More competition for AA/ Eagle!

[BartlettAve]

Someone please stop this "broken record!" Again and again, bla, bla, bla! We have heard it over and over. Go play somewhere else!

The night before B6's aircraft order was announced there were rumors running rampant at B6's MCO training center. Word was that the the 320neo aircraft order and the A321 order was just the first of two announcements from B6. The source said that the second announcement would "blow people away".

The source also said that by year-end 2011, the AE operation at SJU would be gone.

Comments?

 

[WorldTraveler]

Yep. Efficiency isn't just about the wages.

That part-time FSC earning a few shekels above minimum wage is still getting a pension and a damn good medical plan, and it doesn't matter what he's paid if the airline he works for can't put the right size aircraft into a particular markets (or even serve other markets) because of contract language in his or someone else's contract...

B6 can order 777-300's tomorrow, and fly them on 14 hour flights without worrying about anything except how much to pay for them. They could chose to serve another dozen or two backwater destinations as quickly as Sky West or Air Wisconsin can get the equipment lined up. Heck, B6 just ordered A321's, and didn't have to negotiate via a third party on how much they're going to pay the guys flying it vs. the A320 rates...

Efficiency comes from having the ability to make decisions which allow the company to compete with other airlines.

If unions showed any interest in competition (other than keeping up or staying one step ahead of what other airlines' employees are getting paid), maybe AA would be in a much different market position...

that's absolutely right... and despite what some people want to believe, there are well paid airline employees who don't have rancorous relationships with management - and their companies are succeeding- at least as best as anyone can succeed in this industry.

Someone please stop this "broken record!" Again and again, bla, bla, bla! We have heard it over and over. Go play somewhere else!

because....? the truth hurts and perhaps also there are people who aren't interested in watching AA go down in flames at the hands of its competitors?

The night before B6's aircraft order was announced there were rumors running rampant at B6's MCO training center. Word was that the the 320neo aircraft order and the A321 order was just the first of two announcements from B6. The source said that the second announcement would "blow people away".

The source also said that by year-end 2011, the AE operation at SJU would be gone.

Comments?

It's all about flexibility. Anyone remember the book Who Moved My Cheese? It's all about how to win in changing marketplaces. Some companies can and some can't.
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If AA or anyone else can't adapt to the markets, someone else will. Whether it happens to be B6 or DL or UA or WN is immaterial.... those are lost jobs from AA/AE and lost future revenue and thus salaries and benefits for AA employee - while other carriers manage to add salaries and benefits for their employees.

 

[Bob Owens]

and how do B6 benefit costs compare to AA benefit costs?
Is B6 total compensation per employee as high as or higher than AA? I don't think so.

Well as far as Maint you would be wrong. B6 mechanics top out at $40/hr in NY and other high cost cities. AA mechs top out $7/hr less.

So we are paid less than UPS, Fed Ex, Southwest, Continental, Jet Blue Delta and the UAL TA was better than ours. I think the only mechanics that are below us now is USAIR and they are in negotiations.

As far as our benifits we have pretty much the costliest medical, the least amount of vacation, holidays , sick time,IOD time and the company admitted that the 5.5% on 2080 hrs 401k they offered for the pension would cost more in the near trem than the DB plan we now have. Of course their story changes from time to time. (UPS gets 13% up to 45 hours per week)

 

[WorldTraveler]

Well as far as Maint you would be wrong. B6 mechanics top out at $40/hr in NY and other high cost cities. AA mechs top out $7/hr less.

So we are paid less than UPS, Fed Ex, Southwest, Continental, Jet Blue Delta and the UAL TA was better than ours. I think the only mechanics that are below us now is USAIR and they are in negotiations.

As far as our benifits we have pretty much the costliest medical, the least amount of vacation, holidays , sick time,IOD time and the company admitted that the 5.5% on 2080 hrs 401k they offered for the pension would cost more in the near trem than the DB plan we now have. Of course their story changes from time to time. (UPS gets 13% up to 45 hours per week)

but all of that means nothing without knowing the seniority of AA vs B6 employees to know where people actually fall on the pay scales - and how much of those benefits they actually use.
I can almost guarantee you that AA employees make more on average than B6 employees for no other reason than that AA employees are higher seniority.

 

[Hopeful]

Yep. Efficiency isn't just about the wages.

That part-time FSC earning a few shekels above minimum wage is still getting a pension and a damn good medical plan, and it doesn't matter what he's paid if the airline he works for can't put the right size aircraft into a particular markets (or even serve other markets) because of contract language in his or someone else's contract...

