Good Ole Bob

[Buck]

How do you rate productivity? AA has more mechanics per departure than any other airline, more mechanics per aircraft than any other airline, and more OTS aircraft than anyone else. Yes we deserve more money.

The TWU speaks, welcome back.

 

[WorldTraveler]

Either way, consolidated CASM at AA - which will be higher because other network carriers have shifted more of their system ASM mix to regionals - will still reflect the same cost as before (in the interest expense and depreciation income statement lines).

regional jet flying is higher CASM, not lower.
supposedly RJs allow you to pick off the "cream of the crop" of the revenue to match those higher CASMs but we know how well that works.
If consolidated CASM is AA remains high it will be because they have higher than average costs for either RJs or mainline.

 

[Bob Owens]

Nope. AA's mainline CASM won't change as a result of acquiring the Eagle aircraft and assuming the related debt. Nor will this transaction alter the consolidated (mainline plus commuter) CASM - those numbers are already netted in the quarterly and annual losses.

Nice spin.

Going forward it will affect their CASMs because they still will have the debt and related costs but they no longer will have the ASMs that Eagle produced. Like I said, we will have costs that get thrown into our CASMs that may generate revenue but do not generate any ASMs for AA.

As an aside, once the spinoff occurs, what businesses will AMR be in besides AA? None that I know of, so AA and AMR numbers will be one and the same. Like all airlines, however, AA will still report mainline numbers and consolidated numbers, just like it currently does.

Maybe, maybe not, but what is to stop AMR setting up a deal where AMR is paid by Eagle for the leases instead of AA?

Who cares what the "talking heads" say about AA's revenues and expenses? You fix airplanes just like the A&P license holders at UPS, FedEx and WN. You deserve comparable pay and benefits. The AMTs at those three companies have hired negotiators that have been successful in attaining those wage and benefit levels - so it's time you guys do the same.

Really? Name them, I'll even give you credit to thye finder fee. I'd really like to know who non-union Fed Ex mechaincs hired to do their "negotiations".

No, the interest on that debt and the depreciation on the airplanes is already included in the quarterly and annual profit or loss numbers reported. The mainline CASM won't change as a result of AA owning these planes and paying the debt - those costs won't be included in computing the mainline numbers, just like the regional revenues and expenses are not included in mainline CASM figures at DL, UA or US. Currently, the subsidiaries of AMR (AA and Eagle) add their revenues and expenses together and the resulting net loss is reported every 90-95 days. This spinoff doesn't change any of that.

Does DL, UA and US own the assetts of their regionals? How can you say that these costs will be set aside when figuring out CASMs? Going forward, once Eagle is spun off the company will no longer have those ASMs that were generated by Eagle but because they still have the assetts and the debt they will still have the costs. This will inflate the CASMs for AA the same way that 3P labor was added to our labor costs that went into CASMs. Sure there may be additional revenue but when looking at CASMs as a stand alone figure we will see an increase.

 

[Bob Owens]

How do you rate productivity? AA has more mechanics per departure than any other airline, more mechanics per aircraft than any other airline, and more OTS aircraft than anyone else. Yes we deserve more money.

By the amount of revenue generated per employee. AA has the truest indicator of productivity because they did not hide their labor costs needed to produce their product through outsourcing, in fact because AA increased insourcing productivity is under-reported.

 

[Flying low]

This may be off the subject, but I do have a question. Once AA holds the "titles" for Eagles planes, how will that affect the maintenance? As far as I know, Eagle has 2 OH bases, one in Michigan (union) and the other in Abilene (non union). The base in Abilene is actually called American Eagle Aviation Services and all their work on Eagles jets is part 145. Not sure about the MI base. Once AA gets hold of the planes, could/would they take them to TUL/AFW for OH work? How will this affect Eagles line maintenance? Will line turn to 145 work because they are now working on leased jets?

 

[commavia]

Going forward it will affect their CASMs because they still will have the debt and related costs but they no longer will have the ASMs that Eagle produced. Like I said, we will have costs that get thrown into our CASMs that may generate revenue but do not generate any ASMs for AA.

