

And these are from a few years ago! Imagine now!
Keep waiting for that contract.

 

[NYer]

today is a way different era. i remember an airline such as continental...in bk, during the mid 90s, starting fare wars under bk protection. no such hurdles in today's airline world, just listen to doug, he'll tell us. you're arguing from the point of view of employees, i'm arguing from a point of view of a shareholder. the biggest advocate of the shareholder, the BOD.

what i'm saying is that generation of top execs had to roll up their sleeves and earn their hundreds of thousands & millions. this generation at aa earning in the tens of millions...dropped the ball on the airline's 2nd largest expense. it was right there. it's not only me that feels this way, ask the analysts about dl's business model and southwest's execs (earned more money than aa in 1q'18, despite aa generating double the revenue) compared to our 'team'.

if you believe that aa timed and was fully aware that oil would close under $30/barrel..and dl & southwest had no clue of this, well, that's just wrong. i'd say that american airlines mr. magooed their way to huge jet fuel windfall profits because they didn't hedge, then sat in paralyzed amazement and didn't hedge as oil would predictably move back up.

this is not inspirational, cutting-edge management. it's also not hindsight at all. this was discussed, as in aa can really play this masterfully. they chose to do nothing and now southwest earned more (hedged and got back .5 cents a gallon) than aa...despite 50+% less revenue.

2016: "A decade ago, fuel hedges were a huge competitive advantage for Southwest Airlines. Between 1999 and mid-2008, Southwest saved $3.5 billion on fuel due to an aggressive strategy of hedging its fuel costs years into the future. Meanwhile, most of its peers didn't have good enough credit to do much hedging."

"However, fuel hedges have become a huge liability for Southwest Airlines in the past two years. While there is a light at the end of the tunnel, fuel hedging losses will likely cause the company to report its first year-over-year drop in adjusted profit in several years in Q3. This unwelcome news contributed to a massive 11% decline in Southwest's stock price after it reported earnings last Thursday."

2018: American Airlines Group Inc., United Continental Holdings Inc. and Delta Air Lines Inc., three airlines that stopped fuel hedging, will pay the least for fuel this quarter, according to company projections. Alaska Air Group Inc. and Southwest Airlines Co. have hedged the highest portion of their fuel and yet will pay the highest and third-highest prices, respectively." - -Bloomberg Feb. 2018

Not an exact science.

 

[swamt]

Update

The Association sat together yesterday in DFW and were together as one in our message to Doug and Robert. I want to praise the comments and questions made by TWU members in the town hall. After the town hall Robert Isom stayed for about 30 minutes to talk with Association members. We pounded him with all the bs proposals the company has made. We defended our scope, insurance and numerous other issues.

I do see section 6 as a very likely scenario moving forward.

P. Rez

Sadly, so do I. I just didn't want AA to use these oil prices going up as an advantage to pull back on some offerings already agreed to, but, we all know they will.
So P Rez, if this does go sec 6, how long would you guess? Maybe 2-3 years? My guess there, but it means nothing...

Update

I believe Doug stated the company proposal cost the company 100's of millions, which included the money they already gave us. What he failed to disclose is that with the minimum of 5000 jobs they want to outsource, that saves them 200-300 million per year. He also failed to disclose that the removal of our pension and insurance will save them millions too.

P. Rez

Doug's job is to make it look as bad as possible in order not to extend the company too far, however, the company is not even close to what you guys deserve and have waited very patiently for, I might add. Good luck.

 

[CremaDiLimone]

it's not an exact science. i have bought into the shale/fracking revolution..we've seen opec's + russia's violent production cuts and along with world economies growing, oil has gone up $40 from it's recent lows.

what isn't a risky roll of the dice is when oil is at $28/barrel. it's not going to $12/barrel. it would have taken a massive world-wide recession to get oil to the teens.

this is my point. this is where i would have liked to have seen someone being proactive and taking the initiative in looking to increase profits for the company. no one is saying to hedge 50% of your fuel purchases...

just like parker is very confident that ticket prices will catch up to rising oil, i'm confident that the frackers will catch up to rising oil and start fracking in fields where oil needs to be in the high $50s/$60s to be profitable. eventually, that supply will make it's way to the market.

bottom line, parker hasn't used energy as an excuse against labor, yet..

...but i've seen & heard some of us start using it as an excuse to sign anywhere/anytime.

 

[CremaDiLimone]

If you noticed yesterday, Parker's last comment was about rising fuel prices. I do not think that was insignificant.

i noticed a few things -

he used the past tense speaking about lus insurance with the woman from charlotte. he knows that's gone more than he knows the sun will rise in the east tomorrow morning.

parker is also spinning that aa spends/offers more than anyone else. ummm...how many employees do we have? that's something that might a make a mark on an 11 year old?

yeah, you are going to spend more because being the largest airline in the world, we will have more employees than anyone else.

