AMR stock at $2.43/shr

[commavia]

Why do you think there's this rift between OH and Line mechanics on this forum??? I see what other carriers have done with OH, and I'm also well aware of the pay structure of these third world countries doing OH for UA and others. I know my pay cannot compete against some unlicensed person in SA making $5 a day. In other words, I'm not stupid or ignorant to the fact that our gov't, the FAA, has sold out the licensed mechanics jobs to other emerging markets, just like every other job in this country.

I don't get the sense that most rank-and-file TWU members feel that way.

But, how do you convince the majority of aircraft mechanics in TUL that their jobs are in jeopardy without angering our so called "union brothers"? I get accused of being management one day and golden goose killer the next.

Good question.

I blame management for AA's problems because they too had an opprotunity to get as much relief from our CBA's as they could in 2003, and didn't, and now they go around and claim that they are at a labor disadvantage to other carriers. Really? Well, let me just say that management only gets one bite at the apple, and they failed to devour the apple....

While I certainly understand what you're saying, I think the critical piece missing from your statement is that the world changed - dramatically - after the company came to the unions asking for concessions in 2003.

Within five years of those concessions, fuel prices had hit historic highs that have now become the "new normal." And, most importantly, within three years, every one of AA's legacy competitors save one had entered bankruptcy. Perhaps AA management should have had the foresight to see that coming, but I know that at least I didn't expect - back in 2003 - that within a mere couple of years half or more of the capacity flying around U.S. skies would be on insolvent carriers. Had AA and/or the unions fully anticipated that in 2003, perhaps the level of concessions requested in the first round would have been larger.

The reality is that while the unions gave up heart-wrenching concessions in 2003, other airlines soon went into bankruptcy and were able to reduce their labor costs even further below AA's post-concessions levels through pay cuts, work rule changes, SCOPE relaxation, layoffs, outsourcing, flexibility, etc. What was absolutely monumental in 2003 - and seemed sufficient - was by 2006-2007 no longer enough to be competitive.

That's why for a period after 2003, AA was being roundly regarded as the best-managed and most successful legacy carrier: labor and non-labor costs came down dramatically from pre-9/11 levels, the company was paying down debt, and all of AA's competitors were in turmoil. But, alas, as any AA (or indeed any airline) employee well knows, things change really, really fast in this industry. And - again - what changed? Fuel and AA's competitors going bankrupt.

WE are NOT management's piggy bank, and it's time for senior management to figure out how to run this crazy business without harming the people that actually do take care of their customers....the employees, because without somewhat happy employees....AA's customers will always suffer, and management and the employees will always point fingers at each other and WE ALL LOSE!

I 100% agree with your sentiments: AA does have to find a way to both be profitable and have motivated, happy employees. Regardless of which side of the boat you're on, if it sinks, everyone's going down.

However, the challenge AA faces is that in many cases AA is now competing against airlines that either pay their employees less than AA, or get more productivity out of those employees than AA, or have dramatically fewer of those employees (relative to size) than AA, or some combination thereof. And, somehow, those airlines' employees - despite all that - seem motivated and happy in many cases. So how do AA and its employees compete with that?

 

[WorldTraveler]

I agree with both of you, Jim and strike.

There is no hope of turning any company around if there is such contempt for the people that will provide the majority of the cuts necessary to turn the company around... once again.
I still don't understand why AMR people have not been any more successful in convincing the board or Wall Street that the current mgmt team needs to go...
there is no reason why AA's 3 main labor groups couldn't get together and come up w/ a turnaround plan, present it to the Board - who has a responsibility to listen - and to Wall Street. And predicate it that on a change in management and at least a strong union presence in the boardroom.
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Once again, because AA's labor groups haven't taken the initiative, the company calls the shots and they are clearly not making decisions that are in the best interests of AA's labor long term and ultimately against the company since you can't have a stable company and beaten-down labor.
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Strike,
the problem is the classic union problem.. the business has evolved but labor doesn't want to adapt because doing so will result in a loss of membership.
The reality is that there is little chance that AA's maintenance capabilities outside of OH are in danger..unless the company decides it isn't worth messing w/ the union at all and they see too much solidarity and just throw the whole maintenance operation overboard - ALA NW.
I personally believe they are going to slowly whittle away OH and prepare to get rid of it. But it is very possible to isolate what doesn't make sense - perhaps airframe maintenance and keep engine and component maintenance - ala Delta.
Until you deal w/ the part of the operation that doesn't make sense, everyone pays the price. Someone needs to step up and get rid of the labor leadership who is willing to cut off one limb from everyone than throw 1/4 of the people entirely overboard in order to save the 3/4 still on the ship.
Sometimes you have to make those tough choices.
Keeping 100% of the world unhappy to please the 25% who will be negatively impacted helps no one. Cut off the 25% of people (whatever that number or percentage is) and provide a future for whoever remains.
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Commavia,
While CO did not file BK in the 2000s, it filed twice in the 20 or so years prior and continued to reap benefits from those BKs. CO's average compensation expense per employee shows the effect of having much lower pension expenses and much lower seniority.

