Every 8 days

[telebender1956]

You guys are funny, E brings out a stat that clearly shows AA top heavy with mech and support staff/aircraft and you shift excuses to fleet type and widebody? The obvious reason is OH, get a grip. Whats more AA OH prices/man hour are far and above what the carriers that contract all their junk is. Now, go bury your heads in the sand.

Get your head OUT of the sand. AA management at TUL admitted to us during the 2003 concessions that they shopped for a MRO to perform the H/C checks on our B757 Fleet. The AA management and TWU went in person to an MRO provider in Texas to explore the strong possibility of outsourcing the B757 H/C checks.
The Company found out that TULE is more than a BARGAIN when compared to an MRO.The Company presented the BOW for our B757's to the MRO and requested an accurate turn time for the BOW. The best the MRO could do was 25 days as compared to TULE 15 DAYS. AA Management decided they were getting a lot more bang for their buck at TULE than going with an MRO.Do you have any idea how much revenue 1 B757 can generate in 10 Days? This more than offset the "cheaper" cost at the MRO.
Tulsa has the best H/C AMT's anywhere in the world and cannot be matched for knowledge, skills, and years of experience. No MRO can match this but unfortunately the present group of bean counters at AA does not care.

 

[DallasConehead]

They admitted this to you? Or you just heard this?

 

[BoeingBoy]

Comparing ANY airline to ANOTHER is not realistic.

Using publicly available data, I think I've said basically the same in the past. Each airline is unique is some respects, with the only thing in common is that they all fly airplanes. But part of that uniqueness is the ability to only pay $X for job A while another can pay $Y for job A.

Jim

 

[Hopeful]

Using publicly available data, I think I've said basically the same in the past. Each airline is unique is some respects, with the only thing in common is that they all fly airplanes. But part of that uniqueness is the ability to only pay $X for job A while another can pay $Y for job A.

Jim

I couldn't agree more. And the ability for one to pay its workers $X while another can only pay $Y has nothing to do with how many workers of a particular title are employed.

 

[BoeingBoy]

And the ability for one to pay its workers $X while another can only pay $Y has nothing to do with how many workers of a particular title are employed.

And there we part company - the more workers A has in a given group (or even in total) compared to B means that for every dollar more per hour that B pays, A can only give a smaller increase in hourly pay to keep it's increase in costs the same. Of course, the option for A is to give fewer employees a larger raise - fine if you're one of those still having a job (you get a bigger raise because someone else lost their job) but not so good for those losing their job so someone else can get a bigger raise.

Take two carriers and using small numbers for my feeble brain - airline A has 1000 employees in a given group while airline B has 2000 employees in the same group. Even if the two airlines have the same profits, for every $1.00/hour raise that airline A gives those employees the costs go up $1000 per hour the group works. Airline B can only pay $0.50 more to keep it's cost increase to the same $1000 - if it raised the pay by the same $1/hour it's costs would increase twice as much (to $2000/hr that the group worked) as airline A. Alternatively, B can furlough 1000 employees and give the remaining 1000 the same $1/hour raise, and see it's cost go up the same amount as airline B.

Jim

ps - it occurs to me that you may be using $x and $Y to represent the total pay (compensation really) for a given group. In that case you're correct - two airlines performing equally financially could afford the same total increase in costs for the equivalent employee groups. But the more employees one carrier has in that group compared to the other, the smaller the individual's increase would be because the same total increase is divided between more people.

Of course, this is all before even bringing relative financial performance of the various airlines into the discussion.

 

[Hopeful]

Jim

ps - it occurs to me that you may be using $x and $Y to represent the total pay (compensation really) for a given group. In that case you're correct - two airlines performing equally financially could afford the same total increase in costs for the equivalent employee groups. But the more employees one carrier has in that group compared to the other, the smaller the individual's increase would be because the same total increase is divided between more people.

Of course, this is all before even bringing relative financial performance of the various airlines into the discussion.

Which is how I define compensation. Which is not just the hourly rate, but the whole package. The reason I include everything is because that is how the company explains their employee cost. Having said that and included everything, there is no reason to keep harping over the face that we still have a pension...Employee costs, plain and simple.
Where my problem keeps coming back is over the outsourcing issue. If a TIMCO or AAR is paying, say, $25 an hour....The customer isn't paying $25 an hour, but maybe $50, maybe $60 an hour, which is probably near what AA considers the cost to keep a mechanic on payroll.

 

[BoeingBoy]

Where my problem keeps coming back is over the outsourcing issue. If a TIMCO or AAR is paying, say, $25 an hour....The customer isn't paying $25 an hour, but maybe $50, maybe $60 an hour, which is probably near what AA considers the cost to keep a mechanic on payroll.

I agree about outsourcing, for everyone from pilots/fa's (express carriers) to agents (kiosks) to res (offshore), to maintenance (express + MRO's) to ramp (contracting at smaller stations) to etc. Basically every work group is adversely affected one way or another.

