Eject Eject Eject!

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On 9/22/2002 9:04:43 AM AAmech wrote:

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On 9/21/2002 11:51:32 PM FA Mikey wrote:

What should a CEO make? What is too much? How much is not enough? Don Carty makes over 100 times the pay of a typical AA employee.


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Being that the average US CEO salary is over FIVE HUNDRED times greater than that of their average hourly employee, Don Carty's pay looks very reasonable. Right now I really don't think his pay is an issue. We've got much bigger problems to worry about!
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Off topic a bit here, but the problem is that there are a whole lot of people who could do a better job of running most any company for a whole lot less money. These we need to attract and keep quality managment songs that are sung are pure bullsh*t. If management was so quality, how did they ever get into the dire situations many companies find themselves in?

A local telecom company here filed bankruptcy and a visiting BK judge from Texas set a salary cap of $100,000 for management while they operated under bankruptcy protection - citing that if managment was that great, what the @!$#(%@ were they doing in bankruptcy in the first place? Of course, the need to attract and maintain was thrown up and another judge overruled him. Too bad. I've been critical of labor unions looking at what the employees of XYZ company make and shooting for industry leading to top them. But managment is just as guilty. Executive compensation is the next issue that should be addressed by any government inquiry. We now return you to your regularly scheduled discussion.
 
Ask the folks at IBM if Gerstner was over paid? Or Welsch @ GE?

You get what you pay for. The problem with this business is not CEO compensation, it's the government. The aviation industry will never attract the Harvard or Warton MBA's because the opportunity for the big dollars is not there. Let's face it the yeilds stink in this industry, why would a promising executive choose this business over one that makes money?

The problem is that the gov is not about to let airlines go under, the weak are always around. How do you compete when the Senators from state XYZ are pulling every favor that they have on the hill to save their states airline/jobs/votes?

Your product has no shelf life, their is no inventory or R&D. Any time a new idea comes forth(like U's charging for missed flights, which I agree with), either the whole industry accepts it as a group or it is shot down. You only have two vendors to choose from Airbus and Boeing. I could go on and on. How many fortune 100 CEO's have a governing body like the FAA or the DOT to work their 5 year plans around?

Capacity/supply is not effected by demand, so mgt is forced to compete solely on costs only. The airline with the cheapest costs win. Unless you are talking about international flying and dealing with another nations Flag carrier, then it's another set of rules.

AA's problem is not Carty, if you have any doubt look at the way he handled the slots at LGB(B6) or the STL RJ issue/AX code(which I disagree with), all recent mgt choices that needed to be made. His problem is the government(s), the laws of business that the rest of the CEO's use, do not apply in this industry.
 
Then simply put, all we need to do is just do away with the monetary system and all will be hunky dory! That filthy lucre, it ruins everything!
 
CEO's used to make about 40 times the nominal salary of the workers. It's now about 400 times. There is serious corruption going on among US company's rubber-stamp BODs and senior leadership. I think we've only scratched the surface with the ENRONS and WORLDCOMs. The aviation industry's poster children for incompetence and featherbedding?. . . try Goodwin, Wolf, and Gangwal on for size.
 
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On 9/22/2002 12:13:03 PM G4G5 wrote:

Ask the folks at IBM if Gerstner was over paid? Or Welsch @ GE?
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I beleive some are begining to think that Welch is being paid a bit too much to stay at home... And how many IBMer's did Gerstner jettison when he first took over? Bottom line, NO CEO is worth several hundred times what their labor force is. You're right, G4G5, for the most part, a CEO will earn less at an airline than at a failing telecom. I'm all for pay for performance, but how about extending the vesting period for CEO stock options out for several more years (sort of a retirement fund if you will)? As it stands, too many are making short term decisions that positively effect the stock price, but in the long run, hurt the company. Best example I can think of it Bill Esrey, CEO of Sprint - put Sprint on the market to sell to Worldcom, put a tiny little line in the shareholder vote that if the merger is approved, all top managment is immediately vested in their stock options, and then rake it in. Most execs sold their stock at $60 a share, while the stock in the employees 401K accounts (made up with company matching stock - can't be moved as long as the employee works there) is $9 a share. Sounds a little like U, doesn't it?

Bring in a high school dropout with a decent amount of common sense and a passion for an industry, pay them a couple hundred thousand a year, and I guarantee that they'd make Jack Welch and Lou Gerstner look like rank amatuers, despite the Harvard MBA's.
 
Not that IVE ever drifted off topic(tongue in cheek), but JFK Fleet Service started this thread with what us employees wiil do, wont do, might do, with regard to the alarming situation at hand.
IMHO, because this is a very good subject, I'd like to see ALL of us(employees and non-employees) pull this thread , back on topic !!

NH/BB's
 
NHBB - if UAL goes Chapter 11, then, IMHO, AA will not have many options available to them but to head to court and file for themselves. Because along with a of lowering labor costs, UAL will successfully eliminate a bunch of debt. No amount of employee concessions, short of working for nothing, will allow AA to compete with a debt load and their labor costs. Chapter 11 might allow a company to force concessions out of labor, but the other half of the bankruptcy equation - reduction in debt -, then turning around and running fire sale prices (at a profit for the bankrupt airline) is what can do the most harm to competitors. Don't you think AA would love to have been able to walk away from the F100's for just pennies on the dollar?
 
