The Dollar and American Airlines

[Buck]

The Dollar and American Airlines

 

[olderguyAMT]

The Dollar and American Airlines

So the weak dollar caused the AA bk.

And now the employees have to pay for it in lost jobs and treasure.

They forgot to mention mgmts part in the process. Liability, Accountability, and Responsibility are the issues.

Great. Now there will be layoffs and cuts to bennies. Sure mgmt ranks will be thinned, but they will include secretaries and clerical workers in their reports, while calling all of them management. Real sneaky of them.

The high stakes game of BK negotiations will continue in the courtroom, with careers , pensions, and livelihoods at stake.
Lawers, and Co. execs will get richer, while the lowly worker gets poorer. And the furloughed will be like a dog, begging for crumbs under the table.

One has to work or have an income to pay taxes to local and fed. govt. Now some of us want to cut taxes for the rich, while those grannies on fixed incomes take a hit. What, we had minimal pay raises in the last 10 years. Add inflation to that senario and you get the real picture. Been gettin' the shaft for a long time now. Thank you to the US govt. who keeps printing more money whenever they need more.

 

[FWAAA]

Interesting article, but the author lacks historical perspective:

Also, implicit in today’s popular narrative is that American’s compensation structure was well out of line with the rest of the industry. But if true, it seems American would have attracted higher quality employees; something that frequent flyers would question for the airline’s on-time record alone.

First, AA already had (and still has) high quality employees. The quote above makes it appear that he hasn't been paying attention for the past 10 years. While high wages will eventually attract higher quality employees, it's not like AA raised its wages far ahead of the competition - instead, the competition lowered theirs in bankruptcy. AA hasn't hired very many employees off the street in the past decade, so its higher wages could not have attracted higher quality employees.

Another gem:

And with stock prices most useful as discounting data for the future, if bankruptcy for American was inevitable, this would have been priced into its shares long ago.

In 2003, when management was threatening to file Ch 11 unless the concessions were approved, bankruptcy was built into the stock price: the stock price was less than $3/sh for most of 2003 prior to May 1 and hit a low of $1.25/sh during that span. When the concessions were deemed approved, the stock price exploded and continued to climb as Arpey's aversion to Ch 11 became well-known. In January, 2007, AA was profitable and the stock hit $41/sh. Then fuel prices exploded for 18 months, culminating in $4/gal jet fuel and $147/bbl oil in July-August 2008. Along with the fuel price spike, the global economy melted down and AA's four-year string of losses began.

Yes, fuel prices were a contributing factor, but the sad fact is that the bankrupt airlines lowered their wage expenses far below those of AA. One of Arpey's failures was thinking that wages at those formerly bankrupt airlines would quickly recover - and he was wrong. AA found itself as the high-labor cost airline with an aging fleet and lots of debt. After DL and NW lowered their costs in bankruptcy, it was only a matter of time until AA found itself in bankruptcy.

AA's bankruptcy has many causes, including high wage expenses (due to bankruptcies at its competitors) and very high fuel prices. Fuel prices hurt all, but the greater costs cuts at the bankrupt competitors allowed them to survive the the price increases and to become profitable over the past couple of years, aided by better-than-AA revenue improvements.

 

[Buck]

Yet in most cases, AA's mechanic wages were held well below the other airlines. AA has consistently used the pension multiplier to justify the wage disparity. Now that the multplier, along with pension are gone, wage equality can be achieved by our union representative.

 

[Birdman]

Yet in most cases, AA's mechanic wages were held well below the other airlines. AA has consistently used the pension multiplier to justify the wage disparity. Now that the multplier, along with pension are gone, wage equality can be achieved by our union representative.

A 6 year CBA for M&R would acheive well beyond the "Targeted Annual, Permanent Cost Savings of $210 Million" on average. Every time our competitors, who already enjoy more pay/holidays/vacation, increase wages and benefits AA saves even more. UA/CO just settled, WN amends in August of this year, US gets an automatic 3% in July, and DL is keeping pace. This deal could be the dose of poison that kills AA.

 

[Buck]

A 6 year CBA for M&R would acheive well beyond the "Targeted Annual, Permanent Cost Savings of $210 Million" on average. Every time our competitors, who already enjoy more pay/holidays/vacation, increase wages and benefits AA saves even more. UA/CO just settled, WN amends in August of this year, US gets an automatic 3% in July, and DL is keeping pace. This deal could be the dose of poison that kills AA.

Maybe there is more to the equation than mechanic compensation. Could be one the parties is being held hostage.

 

[FWAAA]

Yet in most cases, AA's mechanic wages were held well below the other airlines. AA has consistently used the pension multiplier to justify the wage disparity. Now that the multplier, along with pension are gone, wage equality can be achieved by our union representative.

Perhaps the worthless union can finally obtain competitive hourly wages for the AA mechanics, but I'll believe that when I see it.

AA's overall labor costs have been higher regardless of the mechanics' hourly rates. AA's labor costs are made up of a lot more people than just mechanics.

AA's overall maintenance costs have been the highest per ASM (WT has posted the disparity between AA and the competition) based on DOT numbers. That's probably due to AA having about 11,500 mechanics and related even if their blended hourly rates are below the competition's hourly rates (thanks to the OSMs). None of the competitors employs so many M&R per airplane or per ASM. Bob Owens has tried to argue that outsourced maintenance is more expensive, but the DOT numbers show otherwise.

 

[Buck]

Perhaps the worthless union can finally obtain competitive hourly wages for the AA mechanics, but I'll believe that when I see it.

AA's overall labor costs have been higher regardless of the mechanics' hourly rates. AA's labor costs are made up of a lot more people than just mechanics.

AA's overall maintenance costs have been the highest per ASM (WT has posted the disparity between AA and the competition) based on DOT numbers. That's probably due to AA having about 11,500 mechanics and related even if their blended hourly rates are below the competition's hourly rates (thanks to the OSMs). None of the competitors employs so many M&R per airplane or per ASM. Bob Owens has tried to argue that outsourced maintenance is more expensive, but the DOT numbers show otherwise.

Are you defining what mechanic and related means?

 

[FWAAA]

Are you defining what mechanic and related means?

Not intentionally. Isn't that the job of the NMB?

Here's what AMFA said in 2004 about the NMB's definition of your class and craft:

Q: What, exactly, is the "Mechanic and Related" Craft and Class?

This answer is directly from the National Mediation Board: "The Board considers several facts in determining a proper craft of class including the composition and relative permanency of the employee grouping along craft or class lines; the functions, duties and responsibilities of the employees; the general nature of the work performed; and the community of interest between job classifications." In a nutshell, Employee groups that are determined by the NMB to have a commonality of interest are grouped together. Historically the Mechanic and Related Craft and Class has included:

Aircraft Mechanic Overhaul Support Mechanic Auto Mechanic Facility Mechanic Ground Serviceman
Aircraft/Part Washer Cabin/Building Cleaner Blasting Machine Operator

Most airlines disclose (in their annual SEC filings) the total number of employees in various categories like pilots, flight attendants, fleet and maintenance. I think that AA used to do that but has not disclosed the numbers in the 10-K for at least a few years. Anyway, the total of the TWU-represented Title 1 and Title II is somewhere around 11,500. That's not a total of A&P ticket-holders nor is it a total of aircraft mechanics. Just a total of people who fix things and the various support personnel who help them - in short, maintenance.