Things AA "can" afford

[Frank Szabo]

How about they come clean on what they do for a living .... Lets go through their salary and benefits and see what we can cut. Who gives them the right to dictate what we deserve....
Love to see the look on their faces if all of the sudden a 33 % pay and benefit cut was staring them in the face. And then their bosses were taking millions in bonuses and claiming the company costs are way to high, sorry no raises.

What makes you believe the supposed "exec" type like Josh would tell you the truth anyway? One of the hallmarks of the "better than thou" sort is the inability to tell we "lesser forms of life" the truth.

 

[Vortilon]

How many of you as a 18-22 year old researched labor contracts and future earnings potential before going to A&P school?

Or did you simply think "wow, this looks cool" and get your A&P?

Bob's probably right that there are a bunch of senior guys leaving the industry, but never underestimate the willingness of people to come into it.

Just as there has never been a shortage of people willing to mop up puke & excrement at the hospitals or train stations, you'll always find someone who is interested in working with complex machinery and/or electronics.

Oh, and by the way, aviation schools advertise, too. That's how they manage to find people willing to pay tuition.

It looks like advertising makes up about 0.6% of AA's cost of sale. I've seen companies spending upward of of 2-3%. Brand recognition helps, but brand stagnation (i.e. not advertising) is usually fatal.

The most obvious difference between what a 18 - 22 year old has for researching careers now versus 25 years ago is the internet. Now that potential A&P Mech has the resources available to research everything he/she would need to know in making a career path decision.

So, what at first glance might seem like a pretty cool career is now looking a little bleaker. 25 years ago, we didn't have this info available. Of course the circumstances of the industry were much different as well.

My nephew just got out of the Air Force as a crew chief (perfect candidate for A&P), he did not even hesitate to say no, when I asked him if he even considered a career in aircraft maintenance. His feelings about it are not uncommon.

You know it's getting bad when airlines are struggling to find drug free, English speaking, qualified applicants that can pass a background test. Now consider the quality of the first round draft picks that the MROs are attracting. They were scraping the bottom of the barrel 20 years ago, now....use your imagination. 😉

 

[Frank Szabo]

The most obvious difference between what a 18 - 22 year old has for researching careers now versus 25 years ago is the internet. Now that potential A&P Mech has the resources available to research everything he/she would need to know in making a career path decision.

So, what at first glance might seem like a pretty cool career is now looking a little bleaker. 25 years ago, we didn't have this info available. Of course the circumstances of the industry were much different as well.

My nephew just got out of the Air Force as a crew chief (perfect candidate for A&P), he did not even hesitate to say no, when I asked him if he even considered a career in aircraft maintenance. His feelings about it are not uncommon.

You know it's getting bad when airlines are struggling to find drug free, English speaking, qualified applicants that can pass a background test. Now consider the quality of the first round draft picks that the MROs are attracting. They were scraping the bottom of the barrel 20 years ago, now....use your imagination. 😉

You nephew sounds like he's got his act together.

Caring relatives don't let their younger people get hooked up with aircraft maintenance.

 

[strikeforce]

The most obvious difference between what a 18 - 22 year old has for researching careers now versus 25 years ago is the internet. Now that potential A&P Mech has the resources available to research everything he/she would need to know in making a career path decision.

So, what at first glance might seem like a pretty cool career is now looking a little bleaker. 25 years ago, we didn't have this info available. Of course the circumstances of the industry were much different as well.

My nephew just got out of the Air Force as a crew chief (perfect candidate for A&P), he did not even hesitate to say no, when I asked him if he even considered a career in aircraft maintenance. His feelings about it are not uncommon.

You know it's getting bad when airlines are struggling to find drug free, English speaking, qualified applicants that can pass a background test. Now consider the quality of the first round draft picks that the MROs are attracting. They were scraping the bottom of the barrel 20 years ago, now....use your imagination. 😉

Do they have XBox on board? My kid qualifies...hands down!

 

[odie01]

You nephew sounds like he's got his act together.

Caring relatives don't let their younger people get hooked up with aircraft maintenance.

My youngest Freddy (4), loves airplanes just like his old man, also likes bus-tin knuckles in the garage on the old 64" C10. I don't think I would steer him away from aircraft maintenance, I would just tell him to pick a company that treats their employees fairly, and if they have a union, make sure its not the twu.

 

[Frank Szabo]

My youngest Freddy (4), loves airplanes just like his old man, also likes bus-tin knuckles in the garage on the old 64" C10. I don't think I would steer him away from aircraft maintenance, I would just tell him to pick a company that treats their employees fairly, and if they have a union, make sure its not the twu.

