Frequent flyer program should be terminated in BK

[FWAAA]

I have no control how AA runs it's business but apparently they are lacking...If they were in fact genius businessmen we wouldn't be in this predicament.

Exactly. If Arpey was a true genius, he would have filed for Ch 11 protection in 2003, slashed wages even further, terminated the pensions, outsourced all heavy checks to match the industry, and been in a position to buy/merge with/combine with one of the other legacy airlines after they completed their bankruptcies, so that AA could be where DL/NW and UA/CO are now (huge profits and growing market share) instead of in bankruptcy.

 

[737823]

UA spent nearly $660 million on bankruptcy lawyers, investment bankers, accountants and other parasitic advisors during its three year bankruptcy odyssey. I expect AA's bankruptcy to run in the hundreds of millions of dollars in expenses, as lawyers' fees have risen substantially since 2003.

Bring it on! That's good for them and they should be rewarded for their contribution in AA's restructuring efforts!

Josh

 

[Buck]

I have no control how AA runs it's business but apparently they are lacking...If they were in fact genius businessmen we wouldn't be in this predicament.

Aren't the real genius business men at the TWU International?

After all, their revenue continues to flow.

 

[BoeingBoy]

That doesn't take a genius businessman/woman. Just anyone who sees the golden opportunity that the government is handing out on a silver platter. There's not many smarts necessary to collect dues/agency fees when the government says that the members must pay them regardless of the representation provided. The skill, if any, is convincing the majority of members that it's someone else's fault when they don't get what was promised.

Jim

 

[Bob Owens]

All very true, BoeingBoy.

I would sumbit that a company with assets (including its $4 billion of cash) of $24 billion and debts, liabilities and other obligations of $29 billion, that loses over $1 billion in a year when every other competitor is profitable is, indeed, broke.

AMR does have enough cash (all borrowed, Chris Perry) to survive a ch 11 reorganization.

Two choices: Screw every possible constituency in hopes of reducing costs enough to survive as a going concern or liquidate. No doubt a few chest-thumpers will scream "LIQUIDATE, Already," but thousands of others will realize that it's their time to experience what employees of US, UA, NW and DL faced over the past decade.

UA spent nearly $660 million on bankruptcy lawyers, investment bankers, accountants and other parasitic advisors during its three year bankruptcy odyssey. I expect AA's bankruptcy to run in the hundreds of millions of dollars in expenses, as lawyers' fees have risen substantially since 2003.

Other than the Pension and retiree medical we did experience what employees of US, UA NW and DL did, we took deeper cuts now to save things for the future. We worked at least one week more than any of our peers, had fewer paid holidays and worked for half pay on the few they did recognize.

as lawyers' fees have risen substantially since 2003

Is there a shortage of Lawyers? With fewer big BKs you would think that rates would go down. What do you base that claim on?

 

[BoeingBoy]

Other than the Pension and retiree medical

That's two big ticket items, Bob. Keeping those two makes a big difference in how much you gave up, so don't brush over them so lightly.

We worked at least one week more than any of our peers, had fewer paid holidays and worked for half pay on the few they did recognize./quote]

Try giving up 4 weeks of vacation for those that had 7 weeks and the first sick day not paid.

The fact is that all the available statistics show that AA has an employee cost disadvantage to all it's peers. So either the employees had higher compensation prior to the 2003 concessions and gave as much or gave up less.

Jim

 

[eolesen]

I say wipe the slate clean. Any miles earned before November 29 are expired, think of it as sharing h pain and your contribution to buy those nice new airplanes for you to ride on.

Fine with me.

And since you're wiping the slate clean, let's erase all employee seniority, accrued sick time, etc.

Hell, why not just fire everyone and make them re-interview for their jobs while you're at it?


I suspect that expiring miles already earned would be viewed by some as the company trying to retroactively cut your pay.

Honestly, AA can already take my miles at any time they want to --- it's in the terms & conditions if you read the fine print. It also wouldn't affect my buying decisions if that was the only thing done. I only care about getting access to the "seniority" driven aspects like early boarding, elite queues at security, access to partner lounges when I travel.

I've got close to 1M miles in AA's program, but rarely cash out an award because the last thing I want to do on my (rare) time off is get on another airplane.

Unlike you, however, my "seniority" as a flier is transferable. All I have to do is fax a copy of my AAdv statement over to UA, and they'll give me the same access as long as I start flying on them.

 

[limit]

Fine with me.

And since you're wiping the slate clean, let's erase all employee seniority, accrued sick time, etc.