Really? At minimum wage? A company giving a 5% 401k match is more than the annual contribution AA is giving at that wage. AA contributed $1200 to my pension last year. A 5% 401k match would have been $3400.

Efficiency comes from having the ability to make decisions which allow the company to compete with other airlines.

If unions showed any interest in competition (other than keeping up or staying one step ahead of what other airlines' employees are getting paid), maybe AA would be in a much different market position...

Are you making the asinine assumption that the decisions the company makes are always the right ones? Even with inept management?

 

[eolesen]

Really? At minimum wage? A company giving a 5% 401k match is more than the annual contribution AA is giving at that wage. AA contributed $1200 to my pension last year. A 5% 401k match would have been $3400.

AMR will contribute that or some other amount until you die. And it won't always be $1200 when you have tens of thousands of active retirees -- it could be considerably higher as you age.

B6 will contribute $3400 until you retire, but only for the 30 years or so you work there.

For a guy who started at AA at age 30, AA contributes for some 50-60 years.

Are you making the asinine assumption that the decisions the company makes are always the right ones? Even with inept management?

No, that's your assumption.

But, I'd rather have a management free to make decisions to see if they work out, versus a management who can't make any decisions because of the constraints in a labor agreement.

 

[Hopeful]

AMR will contribute that or some other amount until you die. And it won't always be $1200 when you have tens of thousands of active retirees -- it could be considerably higher as you age.

B6 will contribute $3400 until you retire, but only for the 30 years or so you work there.

For a guy who started at AA at age 30, AA contributes for some 50-60 years.

So be it..If the fat cats can "get their" lucrative parachutes, so can the peons!

No, that's your assumption.

But, I'd rather have a management free to make decisions to see if they work out, versus a management who can't make any decisions because of the constraints in a labor agreement.

My assumption? I asked YOU if YOU were assuming it!
And when the decisions are disastrous, they can blame the employees and "adjust their compensation" to compensate for management's mistakes.

 

[WorldTraveler]

AMR will contribute that or some other amount until you die. And it won't always be $1200 when you have tens of thousands of active retirees -- it could be considerably higher as you age.

B6 will contribute $3400 until you retire, but only for the 30 years or so you work there.

For a guy who started at AA at age 30, AA contributes for some 50-60 years.



No, that's your assumption.

But, I'd rather have a management free to make decisions to see if they work out, versus a management who can't make any decisions because of the constraints in a labor agreement.

Or better yet... how about we actually hold AA mgmt to performance standards comparable to what they want to hold their employees to - you are compensated relative to the quality fo the work you actually do.
That concept, however, requires that we actually compare the health and performance of AA to its peers.. which is probably why AA mgmt huggers like you want to side with AA mgmt yet you really don't want to see the horrific job that AA has done in running the company - and then you side with "them" in telling them that it is all the employees' fault that AA is in the condition that AA is in.
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Hogwash. With a pressure washer.
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AA has made one strategic network blunder after another that have severely impacted their network and their ability to compete with other carriers....
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it is no surprise we are talking about why B6 is overrunning AA's historical and key markets just like other carriers have done elsewhere - including WN in STL, and why UA has a revenue premium over AA on EVERY Asian flight they compete on - and why AA's European operation at ORD is the smallest it has been in decades - you know since when they innovated all of that interior US to Europe flying with the 767s - all that flying that somehow now they no longer can support - yet other carriers can using the same aircraft type from ORD and from other hubs?
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No, Eric, we'd rather have a management team that would recognize that their decisions HAVEN'T worked and one that would be willing to recognize that every passing day that they hold up in their ivory suites allows competitors - across the board to further steal revenue and passengers from AA.
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It's not the employees, Eric. It's management.
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The poor hapless employees of AA just want someone to lead them and to make the company run again. Anyone with a proven track record would do... no more guessing, no more experiments, no more trips down memory lane pretending that will work.... no, just someone who can actually run the AAirline.

