American Chief Takes Blame on China Failure

[Hatu]

American Airlines CEO Gerard Arpey took an unusual step last week, apologizing for assuming that the airline's pilots would agree to overlook a contract provision to make the carrier's bid for China service work.
Speaking during an investor Webcast, Arpey provided an explanation for the pilots' controversial failure to support American's 2006 bid to fly Dallas-Beijing, and shouldered the blame for the bid's rejection. "In the case of this application, I made presumptions that in retrospect were foolish to make," Arpey said.

"You have to give him credit for saying that," says aviation consultant Mike Boyd. "What other CEO in the airline business has said 'I made a mistake'?"

http://www.thestreet.com/_yahoo/newsanalys...E&cm_ite=NA

 

[FWAAA]

It's too bad that Arpey didn't also take responsibility for the monumental failure evident in the application itself: DFW-PEK was a complete loser from the moment it was filed. A review of the DOT's decision to award the 2007 frequencies to UAL for its IAD-PEK route makes it painfully clear that AA had no chance even if the pilots had agreed to an extended duty day.

Dunno if ORD-PEK would have prevailed (stressing the consumer-beneficial competition with UA), but it worked two years ago. Why Arpey thought it best to apply for Texas-China (when DFW's local traffic to China is a lot like the paltry ATL-China market) is a complete mystery.

 

[eolesen]

Totally agree -- I saw it as a weak attempt to reward DFW for their efforts in supporting the eight year Wright Amendment pulldown...

 

[Barfbag]

With open-skies opening the flood-gates into Heathrow, and the rest fortress Europe, the only real money making franchise left is Asia.

I guess it's time for some serious talk with NWA.

 

[Ken MacTiernan]

"You have to give him credit for saying that," says aviation consultant Mike Boyd. "What other CEO in the airline business has said 'I made a mistake'?"


Didn't Uncle Don say he was sorry as he walked out the door with a bag of money?

Now, if Arpey would only say he was sorry for stealing from labor to fill management's pockets.

 

[FWAAA]

Now, if Arpey would only say he was sorry for stealing from labor to fill management's pockets.

"Stealing from labor?" Hardly. Most of the 2006 and 2007 payouts are in stock, right?

The wealth with which management is filling its pockets (much to your consternation) is coming from the same place as did the options on 38 million shares transfered to "labor" in 2003: The shareholders' pockets.

Just because you post under your real name doesn't magically prevent you from posting ignorant drivel, Mr MacTiernan. Non-sequiturs are non-sequiturs, regardless of your internet message board username.

 

[Ken MacTiernan]

"Stealing from labor?" Hardly. Most of the 2006 and 2007 payouts are in stock, right?

The wealth with which management is filling its pockets (much to your consternation) is coming from the same place as did the options on 38 million shares transfered to "labor" in 2003: The shareholders' pockets.

Just because you post under your real name doesn't magically prevent you from posting ignorant drivel, Mr MacTiernan. Non-sequiturs are non-sequiturs, regardless of your internet message board username.

MEOW! Hiss! Hiss!

What has using MY real name have to do with FACT? Look, you throw the 38 million shares to "labor" as if it's a magic elixir.

I LOST 28 1/2% of my pay & benefits. THAT equals around $120,000.00 over the life of the concession contract. Your "elixir" gives me how much of that $120,000.00 while management takes MILLIONS?

I NEVER asked for the stock. I do NOT want stock. I want solid, tangible pay & benefits. Go and make excuses for management's actions somewhere else.

Oh, and before I forget, I do NOT want a signing bonus to help swallow my next contract to make me feel all warm and fuzzy inside. I want what was stolen from me.

"Just because you post under your real name doesn't magically prevent you from posting ignorant drivel, Mr MacTiernan."

No, but your using your alias does enable you to post as such.

 

[Wretched Wrench]

"In the case of this application, I made presumptions that in retrospect were foolish to make," Arpey said.

"You have to give him credit for saying that," says aviation consultant Mike Boyd. "What other CEO in the airline business has said 'I made a mistake'?"

A rather oblique admission. Misdirection, minimization, or just plain old spin, I call it.

The mistake he made was the executive bonuses that angered the pilots in the first place. But it wasn't just him. It was the whole board of directors, the same old gang that has been in place and calling the shots for quite a while.

Unhappy employees are a real problem. So is a misjudgment on the cost of same.

 

[flyhigh]

MacTiernan,

Have you truly convinced yourself that mgmt didn't lose anything? Just because it's more than you doesn't mean it's whole.

By the way, nothing was stolen from you. The idea that you want a union and the benefit of collectively bargaining without the drawbacks is utterly ridiculous. Take Tom Horton for example...do you honestly believe he's making what he made at AT&T? He probably had an opportunity to go elsewhere for more money...a CFO who can put a large albatross in a position that he put AT&T in to get purchased is pretty hard to come by. He bargains for himself and gets what he can negotiate.

