How is AA computing flight attendant cost?

[jersey777]

http://avstop.com/news_feb_2010/american_a...up_the_heat.htm



I was intersting to read this and discover that AA is using cost per hour rather than CASM to artificially inflate their labor costs. I hope the mediators know this. I think it would be to APFA's benefit to make this as widely known as possible.

 

[BoeingBoy]

If you want cost per ASM, Airline Financials calculates it that way. They use annual data so the latest is for 2008. For F/A's it's graph 27 at this link:

Airline Financials

That chart compares the 7 biggest carriers - the 6 legacies (DL and NW are treated as separate carriers before the single ops cert was issued) and WN.

Jim

 

[Hopeful]

If you want cost per ASM, Airline Financials calculates it that way. They use annual data so the latest is for 2008. For F/A's it's graph 27 at this link:

Airline Financials

That chart compares the 7 biggest carriers - the 6 legacies (DL and NW are treated as separate carriers before the single ops cert was issued) and WN.

Jim

Not having a degree in business and finance, I see that on each chart AA is somewhere in the middle here and there, be it debt, labor costs, operating costs...etc.
Doesn't seem that AA has the highest costs in any category.

I think it is sometimes unfair to make comparisons to other airlines when structurally they are all different.
A good example is saying Southwest operates with less FA's..Sure, when you fly one type of equipment that requires less FA staffing than a widebody.
When you require more crews overall just to maintain an international operation,,,,sure.

AA always uses comparisons to justify reducing labor costs. It's the same page taken from the same play book that they have been using for years.

It gets old.

 

[BoeingBoy]

While I hate to say it and in no way mean it as saying the FA's shouldn't make their viewpoint known, about all that will really be accomplished is giving management an idea of how much support the union really has. If 25% wear the red disc, 15% sent management's correspondence back with the message written on it, and 10% send letters to management, that will give management one message. If 95+% do all three, management will get another message.

What management chooses to do in either case is strictly up to management. With high FA participation they could sweeten the pot, they could make plans for locking out a lot more FA's in the event a work action begins when legal, or anything in between. If there's low participation, management could just stand pat knowing it wouldn't need nearly as many replacement FA's.

Jim

 

[jimntx]

Oh, I agree with you wholeheartedly. And, American flight attendants are known for their apathy when it comes to elections, etc. The last election we had for union officers garnered votes from less than 50% of the "active" flight attendant corps. (Of course, one could say, "In other words they simply match the demographic of the U.S. adult population." 🙄 )

However, I will say that I doubt public participation in the pre-strike activities can be used to predict strike participation. They may not wear the red disk, but judging from the virulent scorn still addressed to those who crossed the picket line back in the previous strike ('93?), I don't think many would cross in the event of an actual strike.

What will be interesting to see is whether any of the unions at AA are willing to support a strike from another one of the unions. We are all close to that point in negotiations.

When I was growing up in Birmingham, AL in the 50's and the steel mills and coal mines were still going gangbusters, no one, and I mean, NO ONE, crossed a picket line--even if it was just 10 shop janitors on strike.

 

[FWAAA]

Not having a degree in business and finance, I see that on each chart AA is somewhere in the middle here and there, be it debt, labor costs, operating costs...etc.

Doesn't require a degree in business or finance to see that AA's FA labor cost per ASM is the highest. Look at Chart 27 as BoeingBoy pointed out. All you have to do is open your eyes.

Doesn't seem that AA has the highest costs in any category.

Well, sitting on the ground at JFK, the world doesn't look round, either. AA is not the highest in every category, but AA's costs are the highest in some categories, like FA costs per ASM. See chart 27.

I think it is sometimes unfair to make comparisons to other airlines when structurally they are all different.
A good example is saying Southwest operates with less FA's..Sure, when you fly one type of equipment that requires less FA staffing than a widebody.

Well, is it fair to compare AA to UA? UA runs lots of widebodies, almost all with 3-class service. AA's FAs are substantially more costly per ASM than UA's. Delta's 777s require as many FAs as AA's 3-class 777s, as DL's evacuation procedures were certified with more than the 1:50 minimum ratio. Seems fair to compare AA and DL, both global airlines with lots of premium seats.

I agree that when comparing FA costs, UA and DL and CO and US are a better comparison than WN, which is structured to use minimum numbers of FAs in a very efficient manner.