 

[Hopeful]

Or better yet... how about we actually hold AA mgmt to performance standards comparable to what they want to hold their employees to - you are compensated relative to the quality fo the work you actually do.
That concept, however, requires that we actually compare the health and performance of AA to its peers.. which is probably why AA mgmt huggers like you want to side with AA mgmt yet you really don't want to see the horrific job that AA has done in running the company - and then you side with "them" in telling them that it is all the employees' fault that AA is in the condition that AA is in.
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Hogwash. With a pressure washer.
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AA has made one strategic network blunder after another that have severely impacted their network and their ability to compete with other carriers....
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it is no surprise we are talking about why B6 is overrunning AA's historical and key markets just like other carriers have done elsewhere - including WN in STL, and why UA has a revenue premium over AA on EVERY Asian flight they compete on - and why AA's European operation at ORD is the smallest it has been in decades - you know since when they innovated all of that interior US to Europe flying with the 767s - all that flying that somehow now they no longer can support - yet other carriers can using the same aircraft type from ORD and from other hubs?
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No, Eric, we'd rather have a management team that would recognize that their decisions HAVEN'T worked and one that would be willing to recognize that every passing day that they hold up in their ivory suites allows competitors - across the board to further steal revenue and passengers from AA.
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It's not the employees, Eric. It's management.
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The poor hapless employees of AA just want someone to lead them and to make the company run again. Anyone with a proven track record would do... no more guessing, no more experiments, no more trips down memory lane pretending that will work.... no, just someone who can actually run the AAirline.

Wow, WT, you just summed up the situation at AA in a single post.. I couldn't agree more.
However, most pro-company/anti-union folks who post here put the blame squarely on labor because of what they call "burdensome, restrive, inefficient,etc,etc," labor agreements.

According to them, AA cannot compete unless workers lose their pensions and get WALMART medical and wages.
I have seen our great management team give away premium markets to Jetblue and other carriers....But the critics here blame labor for that.
AA used to own the Carribean, but no more....thanks to labor!

When was the last time anyone saw our leader, Arpey, making any kind of statement or gesture regarding the three contracts outstanding?
When is the last time, he made any statement or gesture regarding employee morale?
The only time you hear from him is when he is being quoted at a shareholder's meeting or visiting Wall Street.


You are 100% correct, WT....IT'S THE MANAGEMENT!
We do not have any leadership worth respecting nor having any faith in..

The pro company, anti-unionists has made AA's financial situation ALL about unions and union wages and contracts.

They have given AA's inept management a pass on everything!

 

[eolesen]

I actually have no quarrel with what either of you've said about the current management. They've been drifting for years in my opinion, which was a big part of my decision to leave.

And yes, I'm all for having real variable compensation measures for management. Go read anything I've written since 2003 on the topic, and you'll see where I've argued it needs to be tied to operational and financial measures, which is exactly how the AIP and profit sharing plans are triggered. There should be one standard, and there's not.

But the point about flexibility still stands. AMR's ability to compete boxed in by four main factors: Labor agreements, fuel, the economy, and direction.

They can't control fuel or the economy. Labor agreements have a middle ground that needs to be found in the agreements to bring both workrules and compensation in line with the other airlines The reason that topic gets beaten to death here on the forums is because that's the one issue closest to the majority of people on this forum.

That leaves direction... The fact that something isn't discussed doesn't mean I or anyone else who isn't a front line employee agrees with the current direction or management team.

If you had just as many managers from AA here as you do mechanics, I'd love to take them to task on any one of several dozen topics, but what's the point when there's nobody here to debate their side of the argument?...

Garton being moved aside was a good start, but I do think it's probably time for Horton to take over. That may be already in work, and why you don't see Arpey in the limelight as much over the past two years, especially with regard to labor contracts.

Tom already brought in a marketing guy from AT&T to replace Garton. Maybe there are some other folks from the outside who could help right the ship, be it from other airlines or other industries...

 

[Hopeful]

I actually have no quarrel with what you've said about the current management. They've been drifting for years in my opinion, which was a big part of my decision to leave.

And yes, I'm all for having real variable compensation measures for management. Go read anything I've written since 2003 on the topic, and you'll see where I've argued it needs to be tied to operational and financial measures, which is exactly how the AIP and profit sharing plans are triggered. There should be one standard, and there's not.

But the point about flexibility still stands. AMR's ability to compete boxed in by four main factors: Labor agreements, fuel, the economy, and direction.

They can't control fuel or the economy. Labor has been beaten to death here on the forums. There's middle ground that needs to be found in the agreements to bring both workrules and compensation in line with the other airlines.

That leaves direction... Garton being moved aside was a good start, but I do think it's probably time for Horton to take over. That may be already in work, and why you don't see Arpey in the limelight as much over the past two years, especially with regard to labor contracts.

