Dallas Business Journal Article

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MiAAmi

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Aug 21, 2002
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Dallas Business Journal
Slashing AA''s costs presents daunting task
Observers say bulk of $3 billion in cuts must come from pilot salaries
Margaret Allen Staff Writer
FORT WORTH — As Fort Worth-based American Airlines Inc. struggles to slash a whopping $3 billion — about 15% — from its annual operating costs, industry analysts contend the crippled carrier must ravage a large chunk of it from its high-paid pilots.

The analysts estimate 35% to 40% of American''s operating costs are labor, driven largely by pilot pay.
So far, airline management hasn''t approached the pilots'' union for concessions toward the cost cutting, according to Sam Mayer, a New York-based Boeing MD-80 captain who is spokesman for the Allied Pilots Association, the collective bargaining agent for 13,000 American pilots.
Don Carty, chairman and CEO of American parent AMR Corp., has said the airline must fundamentally restructure its business. The hope is to regain collapsing revenue caused by the depressed economy and Sept. 11 terrorism attacks.
American, by late September, had lost $1.8 billion since October 2001, according to Carty. The carrier''s schedule is off 10% to 12% from pre-Sept. 11.

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Solving the knotty problem of reigning in pilot pay, however, won''t save the airline, said Mayer. Raises over the last nine years have averaged 1% a year and pilots have seen no raises the past two years, he added.
The business model has failed. They need to look at the revenue side of the equation, said Mayer. What''s frustrating to the pilots is, that''s been the rhetoric, that''s what Carty is saying. But when it comes to taking action, they still do the same old things — cut back routes, park airplanes and lay off employees. They still haven''t addressed what, by their own admission, is the fundamental problem.
Carty has said American will lay off 7,000 employees between now and next March, reduce flying capacity 9%, aggressively retire aircraft and defer delivery from Boeing Co. — the pick-and-shovel supplier to the U.S. airline industry — of 34 new jets through 2005.
Cutting $3 billion annually will be excruciatingly difficult, according to Bill Warlick, Chicago-based director of airline research with the ratings firm Fitch Ratings.
It''s a very hard thing to pull off; $3 billion is an enormous chunk of change, said Warlick. The $3 billion target Carty''s laid out there is extremely ambitious.
Revenue pressures on the major airlines — said to be losing as much as $12.5 billion total this year — is putting pressure on organized labor, particularly pilots, and is rapidly changing the industry''s labor economics.
American, Delta Air Lines, Continental Airlines and Northwest Airlines are no doubt closely watching what happens at United Airlines, said Warlick. The carrier has threatened it will be forced into Chapter 11 bankruptcy without huge wage concessions from its pilots.
Mayer said United pilots would have to give up a third of their wages to reach parity with American pilots.
If United''s pilots yield, however, the pressure will be on at the other majors, according to Adam Pilarski, senior vice president at Virginia-based aviation consulting firm Avitas.
Then American''s labor will agree to cuts without American actually going into bankruptcy, said Pilarski.
Unions essentially killed the former Eastern Airlines, and United is not far off that model, according to Ron Kuhlmann, a vice president with California-based Unisys Transportation Management Consultants.
The labor unions are the stumbling block, said Kuhlmann, particularly pilots. They don''t have to take large pay cuts, they just have to be made much more productive.
Labor is the biggest differential between the majors and low-cost carriers like Dallas-based Southwest Airlines Co., AirTran Airways and nonunionized JetBlue Airways, he said. Southwest, for example, has high pilot productivity and high aircraft utilization because it doesn''t run a hub-and-spoke system, like American, which is now trying to stagger aircraft arrivals and thereby reduce staff, equipment and gates at its main connecting hubs, Dallas/Fort Worth International Airport and Chicago''s O''Hare International Airport.
Mayer agreed that productivity must improve, but said pilot hands are tied.
We do an awful lot of sitting around. The Southwest pilot doesn''t do that. American doesn''t build its schedules the same way, but that''s not the pilots'' fault, said Mayer. I just came off a trip with a three-and-a-half-hour sit in Dallas. I would''ve loved to have been flying. Management needs to look at their model and see how they can increase our productivity. Our pilots would much rather be flying than sitting around a crew room reading a magazine for three or four hours.
Contact DBJ writer Margaret Allen at mallen@bizjournals.com or (214) 706-7119.
 

MileHighGuy

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Oct 14, 2002
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Ladies and gentelmen, let's bring out the calculators. How much of a pay cut do you think Carty is going to ask for? 15%? 20%? 25%? Pick a number.
 

