American Airlines is thriving despite bankruptcy

[signals]

Despite what people might think, I believe AA is doing what it has to to restructure and survive on its own. Those who have been through BKs point to the fact that AA filed, perhaps too late. They give their opinions on their personal BK experiences. They talk of mergers as a salvation(even though everyone sees their man-behind-the-curtain). They speak their experiences and predict whatever they went through...ha-ha!

If you understand corporate America, you know that it learns from its PAST mistakes. It also learns from OTHERS past mistake. Now this is just my opinion, because I wouldn't want anyone to point the obvious. American may have learned from the others past mistakes. Maybe they are determined to survive unlike the others. You others have made a path and all AA has to do is follow it and be prepared to CORRECT it.

Regardless what we think, those running the business are a lot smarter than the rest of us. They just have to protect their bottom line. If you read between the lines, AA will stay AA, or American Alone!

 

[Buck]

While this far from over, the way it is playing out differs from the previous airlines in bankruptcy. Are there any proponents for a standalone company coming out of bankruptcy?

 

[thnkppl]

Anyway, the point of the guy's article is that AA's revenue is improving just fine, something that hasn't always been the case with airlines in bankruptcy. The other half of the restructuring, lower labor costs, is still necessary and will happen in a just over a week.

Snip...

You said the point of the guys article is that AA's revenue is improving just fine and then in the same paragraph you say lower labor cost is still necessary.

Really?

AA's revenue is improving just fine without lowering labor cost. Nothing has change with labor since BK.

AA needs managers that can run an airline. It seems to me that right mow AA is run by accountants and marketing people.

AA needs airline people that know the ins and outs of running an airline. If ran correctly AA would be a money maker without pissing off their labor force. And if their labor force was happy and motivated their profits would skyrocket!

 

[Buck]

Parker: “Look, the only issue we’ve heard from bondholders is ‘You guys are giving too much to labor.’ Our answer is no. Here’s what I think about what we give to labor. We create an airline here that has the same scale and revenue generating capabilities as United and Delta, we should have our employees therefore compensated similar to United and Delta. American can’t do it standalone. We can’t do it standalone for our employees. But put them together, we can and we should. They’re still large concessions for the American employees, as you know.”

I find it interesting that Parker believes that labor can be compensated equal to their peers, if the merged airline can generate revenue equal to their peers.

 

[AA89]

Exactly Buck. As we all know, like him or not Parker has at least made a career in the airlines. Whorton on the other hand is only here as a hatchet guy for his next payday.
I'm not smart enough (and probably most on this post aren't either) to predict the best course for AA but I do see a better future for AA with a management team that understands ALL of the facets of of running a business as labor oriented as an airline.

 

[FWAAA]

You said the point of the guys article is that AA's revenue is improving just fine and then in the same paragraph you say lower labor cost is still necessary.

Really?

Yes, AA's revenue is improving but its labor costs are higher than UA or DL or US. And the difference in labor costs is far more than just the labor that AA pays for overhaul (that others outsource).

AA's revenue is improving just fine without lowering labor cost. Nothing has change with labor since BK.

AA needs managers that can run an airline. It seems to me that right mow AA is run by accountants and marketing people.

AA needs airline people that know the ins and outs of running an airline. If ran correctly AA would be a money maker without pissing off their labor force. And if their labor force was happy and motivated their profits would skyrocket!

So AA's management is succeeding at improving its revenue and yet you and many others continue to parrot the assertion that AA's management doesn't know how to run an airline. Uh-huh.

During 2010 and 2011, the other airlines increased their unit revenue faster than did Arpey & Co. During those two years, the Wall St analysts started saying that AA's problems were two-fold: labor costs that were too high PLUS revenues that were growing more slowly than at UA, DL and US.

In the past five months, AA management (now that Horton is in charge) has increased unit revenue faster than has UA or US. For the first quarter, DL's revenue was increasing very fast also. But during the last couple of months, Delta's unit revenue percentage gains have begun to slow down below the rates at AA.

