Arpey- How We Do Things Differently

[nicky guy]

Wow! What can I say to this? Well, I'll give it a shot.


So, our illustrious CEO has a strong ethical sense? He also has a "commitment to principle"? His "faith has been the overarching anchor of my soul, from which a reservoir of fortitude has sprung"?

Whew, wait a second while I wipe a tear away from my burdened eyes. Okay, I'm better now. What exactly does Mr. Arpey mean by "ethical sense"? Do the words lie and steal reside in his meaning? Because from my personal experience his sense of ethics certainly include these words. How can he cry to his employees that there will be a "shAAred sAAcrifice" from everyone at AA in order to stay away from the bankruptcy monster but in reality not everyone had the joy of burdening this sacrifice? This was a flat out lie. He then went on and stole from the employees because his accepting million dollar bounuses, along with the rest of the Chosen, was stealing from the employees.

His commitment to principles falls hollow on my ears because a person needs to possess principles in order to preach them. Now it might just be me but "principles" to me means that a person does what is right all the time. Principles do not mean you lie and steal to benefit any group. A simple test to ask yourself is if you owned a bussiness and told your employees they had to take life changing cuts in pay and benefits in order to keep their jobs and then you flagrantly took a pay raise in the form of bonuses, would you have principles? I don't think so.

As for his "overarching anchor" that is the bank account he possesses own our blood and sweat.

I particularly like how AA is $600.00 million behind the 8 ball compared to other airlines. Wait a second! We gave up BILLIONS in concessions 7 years ago yet we are still behind? The concessions were to last only 5 years yet Mr. Arpey has dragged his feet for an extra two years, with all work groups at AA, yet we are behind!

I would like to suggest that Mr. Reed look back at AA's history and really see "How We Do Things Differently" at AA. I am positive C.R. Smith would take a switch to young Mr. Arpey's well padded behind and Mr. Crandall would simply grab Gerard by the ear and teach him a lesson in how to make an airline number one. And lesson number one is you don't lie or steal from your employees.

Ken MacTiernan
Certificated A&P, I.A.

Mr. MacTiernan.

Ken, as a looong time AA customer flying a lot out of virtually every large AA hub, and focus cities(LAX-JFK-BOS) and a fairshare out of SEA-SAN-IAD, it's seems to me, that (AA) things started to (early) decline with the departure of Bob Crandall.
I'm curious if that might be your "take" on things as well ?

Thank You,
N. B.

 

[Ken MacTiernan]

Mr. MacTiernan.

Ken, as a looong time AA customer flying a lot out of virtually every large AA hub, and focus cities(LAX-JFK-BOS) and a fairshare out of SEA-SAN-IAD, it's seems to me, that (AA) things started to (early) decline with the departure of Bob Crandall.
I'm curious if that might be your "take" on things as well ?

Thank You,
N. B.

Nicky Guy,

There was a saying at AA that went kinda like this, "Crandall was a bastard, but he was OUR bastard.". This meaning that Bob was a business man BUT he would NEVER have done what cAArty or AArpey have done. Bob wanted AA to be number one. We were. I would like to see Bob come back.

 

[eolesen]

I would like to suggest that Mr. Reed look back at AA's history and really see "How We Do Things Differently" at AA. I am positive C.R. Smith would take a switch to young Mr. Arpey's well padded behind and Mr. Crandall would simply grab Gerard by the ear and teach him a lesson in how to make an airline number one. And lesson number one is you don't lie or steal from your employees.

I think you need to do your own look back at history, Ken. Dan Reed wrote a book about Crandall (http://www.amazon.com/American-Eagle-Ascent-Crandall-Airlines/dp/0312086962), and followed AMR for over 20 years as the aviation business reporter for the Fort Worth Star-Telegram. In 2002, he left that job and started freelancer writing, mostly for USA Today and The Street.

Given that Reed wrote a book on Crandall, and had pretty good access to Carty, Arpey, and even Bob Baker and Al Casey before they both passed away, I suspect he knows AMR's history better than many employees do.

I won't disagree on your opinion that Crandall would have done things differently. He wouldn't have pursued pay cuts. He would have simply laid more people off and parked airplanes.

With the single exception of the bonuses, I think Arpey has done as well as could have been expected given the hand dealt to him. Carty's six years of aloofness and being extremely out of touch with reality didn't help matters...