I think most people would agree that execs are overpaid in general, but compared across the board of other execs, airlines CEO, etc. are and have always been underpaid. That's why you don't see many otsiders. Tilton is one of the few and look at the difference of his pay and that of other industry CEO's...

I'm not sure what you do specifically, but knowing the mechanics I do, they're still making comparable wages compared to non-airline guys. Remember, consider your benefits too, not just the check amount.

As for the topic, it was an oversight/mistake. Arpey assumed that the opportunity provided by the new flight would be enough for the pilots to agree to amend the contract.

 

[lpbrian]

What's AA's next move going to be? I think they should apply for LAX-Shanghai. Right now there is no US carrier flying between LA and China. I don't have any statistics to back me up but I would presume LA is the largest O&D market to China. AA has lots of feed into LAX and an LAX would not run afoul of the pilots agreement. I think this route would stand the best chance for approval.

 

[Hopeful]

MacTiernan,

Have you truly convinced yourself that mgmt didn't lose anything? Just because it's more than you doesn't mean it's whole.

By the way, nothing was stolen from you. The idea that you want a union and the benefit of collectively bargaining without the drawbacks is utterly ridiculous. Take Tom Horton for example...do you honestly believe he's making what he made at AT&T? He probably had an opportunity to go elsewhere for more money...a CFO who can put a large albatross in a position that he put AT&T in to get purchased is pretty hard to come by. He bargains for himself and gets what he can negotiate.

I think most people would agree that execs are overpaid in general, but compared across the board of other execs, airlines CEO, etc. are and have always been underpaid. That's why you don't see many otsiders. Tilton is one of the few and look at the difference of his pay and that of other industry CEO's...

I'm not sure what you do specifically, but knowing the mechanics I do, they're still making comparable wages compared to non-airline guys. Remember, consider your benefits too, not just the check amount.

As for the topic, it was an oversight/mistake. Arpey assumed that the opportunity provided by the new flight would be enough for the pilots to agree to amend the contract.

So, I suppose the pilots should have just amended their agreement for the route's sake but the executive go right ahead and take their payouts?

 

[flyhigh]

Personally, I disagree with the idea of having a limit below the Federal regs in their contract at all. If a CO pilot can do it, why can't an AA guy? With something like that in the contract, their complaints of the company not doing enough lose credability to me. You can't put handcuffs on their ability to compete and complain. It's like those who don't vote...you can speak but I'm not interested. It's a ridiculous rule that in my opinion oversteps the bounds of a union's purpose. I still believe Arpey assumed something he shouldn't but part of the sale on the contract concessions was that the airline would expand when it could...they tried and got spoiled by the very people who would benefit from expansion. Utterly ridiculous.

Mgmt got stock options...the stock went up. If you and your union didn't accept that possibility as an outcome, then you failed only yourself.

 

[AMFAMAN]

Personally, I disagree with the idea of having a limit below the Federal regs in their contract at all.

And you most likely disagree with anyone other than management having a salary above the Federal Regs--minimum wage.

These were rules that AA management agreed to. If they wanted them changed, they could of negotiated a change. Thankfully not all unions are like the twu and just roll over for management.

 

[ILS2MINIMUMS]

Arpey assumed something he shouldn't but part of the sale on the contract concessions was that the airline would expand when it could...they tried and got spoiled by the very people who would benefit from expansion. Utterly ridiculous.

False. The concessions we "agreed" to had no provisos regarding future growth. As to the proposed Beiging flying, it was not expansion in the traditional sense... It was a reallocation of assets. The plane for the planned China route was to come from elsewhere in the AA system.

The reason gerard 'assumed' we would allow them to violate the contract yet again was because the APA had already caved before for Dehli and other "side letters of agreement"...

 

[FWAAA]

So, I suppose the pilots should have just amended their agreement for the route's sake but the executive go right ahead and take their payouts?

I'm glad the pilots didn't just roll over, especially since the DFW-PEK proposal was a loser compared to the CO and UA proposals. Claiming that the APA killed AA's 2007 China case is just plane childish, IMO. Sometimes Arpey the junior executive acts somewhat childish, and this episode is no different. Someone at AA snowed Arpey into thinking that DFW was the proper gateway. Then CO and UA filed their apps (which were head and shoulders above AA's pathetic application), and yet AA stubbornly held to a loser proposal.

Instead of simply withdrawing an application that was bound to be a loser, Arpey the childish tried to pin it on the APA - and ended up looking like an idiot in the process. Ultimately the application was withdrawn - as expected.