AA needs both: lower labor costs AND higher revenues. So far in 2012, the higher revenues have been a reality. In a few days, AA will probably have the lower labor costs to complete the restructuring.

 

[FWAAA]

Exactly Buck. As we all know, like him or not Parker has at least made a career in the airlines. Whorton on the other hand is only here as a hatchet guy for his next payday.

The facts don't match this paragraph. Horton and Parker both began their careers at AA. After a few years, Parker left AA to go to NW before landing at HP. Horton, on the other hand, stayed at AA for many years before his brief stint at AT&T. After the merger of AT&T, AA recruited Horton to return, where he's been for several years. I'm not saying anyone has to like Horton, but he knows more about running an airline than does Doug Parker.

I'm not smart enough (and probably most on this post aren't either) to predict the best course for AA but I do see a better future for AA with a management team that understands ALL of the facets of of running a business as labor oriented as an airline.

I'm certainly not smart enough either, but Parker's expertise has been in convincing his pilots to work for less than jetBlue pays its A320 and E190 pilots. Parker inherited USAir with pilot and FA payrates that were substantially below AA's 2003 concession payrates.

Of course, the USAir employees got rid of the old USAIr management when Parker took over with the merger in 2005, and thus the US employees don't hate him - after all, he wasn't the boss that took them into Ch 11 twice in two years and imposed three rounds of concessions on them and terminated their pensions. So perhaps the hatred that AA employees have for Horton & Co will prevent AA employees from backing Horton and will push them into the arms of Parker, the true Pay Miser of the airline industry.

 

[AA89]

Whether right or wrong I think the key difference between AA and any other airline is the concessions followed by management bonus fiasco. Our history of cooperation with management is unique.

Parker may be the Pay Miser of the industry but isn't that because he has been unable to make his airline profitable through mergers and other morally acceptable ways beside breaking the unions? Has he slapped his employees in the face as AA management has done?

It seems that to alot of AAers, particularly the unions, that Whorton is not interested in AA becoming profitable unless it is done mostly by breaking union contracts. After this is done he will collect his payday and be gone.

So yeah, Parker seems like a better leader to a lot of people right now.

 

[Buck]

Not attempting to pick a fight, however when one speaks of AA's labor cost being high, why is it that we as the employees or stockholders never see a breakdown of the different groups and where they rank against their peers?

 

[eolesen]

Amazing the denial some people are in... To be fair, Parker, Kirby, Isom and the rest of the management team have done quite well playing the hand they've been dealt post merger. But some of you conveniently forget that Parker's management team didn't need to force concessions: Glass, Siegel, Bronner, and Lakefield had already won that war twice before the HP management team took over (with a few token legacy US VP's).

I know Horton may not be the most popular guy on the block right now because of the job he has to do, but it's a fact he's been an airline guy longer than not. Likewise for the rest of his senior staff with the exception of Vahidi (the marketing SVP).

Once Brundage departs, it appears that none of Arpey's or Carty direct reports will be left in senior positions at the airline, except perhaps for Gary Kennedy in Legal... You've had the management turnover that everyone was demanding for years, and you don't even realize it.

 

[thnkppl]

Yes, AA's revenue is improving but its labor costs are higher than UA or DL or US. And the difference in labor costs is far more than just the labor that AA pays for overhaul

Snip..

I have friends around town that would read this statement and then turn to me and say, "You get paid more than UA, DL and US. All you mechanics have nothing to #### about."

I wish someone would start a new topic and explain why we do have something to #### about and how we are the lowest paid with the worst benefits.

There may be many outsiders that read these post and do not understand what labor cost for the airline industry are exactly.

For example. Here is a definition labor cost when I did a search on Google.

Labor Cost
The cost of wages paid to workers during an accounting period on daily, weekly, monthly, or job basis, plus payroll and related taxes and benefits (if any).

If you read the comments below any article about AA on the Tulsa World website you will see right away how those "highest paid greedy mechanics" are hated.