 

[nicky guy]

I think you need to do your own look back at history, Ken. Dan Reed wrote a book about Crandall (http://www.amazon.com/American-Eagle-Ascent-Crandall-Airlines/dp/0312086962), and followed AMR for over 20 years as the aviation business reporter for the Fort Worth Star-Telegram. In 2002, he left that job and started freelancer writing, mostly for USA Today and The Street.

Given that Reed wrote a book on Crandall, and had pretty good access to Carty, Arpey, and even Bob Baker and Al Casey before they both passed away, I suspect he knows AMR's history better than many employees do.

I won't disagree on your opinion that Crandall would have done things differently. He wouldn't have pursued pay cuts. He would have simply laid more people off and parked airplanes.

With the single exception of the bonuses, I think Arpey has done as well as could have been expected given the hand dealt to him. Carty's six years of aloofness and being extremely out of touch with reality didn't help matters...

 

[Imjustsayin]

I think you need to do your own look back at history, Ken. Dan Reed wrote a book about Crandall (http://www.amazon.com/American-Eagle-Ascent-Crandall-Airlines/dp/0312086962), and followed AMR for over 20 years as the aviation business reporter for the Fort Worth Star-Telegram. In 2002, he left that job and started freelancer writing, mostly for USA Today and The Street.

Given that Reed wrote a book on Crandall, and had pretty good access to Carty, Arpey, and even Bob Baker and Al Casey before they both passed away, I suspect he knows AMR's history better than many employees do.

I won't disagree on your opinion that Crandall would have done things differently. He wouldn't have pursued pay cuts. He would have simply laid more people off and parked airplanes.

With the single exception of the bonuses, I think Arpey has done as well as could have been expected given the hand dealt to him. Carty's six years of aloofness and being extremely out of touch with reality didn't help matters...

From what I read on this blog I'm not sure it matters who is running American Airlines. It's funny how time passes and people want to look fondly back on Robert Crandall. AA unionized employees hated him. AA will not get its ship righted until the employees get their ship together.

 

[WorldTraveler]

I do appreciate AMR's decision not to file for bankruptcy - with all of the negative consequences of it. But AMR is no different from any company in that they have to make money... and if they don't, they have failed.
IN reality, Arpey has for one reason or another chosen not to take a very confrontational approach to labor that would probably solve AA's cost problems - which are related to productivity, not average employee compensation.

But it is also true that AA has not had the "fire in the belly" which once characterized AA. AA was THE innovator and THE aggressor in the US airline industry and it allowed AA to make tremendous strides as a company. Now, DL is the most aggressive of the network carriers and there isn't a whole lot of innovation coming from anyone.

Strategically, AA has missed some key opportunities. They can pride themselves on their partnerships with oneworld but the fact is that their partnerships are not near as developed and AA's network outside of LHR is not as developed as its competitors.

The 767s at AA, DL, and UA are a long ways from being retired.... the 767 is still a very viable aircraft and with winglets, the cost differential compared to new aircraft is not near as great as alot of people want to believe it is... that is a big reason why DL has chosen not to purchase the 787 for now. The return on investment for winglets is generally less than 5 years and it most 767s will still be in service in that time.

 

[chris perry]

I think you need to do your own look back at history, Ken. Dan Reed wrote a book about Crandall (http://www.amazon.com/American-Eagle-Ascent-Crandall-Airlines/dp/0312086962), and followed AMR for over 20 years as the aviation business reporter for the Fort Worth Star-Telegram. In 2002, he left that job and started freelancer writing, mostly for USA Today and The Street.

Given that Reed wrote a book on Crandall, and had pretty good access to Carty, Arpey, and even Bob Baker and Al Casey before they both passed away, I suspect he knows AMR's history better than many employees do.

I won't disagree on your opinion that Crandall would have done things differently. He wouldn't have pursued pay cuts. He would have simply laid more people off and parked airplanes.

With the single exception of the bonuses, I think Arpey has done as well as could have been expected given the hand dealt to him. Carty's six years of aloofness and being extremely out of touch with reality didn't help matters...

I have to agree with you E on Carty. He lives in a fantasy world!!!!!