Kirkpatrick;
The question is, Do market forces have a real influence or it the market fixed by an old boy network? The problem is that those who determine CEO pay apparently have a greater interest in seeing CEO pay go up than getting the most manager for the buck.
 
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On 9/23/2002 9:21:55 AM KCFlyer wrote:

NHBB - if UAL goes Chapter 11, then, IMHO, AA will not have many options available to them but to head to court and file for themselves. Because along with a of lowering labor costs, UAL will successfully eliminate a bunch of debt. No amount of employee concessions, short of working for nothing, will allow AA to compete with a debt load and their labor costs. Chapter 11 might allow a company to "force" concessions out of labor, but the other half of the bankruptcy equation - reduction in debt -, then turning around and running fire sale prices (at a profit for the "bankrupt" airline) is what can do the most harm to competitors. Don't you think AA would love to have been able to walk away from the F100's for just pennies on the dollar?
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I've said this before - sure Ch.11 will eliminate/restructure debt, labor costs and so on - I guess these are the positives. BUT, is worthwhile to file Ch.11 and:
1) wreck your credit rating
2) receive negative public perception

A lot of people will look for the cheapest fare, but a good number of people will tend to stay away from an airline that is in or went through bankruptcy. There is a negative perception attached to it.
If UAL does file Ch. 11, it will also shed routes/planes/employees.
I thought that an airline can't shrink itself to profitability - isn't that one of the basic principles of airline economics?
AA should be marketing itself as a financially strong, reliable airline.
IMHO, good management is what AA is doing right now, cutting costs and improving efficiency - so that when the economy rebounds, AA will again make huge profits. A company like AA can weather an economic downturn because it had good management in the past, it still has cash and assets to borrow against in bad times.
 
Please don't get me wrong, frugalflyer - I think that bankruptcy laws need to be changed. If that means that somebody has to be allowed to fail, then so be it. The competitors will pick up many assets and employees to fill the void created by the failure. Call it rightsizing the industry. U has already filed. If UAL files, then, IMHO, the public will no longer have any stigma attached to flying a bankrupt carrier because ALL the other carriers will file bankruptcy to achieve the balance to compete. And that includes Southwest. Why do something silly like pay 100 cents on the dollar for your outstanding debt when the bankruptcy laws can allow you to pay just a fraction of that...and break a few union contracts while you're at it?
 
KCFlyer,
Yo, my PC pal,
Whats up with Hooters air in KCI
Are you planning to buy any stock, or just check out the operation ?????????
[img src='http://www.usaviation.com/idealbb/images/smilies/11.gif'] [img src='http://www.usaviation.com/idealbb/images/smilies/1.gif'] [img src='http://www.usaviation.com/idealbb/images/smilies/11.gif']

NH/BB's
 
Now, that's interesting.
The articles reports that AA has lost $3 billion in the past 18 months.
18 months ago AA announced that they were going to spent $3+ billion (cash and lease obligations) to take over TWA . This aquisition did nothing to better position AA in an increasingly competitive market, since the JFK operation was entirely shut down, and the STL hub is entirely redundant - there is no traffic flow of any significance that could not be routed through ORD or DFW just fine - without the cost of an additional hub operation.

So, if AA is indeed in such dire straits, why not consider an asset sale and Eject Eject Eject! - TWA?! A spin-off of TWA LLC would certainly be the most straightforward solution: it would AA bring back to a healthy size, and on top of it, AA migt make sum cash rather than draining more.
 
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On 9/23/2002 8:32:26 PM KCFlyer wrote:

Please don't get me wrong, frugalflyer - I think that bankruptcy laws need to be changed. If that means that somebody has to be "allowed" to fail, then so be it. The competitors will pick up many assets and employees to "fill the void" created by the failure. Call it "rightsizing the industry". U has already filed. If UAL files, then, IMHO, the public will no longer have any "stigma" attached to flying a bankrupt carrier because ALL the other carriers will file bankruptcy to achieve the "balance" to compete. And that includes Southwest. Why do something silly like pay 100 cents on the dollar for your outstanding debt when the bankruptcy laws can allow you to pay just a fraction of that...and break a few union contracts while you're at it?
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I agree that the bankruptcy laws need to be changed.
But with a possible war with Iraq in the near future, the losses that will be inccurred by the majors will probably be greater than of the past year or so (if Gulf War v1.0 was any indication). So, what airlines will be/ should be 'allowed' to fail? Of all the majors, it appears that US and UAL seem to be in the most trouble right now, with AA right behind. So, which of these three will/should fail? One, two,or all three? IIRC PA, EA, BN were at one time also thought of being too big and too important to be allowed to fail, yet they did. Or should/will the smaller carriers like National, Spirit, Frontier, AmericaWest, etc. perish first?
I think what may happen during or after Gulf War v.2 is that all the airlines will go crying to the government for a bail out or go running to bankruptcy court. I guess then you're right, there will be no stigma attached to any airline as they all will have received a bailout or gone through Ch.11.
 
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