 

[NYer]

it's not an exact science. i have bought into the shale/fracking revolution..we've seen opec's + russia's violent production cuts and along with world economies growing, oil has gone up $40 from it's recent lows.

what isn't a risky roll of the dice is when oil is at $28/barrel. it's not going to $12/barrel. it would have taken a massive world-wide recession to get oil to the teens.

this is my point. this is where i would have liked to have seen someone being proactive and taking the initiative in looking to increase profits for the company. no one is saying to hedge 50% of your fuel purchases...

just like parker is very confident that ticket prices will catch up to rising oil, i'm confident that the frackers will catch up to rising oil and start fracking in fields where oil needs to be in the high $50s/$60s to be profitable. eventually, that supply will make it's way to the market.

bottom line, parker hasn't used energy as an excuse against labor, yet..

...but i've seen & heard some of us start using it as an excuse to sign anywhere/anytime.

We can argue that the Company and CEO has a moral responsibility to their employees. They also have a fiduciary responsibility to the shareholders, a legal responsibility.

Therefore, shareholders voices are louder because they carry a legal significance. It's part of the reason the airline industry is such a copycat industry.

Expenses go up together and they go down together.

It's what made hedging so popular with Southwest and it created an advantage they needed to profit and stay ahead of everyone else who had a larger revenue stream. They had a expense that was lower than other airlines and it helped them to profit while others were facing BK.

Stockholders and Wall Street analysts control much of what an corporation does by the influence they have with the stock price and the fact that a CEO has the legal responsibility to ensure decisions are made in the best interests of that group in particular.

The pecking order in that system then includes, in no particular order, creditors, vendors, employees, partners, customers, etc.

 

[Kev3188]

Given the time spent on your contract is their any reason to believe that these people deserve their company salaries AND also your dues salaries? This is insane!

Why do you hate working class Americans so much?

 

[bob@las-AA]

Given the time spent on your contract is their any reason to believe that these people deserve their company salaries AND also your dues salaries? This is insane!
https://www.unionfacts.com/lu/43711/TWU/501#leaders-tab
https://www.unionfacts.com/lu/32965/TWU/502#leaders-tab
https://www.unionfacts.com/lu/32995/TWU/505#leaders-tab
https://www.unionfacts.com/lu/9258/TWU/507#leaders-tab
https://www.unionfacts.com/lu/29126/TWU/510#leaders-tab
https://www.unionfacts.com/lu/4011/TWU/512#leaders-tab
https://www.unionfacts.com/lu/26077/TWU/513#leaders-tab
https://www.unionfacts.com/lu/36291/TWU/514#leaders-tab
https://www.unionfacts.com/lu/542440/TWU/529#leaders-tab
https://www.unionfacts.com/lu/529395/TWU/567#leaders-tab
https://www.unionfacts.com/lu/528240/TWU/568#leaders-tab
https://www.unionfacts.com/lu/545100/TWU/591#leaders-tab

And these are from a few years ago! Imagine now!
Keep waiting for that contract.

I say who cares. "Render to Caesar the things that are Caesar's"

 

[Tim Nelson]

Update

I believe Doug stated the company proposal cost the company 100's of millions, which included the money they already gave us. What he failed to disclose is that with the minimum of 5000 jobs they want to outsource, that saves them 200-300 million per year. He also failed to disclose that the removal of our pension and insurance will save them millions too.

P. Rez

Please remove the pension.

 

[Tim Nelson]

Well isn't that great news...so the TWU can get screwed a few years more while the IAM benefits.
Again, this Association is nothing but a joke and has been a "colossal" failure for the TWU. It has protected the IAM and their benefits (nothing personal guys) while the bankruptcy and it's contract remain in place for the TWU members. The frustration is mounting...

The TWU solidarity at the leadership level allowed us to prosper with a stand alone IAM agreement that advances our craft. The TWU leadership did that because then it realized it could then advance its own members by moving the bar even higher than the IAM stand alone. Unfortunately, it hasn't played out like that and I do agree that it appears that the TWU is now hosed, but can't turn back now. If we can get into section 6 and kick this can down the road for several more years, things may eventually pan out for the TWU members. Until then, it makes no sense to toss in the towel and accept what is offered. I mean if we were going to just accept what the company offered, we could have done that 4 years ago and went straight to a JCBA and scrapped the stand alone. So that makes no sense at all.

The only problem is that our IAM boss, Sito, has eventually flipped and accepted a lot less than what was originally offered and Parker knows this. And he may root Sito completely out by either closing 5 TWU stations, or laying off over 1,000 IAM members who aren't protected with the no displacement language, i.e., PHL, DCA, LGA, CLT by eliminating the 70s from our work. The IAM has previously refused to secure this work so it may come back to haunt us.

From my perspective, it's going to be section 6 unless until at least Sito's election in April 2019.

 

[Tim Nelson]

the twu pretty much got conned. Unless twu members force a vote for another union, their majority 70% is meaningless. Time for twu members to plan for several years of stall.

 

[B737 driver]

the twu pretty much got conned. Unless twu members force a vote for another union, their majority 70% is meaningless. Time for twu members to plan for several years of stall.

Tim look how long it took us to keep our scope, and we don't have the issues that American does, I would tend to agree with you on taking a while to get yours.