BeenThere

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Aug 26, 2002
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I say he would like to roll back the wages to before the last contract (for the TWU at least)
 

G4G5

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Aug 21, 2002
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[P][BR]This guy is an idiot. [BR][BR]SWA has high utilization because it doesn't fly spoke to spoke sure but, he leaves out the part that they only fly 737's. We be pretty effiecent is we only flew 757's. Da[BR][BR]Looking for pilot concessions, he left out the part that even with the cutbacks UAL pilots are still paid 5%-10% more then AA pilots. So even getting the new UAL reduced rates would stil be a raise for AA pilots. AA needs a pay cut, that provides a 10% raise. He didn't even bring up the pre payment of the 2003 aircraft or the billion invested in capital expenditures. This guy knows nothing. We are paid less then UAL, NWA and DAL. So you might draw the conclusion that NWA and DAL would need a pay cut first. Da[BR][/P]
[P]Productivity can only improve with a new contract!!!! Any financial writer could draw the simple conclusion that AA mgt likes their 500+ million dollar cost advantage, over DAL pilot pay rates vs increasing productivity.[/P]
[P][BR]Is this the same guy who wrote the money section in the Enquire? I really liked his article on Tax shelters on Mars and How aliens stole my 401k.[/P]
 

aapitbull

Veteran
Oct 4, 2002
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This gal is on dope someone get her a drug test. I don't have knowledge of the pilots contract but I can tell you thanks to the TWU the mechanics still have the lowest average wage in the majors.

Ask a mechanic what a OSM is {overhaul shop mechanic} no lic
required just get a job as a building cleaner and move up! Now for those of you that don't know 25% of the mechanic ranks at the bases can be filled with these folks and they don't have to pay but 10 bucks an hour to get them,and after 10 to 12 years they can top out at 24.

One more thing someone needs to ask this gal if she ever heard of a fellow named Frank {I make the Enron guys look good}Lorenzo!!!!! Hey weren't they both from Houston.

When the idiot light comes on call a mechanic cause you d@m sure can't fix it
9.gif']
 

j7915

Senior
Sep 7, 2002
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How about all those high payed SWA mechanics? How much is SWA paying their overhaul mechanics?

aapitbull you must be a line mechanic. Didn't they cry all over the place when the wheel, AKA retirement shops, were moved to Tulsa? Could it be that there are many specific jobs that can either be contracted or filled with lower paid people? I'd rather create jobs within the company than let the work go outside, where they don't care if we are on strike or not. BF Goodrich in Seattle will work on airplanes whether their customer's employees are on strike or not.

Fortunately for the pilots and unfortunately for everyone else, the cockpit crew has to be fully certified, particularly with the two man crews. Further the pilots don't give a damn for anyone else, locate the message about their scope clause. As the author said, he won't fight other's battles for them. He won't refuse to deliver and pick up airplanes from third party repair shops.

The maintenance field can operate with apprentices and trainees. That is just the way it is. That is what the laws says. Now if you want to change the regs we'll have to get into politics, and that will be off topic.

Aviation is changing. Mechanics have been telling the companies for so long that a mechanic is a mechanic is a mechanic, that the guy fresh off the street is worth as much as some one with twenty years. Now management believes it. They will try to pay an experienced employee just as little as some one just off the street.

It all boils down to being careful what you wish for.
 

AAmech

Veteran
Aug 22, 2002
766
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[blockquote]
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On 11/4/2002 5:10:34 PM j7915 wrote:

I'd rather create jobs within the company than let the work go outside, where they don't care if we are on strike or not. BF Goodrich in Seattle will work on airplanes whether their customer's employees are on strike or not.



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[/blockquote]

I'm right there with you J! AA's use of OSM is far superior to farming this work out as most other airlines do. Not to mention our contract allows licenced mechanics to bump back into these positions AND KEEP OUR MECHANIC'S PAY!!! Sometimes I think people just like to complain.
 