AA always uses comparisons to justify reducing labor costs. It's the same page taken from the same play book that they have been using for years.

And AA's represented employees love to compare their wages to other airlines - but only when their workgroup's wages are lower than those of the other airline. Same page from the same playbook.

 

[jersey777]

Unfortunately, the other unions are not legally able to do a sympathy strike as far as I know. You are right as far as flight attendants going on strike. Experience has shown that in day to day union activities, the flight attendants are apathetic. But when it comes to contract negotiations, they get involved and informed quickly. Plus, it is my prediction and hope that if there a strike it will be a one day strike and will not have government intervention.

 

[BoeingBoy]

I agree that when comparing FA costs, UA and DL and CO and US are a better comparison than WN, which is structured to use minimum numbers of FAs in a very efficient manner.

Personally I'd take US out of that comparison because of their relatively small wide-body fleet - 9 A333's, 5 (and two more coming next month) A332's and 10 767-200's represent about 10% of the mainline fleet and probably 5-6% of the total branded fleet. Everything else except the ETOPS 757's when flying TA routes use FAR minimum FA staffing.

Jim

 

[FWAAA]

Good point about US - it doesn't have as many widebodies as a percentage of its operation.

I'm assuming that the author of the article, Mike Mitchell, is an AA flight attendant - perhaps an officer of the APFA? He's long on unsupported allegations and short on statistics to back up his claims.

He claims that AA's domestic FA costs per ASM are "competitive" but gives no numbers to back that up. He then claims that if AA's international FA costs are higher, it's because of AA's 47 3-class 777s. Once again, no numbers to back up the claim. He ignores UA and its large fleet of 3-class 763s, 777s and 747s. He ignores the fact that DL's 777s run with about the same number of FAs as AA's 777s because their evacuation procedures were certified with more than the min. 1:50 FA ratio.

No matter how it's measured, AA's FA costs are higher than its competitors, either on a cost per ASM basis or on an hourly basis. Only WN FAs make more $$$ per hour than AA's FAs and because AA FAs fly much, much less than WN FAs per month, AA's costs per paid actual flight hour are the highest of any US-based airline:

http://www.aanegotiations.com/apfaProductivity.asp

 

[BoeingBoy]

Concessions tend to have odd effects - anyone who gives up something usually thinks their fate is worse than anyone else's. I think all pre-merger US employees would trade their pay/benefits with their peers at AA, DL, CO, and UA because those US employees feel that they got the worst deal in the industry - a feeling that is largely justified thanks to two bankruptcies is quick succession.

The other side of the coin is that management usually picks which metric will give the most support to their argument. During BK2 at US, management wanted the comparison to be employee cost per ASM relative to the low cost mostly point-to-point carriers, effectively making the employees responsible for the inefficiencies of the hub/spoke model compared to the point-to-point model. Using that measure, even WN had a lot lower employee cost/ASM than US despite of it's higher hourly pay rates.

Jim

 

[Hopeful]

Doesn't require a degree in business or finance to see that AA's FA labor cost per ASM is the highest. Look at Chart 27 as BoeingBoy pointed out. All you have to do is open your eyes.



Well, sitting on the ground at JFK, the world doesn't look round, either. AA is not the highest in every category, but AA's costs are the highest in some categories, like FA costs per ASM. See chart 27.



Well, is it fair to compare AA to UA? UA runs lots of widebodies, almost all with 3-class service. AA's FAs are substantially more costly per ASM than UA's. Delta's 777s require as many FAs as AA's 3-class 777s, as DL's evacuation procedures were certified with more than the 1:50 minimum ratio. Seems fair to compare AA and DL, both global airlines with lots of premium seats.

I agree that when comparing FA costs, UA and DL and CO and US are a better comparison than WN, which is structured to use minimum numbers of FAs in a very efficient manner.



And AA's represented employees love to compare their wages to other airlines - but only when their workgroup's wages are lower than those of the other airline. Same page from the same playbook.

So all these airlines who have filed bankruptcy and gutted labor agreements and decimated wages and pensions,,,,,,Shouldn't they be at the bottom of the chart with respect to costs?


Seems to me management got their way in going bankrupt to force concessions on employees and they still can't make huge profits?

Looks strictly like a management problem to me since there are virtually no labor agreements worth anything.

Management is in complete control at the bankrupt carriers. Maybe they should cut the employees even further so they may qualify for food stamps and welfare.