Tom already brought in a marketing guy from AT&T to replace Garton. Maybe there are some other folks from the outside who could help right the ship, be it from other airlines or other industries...

Eric, Labor has been beaten to the death PERIOD....Not just on these forums.
And I will repeat again for the umpteenth time...prior to the 2003 raping from which we still are enduring...I could care less what an executive earned, let alone anyone else.
But it's till LABOR who has to give more...that's what you are saying. Be it workrules, pensions and other benefits, it always goes back to LABOR.

And i will also say that management needs to be more specific in what they want. If the want the structure of SWA and UPS, etc with regards to outsourcing THEN SAY IT!
Don't start with obscure changes that will eventually lead to what they really desire..
Same goes for pilots and fas

 

[eolesen]

But it's till LABOR who has to give more...that's what you are saying. Be it workrules, pensions and other benefits, it always goes back to LABOR.

Read closer, Hopeful... I also said that management needs to take a paycut, albeit not that bluntly.

That's the whole idea behind having real variable comp metrics. In my idealistic world, you'd have some factor determining guarantee/base pay to be no more than X% of the highest paid direct reports in their organization. Tie the other Y% or whatever it takes to be competitive with other airlines/industries to financial & operational performance.

I've said before that I'm on variable comp. That's triggered entirely on my organization's business objectives and financial targets being met. I learned a long time ago to live on my guarantee. I'm sure AA's directors and above could do the same...

 

[WorldTraveler]

thank you, Hopeful. I appreciate it.
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Of the four things that you mention, Eric, every other airline has to deal with two of the four; the other two are unique to each airline - and management shapes the way those two controllable things interact with those other two.
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Every company and airline has to deal with fuel and the economy and make it work.
Every airline also has to set its own direction and deal with labor. Labor relations in the airline industry are notoriously bad.
But AA is uinque in the airline industry that it has had such poor performance relative to its peers and has been unable to correct its downward trajectory (lack of direction) WHILE ALSO watching its labor relations deteriorate.

Are AA employees any different than other airlines'? No. People are people and they expect to be well treated and compensated at least as best as they can.
They aren't stupid and they understand the hardship of the industry... but management at the other four formerly BK airlines had a sense of direction, took their companies through BK, came out and are running acceptable companies by Wall Street standards - at least as evidence by the fact that their market valuations are relatively close; it is AMR/AA that is the outlier and underperformer in the industry.

Pay cuts to executives won't turn AA around... it requires getting rid of people who can't quickly articulate the threats to AA's long-term viability and who can't develop strategies for turning the company around.
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AA has watched its position in the industry deteriorate for 8 years... it is virtually impossible to conceive of a scenario/set of scenarios that will allow AA to return to a significant place of leadership in the industry.
Even if AA bought all the new planes available and got labor contracts that brought AA total labor CASM in line with the industry, esp. since doing so would require huge pay cuts that AA employees undoubtedly won't accept, AA can't undo the damage that has left AA as the 3rd largest airline in NYC and at best with potential for growth at the airport that is most distant from the Mahattan business district - and AA STILL is a distant number 3 at JFK NOW - and that same #3 or #4 pattern has been repeated in market after market around the country - markets where AA was the #1 airline!
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It is absolutely true that AA has to fix the one thing it has complete control over - direction. That is what management is supposed to do.
And they should do it without destroying labor in the process.
The fact that other airlines - union and non-union have direction AND decent labor relations - and also far better financials - proves that it is not an impossible task.

 

[eolesen]

I've never bought into the argument that he who rules NYC or the transcons rules the industry anymore than I've bought into the argument that being the biggest airline makes you the leader.

The only thing AA should be concerned with is being profitable. If it means they're the third or the sixth biggest dick on the table, who cares?


You're right that gutting executive pay won't do a damn thing for the balance sheet. But it will do a few things:

** provide some motivation for those who think they're worth more to leave
** provide motivation for those who like working for an airline to perform
** send a signal to front line employees that executive management finally gets the fact that their commitment to "shared sacrifice" was wrong.

Current management isn't entirely responsible for poisoning the well with labor, but it's their cross to bear.

 

[Frank Szabo]

... snip

** send a signal to front line employees that executive management finally gets the fact that their commitment to "shared sacrifice" was wrong.

... wrong, being their attitude was, "Here boys - share this amongst yourselves".

Current management isn't entirely responsible for poisoning the well with labor, but it's their cross to bear.

Not entirely responsible? Was it really necessary to continue the lies put forth originally?