Why not? New 738s will burn substantially less fuel than the MD-80s. Would you rather AA waste money on jet fuel?
You know a Prius would burn a lot less fuel than my 1995 Suburban, and my wife would love to get one. Would buying the Prius save me money on fuel? Yes, but in the short term it would cost me more to buy it than it would save me. I would also love to put Solar Panels on my roof, same story applies there as well. Investing in long term effeciencies is a luxury. One of the reasons EAL failed is they tried to invest in fuel efficient aircraft at the wrong time-they failed to maintain enough liquidity. I simply dont have the cash flow to make energy saving investments. AA is claiming that they are in such dire straits that they cant offer us any relief from the 6 year recession that they have imposed on us. Before I see AA invest in fuel efficient aircraft I want my pay restored. In the end paying us well would probably save them more money than the fuel savings would.
Upgrading interiors is necessary to continue to attract more revenue. You know, the revenue you want to take home as paychecks.
I thought cheap fares attracted more revenue? If the seats are already sold do you actually believe that new seats will generate more cash? The consumer cant see the seat when he buys his seat on-line at the lowest price. Unhappy workers means unreliable service, that would chase away more passengers than dated interiors.
Winglets? Again, they save fuel, are installed by AA mechanics (one would think you'd be in favor of that) and their cost is negligible. I'd bet that more cash "disappeared" from domestic beverage revenue every year prior to the cashless system than the winglets cost.
Again the Prius and Solar Panels. We have plenty of other stuff to keep mechanics busy, maybe they should stop refusing 3P work. More 3P work would generate an immediate cash infusion, they wouldnt have to wait ten years for fuel savings to pay them back for the costs they are incurring today.
Goose is right; it is confusing. At least it's confusing for Bob Owens. Capital expenditures like new 738s, new interiors and winglets didn't factor into the net loss for the second quarter. They will save AA billions of dollars in fuel over their useful life, so their purchase makes sense.
I didnt say they didnt make sense, I was responding to claims that the company cant afford to pay us, well if they can afford all those other things then they can afford to pay us. Its as iff they are telling the Electric company that they cant pay the electric bill because they are using the money to put solar panels on the roof.
Actually, about $1.7 billion of it was spent on wages and salaries in the second quarter -.
HMM, I thought the numbers werent being released till Wednsday?
that's about 35% of revenue, a much higher percentage of AMR's revenue than the second quarter last year. You've been demanding a larger percentage of AA's revenue for some time now. Well, you finally got it. Enjoy
No I been demanding a fair wage. you know as well as I that the percentage value changed because of the steep reduction in the price of fuel. If I brought up labor costs as a percentage of revenue it was to show that despite the companys claim that labor costs were hurting the company that labor was consuming less than ever(wages were certainly less than ever-keep in mind that executive wages and benifits are part of labor costs as well and over the last six years AA management has recieved large increases in pay-the fact that they moved everyone up a paygrade from Supervisors to managers gave them bi wage increases).Plus that goes back to the arguement that just because a carrier has higher labor costs it doesnt mean that the carrier is at a competative disadvantage. In the case of AA they enjoy lower overall maintenence costs(excluding special fuel saving mods and optional cabin reconfigurations) and pay their workers less than most of their competitors despite the fact that they show higher labor costs than their competitors. AA may have higher labor costs but the end result of costs-CASMs are lower. SWA has lower CASMs but their RASMs are lower as well. SWA subscribes to the theory that if you pay your workers well that they will generate savings that offset the increased lwage cost, sometimes the higher wage can result in labor cost savings as well as operational cost savings.
Heres an example. A motivated happy well paid mechanic (motivated because he's paid well not because he's being threatened with his job), finds a problem a returns an aircraft to service in short order. The unmotivated poorly paid mechanic goes through the motions with no real desire to find the problem, he's just covering his but and keeping busy, the flight gets cancelled and the company calls OT to get it fixed so they can use it the next day. Sure the comp-any paid him less, but then they had to pay more hours to get the same thing done and they lost the revenue that the plane would have generated. The lost revenue numbers add up quick, one lost trip would probably pay several mechanics for several years. So by paying low wages are they really saving money?
These are not threats, Gordon Bethune even wrote about this in his book about restoring Continental, its a fact of life, it's not even intentional, if the mechanic is not 110% into the job he will not do it as quickly or efficiently, he cant vary the quality of the product but the pace at which stuff is put out can vary greatly with the mindset he has when he approaches the job.
Money is a motivator, no matter how many times fools will claim the opposite that fact will never change. The only time money is not a motivator is when there is no need for it, when that happens let me know.
New fuel efficient aircraft, wingletts, new interiors, I'm all for it, AFTER you restore my pay. Even new airplanes break and need to be maintained.When you are paying off that new fuel efficient airplane you can only realize the fuel savings when its flying, and that requires labor.Go cheap on labor and your airplane may not fly as much as it could.