 

[BoeingBoy]

So all these airlines who have filed bankruptcy and gutted labor agreements and decimated wages and pensions,,,,,,Shouldn't they be at the bottom of the chart with respect to costs?

Costs in general or specifically employee costs? Employee costs or employee wages? Both make a difference and without knowing which you're specifically talking about it's hard to have a meaningful discussion.

Costs in general include a lot besides employee costs which are merely pay + benefits + payroll tax. If you're talking about employee costs, AA is at/near the bottom in productivity metrics, at or near the top is employee cost/ASM, and 2nd lowest CASM excluding labor costs. All 2008 data.

So in 2008, AA was one of the most efficient legacy carriers - the CASM excluding labor costs - but one of the higher cost legacies if labor costs are included.

On the other hand, if you're talking about wages instead of costs, then you need to address those who decided to reduce wages more in exchange for keeping benefits higher. For example, what percentage of AA employees still have a defined benefit pension plan vs pre-concessions? A DB plan has been a lot more expensive for the company han a defined contribution plan over the last decade, but employees with a significant amount of time left to work can come out ahead with a DC plan if they invest the money wisely. However, employees nearing retirement haven't had time to make up for a loss of a DB plan unless they invested very wisely and the oldest of those would be behind with a DC plan. So keeping the DB plan instead of giving up more wages potentially helped some and hurt others. Yet the extra cost of the DB plan has to be paid if it's kept and that cost goes into employee costs.

Jim

 

[Hopeful]

I'm not buying into that argument that because we have a pension, we don't deserve a raise.
That's corporate rhetoric.
I just looked at my TOTAL VALUE statement and for 2009 AA contributed $1220.00 towards my pension. Now if we went with a 5% 401k match, that would be $3500.00.

So for me individually, my DB contribution is less than a 401k match.
Now i'm sure I will be responded to with the "oh you don't how the system works, etc etc blah blah blah....
I fully understand the DB as opposed to IRA/401K concept.

I bring this up because AA uses my TOTAL VALUE including AIP payments as my overall compensation.
So if they're going to preach to the world that we still have a DB plan, I would like the world to know that in actuality, the DB contribution for ME and ME ALONE is way less than a 5% match on a 401k plane. $1220 vs $3500....

 

[BoeingBoy]

I just looked at my TOTAL VALUE statement and for 2009 AA contributed $1220.00 towards my pension. Now if we went with a 5% 401k match, that would be $3500.00.

As I said, the pension is just one example, not the whole reason that AA's employee costs are higher than most of the other legacies. And I would guess that you've got long enough left to work (or less time working at Aa) to have built up a big DB payout yet. So as I said, preserving the DB pension could hurt some while helping others.

What you keep trying to do is say it's not this, it's not that, it's not some other single item, etc, that makes AA employees more costly to the company than most other legacy carrier's employees. Well, you're right - it isn't any single thing. but if you add enough of those single things together for all the people AA employees you get pretty big money.

You don't have to believe me, you don't have to believe FWAAA, you don't have to believe anyone who posts here. But when you look at impartial info from two different sources (MIT and Airline Financials) and they say the same thing, who do you argue with when you don't agree?

Jim

 

[Hopeful]

the bottom line is, there are those on this board for calling us unrealistic, dreamers and outright crazy for asking for anything.
What always gets left out of the argument is the fact that we gave back over a billion in a half in wages and concessions.
We are called unreasonable and unrealistic for asking for something back that we gave up almost 7 years ago? 7 years ago we were still not at the top of any wage and benefit chart.

My personal loss was $20,000/yr.....You can do the math for the total as we are coming up on 7 years.

I will take my chances with a PEB...

Let the chips fall where they may.

And as for yourself and all other people employed by the airline industry during and since deregulation......all of you...and the rest of us let companies decimate all our careers and we did nothing...

Every airline should have shut down..try replacing everyone...
Let the National Guard come to my home and force me to go to work...I'll kill every aircraft I work on.


Sick and tired of hearing how fragile the company is.

They had their chance to go bankrupt and chose not to. They could have abrogated all labor agreements and laid off tens of thousands.

I do not feel sorry for this company one bit. they had no problem taking concessions and they still want more....No way unless they want to have the worst on time performance of any carrier.
This company takes and takes and takes,,,but when it comes time for payback, they find something else. Typical airline management tactic.

Isn't it almost time for executive pups/bonus?