More AA & Outsourcing at MIA

[WingNaPrayer]

By purchasing ASM, which also provides outsourced services -- particularly ramp workers, baggage handlers and security personnel for airlines at Miami International and other airports

ASM is a major contractor for American Airlines and also does work for other airlines at MIA. Although August passenger traffic at MIA was down 2 percent and cargo traffic was down 20 percent, a terminal expansion is under way and American has announced plans to increase flights to Miami.

The 500 new jobs will be created over the next eight months and will be evenly split between the airport and other locations, said Joseph C. Lorenzo, the new president of Eulen America.

Lorenzo, formerly of AMR, left after 11 years to begin his own company that specialized in providing outsourced labor to American Airlines, and others.

Minimum pay at MIA for AMR is approximately $35.00 - 37.00 total cost per hour at max pay for counter and gate agents, among others. Of that amount the average agent sees 17.00 - 19.00 per hour. The rest is benefits and expenses to the airline.
STORY

 

[eolesen]

Nice spin, Wing...

How is this about outsourcing and AA?...

Did you miss the part where he says the new jobs are incremental, and not a matter of companies outsourcing to ASM/Eulan?...

 

[AA767JET]

Has anyone heard of AA trying to obtain and losing a Continental Airlines maintenance contract recently ?
(Meaning we would have been servicing there fleet.)

 

[lpbrian]

AA should outsource IT. Idiots can easily be replaced. Many of them are hackers and are probably
under investigation anway. While we are at it, we should get rid of corporate security, spooks don't make the airline fly...

 

[WingNaPrayer]

Nice spin, Wing...

How is this about outsourcing and AA?...

Did you miss the part where he says the new jobs are incremental, and not a matter of companies outsourcing to ASM/Eulan?...

Yes, it's an excellent spin. When I see the name "Lorenzo" I know better. The fact that he already provides outsourced labor to AA in MIA, refuses to say how many (rumored to be over 800) the fact that he lied about it last time he did it, coupled with the fact that Tom DeValle was in MIA this week meeting with management, preparing them for the November onslaught of outsource replacements.

It's ok to kid a kidder, but when something is staring you in the face, denial just makes you a fool.

How about, we just wait and see? I'm betting there will be some unions screaming just in time for the holidays.

Please see your PM for additional.

 

[Hopeful]

It seems that outsourcing is no longer exclusive to aircraft maintenance.
I'm wondering why a pilot and flight attendant outsourcing firm has not been started given the number of those job groups on layoff.

But seriously, outsourcing is the company's answer to what they believe are still high labor costs. Just pay a flat rate to the outsourcer and that's it. If they don't like the product they are receiving with respect to the workers, then get another company.
It's all about the bottom dollar. Nothing more...

 

[Bob Owens]

Privately held Eulen says it has $2.3 billion in annual revenue and more than 81,000 employees, almost half of whom are in Latin America.

Wow, they have around the same number of employees but one tenth of the revenue.

 

[eolesen]

Yes, but it's entirely possible that on 10% of AMR's revenue, they're more profitable on both a net basis and a margin basis...

 

[Bob Owens]

Yes, but it's entirely possible that on 10% of AMR's revenue, they're more profitable on both a net basis and a margin basis...

And its likely that labor makes up a greater percentage of expenses than it does at AMR so the problem isnt labor its how they run the business.

 

[FWAAA]

Privately held Eulen says it has $2.3 billion in annual revenue and more than 81,000 employees, almost half of whom are in Latin America.

Wow, they have around the same number of employees but one tenth of the revenue.

And its likely that labor makes up a greater percentage of expenses than it does at AMR so the problem isnt labor its how they run the business.

Eulen is a supplier of outsourced unskilled labor. They don't employ tens of thousands of pilots, mechanics and flight attendants. They don't buy 2.5 billion gallons of jet fuel each year and they don't fly over 900 jets around the country (and world). They aren't paying for those 900 airplanes. They don't own or lease expensive real estate in a couple hundred airports. They don't have nearly 100 million customers.

In short, they aren't an airline, so their list of expenses is much smaller than AMR's. And of course labor expense is a large percentage of their revenue - in fact, it probably represents nearly all of their revenue, except for management and some overhead (and profit).