MrMarky

Advanced
[P][STRONG][EM]We do an awful lot of sitting around. The Southwest pilot doesn't do that. American doesn't build its schedules the same way, but that's not the pilots' fault, said Mayer. I just came off a trip with a three-and-a-half-hour sit in Dallas. I would've loved to have been flying. Management needs to look at their model and see how they can increase our productivity. Our pilots would much rather be flying than sitting around a crew room reading a magazine for three or four hours. [/EM][/STRONG][/P]
[P]Mr. Mayer makes it sound as though the pilots are being paid while they're sitting around. I thought the pilots only got paid from pushback until arrival at the destination gate, and all that waiting around time was on them, not the company. Is this correct or am I wrong? I'm almost positive it was that way at TWA and the same went for the F/A's.[/P]
[P]If I've got that right, I don't understand Mayer's point. He's trying to imply the airline's scheduling inefficiencies are costing money because pilots are being paid for doing nothing. Could his real axe to grind be that they're forced to sit around and they're NOT being paid for it? Or if they start a trip that involves a connection are they still on the clock while waiting for the connection?[/P]
[P]Could G4G5 or one of the other pilots please clarify this? Personally, I think the pilots should be paid from the time they are required to check-in at the airport for duty until they have completed their flight. If the flight cancels they should be paid at least some minimum time just for showing up, like any other workers are. [/P]
[P]Thanks,[/P]
[P]mAArky[/P]
 

Busdrvr

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Aug 20, 2002
2,217
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[blockquote]
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On 11/4/2002 5:33:45 PM MrMarky wrote:

Mr. Mayer makes it sound as though the pilots are being paid while they're sitting around. I thought the pilots only got paid from pushback until arrival at the destination gate, and all that waiting around time was on them, not the company. Is this correct or am I wrong?


You are correct. However, nbot being quite as dumb as we look, we have provisions that force the company to schedule more efficiently. For instance, we have what is called trip rigs and duty rigs. a trip rig is a rule that says, for instance, for every 3.5 hours I'm away from home, I get at least 1 hour of pay credit. A duty rig would be for every 2 hours I'm on duty, I get 1 hour of pay. the rules used to be better (trip rigs were typically 3 to 1) during the 80's. They were all relaxed during the concessionary contracts of the 80's and early 90's from which we have not, and will never recover. I'd say at least 90-95% of my airlines' trips are hard time trips, meaning my actually flying time is in excess of the flying time these rules would provide. The rules only serve to keep the company honest in scheduling.

If I've got that right, I don't understand Mayer's point. He's trying to imply the airline's scheduling inefficiencies are costing money because pilots are being paid for doing nothing. Could his real axe to grind be that they're forced to sit around and they're NOT being paid for it? Or if they start a trip that involves a connection are they still on the clock while waiting for the connection?[/P]

Could G4G5 or one of the other pilots please clarify this? Personally, I think the pilots should be paid from the time they are required to check-in at the airport for duty until they have completed their flight. If the flight cancels they should be paid at least some minimum time just for showing up, like any other workers are. [/P]


Most airlines also pay pilots for the minimum of scheduled vs actual flight time. So if I leave home on a trip and a ORD-IND turn in the middle of the trip is CNXed, I'll still get paid for it. Now here's where SWA benefits from it's scheduling. Pilots, along with every other profession, need time off. SWA typically schedule more hours of flying per day for it's average pilot than the majors due to shorter sits. So a SWA pilot may fly the same number of hours in 14 days than an AMR pilot flies in 18 days. If there is some additional open time avail during a month, which pilot will pick it up? the SWA guy who's flown only 14 days that month, or the maxed out AMR guy at 18? Thus SWA employs fewer pilots to fly the same number of hours, which saves HUGE dollars when the entire benefit package is considered. The good news is that SWA efficiency will likely go down some as they bring ACARS online. When you have acars, you sometimes are prevented from flying a leg due to FAA restrictions. you don't have the ability to make the numbers work.

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Busdrvr

Veteran
Aug 20, 2002
2,217
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[blockquote]
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On 11/4/2002 6:44:43 PM KCFlyer wrote:

Those lyin' thievin' bastards! Sounds like St. Peter uses ACARS at the gates of heaven.[/P]
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[/blockquote]

Hey, make light of it if you'd like, but rulings like the Whitlow lettter are gonna bite them big.
 

KCFlyer

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Aug 20, 2002
10,634
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[P]
[BLOCKQUOTE][BR]----------------[BR]On 11/4/2002 6:09:24 PM Busdrvr wrote:
[P]
[BLOCKQUOTE][BR] The good news is that SWA efficiency will likely go down some as they bring ACARS online.  When you have acars, you sometimes are prevented from flying a leg due to FAA restrictions.  you don't have the ability to make the numbers work.[BR][BR]----------------[BR][/BLOCKQUOTE][BR]
[P][/P]----------------[/BLOCKQUOTE]
[P]Those lyin' thievin' bastards! Sounds like St. Peter uses ACARS at the gates of heaven.[/P]
 

RV4

Veteran
Aug 20, 2002
1,885
80
www.usaviation.com
[blockquote]
----------------
On 11/4/2002 5:10:34 PM j7915 wrote:

aapitbull you must be a line mechanic. Didn't they cry all over the place when the wheel, AKA retirement shops, were moved to Tulsa? Could it be that there are many specific jobs that can either be contracted or filled with lower paid people? I'd rather create jobs within the company than let the work go outside, where they don't care if we are on strike or not. BF Goodrich in Seattle will work on airplanes whether their customer's employees are on strike or not.