Fuel went up for every other network airline.. .they had no more or less hedges than AA... only WN had an advantage and that advantage that allowed them to grow rapidly into new markets is gone and they now are finding it harder to compete against network carriers who aren't willing to roll over and play dead.
Fuel prices have not and will not be any more of an excuse for AA's problems than they were for the rest of the network carrier segment.
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AA started to restructure and stopped after they got the paycuts. AA had an advantage they did not use. It didn't take long and that advantage was wiped out.
But it wasn't because employees didn't give the company enough for them to turn things around.

 

[strikeforce]

I still don't understand why AMR people have not been any more successful in convincing the board or Wall Street that the current mgmt team needs to go...
there is no reason why AA's 3 main labor groups couldn't get together and come up w/ a turnaround plan, present it to the Board - who has a responsibility to listen - and to Wall Street. And predicate it that on a change in management and at least a strong union presence in the boardroom.

.
Strike,
the problem is the classic union problem.. the business has evolved but labor doesn't want to adapt because doing so will result in a loss of membership.
The reality is that there is little chance that AA's maintenance capabilities outside of OH are in danger..unless the company decides it isn't worth messing w/ the union at all and they see too much solidarity and just throw the whole maintenance operation overboard - ALA NW.
I personally believe they are going to slowly whittle away OH and prepare to get rid of it. But it is very possible to isolate what doesn't make sense - perhaps airframe maintenance and keep engine and component maintenance - ala Delta.
Until you deal w/ the part of the operation that doesn't make sense, everyone pays the price. Someone needs to step up and get rid of the labor leadership who is willing to cut off one limb from everyone than throw 1/4 of the people entirely overboard in order to save the 3/4 still on the ship.
Sometimes you have to make those tough choices.
Keeping 100% of the world unhappy to please the 25% who will be negatively impacted helps no one. Cut off the 25% of people (whatever that number or percentage is) and provide a future for whoever remains.

The unions don't have to prove to the BOD and Wall street that management stinks. The BOD and wall street see it just like WE do. I've been saying it since I started posting on this forum....Arpey, Horton, Goulet, Garton, Reding, Durst, and ALL the others need to go!!!

I've also said that the TWU needs to go! And, it goes on deaf ears. I've also said that if it was up to the TWU INTL leadership they would agree to lower AA's cost structure at the base that would be equivalent to emerging markets, as long as, they continue collecting dues. The TWU needs TUL because TUL provides the safety net for the TWU...otherwise the TWU would be gone.

It wouldn't be the first time that AA had layoffs.....but, AA is hiring, not firing. They just hired about 40 mechanics at ORD, and the other day the MOD held a crew meeting and told us that ORD was fat.....does that make any sense????

 

[WorldTraveler]

The reason AA mgmt isn't given the boot is because no one has proposed a plan to turn around the company... it isn't rocket science and there are lots of examples of what to do and what not to do.
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Yes, the TWU is holding onto TUL for their survival. It is up to the rest of the maintenance work force to do what is in their best interests - along w/ the rest of AA.
Mgmt should be figuring out what really doesn't work and take the steps to cut off the parts that are no longer viable. But if they can't do it, then the rest of labor needs to figure out how to get the job done.
Perhaps the line mechanics need to join forces w/ the rest of the labor groups and figure out what needs to be done and do it - if it means TUL gets thrown overboard and the TWU goes with it, then what remains might have a chance of survival.
I don't know what the real drag on the company is and I also find it hard to believe that the TWU doesn't have a better idea of how their staffing for the rest of the operation compares w/ other airlines that don't have the same level of in-house airframe overhaul.
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But if the rest of AA's workforce wants to save their backsides, someone better take the initiative to find out what works and what doesn't from a financial standpoint and get it fixed or cut off.
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Not sure what maintenance capabilities AA has at ORD but if the problem is line maintenance shortages, then that is what needs to be staffed... but someone doesn't have their ducks lined up if someone is saying overstaffed and someone else is hiring.
It still goes to show that if AA recognizes what the problem is w/ its maintenance costs, it seems to be taking little initiative to fix it.

