Carty Declares: Airline Wages Too High!

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WingNaPrayer

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[DIV class=body-head][SPAN class=headline][STRONG][FONT size=4]Carty: Airline wages too high[/FONT][/STRONG][/SPAN][BR][FONT size=-1][SPAN class=byline]By Trebor Banstetter[/SPAN][/FONT][BR][FONT size=-1][SPAN class=creditline]Star-Telegram Staff Writer[/SPAN][/FONT][BR][/DIV]
[P]A tentative deal to cut $2.2 billion in pilots wages at United Airlines probably won''t be enough to help that airline win a loan guarantee from the federal government, Don Carty, chairman and chief executive of American Airlines, said Wednesday.[/P]
[P]Speaking to analysts gathered at the American Airlines Center, Carty said that the trend of rapidly rising wages in the industry must level off or even reverse itself before airlines can become profitable again.[/P]
[P]He predicted that the major airlines will lose a record $9 billion this year and that revenues may never return to levels of the late 1990s, when the industry posted some of its biggest profits.[/P]
[P]The hole the industry finds itself in today is, in my estimation, deeper than anything any of us in this industry have ever experienced before, he said.[/P]
[P]As it works to cut $4 billion in costs, American will continue trim its flight schedule. By the end of next year, American''s capacity will be down 16 percent compared with the start of 2001, said Henry Joyner, senior vice president of planning.[/P]
[P]Analysts are watching developments at United to see whether that carrier can avoid a bankruptcy filing. The carrier''s unions have pledged to trim labor costs by $5.8 billion over 5 1/2 years and are meeting separately to set individual targets.[/P]
[P]Carty said that even if United''s pilots approve a concession package approved by their leaders last week, they will still be paid at least 2 percent more than American pilots. And after 5 1/2 years, he said, their pay will jump back to its current level, which is about 27 percent more than their counterparts at American make.[/P]
[P]We don''t see that as having accomplished anything, said the top executive of the Fort Worth-based airline. I don''t see how [the federal government] can approve a loan for United with those kinds of wages.[/P]
[P]United is hoping to win a $1.8 billion loan guarantee from the federal government to help it avoid bankruptcy, but the board that oversees the lending program has demanded that the carrier cut costs before it receives approval.[/P]
[P]Carty said that the industry''s labor costs must be addressed.[/P]
[P][FONT color=#ff0033]We clearly have to slow wage escalation in the industry, if not halt it for a while or in some cases roll it back, he said.[/FONT][/P]
[P]American, which has lost nearly $3 billion this year amid a steep drop in business travel and an intense fare war, is in negotiations for a new contract with its pilots. It approved new deals last year, before Sept. 11, with flight attendants and mechanics that awarded industry-leading pay to both groups.[/P]
[P]Carty emphasized that pilot contract issues such as work rules and the limits on growth of its American Eagle regional carrier -- called the scope clause -- are just as important as wages.[/P]
[P]One place where we have a competitive disadvantage in our contract is in the scope provision, he said. If our pilots were looking to help the company economically, that''s one of the areas we''d like to look to them to be helpful.[/P]
[P]During the conference, American executives detailed their strategy for surviving the downturn, while acknowledging that they still haven''t come up with a long-term solution for profitability.[/P]
[P]The strategy, which has been rolled out during the past few months, includes cutting flights and grounding planes, smoothing out operations at hub airports, adjusting fare restrictions, slashing 7,000 jobs and cutting costs wherever possible.[/P]
[P]For example, American has been cutting back on unsuccessful international routes, particularly in South America, and adding flights to more po****r foreign locales, including vacation destinations in Mexico and the Caribbean.[/P]
[P]The airline''s large Latin American network has been especially hurt this year because of economic problems there.[/P]
[P]The carrier is also cutting back on domestic routes, particularly to and from high-tech centers such as San Jose, Calif., Boston and Austin.[/P]
[P]But the company has only identified about $2 billion of the $3 billion to $4 billion in savings needed to compete profitably with low-cost carriers like Southwest Airlines, Carty said.[/P]
[P]One analyst, Ray Neidl of Blaylock and Partners, raised his rating on American stock from hold to buy Wednesday after deciding that it is less likely that the carrier will file for bankruptcy.[/P]
[P]He also raised his recommendation to buy for Continental Airlines and Northwest Airlines.[/P]
[P]However, he said, the airline industry avoiding bankruptcy does not solve its long-term fundamental issues, and said that a war with Iraq could raise more problems.[/P]
[P]American''s stock jumped nearly 30 percent Wednesday, to $7.61, after the company announced the sale of Executive Airlines, its Miami-based turboprop carrier that served the Caribbean.[/P]
[P]At the analysts'' briefing, American executives also said:[/P]
[P][SPAN class=box_solid]• [/SPAN]They made a strategic error when they added back flights early in 2002, when the economy showed signs of improving. American''s strategists still hadn''t realized that the downturn in business travel was different from past dips in traffic and wouldn''t be returning to its previous levels, said Jeff Campbell, the carrier''s chief financial officer.[/P]
[P]We assumed we''d see a continued recovery, he said. We all know that''s not the way the world worked out.[/P]
[P][SPAN class=box_solid]• [/SPAN]The Republican takeover of the Senate will help the industry persuade Congress to extend affordable terrorism insurance coverage and pick up some security costs.[/P]
[P]It could also boost the industry''s push to change the Railway Labor Act, which governs airline contract negotiations. The airlines want the government to be able to impose binding arbitration, a move vigorously opposed by unions because it would limit their ability to strike.[/P]
[P]That would expedite the process greatly, said Will Ris, American''s senior vice president for government affairs.[/P]
[P][SPAN class=box_solid]• [/SPAN]Fare levels are deeply affected in markets where American competes with discounter Southwest, said Dan Garton, American''s executive vice president for marketing.[/P]
[P]In competitive markets, American generally maintains a 35 percent to 40 percent premium over Southwest. But on noncompetitive routes, American''s fare levels are generally 85 percent to 100 percent greater than Southwest''s average fares, he said.[/P]
[P]So our cost premium shrinks as Southwest grows, he said.[/P]
[P][SPAN class=box_solid]• [/SPAN]The airline is working to maintain its identity as a premium carrier even as it cuts costs, and it will continue to focus on business travelers as its core customers despite the drop in business travel.[/P]
[P]There are less of them, Garton said, but they''re still very valuable.[BR][/P][/SPAN][/SPAN]
 