 

[Veritas]

Yes, but under Israeli severance law AA is being held accountable and the government has lien on AA. I'd support them using contractors like Continental does (frankly CO has better ground service-shorter lines, faster service in TLV than LY, except the King David Lounge is amazing compared to the awful Dan Lounge CO contracts). Again I don't know the operational specifics as I don't have any airline experience, but 100 employees for a 767 does seem excessive. I imagine if AA tried to pull something like this in the United States, the unions would be up in arms too. Again-in the United States AA has no problem complying with all of the laws, FAA regulations and in other countries as well. Their US based employees are well compensated and enjoy generous benefits.

First of all, Israeli judge, Varda Alshech, issued an injunction prohibiting TWA, not AA, from removing, selling or transferring ownership of any of TWA's Israel based assets.

Secondly, TWA was a U.S. registered company which was liquidated in legal proceedings that took place in the Delaware Bankruptcy Court. The Israeli workers petitioned the Delaware Court for their severance and pension benefits. However, their request was denied and that denial was upheld by then U.S. Third Circuit Court Judge and currently U.S. Supreme Court Justice Samuel Alito.

Thirdly, AMR (AA parent company) bought only select assets of TWA and offered employment to most of its U.S. based employees (who for the most part ended up at the bottom of the seniority list and were furloughed shortly thereafter).

Thus, even though AMR would have been on the hook for the Israeli workers' severance pay had it acquired TWA, it is not since did not buy TWA.

I don't believe that a lien was ever issued against AMR. If, and that is a big if, such a lien was issued, the Israelis are merely trying to blackmail AMR into paying severance pay owed by a liquidated entity. Israeli politicians and TWA's former Israeli employees have a poor understanding of U.S. Bankruptcy laws which control the fate of U.S. based corporations. The only reference that I can find is that then Israeli Transport Minister Ephraim Sneh threatened to sanction AA until the Israeli TWA employees received their severance pay. That is never going to happen.

There are plenty of lucrative destinations for AA to fly without being subject to extortion.

This subject was extensively discussed on this bulletin board back in 2006 in this thread.

שנה טובה

 

[Bob Owens]

As to the cost v benefit of the 763 winglets, the winglets are expected to save "upwards" of half a million gallons of fuel each year per 763 or about $1 million of fuel annually at today's prices:



http://www.bizjournals.com/dallas/stories/2009/03/09/daily8.html

Most of today's AA 763s will still be flying at AA well into the later part of this decade even if the current 787 delivery schedule holds up - so AA will get several years of fuel savings in exchange for the investment, which is about $2 million per plane:

Looks to me like it's a safe gamble that the fuel savings will more than pay back the $2 million, since that's just two years worth of fuel savings at today's jetA price. Of course, if fuel prices climb higher, that just speeds the payback period. On the flipside, if fuel prices crash, then the billions of dollars AA would save from lower fuel prices will enable AA to pay you guys whatever you want and the $116 million "wasted" on the winglets would be pocket change. And odds are that fuel prices don't permanently collapse between now and 2018 or 2021 or beyond.

Was expensive mods the best way to get the savings? Expensive Mods on old aircraft may or may not pay off but common sense changes in the way we do things on the ground would likely save a lot more fuel than the winglets would. One example, across my Local there are scores of bought and paid for power units and A/C carts that remain out of service because they dont have enough T-II mechanics to fix them and their management refuses to pay OT. As a result APUs are left running all night burning up a lot more fuel than those winglets will save. They could have spent a fraction of what they spent on winglets and saved a lot more fuel by fixing the ground equipment, but thats just common sense.

 

[Mr Red]

But thats the AA way spend a million to save a thousand !!!! As I worked my way around the system over the years
and looked at the other airlines with the beat down employees and equipment , I was thankful to be at AA.
Fast foreward 20 years we are that BEAT DOWN airline,

 

[eolesen]

I think you need to do your own look back at history, Ken. Dan Reed wrote a book about Crandall (http://www.amazon.com/American-Eagle-Ascent-Crandall-Airlines/dp/0312086962), and followed AMR for over 20 years as the aviation business reporter for the Fort Worth Star-Telegram. In 2002, he left that job and started freelancer writing, mostly for USA Today and The Street.

Given that Reed wrote a book on Crandall, and had pretty good access to Carty, Arpey, and even Bob Baker and Al Casey before they both passed away, I suspect he knows AMR's history better than many employees do.