Hell, why not just fire everyone and make them re-interview for their jobs while you're at it?


I suspect that expiring miles already earned would be viewed by some as the company trying to retroactively cut your pay.

Honestly, AA can already take my miles at any time they want to --- it's in the terms & conditions if you read the fine print. It also wouldn't affect my buying decisions if that was the only thing done. I only care about getting access to the "seniority" driven aspects like early boarding, elite queues at security, access to partner lounges when I travel.

I've got close to 1M miles in AA's program, but rarely cash out an award because the last thing I want to do on my (rare) time off is get on another airplane.

Unlike you, however, my "seniority" as a flier is transferable. All I have to do is fax a copy of my AAdv statement over to UA, and they'll give me the same access as long as I start flying on them.

Why do you still bother Eric?
You can not fix stupid.

 

[Bob Owens]

That's two big ticket items, Bob. Keeping those two makes a big difference in how much you gave up, so don't brush over them so lightly.

Try giving up 4 weeks of vacation for those that had 7 weeks and the first sick day not paid.

The fact is that all the available statistics show that AA has an employee cost disadvantage to all it's peers. So either the employees had higher compensation prior to the 2003 concessions and gave as much or gave up less.

Jim

While those two items represent a lot of potential liability (that could change depending on how the funds investments do) the fact is we gave more in current reductions per worker than most who went BK.

You cite USAIRs reduction to a max of five weeks vacation (200 hours is 5 weeks), well that only afftects a small portion of the workforce, we lost a week across the board, people with less than 5 years only get one week. Guys at USAIR who have less than 25 years get one week more than their counterpart at AA. From 25 to 30 we get the same, over 30 we get a week more. How many ever see much more than 30 years? We would have to work 55 years to end up with the same total amount of vacation over our careers.

Sick, from what it says in the USAIR contract its the first three at half pay unless to have over 100 days in the bank(800 hours or 10 years of perfect attendance), then you get 100% for all days, you also get 100% for all days if hospitalized. They can also bank 1600 hours vs our 1200 and they get 10 days per year vs our 5.

"all the avaialable statistics show that AA has an employee cost disadvantage"? Really? Lets look at one, wage rates. AA mechanics, by the companys admission on their own website indicate that in 10 days AA will likely have the second lowest topped out wage rate in the industry. And we can play games with that number the way the pundits do with labor costs, Do you realize that USAIRs mechanics base wage is $1.28 higher than AA's? And They are the only one less than us on the company chart. AA is $27.20 and USAIR 28.48. USAIRs lowest starting rate for a mechanic $19.36, while the lowest starting rate for a mechanic at AA is $9.58. We get bigger License Premiums , but they get higher shift premiums. When all the premiums are added in AA comes out 56 cents ahead, but thats only line guys on Nights, however for non-line guys on days the difference is 22 cents. Then we have to factor in the holidays. When you factor in the Holidays they get 60 more hours pay than we do for working the Holidays, broken down that adds .94 cents to their base pay(60hrs x $32.59 /2080hrs), then add in the Vacation, another 40 hours more pay than we get for the same hours worked, that adds another 63 cents. So when you add in the Holidays and vacation they actually come out ahead, that would put us at the bottom, and thats after USAIRs two bankruptcies. I would love to see you win the aguement over who got the crappiest deal, after all who would want to win it? USAIR used to be one of the best carriers to work for. After seeing a few of my peers quit AA back and jump over to USAIR in the 80s I considered trying to do the same. But as I think we both agree there is more to pay than the wage, and the guys at USAIR did preserve more of their language through two rounds of BK than we did without even going BK.

 

[PHL]

I am speaking from the school of Airline Management 101 starting with deregulation...In order for airlines to compete with Greyhound and Trailways and their passengers, airlines had to reinvent themselves......
.....
But guess what Josh? Thanks to deregulation and that golden opportunity to enable the average person to fly, the passenger is NOW paying for everything except using the toilet..Delays up the ying yang..in most cases no more hotel accomodations for cancelling trips...maybe a meal voucher here and there....You tell me how great the passenger has it.

Fares are gradually creeping up and the passenger gets nothing more in return.

Deregulation is a FAILED experiment.

Had the airlines not deregulated, let's think about how the landscape might look 33 years later...

• Fewer, if any, startup airlines.
• Crotchity old legacy carriers flying their protected routes
• Fuel prices still increased to where they are today
• Employee wages still increased
• pension/medical costs still rising
• Higher, regulated fares, leading to fewer passengers being able to afford to fly
• Fewer passengers flying = less employees needed

Am I missing anything? Oh - I suspect many of those of you hired since 1978 might not have ever been hired in the first place since the airline you work(ed) for would never have expanded as much as it has in those 33 years to enable .