The consolidated figures will still be the same - the ASMs will still be used to calculate the overall, consolidate system ASMs - whether Eagle is owned or not. That's how Delta, United, etc. do it as well.

Maybe, maybe not, but what is to stop AMR setting up a deal where AMR is paid by Eagle for the leases instead of AA?

Well, post-spin-off, essentially AMR=AA from an accounting standpoint, since AA will be AMR's only meaningful subsidiary.

Does DL, UA and US own the assetts of their regionals?

Yes, in several cases. I don't have all the specifics in front of me at the moment, but yes, several other carriers - including Delta and I believe Continental - have structured agreements with their non-owned regional operators so that the mainline company continues to own the aircraft, and lease them to the regional to operate. AMR/AA is hardly unique or novel in that regard - other carriers have been using such arrangements for years.

By the amount of revenue generated per employee.

How does AA stack up in terms of revenue per employee compared with other major U.S. carriers?

This may be off the subject, but I do have a question. Once AA holds the "titles" for Eagles planes, how will that affect the maintenance? As far as I know, Eagle has 2 OH bases, one in Michigan (union) and the other in Abilene (non union). The base in Abilene is actually called American Eagle Aviation Services and all their work on Eagles jets is part 145. Not sure about the MI base. Once AA gets hold of the planes, could/would they take them to TUL/AFW for OH work? How will this affect Eagles line maintenance? Will line turn to 145 work because they are now working on leased jets?

AMR will own the aircraft and Eagle will lease them, but Eagle will be responsible for maintenance - and in any event the direct maintenance expense of the jets will definitely fall onto Eagle's books, not AMR's or AA's.

 

[FWAAA]

Nice spin.

Going forward it will affect their CASMs because they still will have the debt and related costs but they no longer will have the ASMs that Eagle produced. Like I said, we will have costs that get thrown into our CASMs that may generate revenue but do not generate any ASMs for AA.

Negative, Bob. Perhaps you should stick to fixin' airplanes, since correctly relating financial statements is beyond your demonstrated ability.

Mainline CASM is computed based on the costs of generating mainline ASMs. No matter how much you spin in an attempt to pass off the nonsense above as fact, your posts on this subject in this thread are not accurate.

Maybe, maybe not, but what is to stop AMR setting up a deal where AMR is paid by Eagle for the leases instead of AA?

Who cares which entity gets the payment as long as the bills get paid? Wouldn't matter whether AMR or AA or a different yet-to-be incorporated subsidiary gets the rent checks. As I and commavia have posted, this does not affect mainline CASM or regional CASM or consolidated CASM.

Really? Name them, I'll even give you credit to thye finder fee. I'd really like to know who non-union Fed Ex mechaincs hired to do their "negotiations".

My point exactly. Nice wages without paying part of their wages to others to work on Union Business. Not such a bad deal for those guys. The common bargaining agent between UPS and WN is, of course, the IBT. Sure, WN fired IBT in favor of AMFA after IBT brought them the high wages. And the latest UPS agreement contains some enviable wage figures.

Does DL, UA and US own the assetts of their regionals? How can you say that these costs will be set aside when figuring out CASMs? Going forward, once Eagle is spun off the company will no longer have those ASMs that were generated by Eagle but because they still have the assetts and the debt they will still have the costs. This will inflate the CASMs for AA the same way that 3P labor was added to our labor costs that went into CASMs. Sure there may be additional revenue but when looking at CASMs as a stand alone figure we will see an increase.

Negative. Your paragraph makes no sense. AA will own some airplanes it leases to its regional carrier. That transaction has no effect on AA's mainline CASM or Eagle's regional CASM or AMR's consolidated (mainline plus regional) CASM. How can I say that the costs will be "set aside?" Because the regional jets' income and expenses don't have anything to do with mainline revenue and expenses.

Has AA confirmed that the financial statements contain the labor expense allocated to 3P work? Delta expressly says in its financials that it excludes the 3P revenue and labor costs at Delta TechOps in computing its mainline and consolidated CASM.

 

[FWAAA]

It has been stated here several times in the past by myself and others in regards to dumping the worthless Twu, you must not have read it or choose to ignore the answer to your question.