The biggest problem that I see is not in finding a company that treats their people fairly, but finding one that will continue to do so even when the heat is on.

I agree, as many have opined, that American was a totally different company 20 years ago and, ever since then, has changed for the worse. Businessmen were replaced with frat brats that care about nothing but their personal bottom line and their brownie points from the BOD for screwing over the very people they depend on to be the face of the company, keep its equipment in top shape, and operate that equipment. These values aren't quantifiable on a balance sheet therefore, said values don't exist, even though the first few steps on the slippery slope is evident and the helluvit it is it's so simple and relatively cheap to keep those same people happy but balance sheets aren't set up that way and the GAAP doesn't allow for it.

It's gotten to the point at most large businesses it's simply easier to lie to the people than it is to deal with them honestly - it's not a trait of AA exclusively but also many other companies that depend on the MBA/CPA Club to run their businesses (into the ground).

Tell your boy that working for any large company requires he always insures he has an 'out' if things begin to go to hell in the proverbial handbasket - just like when one is driving, always allow yourself somewhere to go as people enjoy boxing you in so you can't move.

 

[jersey777]

The biggest problem that I see is not in finding a company that treats their people fairly, but finding one that will continue to do so even when the heat is on.

As many have opined, American was a totally different company 20 years ago and, ever since then, has changed for the worse. Businessmen were replaced with frat brats that care about nothing but their personal bottom line and their brownie points from the BOD for screwing over the very people they depend on to be the face of the company, keep its equipment in top shape, and operate that equipment. These values aren't quantifiable on a balance sheet therefore, said values don't exist even though the first few steps on the slippery slope is evident and the helluvit it is it's so simple and relatively cheap to keep those same people happy but balance sheets aren't set up that way.

It's gotten to the point at most large businesses it's simply easier to lie to the people than it is to deal with them honestly - it's not a trait of AA exclusively but many other companies that depend on the MBA/CPA Club to run their business.

I don't think that AA was any different 20 years ago. People like to look at the Crandall years as our glory time but it wasn't as far as labor relations go. The only difference is that there was some movement and growth and that helped all of our work lives. I do think that the quality of the airline has gone downhill since then but so has the rest of the industry.

 

[FWAAA]

You are partially wrong. They want to increase the wage slightly but extract whatever they give us by pocketing our Prefunding and other concessions, the Headcount savings is just extra, not credited to us.

Bob, the company has said that it wants to raise individual pay rates and has made no secret that it wants those raises paid for, in part, by paying fewer employees, especially pilots and FAs, two groups where the company wants more hours worked per employee per month. And of course, in all groups, the raises would be funded in part by further concessions imposed on all workgroups like the ones you mentioned.

Nice spin, where should it come from? The reveunue which is up several billion. We are sitting by while everyone else grabs a bigger piece of the pie. We need to grab ours and let everyone else fight over whats left instead of standing last on line and taking whats left. As you said everyones costs go up and evetyone except labor has seen their revenues go up as well.

Yes, revenue is up substantially. Fuel expense is up substantially. Labor costs are down some. Interest expense is up substantially. Some line items have gone up, some have gone down. Bottom line is that all 2010 revenue was spoken for (and then some) without granting any raises.

Are you including all the "fees" that they collect in your figures?

Good catch, and I agree with this point. I'll run the numbers comparing 2000 to 2010 again later today and I'll include all ancillary revenue (bags, AAdvantage miles, etc) plus all cargo revenue. I suspect that total RASM has increased in that 10 years.

Show us your very simple math and its inescapable conclusion. What I see is a $22 billion pie to be divied up between 80,000 workers vendors etc instead of a $17 billion dollar pie to be divied up between 100,000 workers, vendors etc.. Not only is the pie much bigger but it has to be cut into fewer pieces, that should mean bigger pieces for everyone. What we have seen over the last 8 years is other entities taking much bigger pieces, we have to assert ourselves, if dont produce the pie nobody gets anything.Sure the oil companies have been pigs at the table but they dont accont for all of it, who else is getting a bigger piece than ever before and how is it justified when they are dealing in smaller volumes as well?

Total AMR revenue in 2002 (before any concessions) was $17.3 billion. But that revenue wasn't enough to cover all the operating expenses in 2002. AA had to use $1.1 billion of borrowed cash to cover this shortfall, and that doesn't include any new airplanes or capital investments - just the operating expenses like wages, fuel, rent, etc. To make an apples to apples comparison, you ought to add that $1.1 billion of borrowed money to the revenue, meaning 2002's money to be divided up was $18.4 billion. Fuel was $2.6 billion and wage expense was $8.4 billion.