Eulen takes in just over $28,000 average per employee. No doubt the average employee makes less than that, which results in profit. Pretty simple business model.

Of course AMR's problem isn't labor, but labor is the only part of AMR's business that has demonstrated that it will work for less than it used to. If AA could instead force concessions on oil companies and pay no more than $1/gal, I'm certain that AA would do that. If Boeing would sell AA new 738s for $10 million, AA would gladly take that deal. If AA could unilaterally cut its landing fees and terminal rent, I'm certain it would. But instead, employees were willing to keep working even though AA slashed their labor expenses by about 20% in the 2003 concessions.

 

[WingNaPrayer]

FWAAA Said: AA slashed their labor expenses by about 20% in the 2003 concessions.

And still they can't seem to keep the ship afloat with a decent profit. Guess they'll have to up that figure to 50% - and don't think they unilaterally wouldn't do it if they could be sure it wouldn't cause a walk-out!

 

[FWAAA]

How is this about outsourcing and AA?...

Did you miss the part where he says the new jobs are incremental, and not a matter of companies outsourcing to ASM/Eulan?...

Exactly what I was thinking after reading the article:

Although Eulen is in the outsourcing business, Nero and Lorenzo said the 500 new jobs will be genuinely new -- not just cases where existing jobs are shifted from other employers to Eulen.

But why not use the announcement of 500 new jobs at MIA to proclaim that perhaps 500 AA jobs are in jeopardy?

 

[Bob Owens]

Eulen is a supplier of outsourced unskilled labor. They don't employ tens of thousands of pilots, mechanics and flight attendants.

So then their wage expense should be of an even lower percentage.

Of course AMR's problem isn't labor, but labor is the only part of AMR's business that has demonstrated that it will work for less than it used to. If AA could instead force concessions on oil companies and pay no more than $1/gal, I'm certain that AA would do that.

The airlines had their opportunity in BK court but for some reason they didnt even ask for it, but thats right the institutions that own the airlines probably have a stake in the oil companies as well.

But instead, employees were willing to keep working even though AA slashed their labor expenses by about 20% in the 2003 concessions.

The law dictates that we cant strike unless released by the NMB. Now you can go on and on about individual choice but reality is not as simple as you make things out to be. Individual workers must act collectively against the collective power of Capital. One person against a multi billion dollar corporation is not a battle between equals, in order for us to have any real say in our working conditions we either act collectively or its take it or leave it, and we have families to feed.

 

[WingNaPrayer]

The law dictates that we cant strike unless released by the NMB.

Of course, that only applies to the unionized groups, which are far outnumbered by those who are not unionized. They can collectively walk out effectively shutting down the airline, aka Northwest.

 

[FWAAA]

So then their wage expense should be of an even lower percentage.

No, their wage expense is their only large expense and is likely the vast majority of their expenses.

The airlines had their opportunity in BK court but for some reason they didnt even ask for it, but thats right the institutions that own the airlines probably have a stake in the oil companies as well.

You overstate the power of bankruptcy court judges. They have no power to compel vendors to sell to the bankrupt companies or to set the prices for commodities like oil.

The law dictates that we cant strike unless released by the NMB. Now you can go on and on about individual choice but reality is not as simple as you make things out to be. Individual workers must act collectively against the collective power of Capital. One person against a multi billion dollar corporation is not a battle between equals, in order for us to have any real say in our working conditions we either act collectively or its take it or leave it, and we have families to feed.

Correct, you can't strike, but each of you has now had 6.5 years to find something more lucrative than working for a company constantly flirting with insolvency. And while some of you have moved on to more rewarding jobs, many (most) have kept on showing up every day for reduced pay in the desperate hope that you can someday negotiate a restoration of your wages. And if oil had't hit $147 last year in its three year price spike and if the economy hadn't tanked last year, some restoration might have been possible.

If AA refused to pay market prices for fuel, nobody would sell it to AA. If AA stopped paying its interest or principal when due, creditors would file an involuntary Ch 11 petition. Same with other AA bills. But the employees keep plugging away for reduced pay.