Nope, I've read the same story here again and again. It's just that I couldn't care less about your previous failures to replace the worthless union. Your kids/grandkids or maybe your drinking buddies at the Legion might listen politely and hang on every word at your "woe is us" war stories, but I couldn't care less about how the company has screwed you multiple times. Recounting battles lost in the decades past doesn't get you higher pay, at least it hasn't worked yet. Apparently, repeating these stories over and over again doesn't even motivate your union brothers to help you replace your impotent bargaining agent, the worthless union.

The company lied? Should have gotten their promises in writing. It's too bad there isn't a handy agreement where the company's promises could have been memorialized in an enforcable manner - oh, wait, yes, there is such a document - your labor agreement. Your idiot union was too stupid to get the company's promises in writing. And yet, predictably, you villify Arpey for that failure.

Here it is again....for the last time.

For some reason, I don't believe you.

 

[Overspeed]

By the amount of revenue generated per employee. AA has the truest indicator of productivity because they did not hide their labor costs needed to produce their product through outsourcing, in fact because AA increased insourcing productivity is under-reported.

That's a very incorrect way explanation of maintenance CASM. You are assuming insourced costs are the same as outsourced. If AA were to outsource the maintenance at lower labor cost (lower wages, benefits, and no pension) the outsourced work on a cost for labor basis would be cheaper for the exact same amount of man hours of work. For example;

10,000 at $35/Hr would be a total cost of $728M, if AA outsourced half the inhouse work the cost would be $364M and outsourcing the rest at $25/Hr would be $260M for a total of $624M. That's a lower maintenance labor cost of $104M alone. So if AA reduced their overall costs but flew the same ASMs the CASM would be lower due to outsourcing. Profits are revenue minus the cost. If the costs are lowered based on the same revenue you make money, right? If you have the same revenue and have higher overall costs you get...lower profits and or a loss.

You take portions of facts and twist them.

 

[Vortilon]

That's a very incorrect way explanation of maintenance CASM. You are assuming insourced costs are the same as outsourced. If AA were to outsource the maintenance at lower labor cost (lower wages, benefits, and no pension) the outsourced work on a cost for labor basis would be cheaper for the exact same amount of man hours of work. For example;

10,000 at $35/Hr would be a total cost of $728M, if AA outsourced half the inhouse work the cost would be $364M and outsourcing the rest at $25/Hr would be $260M for a total of $624M. That's a lower maintenance labor cost of $104M alone. So if AA reduced their overall costs but flew the same ASMs the CASM would be lower due to outsourcing. Profits are revenue minus the cost. If the costs are lowered based on the same revenue you make money, right? If you have the same revenue and have higher overall costs you get...lower profits and or a loss.

You take portions of facts and twist them.

Your assumptions fail to take into account that 3rd party maintenance vendors need twice the time to get the same job done, and there are no stateside vendors that are only charging $25.00ph. They may pay their mechanics that much, but they are charging more than double that amount. Now, factor in the costs of flying said aircraft to these remote destinations, and the cost goes up even more. Now having been in the business for 26 years, I will say this, there are not too many AMTs that would consider working at a 3rd party chop shop for $25ph a career job. These companies cannot find the talent they need, and it is getting worse. Point is, the companies that chose to put all their eggs in the contract maintenance basket will be held over a barrel, due to supply and demand. Then it comes down to, take a number to get their aircraft overhauled.

 

[Hackman]

Nope, I've read the same story here again and again. It's just that I couldn't care less about your previous failures to replace the worthless union. Your kids/grandkids or maybe your drinking buddies at the Legion might listen politely and hang on every word at your "woe is us" war stories, but I couldn't care less about how the company has screwed you multiple times. Recounting battles lost in the decades past doesn't get you higher pay, at least it hasn't worked yet. Apparently, repeating these stories over and over again doesn't even motivate your union brothers to help you replace your impotent bargaining agent, the worthless union.

The company lied? Should have gotten their promises in writing. It's too bad there isn't a handy agreement where the company's promises could have been memorialized in an enforcable manner - oh, wait, yes, there is such a document - your labor agreement. Your idiot union was too stupid to get the company's promises in writing. And yet, predictably, you villify Arpey for that failure.