As for the argument that the FF miles should be eliminated...it's true that we as customers feel that we are "entitled" to them as much as employees feel they are "entitled" to their pensions, continuing the same work rules and wages. Entitlement is an attitude we are all entitled to, even if it doesn't fit with reality. What IS reality is that, should the FF program be washed out in BK, customers can easily start flying another airline. Sadly, employees can't just go work for another airline when they don't like how their work conditions are changing.

 

[Jacobin777]

Alienating your loyal customer base is not a good way to reorganize under bankruptcy protection.

+1

AA would lose a very large and loyal customer base. The various other carriers would be more than happy to pick them up!

Neither is alienating your employees.

The fact is that customer loyalty is not that important when capacity is low. If AA was really that worried about customer loyalty they would not have the seats so close together and charge for every little thing. The airlines are getting so cocky they are treating customers with the same disdain as they treat their workers, and the planes are still full.

If AA downsizes in BK then capacity will be even lower, meaning that customers will have to compete for seats.

Frequent Flier miles are a liability, the company already spent the money they got for them and owes them the service. Just like any other creditor, these people all extended credit to AA and when you do that there is always risk associated with it. So if it's a choice between writing off that liability or something that we have worked for such as deferred compensation in the form of retiree medical or the pension then I say dump the FF miles. Sure it will piss off a bunch of customers but choices are limited,It will not have any considerable permanent impact on their lives unlike making changes to our deferred compensation would.

70% of the domestic market is controlled by four carriers. People also have short memories, sure they will say they will never fly AA again, until they find that's the only way to get there.

Fact is while you incessantly harp on management, you comments show how clueless you are in running a business. Customer loyalty is one of the most, if not the most important aspect of running a profitable business. The ones who go on orbitz.com looking for the lowest fare aren't the customers a carrier wants.

AA wants people who will choose AA no matter what the situation. Even if the ticket is 10%-15%-30% more, who are willing to make connections, odd hours, smaller planes, sometimes bad service. etc. Those are the customers AA wants, and to me, those are the loyal customers.

Your views aren't idealistic in the real world. Where AA cuts, another carrier starts. This has been shown time and time again with various cities AA has ended or cut frequency, only to see another carrier fly the exact same route or increase frequency.

And if they could put slavery back in place they would complain about how having to feed us is hurting their profits.

Well slavery isn't happening anytime soon (if ever) so maybe you can stay out of scenarios that have <1% chance of happening.

The ignorance displayed regularly by employees of AA on this forum never fails to amaze me.

Citi and other partners buy more AAdvantage miles each year than AA awards for flights. In 2010, AA issued 185 billion AAdvantage miles; of that number, about 62% were purchased by Citi and other partners. The sale of AAdvantage miles brings in more than $1 billion per year, or more than 4% of total revenue.

+1

It was only one employee who expressed this ludicrous idea. You should not lump all employees together any more than the employees stereotype all frequent flier posters as arrogant, condescending and patronizing DYKWIAs.

While one expressed, others have condoned.

This is nonsense. I can't believe the ignorance of the employee posters on this forum. The AAdvantage program is about the only reason left to fly AA and without it AA would lose valuable customers to competing carriers. Like it or not, customers occupying the seats and terminals pay your salary and need to come first. It's likely there will be minimal changes to the AAdvantage program as a result of the BK and we saw with CO, DL, and UA.

Josh

+1.

True. But the less passengers pay for a ticket, the less employees make.
Airline employees have become a piggy bank for airlines to offer cheap fares and virtually every cost they incur including fuel.

+1.

You are not subsidizing cheap fares for the last time. The dynamics of the airline market are such that passenger fares have fallen in this cut throat business. If anything AAdvantage attracts revenue and provides increased job security for employees.

Josh

+1

Tell that to the thousands of AA employees about to lose their jobs!

Non-sequitur.

The only people who have been failed by deregulation have been the union employees.

Delays and hotels? Only had one overnight delay this year, not on AA or a oneworld carrier

Here's a fact for y'all. FF programs work. They keep people spending money you instead of just chasing the lowest fare possible. In many cases, spending more money to fly on AA or a partner. The mythical revenue premium. Yes, it does exist.

Thats not just a marketing school statement. I flew a lot in 2011... 139,000 miles. 122K of that was on oneworld carriers. 80% of my business, but 84% of the money spent. By comparison, Star carriers got 18% of my business but only 14% of my money. Skyteam carriers got 1% (thanks in part to WT's efforts at promoting them here).