While not an operating expense, net interest expense in 2002 was only $530 million.

In 2010, AMR's revenue was $22.2 billion, or $3.8 billion more than in 2002. Fuel was $6.4 billion, or $3.8 billion more than in 2002. Fuel ate up all the additional revenue. But wages were down, so that frees up some money. Wages were $6.8 billion, or $1.6 billion less than in 2002.

So what happened to that $1.6 billion of wage savings? Who got it? Some of the other line items were up and some were down. Interest expense was $300 million higher. Maintenance materials and repairs was up $230 million. Food service was down $200 million. Commissions and credit card fees were down $150 million. Aircraft rental was down $260 million.

Bottom line: AA ended the year cash positive as cash expenses were less than the cash brought in. You're fond of focusing on the increase in revenue since the very bleak year of 2002 when AA borrowed money to pay its operating expenses and its interest expense. Still, AA's expenses were by far the largest per ASM of DL, UA/CO and US. I don't see how AA increases those expenses any higher and continues to compete.

Cue the "Shut it down then" comments.

 

[eolesen]

I don't think that AA was any different 20 years ago. People like to look at the Crandall years as our glory time but it wasn't as far as labor relations go. The only difference is that there was some movement and growth and that helped all of our work lives. I do think that the quality of the airline has gone downhill since then but so has the rest of the industry.

Bingo.

When in growth mode, there's a lot less pissing & moaning. Start contracting (or simply stop growing) and it's the worst place in the world to work.

I seem to recall people saying the same things about how Crandall, Casey, Spater, etc. were just bean counters who didn't care about running an airline.

People also thought Nixon was a crook back in the 1970's. Since then, and he looks more and more like an angel....

 

[Bob Owens]

Bingo.

When in growth mode, there's a lot less pissing & moaning. Start contracting (or simply stop growing) and it's the worst place in the world to work.

I seem to recall people saying the same things about how Crandall, Casey, Spater, etc. were just bean counters who didn't care about running an airline.

People also thought Nixon was a crook back in the 1970's. Since then, and he looks more and more like an angel....

Wages have declined 40%, the company no longer covers medical, we get less vacation, no paid holidays, less sick time etc etc, It was a different place 20 years ago.


Nixon an angel? Well maybe to you. Hitler probably doesnt look so bad to you either after all he was Right Wing, pro-business and hated Unions like you. Arbeit macht frei!! I heard it on Fox so it must be true!!

 

[Bob Owens]

So what happened to that $1.6 billion of wage savings? Who got it? Interest expense was $300 million higher. Maintenance materials and repairs was up $230 million.

Well using your numbers it reinforces what I've been saying. The more concessions we give the more cash we free up for the Oil Companies (up $3.8 billion more despite having used less fuel), the Banks (up $300 million despite carrying much less debt and historically low interests rates for the rest of the economy) and vendors (up $230 million despite the fact that a smaller fleet equals less demand for parts). When you consider that the carrier shrunk yet those things increased the increases must have been huge. If we cut our debt in half yet interest expense went up by $300 million then the amount of interest we are paying for each dollar borrowed must have gone up by more than 100%.

You must have left a few things out because you only showed around a $530 million increase and $2.1 billion in savings. In fact the savings from Leases, catering and commisions equals $610 million , covering all the increases outside of fuel that you cited, which was covered by increased revenue. So where did the $1.68 billion in savings go?

Still waiting for you to show me the simple math that leads to the inescapable conclusion that a $22 billion pie isnt bigger than $17 (18) Billion dollar pie.

 

[Bob Owens]

How many of you as a 18-22 year old researched labor contracts and future earnings potential before going to A&P school?

Or did you simply think "wow, this looks cool" and get your A&P?

Bob's probably right that there are a bunch of senior guys leaving the industry, but never underestimate the willingness of people to come into it.

Looking at the numbers we know there isnt enough out there anymore. If AAR cant get guys offering $25/hr in Oklahoma then what makes you think AA can find them in their five focus cities of New York, Miami, Chicago, Los Angeles and Dallas? Why is Dallas holding guys 1000+ hours of OT per year? Besides even if young kids did decide to start coming in in droves it would be two to three years before they start coming out of school and five years before they are safe enough to be let out alone on the line.

Just as there has never been a shortage of people willing to mop up puke & excrement at the hospitals or train stations, you'll always find someone who is interested in working with complex machinery and/or electronics.

Media reports contradict your claim, besides there are plenty of opportunities to work on complex machinery and electronics outside of aviation. We have A&Ps making the move every day, some of them come back here to post every now and then.