For some reason, I don't believe you.

Well Mr. Attorney/Analist, I was there and I saw the class and craft lists submitted personally, and you were not. Your the one who keeps bringing up "firing" the worthless Twu, not me, but I fully agree. I assume you were not involved in the big lie, or maybe your "professional services" were retained by Centerpork, who knows...or cares. I'm sure if I wanted to I could produce the falsified names the compAAny/Twu submitted, but I don't. I also never mentioned Mr. Arpey by name, I said the Centerpork pig pen, meaning any number of the porkers that reside there. With your 5848 posts of anal retentive nonsensical drivel, you must be the disparaged owner of a law/analist practice that performs at a turtles pace with all the time you spend on here attempting to refute the lowly peon AA employees. I guess it's a step up from chasing ambulances, appearing in court for traffic tickets.... or day trading. Probably pays better too.

Large airlines lie all the time, they are professionals at it, as you should well know. Lies like "Good Faith" negotiations, "The Company is Remaining Neutral", "Pull Together To Win Together", "Promises in Writing", and the infamous "shAAred sAAcrifice. I must say, funny stuff...all those lies....and sad how they can ruin a once great company. Airlines, along with their underhanded partners in the government, is a hard combination to beat. You'll have better luck pissing up a rope than beating them, on a good day. Airline Representational disputes have absolutely nothing to do with any union labor agreement at any said carrier involved in a representation dispute. Since you didn't apparently include any Labor Law in your expensive Columbia State diploma mill education (that's the same one Twu's Jimmy Little received his fake "Masters" degree from), I'll help you out. There is a handy old and outdated written document called the Railway Labor Act enacted in 1926 that spells out the "promises", or the lack thereof. In addition, a document called the National Mediation Board Rules explains the NMB's role in those cases.

Pay particular attention to the NMB Rules Manual and Part 1206- Handling Representation Disputes Under The Railway Labor Act.
Sec. 1206.1 Run Off elections
1206.2 Percentage of valid authorizations required to determine existence of representation dispute
1206.3 Age of authorization cards
1206.4 Time limits on applications
1206.5 Necessary evidence of intervenor's interest in a representation dispute.
1206.6 Eligibility of dismissed employees to vote.
1206.7 Construction of this part
1206.8 Amendment or recission of rules in this part.

Funny, when you read this section of the NMB Rules, it doesn't mention anything in regards to any union labor agreements. Very strange.

For some reason, I just don't believe you either. 🙄

"Promises in writing"....... plu-leeze.

 

[commavia]

Your assumptions fail to take into account that 3rd party maintenance vendors need twice the time to get the same job done, and there are no stateside vendors that are only charging $25.00ph. They may pay their mechanics that much, but they are charging more than double that amount. Now, factor in the costs of flying said aircraft to these remote destinations, and the cost goes up even more. Now having been in the business for 26 years, I will say this, there are not too many AMTs that would consider working at a 3rd party chop shop for $25ph a career job. These companies cannot find the talent they need, and it is getting worse. Point is, the companies that chose to put all their eggs in the contract maintenance basket will be held over a barrel, due to supply and demand. Then it comes down to, take a number to get their aircraft overhauled.

I hear you - and certainly there have been no shortage of people over the years who have brought up the downtime argument (i.e., the pure $/man hour savings don't compensate for the quality degradation and transportation time required to/from the third party base).

But, I guess what I keep coming back to is - if it is so clear cut and dry that third party MRO vendors end up costing airlines' more, why is it that every single U.S. airline (to my knowledge - correct me if I'm wrong) except AA has now decided to send their overhauls externally to third party vendors either in the U.S. (and often without unions), or in many cases to foreign stations in lower-cost locations like El Salvador, Mexico, China, Korea, etc.?

Is there something unique about the economics of doing overhauls in Tulsa that doesn't (or actually didn't, past tense) apply in Atlanta, Duluth, Oakland, Tampa, etc.? Do you know something that AirTran, Delta, Continental, Frontier, JetBlue, Southwest, United, etc. don't?