I would start the topic myself but I know there are many people on this forum that are a lot more articulate than I and can explain it in a language everyone could understand. Trying to explain something is not my forte.

 

[FWAAA]

Not attempting to pick a fight, however when one speaks of AA's labor cost being high, why is it that we as the employees or stockholders never see a breakdown of the different groups and where they rank against their peers?

I'm not trying to be a complete smart-ass, Buck, but nothing is stopping you from looking up the numbers and posting them yourself. I've posted numbers before, as has WT. AA's total labor cost per ASM is the highest in the industry. AA's pilots and FAs are the most expensive in the industry. Despite your lagging hourly wages (now I'm talking maintenance), AA's maintenance costs per ASM are the highest in the industry. Where can you find these numbers? AA and all other airlines file reports with the DoT. That's where WT and analysts like Bob Herbst (airlinefinancials.com) get them.

Yes, for the umpteenth time, I realize that the hourly wage of AA's AMTs lags the industry. But that does not mean that AA's maintenance costs are low; the reality is that the TWU's long history of trading pay for jobs has worked, and you end up with a bloated workforce of low-paid people, which results in very high maintenance costs.

I have friends around town that would read this statement and then turn to me and say, "You get paid more than UA, DL and US. All you mechanics have nothing to #### about."

I wish someone would start a new topic and explain why we do have something to #### about and how we are the lowest paid with the worst benefits.

There may be many outsiders that read these post and do not understand what labor cost for the airline industry are exactly.

For example. Here is a definition labor cost when I did a search on Google.

Labor Cost
The cost of wages paid to workers during an accounting period on daily, weekly, monthly, or job basis, plus payroll and related taxes and benefits (if any).

If you read the comments below any article about AA on the Tulsa World website you will see right away how those "highest paid greedy mechanics" are hated.

I would start the topic myself but I know there are many people on this forum that are a lot more articulate than I and can explain it in a language everyone could understand. Trying to explain something is not my forte.

I wouldn't recommend reading the public comment section of the media - that will just add to your blood pressure and general stress level. As has been posted here many times, you can't fix (or teach) stupid. The world is full of ignorant people who have no interest in learning the actual numbers or the truth; they only want to rant and rave their preconceived notions.

As I mentioned above to Buck, AA's labor costs per ASM are the highest in the industry. That does not mean that AA's employees have the highest hourly pay or that AA's employees are all overpaid. All it means is that every other airline pays less per ASM for its labor than does AA. The estimates range from several hundred million compared to UAL and DAL to over $2 billion compared to US. If AA had the same labor costs (per ASM) as jetBlue, AA's labor expenses would be about $4 billion less each year.

 

[Buck]

I realize that I have repeatedly asked the same question, but I do so for the very reason you say. Hopefully, at some point my union representation will say it publicly also.

 

[signals]

Parker: "Look, the only issue we've heard from bondholders is 'You guys are giving too much to labor.' Our answer is no. Here's what I think about what we give to labor. We create an airline here that has the same scale and revenue generating capabilities as United and Delta, we should have our employees therefore compensated similar to United and Delta. American can't do it standalone. We can't do it standalone for our employees. But put them together, we can and we should. They're still large concessions for the American employees, as you know."

I find it interesting that Parker believes that labor can be compensated equal to their peers, if the merged airline can generate revenue equal to their peers.

Is it possible that he is talking 'outsource' between his siren song?

 

[signals]

Exactly Buck. As we all know, like him or not Parker has at least made a career in the airlines. Whorton on the other hand is only here as a hatchet guy for his next payday.
I'm not smart enough (and probably most on this post aren't either) to predict the best course for AA but I do see a better future for AA with a management team that understands ALL of the facets of of running a business as labor oriented as an airline.

Hmmm. Maybe you should check, because when it comes to labor, Parker is the Ringmaster of a three ring side show circus. Don't believe me. Go to the US pilot forum with labor issues that have been there since 2005.