Aviation is changing. Mechanics have been telling the companies for so long that a mechanic is a mechanic is a mechanic, that the guy fresh off the street is worth as much as some one with twenty years. Now management believes it. They will try to pay an experienced employee just as little as some one just off the street.

It all boils down to being careful what you wish for.

----------------
[/blockquote]

My, My, My,

Along come those that worship the shrine of the BUS commonly referenced as the Transport Worthless Union of America. They come here to defend the UNION instead of the profession, They come here to defend the COMPANY instead of the working man, they come here to defend LOWER PAY in exchange for jobs and dues payers. Truth is those that are hired from building cleaners and made into mechanics will never garner enough self esteem and self worth to ever strike for better wages. Truth is, everyone of them are Just lucky to have a job, Brother and would not strike under the most extreme circumstances. At least those working at the outsource facilities have self worth and self esteem.

Funny thing...

Just a year ago in Oklahoma J7915 and the proud band of Bus Worshipers were proudly wearing DONT LOWER WAGES - VOTE NO on SQ695 which was the right-to-work question. Now, they are not only in Federal Court to overturn the will of the people, they are here now defending LOWER WAGES in exhange for JOBS!

I remember Gov. Frank Keating making claims that right-to-work would CREATE jobs for Oklahoma. But the BUS SHRINE kneelers were in complete opposition at that time to a trade of lower wages for more jobs. What happened?

Today, they take a different stand while defending the four wheeled SHRINE! Now claim that lower wages is better for us all as long it creates jobs and dues payers. Hogwash you idiot, have you been wearing a tie lately and depleteing oxygen to your brain? Or are you just suffocating under the bosses desk?

Meanwhile, I bet J7915 and the other TWU stooges are still sporting their T-Shirts with the big red stop sign advocating NO on SQ695. Two faced, unrelenting stupidity. Only the morons born within the 46 mile radius of the Tulsa Base would be so bold with such two-faced bull$hit.

Next we will find that they are out on Turkey Mountain waiting for the return of the HALE BOPP Comet. After all, the latest rumor is that tail formation of that comet was actually made up of intense Bus Exhaust Fumes.[img src='http://www.usaviation.com/idealbb/images/smilies/9.gif']

I used to be a proud mechanic at the Tulsa base, now I simply watch in awe as the TWU and J7915 destroy the profession while playing politics with money extorted from our paychecks.
 

G4G5

Advanced
Aug 21, 2002
164
0
[P]
[BLOCKQUOTE]On 11/4/2002 6:09:24 PM Busdrvr wrote:
[P]
[BLOCKQUOTE]
[P][BR][BR]Could G4G5 or one of the other pilots please clarify this? Personally, I think the pilots should be paid from the time they are required to check-in at the airport for duty until they have completed their flight. If the flight cancels they should be paid at least some minimum time just for showing up, like any other workers are. [/P]
[P] [/P]
[P]G4G5[/P]
[P]Pilots are paid by two things only. The parking brake and the main cabin door. My clock starts, when all the pax are seated, all the overheadbins are closed and the agent shuts the door(that's half of what I need). Then I call for a push back clearance. ONLY when the parking brake is released is when my clock starts ticking(I punch in). So if we sit or get delayed I am not getting paid (so no one wants to go more then the flight crew). All of the time I spend doing preflight planning, updating charts, walk around inspections, checking the weather, yada yada. Is all gratis, free of charge. [/P]
[P]A flight crew stops getting paid when the parking brake is set and the main cabin door is opened. So all the post flight work is gratis, free of charge. [/P]
[P]-----------------------------------------------------------------------------------------------------------------[BR][BR][BR]SWA has advantages of the 737, every pilot flies the same type. This is a HUGE training advantage. They save on turn times at the smaller airports. Some of which is good some is bad. A Southwest pilot never gets out to inspect his aircraft after each flight, this is done by a NON FAA certified individual. At AA the pilot flying(FO or CA) always does a walk around inspection. At luv it could be the tug driver or the baggage guy(maybe a LUV expert could clarify this). I don't know how they got this one by the FAA but it saves time and money. [BR][BR][/P][/BLOCKQUOTE][/BLOCKQUOTE]
 
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