 

[Bob Owens]

I hear you - and certainly there have been no shortage of people over the years who have brought up the downtime argument (i.e., the pure $/man hour savings don't compensate for the quality degradation and transportation time required to/from the third party base).

But, I guess what I keep coming back to is - if it is so clear cut and dry that third party MRO vendors end up costing airlines' more, why is it that every single U.S. airline (to my knowledge - correct me if I'm wrong) except AA has now decided to send their overhauls externally to third party vendors either in the U.S. (and often without unions), or in many cases to foreign stations in lower-cost locations like El Salvador, Mexico, China, Korea, etc.?

Is there something unique about the economics of doing overhauls in Tulsa that doesn't (or actually didn't, past tense) apply in Atlanta, Duluth, Oakland, Tampa, etc.? Do you know something that AirTran, Delta, Continental, Frontier, JetBlue, Southwest, United, etc. don't?

Odd thing is that AA used to be the leader in outsourcing. Over the last few years AA has insourced work instead of outsourcing.

Well I'm not from OH but I can bring up a few.
-Tulsa provides many incentives to AA including cheap rent and equipment purchases
-The AA/TWU contract had SRPs in place since 1995, these lower paid Mechanics gave AA a significant labor cost advantage over competitors who were paying full mechanics rates to guys doing the same work. The SRP changeover was done through attrition so minimal disruption occured.
-Having the majority of their mechanics set in places that are cheap to live (vs UALs SFO base, USAIRs Pittsburg and PHL) allowed AA to gain concessions that other carriers had to go to BK in order to get, in fact we still lead in concessions.
-While AA would claim that AA had a superior pension prior to the wave of bankruptcies in fact it was less, the multiplier was higher but the first year of service was subtracted, that offset any advantage that the higher multiplier provided, another cost savings for AA
-Prior to the wave of Bankruptcies many other competitors provided zero cost medical, workers at AA have been paying since the early 90s.
-Some competitors continue to provide LTD coverage, AA workers have been paying since the early 90s.
-AA currently offers the least amount of sick time, 5 days vs 10 to 12
-AA currently offers at least one week less Vacation regardless of where one falls on the steps, historically they capped out at six weeks while others capped out at 7.
-AA offers the fewest holidays at the lowest rate of 1.5X if worked, essentially if assigned to work the holiday you are paid half pay
-AA facilities are built, paid for and staffed
So AA had always had, and continues to have advantages over competitors as far as maintenance labor costs. UAL and USAIR are both still engaged in post BK negotiations. It remains to be seen if they adopt now what we gave up 16 years ago in order to compete with AA. UPS mechanics reportedly were looking to bring their OH in house, I beleive contractually it must be done in the US, but were given the choice of $40/hr for bringing that work in or $50/hr to continue to outsource, they chose the $50hr but it gives us more of an idea of the breakeven point.
The fact is that most carriers do maintain a certian amount of OH, UAL still has facilities in SFO, Delta still does OH, even 3P OH, WN Does C checks but not as heavy as AA and I believe USAIR does too.

 

[Overspeed]

Your assumptions fail to take into account that 3rd party maintenance vendors need twice the time to get the same job done, and there are no stateside vendors that are only charging $25.00ph. They may pay their mechanics that much, but they are charging more than double that amount. Now, factor in the costs of flying said aircraft to these remote destinations, and the cost goes up even more. Now having been in the business for 26 years, I will say this, there are not too many AMTs that would consider working at a 3rd party chop shop for $25ph a career job. These companies cannot find the talent they need, and it is getting worse. Point is, the companies that chose to put all their eggs in the contract maintenance basket will be held over a barrel, due to supply and demand. Then it comes down to, take a number to get their aircraft overhauled.

Prove that they take twice the amount to turn an aircraft and who cares how long it takes if you don't need the aircraft that fast. AA has more aircraft out of service than anyone else daily. So we are better? Uh, no.