MileHighGuy

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Oct 14, 2002
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I don't want to say I told you so!, but I guess I will.[BR][BR]Pay cuts are coming as sure as the sun rises.
 

Busdrvr

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[blockquote]
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On 11/8/2002 5:43:23 AM WingNaPrayer wrote:

[Carty said that even if United's pilots approve a concession package approved by their leaders last week, they will still be paid at least 2 percent more than American pilots. And after 5 1/2 years, he said, their pay will jump back to its current level, which is about 27 percent more than their counterparts at American make.[/P]


"We don't see that as having accomplished anything," said the top executive of the Fort Worth-based airline. "I don't see how [the federal government] can approve a loan for United with those kinds of wages."[/P]

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[/blockquote]


Carty needs to worry about his own airline. I think if anything, this is one more shot across the bow of the APA, who is ALREADY the lowest paid out of DAL, NWA, UAL, and prior to BK, U. He's using the numbers from an open contract that was amendable over a year ago (when he offered a 22% pay increase), and one which the pilots struck over. So much for the APA waiting until better times to get a contract, Carty's already using the old contract as the baseline (from which he'll undoubtedly request concessions)
 

MileHighGuy

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[P]
[BLOCKQUOTE][BR]----------------[BR]On 11/8/2002 11:11:54 AM MiAAmi wrote:
[P]Does that mean you'll become the half mile high guy?[/P]----------------[/BLOCKQUOTE]
[P][/P]Nope. I'm still the Mile High Guy! Any half way jokes will be dealt with harshly.
 

capeman

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No I haven't. I just threw that out there as bait. I just wanted to see what would happen. Hopefully, this will open some eyes to all employees. Management hopes we will renegotiate contracts, but what will they do for the company??? There are 2 sides. Management and the labor employees. Which one will give up the most precentage too see AMR survive?
 
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WingNaPrayer

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Certainly not upper management. Right now corporate's focus is on getting that nasty railroad labor act reworded to take away strike rights from labor in favor of binding arbitration. That way, all threats will be removed and contract negotiations will essentially become worthless, the company will have nothing to loose, and everything to gain.
 
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WingNaPrayer

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[blockquote]
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On 11/8/2002 3:02:28 PM capeman wrote:

What about CAArty? Will he take a pay cut in proportion to everyone else???
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[/blockquote]

Have you gone off the deep end man??
 
Oct 14, 2002
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[blockquote]
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On 11/8/2002 3:02:28 PM capeman wrote:

What about CAArty? Will he take a pay cut in proportion to everyone else???
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[/blockquote]
Maybe he should forgo his salary until AMR can get out of this mess....How old is he anyhow? Maybe not such a good idea..The walls in DFW will crumble and they will still be
sitting in their offices..AMR ENRON AND W
What dreams are made of
It wont be long now..The time is near..
 
Oct 14, 2002
85
0
[blockquote]
----------------
On 11/8/2002 3:02:28 PM capeman wrote:

What about CAArty? Will he take a pay cut in proportion to everyone else???
----------------
[/blockquote]
Maybe he should forgo his salary until AMR can get out of this mess....How old is he anyhow? Maybe not such a good idea..The walls in DFW will crumble and they will still be
sitting in their offices..AMR ENRON AND W
What dreams are made of
It wont be long now..The time is near..
 
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