As for the billing of maintenance labor at MRO's, I have no idea how much "mark up" there is. I would assume that there some negotiated rate for a given check on a given airplane type which would include labor costs, with some arrangement for extra costs incurred for any unusual repairs needed, but as I say that's just an assumption. I really have no clue whether labor cost is marked up 10 or 200% when the bill is calculated. Of course, It's my understanding that many of the MRO's (especially in "3rd world" countries) have a minimum number of licensed AMT's who oversee a lot of non-certificated workers who may be making $5 - $10 per hour. Of course, most of the workers at even domestic MRO's don't enjoy anything like the benefits that a big airline's AMT's do, reducing the cost to the MRO and presumably to the client carriers. Just like the employees of an offshore res center don't make the pay or enjoy the benefits that a big airline's res agents do.

Jim

 

[telebender1956]

I agree about outsourcing, for everyone from pilots/fa's (express carriers) to agents (kiosks) to res (offshore), to maintenance (express + MRO's) to ramp (contracting at smaller stations) to etc. Basically every work group is adversely affected one way or another.

As for the billing of maintenance labor at MRO's, I have no idea how much "mark up" there is. I would assume that there some negotiated rate for a given check on a given airplane type which would include labor costs, with some arrangement for extra costs incurred for any unusual repairs needed, but as I say that's just an assumption. I really have no clue whether labor cost is marked up 10 or 200% when the bill is calculated. Of course, It's my understanding that many of the MRO's (especially in "3rd world" countries) have a minimum number of licensed AMT's who oversee a lot of non-certificated workers who may be making $5 - $10 per hour. Of course, most of the workers at even domestic MRO's don't enjoy anything like the benefits that a big airline's AMT's do, reducing the cost to the MRO and presumably to the client carriers. Just like the employees of an offshore res center don't make the pay or enjoy the benefits that a big airline's res agents do.

Jim

If MRO 's are such a great deal then AMR management is stupid for not having outsourced the H/C Checks a long time ago. They are suppose to be running an airline business, not an employment agency. You are correct that Aeroman in El Salvador pays their people working on the aircraft an average of about $7.00/hr U.S Dollars. Have you ever toured the TULE Facility and seen first hand the investment that AA made in TULE during Robert Crandall's tenure as CEO? The CAM building, the TEO building expansion,Hangar 6,have all been built after 1985 when I came to work at TULE.The remodeling of Hangars 1-2-3-4 happened in the late 1980's. At one time we even leased space in the Boeing Factory Building and Hangar 29 on TUL . One would think that AA management then calculated the amount of years it would take to break even with the ROI.
And I don't won't to forget the Tulsa 2025 scam where taxpayers of Tulsa were sold a bill of goods to vote in an TAX INCREASE of which some was used to build the Blimp Hangar for AA.[More Corporate Welfare]
I think it is a selfish motive and not a business decision why AA management hangs on to TULE because of the number of management jobs at TULE. They are not concerned about our maintenance jobs but their own.

 

[BoeingBoy]

If MRO 's are such a great deal then AMR management is stupid for not having outsourced the H/C Checks a long time ago.

Like many things in life, it's not that black and white...

- having the facilities, shops, experienced personnel, etc, can an airline bring in enough outside maintenance to offset some of the extra costs of maintaining it's own planes in-house?

- does an airline see non-monetary advantages to in-house maintenance - shorter turn times, better quality, etc?

- what are the costs of getting airplanes to MRO's vs the in-house facilities? For both routine heavy checks (there's a reason U.S. carriers don't send 737's to Asia for heavy checks) and the unexpected (like the 757 in MIA - the MRO may not save any money if they can't work that airplane into their schedule until 2 months from now and the plane just sits)?

- are there long term commitments for facilities, and the associated cost, that have to be met whether maintenance is done in-house or not (short of BK to break the commitments), i.e. that money would have to be spent anyway and thus is an expense on top of outsourced maintenance?

- etc. I'm sure someone more familiar with the maintenance end of the business could add several more.

It could be that AA (and DL as I understand) are right keeping more maintenance in-house AND that UA/US are right outsourcing more. WN, B6, etc never grew a large in-house maintenance structure coming along much later as they did so never had to make the decision whether to keep it in-house or outsource.

What I'm saying is that airlines can reach a tipping point where doing it one way no longer makes enough economic sense so they go the other way. Different airlines just have different tipping points.

Jim

 

[telebender1956]

Like many things in life, it's not that black and white...

- having the facilities, shops, experienced personnel, etc, can an airline bring in enough outside maintenance to offset some of the extra costs of maintaining it's own planes in-house?

- does an airline see non-monetary advantages to in-house maintenance - shorter turn times, better quality, etc?

- are there long term commitments for facilities, and the associated cost, that have to be met whether maintenance is done in-house or not (short of BK to break the commitments), i.e. that money would have to be spent anyway and thus added to the cost of outsourced maintenance?

- etc. I'm sure someone more familiar with the maintenance end of the business could add several more.