 

[eolesen]

Carmine, if you want to get rid of management, there's really only one card left. Find a white knight, and offer them the necessary concessions in exchange for them launching a takeover bid.

That's essentially what Eastern's unions tried to do --- they negotiated over $200M in annual concessions with Peter Uberoth that they wouldn't give to Lorenzo. The $464m deal didn't work out because Lorenzo kept taking stuff out of the deal (gates, slots, assets) to keep for CO, instead of having them stay with EA as part of the deal...

You've got to change the ownership and the board to get the type of satisfaction you're looking for... It ain't gonna happen by itself in bankruptcy.

 

[strikeforce]

Carmine, if you want to get rid of management, there's really only one card left. Find a white knight, and offer them the necessary concessions in exchange for them launching a takeover bid.

That's essentially what Eastern's unions tried to do --- they negotiated over $200M in annual concessions with Peter Uberoth that they wouldn't give to Lorenzo. The $464m deal didn't work out because Lorenzo kept taking stuff out of the deal (gates, slots, assets) to keep for CO, instead of having them stay with EA as part of the deal...

You've got to change the ownership and the board to get the type of satisfaction you're looking for... It ain't gonna happen by itself in bankruptcy.

Either way, there are going to be casualties.....mass layoffs with BK, so in theory the only card left for the membership is to decertify the union, at a minimum.

The union at Eastern stuck together...far cry from the TWU. The IAM at Eastern tried to do what was best for the interest of the membership. The TWU INTL looks out for the best interest of the organization (business). This forum provides you an idea on how divided the membership is....now multiple that by thousands. The membership is desperate for representation...all it takes is to provide the membership with a little INFORMATION. And, we don't get that....what are they trying to hide?????? And, why are they hiding it??? Look at these informal negotiations...what's going on? Does anybody know because I don't?? Everything with the TWU is a big secret, and that's got to change, and the only way this will change is to decertify. Period! So, let's stop playing games with our careers and the security of our families, and sign a green decertification card! It's really the ONLY answer!

 

[john john]

Sure, they can make all the decisions they want, but they can only do so much within the terms of the CBAs... and that's the problem, Carmine.

Management wanted to fly 777s from DFW to China with 1 CA and 3 FOs (legal per the FAA). Bzzzzzt! Can't do that under the pilots contract.

Management wanted to contract out more flying, and add 70-90 seat jets. Bzzzzt! Scope clause with both the TWU and APA.

Management would probably love to have a full codeshare with Jetblue. Bzzzzzzzzzt! Another scope clause issue.

Management has always wanted flight attendants to clean turns with under 90 minutes of ground time like they already do on thru flights.

Bzzzzzzzzzzzt! Can't do that thanks to the APFA agreement. They couldn't even get some flight attendants to make up a bed in international first class....

Management would also like to contract out dayline cabin cleaning, since they can't get the flight attendants to do it on turns.

Bzzzzzzzzzzzzzzzzzzzt! TWU contract...


So, sure, management can run the business as they wish. With some serious constraints.

Really, it would appear the only things they have total freedom on is everything not directly tied to an airplane, i.e. how they price, sell, and directly service the customer, and how they borrow money. Just about everything else tied to an airplane is controlled by a CBA.

Management is free to do what ever they want with Customer Service agents at the airports and reservations agents and all call centers agents. This employee group is non-union

 

[nbmcg01]

There are always comparisons with our Asian counterparts. How about this one:

Ratio of CEO pay to average worker's pay

Japan
11:1

United States
475:1

Gotta keep that talent...lol

 

[eolesen]

That's a fair ratio. For AA that would imply CEO pay & compensation of around $900K in Japan, and $40M in the US. I don't think Arpey's pulling down $40M like Tilton was.

 

[TIME FOR CHANGE]

But I am sure it is a hell of a lot more than 900K

😉

 

[Hopeful]

That's a fair ratio. For AA that would imply CEO pay & compensation of around $900K in Japan, and $40M in the US. I don't think Arpey's pulling down $40M like Tilton was.

No, not Arpey...But this CEO to worker compensation ratio is way out of whack. No one is advocating that CEO and executives should not earn more the higher they are....But in quite a few cases, CEO compensation is ridiculous..
And before anyone responds with "OH, THE MARKET DICTATES CEO COMPENSATION," please spare me..

THE BOARD OF DIRECTORS COMPENSATION COMITTEE DICTATES CEO PAY....And they themesleves are also captains of industry with boards of directors of their own who dictate their pay...and so on and so on....