Mea culpa -- Dan Reed wrote the book and writes for USA Today.... my comments about him still stand. The article originally referenced was by TED Reed, and apparently he writes only for the Street. He probably doesn't know AMR's history as well as I gave him credit for.

 

[737823]

Which labor costs need to come down Josh?

The unionized labor force has already lost 25% of their pay, the company has slahed 50,000 jobs but somehow their average cost per employee went up $10,000. Management must have gotten a hell of a raise to eat up our concessions and bring the average up $10,000 per employee!!

Flight attendant, pilots, ramp service, customer service agents, perhaps some mid-level management as well. Even after your pay cuts AA employees are still better off than their counterparts at pretty much every U.S. based carrier with the exception of Southwest. Perhaps AA could contract out ramp service, baggage service like DL, CO, and UA have done in many stations.

Good point, Bob.
But Josh's opinion is consistent with the rampant anti-union sentiment in this country that unions have destroyed this country. They like to say they are pricing themselves out of a job. Too many work rules, wages too high (LMAO on that one.)etc, etc.

And the reason they want us all destroyed is so their stock portfolios may increase.

They usually omit the fact that UPS is unionized and Southwest as well.

Yes I do believe unions have destroyed this country. Here are some examples: I am forced to pay more for groceries each time I shop at Shaw's because it's union. My property taxes are higher to pay for the benefits afforded to union teachers in public schools. There's no such thing as a free lunch, and someone has to pay for the plush benefits unions members receive and the incidence falls on the customers of the subject business and taxpayers. I'm sick of rewarding lackluster service from disgruntled, surly, senior union members that have risen to (and retained) their status due to seniority-not merit. Running a successful company and having unions aren't mutually exclusive as you pointed out. Continental, Alaska, Ritz-Carlton Hotels, union-builders, electricians, UPS etc are all union and for the most part provide good service and have superior financial performance to AMR. Difference is these companies are in different market dynamics and have adjusted their other costs to allow for higher employee wages in-turn for more productivity and company favorable work rules. I was at the Ritz-Carlton three weeks ago and didn't see the general manager taking his lunch break in the executive lounge-unlike APA pilots on AA 777 First Class. When Continental Airlines employees are in negotiations, they don't subject the customers to the nonsense APFA does and don't relentlessly attack their management. That's the difference.

Have you looked at AMRs stock recently? UAUA, CAL, DAL, LUV have all outperformed AMR so I don't see the correlation. Anyone looking to 'increase their stock portfolio' isn't going to invest in AMR or any airline stock for that matter. Even Bob Crandall who appears to be highly regarded by the employee posters said:

"I've never invested in any airline. I'm an airline manager. I don't invest in airlines. And I always said to the employees of American, 'This is not an appropriate investment. It's a great place to work and it's a great company that does important work. But airlines are not an investment.'

Good informative answer. Thanks.
But I have a funny feeling that Josh, and others who feel as he does, blame labor costs for AA's inability to purchase the aircraft we need to compete on those routes. It is always the onus of labor to make the necessary adjustments to help the company "survive." How much, or rather, "little" do these people expect us to work for? They blame every woe of the economy on unions while the people who caused the mess get a pass.

I think labor is a big part of AA's problems. Costs need to come down for them to be competitive and profitable once again. Every dollar AA spends on employee compensation and benefits is a dollar that could have been spent on capital such as new aircraft or passenger amenities and facilities. I expect people to work for whatever wage the market commands. For flight attendants, due to the perceived desirability (non-rev benefits, traveling, interacting with public, 15-20 days off/month, etc) of the position supply significantly exceeds the quantity of labor demand, which thus drives down wages. Unions are anti-free market and have fixed your wages and provided work rules that hinder the company (i.e. having APA pilots taking TWO (2) 757 or 767 business class seats or a Flagship Suite on 777 first class, since they aparently can't get the required sleep if a passenger is seated next to them). Another example is the scope clause from APA regarding 70-100 seater aircraft operating on by regional carriers (on regional pay scale). There are some routes AA could profitably operate if they had aircraft of that size.

First of all, Israeli judge, Varda Alshech, issued an injunction prohibiting TWA, not AA, from removing, selling or transferring ownership of any of TWA's Israel based assets.

Secondly, TWA was a U.S. registered company which was liquidated in legal proceedings that took place in the Delaware Bankruptcy Court. The Israeli workers petitioned the Delaware Court for their severance and pension benefits. However, their request was denied and that denial was upheld by then U.S. Third Circuit Court Judge and currently U.S. Supreme Court Justice Samuel Alito.