It could be that AA (and DL as I understand) are right keeping more maintenance in-house AND that UA/US are right outsourcing more. WN, B6, etc never grew a large in-house maintenance structure coming along much later as they did.

Jim

I have already pointed out in posting # 76 of this thread the value of turn times and they do have a monetarily value.I'm just tired of all these AA management types and non-maintenance people who threaten us daily with outsourcing the H/C checks. They need to PUT UP OR SHUT UP.
I beg to differ with you that the BOTTOM LINE is ALL THAT MATTERS at most Airlines and Companies.We were doing Allegiant Air MD80 H/C checks and some components at TULE and they were more than satisfied with our quality of work but still took their aircraft to AAR in OKC because of the Bottom Line.
Example: We overhauled a few of their Engine and APU generators[AA GEN3000] and they were lasting 2-3 times longer "on the wing" than their current vendor but they would not enter into a long term agreement because AA was MORE EXPENSIVE.
A company will eventually run out of investors and financing if they cannot turn a profit.The Bottom is ALL THAT MATTERS.
I do have first hand experience with AA performing MRO work for Fed Ex in the mid-late 1990's on their B727 Fleet. AA could not wait to get out of the contract because we were losing our tails.Fed Ex was more than happy to remain at AA because someone at AA had under bid the contract " just to get the work".
We cannot compete as an MRO unless AA sets up a completely seperate Company from the Airline Maintenance and this is why. We cannot competitively bid work with other MRO's because the total cost of operating TULE is always included in the bid.This includes Engineering-Support Staff-and all other personnel at TULE.Our MRO competition does not have this huge overhead to include in their bids.They have a much leaner support staff and overhead.Part 121 and Part 145 maintenance at the same facility is like trying to mix oil and water.
Unfortunately we have non- airline maintenance people running the maintenance operations at AA and I don't see any improvements coming in the near future .[I'm sorry but Naval Aviation does not even resemble the Commercial Airlines.]

 

[BoeingBoy]

Usually it is the bottom line that drive decisions and rightly so - airlines are in business to make money (at least that's the theory) and doing things to hurt the bottom line doesn't help product profits. But some things that can affect the bottom line are a little more fuzzy than others. You mentioned Allegient going somewhere else for their engine overhauls because the other place was cheaper - that helps the bottom line, right? But if they were only getting 1/3 to 1/2 the time on the wing using the other shop, that hurts the bottom line. Apparently, rightly or wrongly, their management decided which direction was best for their bottom line. But that doesn't automatically mean the same decision is best for another carrier - Allegient was going to be outsourcing engine overhaul regardless since they didn't have the facilities, equipment, or expertise to do it in-house so the choices they faced were somewhat different than someone like AA.

AA, and from what I hear DL, hasn't reached a point where management decides that in-house overhaul hurts the bottom line more than it helps. Could they be wrong? Certainly. Can that point be reached in the future even if they're right today? Certainly.

I don't know where Naval aviation came into the discussion, but I agree that it can't be compared to civil aviation. There are just too many differences.

Jim

 

[787nightmare]

Usually it is the bottom line that drive decisions and rightly so - airlines are in business to make money (at least that's the theory) and doing things to hurt the bottom line doesn't help product profits. But some things that can affect the bottom line are a little more fuzzy than others. You mentioned Allegient going somewhere else for their engine overhauls because the other place was cheaper - that helps the bottom line, right? But if they were only getting 1/3 to 1/2 the time on the wing using the other shop, that hurts the bottom line. Apparently, rightly or wrongly, their management decided which direction was best for their bottom line. But that doesn't automatically mean the same decision is best for another carrier - Allegient was going to be outsourcing engine overhaul regardless since they didn't have the facilities, equipment, or expertise to do it in-house so the choices they faced were somewhat different than someone like AA.

AA, and from what I hear DL, hasn't reached a point where management decides that in-house overhaul hurts the bottom line more than it helps. Could they be wrong? Certainly. Can that point be reached in the future even if they're right today? Certainly.

I don't know where Naval aviation came into the discussion, but I agree that it can't be compared to civil aviation. There are just too many differences.

Jim

FWIW...DL does outsource quite a bit of there wide body HC overseas...as well as 75s in Mobile, AL and SAT? Don't know about the 73s...do there own in ATL TOC??

 

[Duke787]

FWIW...DL does outsource quite a bit of there wide body HC overseas...as well as 75s in Mobile, AL and SAT? Don't know about the 73s...do there own in ATL TOC??

DL 737's are done by AAR at OKC.

 

[BoeingBoy]

FWIW...DL does outsource quite a bit of there wide body HC overseas...as well as 75s in Mobile, AL and SAT? Don't know about the 73s...do there own in ATL TOC??

I learned something new. Is that relatively new for them?

Jim

 

[Hopeful]

I learned something new. Is that relatively new for them?

Jim

After their bankruptcy, the OH base in ATL took a major it. They increased their outsourcing substantially.They laid off many people between ATL and what is now AA's DWH in DFW.