Oh, and by the way, aviation schools advertise, too. That's how they manage to find people willing to pay tuition.

More than half of them have closed since 2001. Many of the students in the surviving schools are foreign Nationals that go back to their own country after graduating. So of the 3000 or so A&Ps that are issued annually (far less than the number attriting out) many leave the country.

And by the way, as a 16 year old, through my school guidance consellor, I did in fact research what Aircraft Mechanics wages were. Afew years back I went to two A&P schools in New York and nearly caused riots when I showed them what they could expect when they got out. May be a good time for another handout, since things have gotten much worse since then. My graph should be enough to change many minds.

 

[Hackman]

Wages have declined 40%, the company no longer covers medical, we get less vacation, no paid holidays, less sick time etc etc, It was a different place 20 years ago.


Nixon an angel? Well maybe to you. Hitler probably doesnt look so bad to you either after all he was Right Wing, pro-business and hated Unions like you. Arbeit macht frei!! I heard it on Fox so it must be true!!

I watched the Fox News statements to the contrary that Hltler was a leftist, as Glen Beck on his show stated the man was mostly an extreme left wing socialist. Hence the Nation Socialist Party he led to power. He also disarmed his country starting in 1933 by passing gun registration and then an outright ban later on, mostly to keep the Jews from fighting back and his country from staging a resistance.

I would surmise being a leader of the Socialist Party, disarming citizens, and being buddies with Communists points in the leftist direction.

Here you go Bob; http://www.youtube.com/watch?v=TjpJP_jDXEc

 

[Bob Owens]

I watched the Fox News statements to the contrary that Hltler was a leftist, as Glen Beck on his show stated the man was mostly an extreme left wing socialist. Hence the Nation Socialist Party he led to power. He also disarmed his country starting in 1933 by passing gun registration and then an outright ban later on, mostly to keep the Jews from fighting back and his country from staging a resistance.

I would surmise being a leader of the Socialist Party, disarming citizens, and being buddies with Communists points in the leftist direction.

Here you go Bob;

And you would be wrong. Gun control is about state control, not specific to the left or right. Dont confuse Totalitarianism, which is undemocratic and can be either left or right, with Socialism. The fact is that the concentration camps were not populated by Industrialist and Capitalists in addition to the Jews, they were populated with trade Union leaders, Socialists and Communists.

In Ireland a "Republican" is left leaning, and opposed to the English occupation of Northern Ireland (I.R.A Irish Republican Army), in America a "Republican" is right leaning and they tend to support the English occupation of Northern Ireland and oppose the Irish Republicans efforts to get the Brits to leave. Be careful with titles, they can be misleading.

Yes, Hitler had a deal with the Communists (much like his deal with the Brits) but he broke the deal and devoted a lot more resources towards his attacks against the Communists than he did on the Western Front. Look up the numbers to see where the German Army was really defeated, it wasnt Normandy, it was Stalingrad. Hitler had wrongly assumed that the allies would let bygones be bygones over the Poles and Checks who just hapened to be in the way,and that he could negotiate a truce with the West that would allow him to go east to satisfy his desire for "lebensraum'. If you ever read any of Mein Kampf, Hitler was more Anti-Communist than Sen McCarthy.

The Facist ideology is not that the state belongs to the Proletariat but that the proletariat belongs to the state which is under the control of industrialists. They always suppress workers rights and unions in favor of the rich elite, hmmm, sound familiar? Just because the Nazis under Hiltler retained the Socialist label that doesnt make them what we consider Socialists.Its funny how when Fox and Conservatives talk about Socialism they dont talk about the Socialist countries, they talk about Totalitarian countries, not Democratic Countries like the Socialist Countries we see in Europe.

Under Fascism workers are expected to make sacrifices so Industrialists can do as they please. Luckily we arent there yet and we can still criticize and question when corprations tell us that we should continue to sacrifice for the corporate good. FWAAA claims that simple arithmatic proves that the $22 billion pie isnt any bigger than the $17 Billion pie of 2002. Maybe he should let Mr Goebbels have a shot at it. He was pretty good at that sort of thing.

 

[eolesen]

Nixon an angel? Well maybe to you. Hitler probably doesnt look so bad to you either after all he was Right Wing, pro-business and hated Unions like you. Arbeit macht frei!! I heard it on Fox so it must be true!!

I don't hate unions Bob. I just have absolutely no sympathy for those who choose to belong to a union and preach to everyone about how it is the only way to be treated fairly, yet in the next breath piss and moan about how bad their union negotiated pay and benefits are...

The rest of your blithering isn't even worth responding to.