You could get rid of AAdv if you want, but it will just create more of a revenue gap in the long run, which is why it won't be done.

+1

I've been PL 7 straight years (and Gold prior to that) and hopefully will go for EXP in 2012. Living in the Bay Area, UA would have been the "full service" carrier yet I still fly AA >50k miles/year-even if it means doing random "mileage runs" as I have done a few times this year.

Also, 95% of my flying is done with OneWorld as well. In fact, my short EK hop was only because I couldn't get a OneWorld flight for my connections so I had to choose EK.

 

[Jacobin777]

I posted this to see you guys reaction.I don't really believe it should be terminated.. But when it's a perk of management or FF you guys blow up like it's a gold mine..That's my right those are my miles,the point is you guys don't even give a #### when its taken from employee's...You act like it's your god given right to steal money from frontline workers..

Stealing?

Fine with me.

And since you're wiping the slate clean, let's erase all employee seniority, accrued sick time, etc.

Hell, why not just fire everyone and make them re-interview for their jobs while you're at it?


I suspect that expiring miles already earned would be viewed by some as the company trying to retroactively cut your pay.

Honestly, AA can already take my miles at any time they want to --- it's in the terms & conditions if you read the fine print. It also wouldn't affect my buying decisions if that was the only thing done. I only care about getting access to the "seniority" driven aspects like early boarding, elite queues at security, access to partner lounges when I travel.

I've got close to 1M miles in AA's program, but rarely cash out an award because the last thing I want to do on my (rare) time off is get on another airplane.

Unlike you, however, my "seniority" as a flier is transferable. All I have to do is fax a copy of my AAdv statement over to UA, and they'll give me the same access as long as I start flying on them.

+1.

I'm very close to 1m on AA as well and actually have never used any of my miles for redemption as it would take away from flying on status-earning flights.

 

[Art at ISP]

I don't think AA will shed AADVANTAGE, nor should they. But, I do think that airline FF programs are evolving. Westjet and WN FF program, although unpopular to many FF's, are the way to go. I think FF's who spend the most money should get the greatest perks. Anybody can fly on a $59 ticket every weekend to Florida and earn enough miles to become elite. If you have 2 elites with the same number of miles, one who spent $12,000 and the other $30,000 to get that same status, if I ran an airline, I know who I would give more to: the one who spent more.

I agree with you to a point. Those who spend the most should definitely be rewarded more, however, the key is to reward desired behavior rather than penalize for buying cheapest tickets. I think you have to look at the overall value of each customer, and competitors like UA/CO and DL are doing just that.

For example, a customer who flies every week, even on a mix of fares, is more valuable to you than one who flies twice a year but always buys last minute fares....the one who flies often is more LIKELY to spend alot more over the course of the year.

In my case, my company requires me to take the lowest fare when available, and I have very limited leeway in that regard. I will often take multiple connections or fly at inconvenient times to stay on the airline of MY choice, and this is acceptable to my company (within reason), and it is a desirable behavior to my airline of choice. So if I fly on a very cheap fare this week, next week or the week after, I will likely fly on a higher fare base, but it is my OVERALL contribution which the airline should value...

These points are lost on many carriers, especially AA's "potential" merger partner, who would rather have an extra $20 now, and doesn't care that you take the rest of your $20K in business elsewhere (slight exaggeration but only SLIGHT)....

I do wish all at AA the very best, it's going to be a long haul but you should come out all right as long as you stay away from US and their management team....

Happy Holidays to you all....

 

[FWAAA]

Other than the Pension and retiree medical we did experience what employees of US, UA NW and DL did, we took deeper cuts now to save things for the future. We worked at least one week more than any of our peers, had fewer paid holidays and worked for half pay on the few they did recognize.

I realize that in your universe, everything revolves around maintenance, but the reality is that AA's employees, on average, did not suffer as much as the employees at other airlines; now they will. AA's mainline employees shared just $1.0 billion in annual wage concessions (as the other $800 million consisted of headcount reductions).

Is there a shortage of Lawyers? With fewer big BKs you would think that rates would go down. What do you base that claim on?

There's no shortage of lawyers. Fewer big bankruptcies? On what do you base that claim? I wasn't aware that there were fewer big bankruptcies.

Higher hourly rates for lawyers? On what do I base that claim? Personal knowledge. Top firm hourly rates (like those at Weil, Gotshal) are up quite a bit in the past eight nine years.