Ferry costs are only a factor of you don't fly there already. UA, DL, and CO all fly to various destinations in Asia (China, Hong Kong, and Singapore) so ferry costs are a non-issue for them on widebody fleet. Narrowbodies, DL flies to Mexico where Aeromexico does their MD80s for a lot less than $25/hour. FYI the going rate for labor including overhead is $55/hour for airframe touch labor. AA is more like double that. So in Mexico DL can hire three to do what AA does with the cost of one. That's a big cost hurdle. Jetblue and US send their A320s down to El Salvador where they charge less than $55/hour and even though Jetblue doesn't fly there, they go to many Caribbean and Mexican destinations, not a big cost for C Check that is once very 6 years.

Isn't AA over a barrel? There are planes stacking up in TUL waiting for C Checks and the AA has been talking about outsourcing them temporarily to catch up. AA has a supply (overhaul space) and demand problem as well but all their over capacity work will have to go to a high labor cost base. That is unless the TWU builds in some flexibility on work rules, innovative work processes, and add in some vastly improved line maintenance in service levels.

Your facts need checking. NWA flew for many years with only 800 mechanics after the strike. Yeah they had a hiccup but they got back up and running with scab labor, foreign outsourcing, and an accommodating group of federal regulators.

The TWU has some big hurdles to overcome and beating your fist on the table demanding a release has not helped us. Maybe we should hold those Presidents accountable that convinced us to vote no that a better deal was coming shortly? They still go week after week to negotiate and spend money while we wait and suffer. The line presidents run around going to each other's swearing in to welcome a new member to the Presidents Tree Fort Club and haven't got us a deal. The committee has to get their act together now!

 

[Overspeed]

Odd thing is that AA used to be the leader in outsourcing. Over the last few years AA has insourced work instead of outsourcing.

Well I'm not from OH but I can bring up a few.
-Tulsa provides many incentives to AA including cheap rent and equipment purchases
-The AA/TWU contract had SRPs in place since 1995, these lower paid Mechanics gave AA a significant labor cost advantage over competitors who were paying full mechanics rates to guys doing the same work. The SRP changeover was done through attrition so minimal disruption occured.
-Having the majority of their mechanics set in places that are cheap to live (vs UALs SFO base, USAIRs Pittsburg and PHL) allowed AA to gain concessions that other carriers had to go to BK in order to get, in fact we still lead in concessions.
-While AA would claim that AA had a superior pension prior to the wave of bankruptcies in fact it was less, the multiplier was higher but the first year of service was subtracted, that offset any advantage that the higher multiplier provided, another cost savings for AA
-Prior to the wave of Bankruptcies many other competitors provided zero cost medical, workers at AA have been paying since the early 90s.
-Some competitors continue to provide LTD coverage, AA workers have been paying since the early 90s.
-AA currently offers the least amount of sick time, 5 days vs 10 to 12
-AA currently offers at least one week less Vacation regardless of where one falls on the steps, historically they capped out at six weeks while others capped out at 7.
-AA offers the fewest holidays at the lowest rate of 1.5X if worked, essentially if assigned to work the holiday you are paid half pay
-AA facilities are built, paid for and staffed
So AA had always had, and continues to have advantages over competitors as far as maintenance labor costs. UAL and USAIR are both still engaged in post BK negotiations. It remains to be seen if they adopt now what we gave up 16 years ago in order to compete with AA. UPS mechanics reportedly were looking to bring their OH in house, I beleive contractually it must be done in the US, but were given the choice of $40/hr for bringing that work in or $50/hr to continue to outsource, they chose the $50hr but it gives us more of an idea of the breakeven point.
The fact is that most carriers do maintain a certian amount of OH, UAL still has facilities in SFO, Delta still does OH, even 3P OH, WN Does C checks but not as heavy as AA and I believe USAIR does too.

Couple of key points, all those items you cite as AA providing may be true however they offer it to less than half the people AA employs. So they use a simliar pie but make the slices bigger for fewer people. Since UA, US, DL all have less people where did their jobs go? To the outsourcers who offer lower than AA compensation. UA facillities in SFO are Engine and Component overhaul only with the majority of high labor hour content C and D going to outsourced vendors. Southwest has some D and most C capability in PHX, MDW, and DAL but they outsource all engine, most of their component, and a majority percentage of airframe overhaul to outsourcers in the US and El Salvador. So who gives up their jobs so a relative few at AA get top pay?