Thirdly, AMR (AA parent company) bought only select assets of TWA and offered employment to most of its U.S. based employees (who for the most part ended up at the bottom of the seniority list and were furloughed shortly thereafter).

Thus, even though AMR would have been on the hook for the Israeli workers' severance pay had it acquired TWA, it is not since did not buy TWA.

I don't believe that a lien was ever issued against AMR. If, and that is a big if, such a lien was issued, the Israelis are merely trying to blackmail AMR into paying severance pay owed by a liquidated entity. Israeli politicians and TWA's former Israeli employees have a poor understanding of U.S. Bankruptcy laws which control the fate of U.S. based corporations. The only reference that I can find is that then Israeli Transport Minister Ephraim Sneh threatened to sanction AA until the Israeli TWA employees received their severance pay. That is never going to happen.

There are plenty of lucrative destinations for AA to fly without being subject to extortion.

This subject was extensively discussed on this bulletin board back in 2006 in this thread.

שנה טובה

Toda!

I appreciate the links but still don't have the complete picture. There seems to be limited information available, nothing of substance from AA directly, and some of the links contradict how IAA (Israel Airports Authority) management explained it to me last summer when I was flying out on LY. However it's clear, AA will not be serving TLV in the near future and spited their Israeli employees. While it would be nice to have an AA JFK/MIA-TLV, there are ample alternatives on other carries. Given both BA and IB currently serve TLV, would it be conceivable for BA or IB aircraft to operate a US-TLV route with an AA flight number (after Israel is upgraded back to category 1 rating from FAA) under the joint venture?

Josh

 

[eolesen]

So much misinformation here, I'll have to reply in chunks...

I appreciate the links but still don't have the complete picture. There seems to be limited information available, nothing of substance from AA directly, and some of the links contradict how IAA (Israel Airports Authority) management explained it to me last summer when I was flying out on LY.

I'm shocked... shocked, I say, that you're not finding anything of substance from AA, and that someone from IAA might have a biased view of the situation, or perhaps doesn't understand US law...

In April 2003, the US Third Circuit Court of Appeals ruled that the Section 363 sale of assets from TWA, Inc to TWA, LLC was indeed "free and clear" and extinguished *all* successor liability.

Like it or not, Israel and the severed TWA employees in Israel in effect became unsecured creditors against the estate of TWA, Inc.

Given both BA and IB currently serve TLV, would it be conceivable for BA or IB aircraft to operate a US-TLV route with an AA flight number (after Israel is upgraded back to category 1 rating from FAA) under the joint venture?

Maybe I'm wrong, but I don't think a Category 2 or 3 rating impacts the ability for AA to codeshare on BA or IB -- the restriction on Cat 1 has to do with US airlines codesharing on flights operated by airlines based in the country with the sub-Cat 1 rating.

 

[eolesen]

Flight attendant, pilots, ramp service, customer service agents, perhaps some mid-level management as well. Even after your pay cuts AA employees are still better off than their counterparts at pretty much every U.S. based carrier with the exception of Southwest. Perhaps AA could contract out ramp service, baggage service like DL, CO, and UA have done in many stations.

I'm sure you've probably not done a full salary comparison of all those workgroups, but let's just say you're wrong. Management (mid level on down) has traditionally been paid about 15-20% less than their peers at UA, DL, CO, and even US. This I know for a fact because I interviewed people from those airlines when I was at AA, and without exception, none of them were willing to work for AA
And since you probably don't know it, AA contracts out ramp, baggage & passenger service in most stations with fewer than six flights a day. Just about all overnight aircraft cleaning is contracted out, and baggage service at all of the hubs is contracted out. When you start getting into stations with more than seven flights a day, the difference between contracting and insourcing isn't as great as you'd think.

 

[eolesen]

View attachment 8834

Have you looked at AMRs stock recently? UAUA, CAL, DAL, LUV have all outperformed AMR

You are so sure of yourself that you don't even check your facts...View attachment 8835

See that black line? That's AMR stock. See those lines below AMR? That's DAL, UAUA, and LUV. The one line above AMR? CAL, and they've always trended higher than AMR.

Outperform? Doesn't look like it to me.