AA posts 220 mil 2nd qrtr profit

[robbedagain]

fwaa where does the bag fees and all them factor into the profits.... i do remember dp saying at one point or may be it was one of his side sicks saying that the fees actually is what made the profits....

 

[CactUSmx]

Who cares about what a company earns. Were not getting any of it..Its just more money for the investor pockets not ours..When the company makes money they should throw us a bone for the hard work but they dont. When a company loses money our medical costs go up and our pay and benefits and perks goes down.

 

[jimntx]

As long as a company keeps reducing the number of employees, it's not all that hard to "make a profit." Payroll (and I include benefits here)--particularly in the airline business--is the major "brick in the backpack." Some will say it's fuel, but fuel goes up in price, then it goes down depending on demand. Those people expect the same paycheck every month until they get a raise. And, once awarded they expect that raise to be reflected in their paycheck every month until the next raise. Heck, if they fired everybody it would be a record profit not only for the Q2, but for every quarter at every company in history.

 

[WorldTraveler]

Who cares about what a company earns. Were not getting any of it..Its just more money for the investor pockets not ours..When the company makes money they should throw us a bone for the hard work but they dont. When a company loses money our medical costs go up and our pay and benefits and perks goes down.

that is why profit sharing is supposed to connect worker pay to company success..... w/o profit sharing, there is little reason (or a whole lot less) for employees to put forth the effort necessary to get the company to the next level.

 

[FWAAA]

sorry but that is not true.

in the year ended 2007 (the year DL and NW emerged from BK), their ANNUAL labor cost decreases were $176 million for DL compared to 2006 and $94 million for NW. AMR's QUARTERLY labor cost decrease was larger than DL and NW's ANNUAL labor cost increase in the year DL and NW emerged from BK.

It is completely true.

In 2004, the last full year prior to DL and NW filing for Ch 11 protection, their combined labor expenses totaled $10.134 billion. In 2007, their combined labor expenses totaled $6.757 billion. That's a bankruptcy-induced annual labor cost savings of $3.377 billion for DL + NW. And DL/NW has never reported an annual net profit since exiting bankruptcy anywhere near the amount of labor savings.

Yes, DL has achieved impressive revenue improvements since both DL and NW filed for bankruptcy and the revenue improvements have continued to impress. But the profits since both filed for bankruptcy have been "on the backs of labor" given the billions in labor cost savings.

 

[paul1]

that is why profit sharing is supposed to connect worker pay to company success..... w/o profit sharing, there is little reason (or a whole lot less) for employees to put forth the effort necessary to get the company to the next level.

well that's what the TWU GAVE AWAY ARE PROFIT SHARING. We should get the merger raise and should not have given up any more.

 

[robbedagain]

At US only the iam does not have profit sharing but they do have the pension... are there any groups at aa that get the profit sharing... mgmt not included as theyre rich enough already!

 

[enough already]

Profit what? Sharing? Pffft...

 

[1airborne]

At US only the iam does not have profit sharing but they do have the pension... are there any groups at aa that get the profit sharing... mgmt not included as theyre rich enough already!

Southwest gives profit sharing to all groups. It was a nice bump. We get a percentage of are all in annual pay.

1airborne

 

[CactUSmx]

When US makes a profit they buy us 2 day old sandwiches and a stale cake for dessert. That's the thanks we get. So when ppl post record profits on this board I really don't care. It does nothing for me. Nothing to celebrate. I do get a little happy due to the fact they didn't lose money so I won't expect another pay cut.

 

[WorldTraveler]

FWA,
If you want to mix apples and oranges, then you can certainly make the case that labor has and always will bear the brunt of airline restructuring. Since apples are not oranges, it is very possible to get to the root cause of where cost cuts come from as well as the profits that AA is now reporting, and I am glad to see.

First, you took a comparison of the last year that DL and NW were in BK compared to AA’s current quarterly report and turned it into a full-scale comparison of the reduction of labor costs over a multi-year period, with no consideration of the factors involved. Subpoint one is that DL and NW started reducing their labor costs via headcount reductions after 9/11 and continued that process up to and thru BK. Dec 31, 2004 was NOT the beginning of DL and NW’s BK filing – it came 9 months – and DL and NW both did reduce labor costs before BK, as well as in it. Yet, AA did the very same thing in 2003 – they just didn’t have the BK part. So, the assumption that BK is necessary to restructure the business is not accurate. In NW’s case, since they were more heavily unionized, many of those cuts between 9/11 and BK came thru consensual agreements – even if under duress, just as they did with AA in 2003. Subpoint two is that the largest part of airline labor cost reductions since 9/11 has come by reducing the number of employees and not the total compensation per employee. It is not at all accurate to say that “restructuring came on the backs of labor” if employees VOLUNTARILY left the company, including thru attrition. In DL’s case, they used voluntary programs MULTIPLE times after 9/11 to reduce headcount on top of normal attrition and probably obtained the majority of their reductions thru voluntary programs; NW had a similar program. I don’t know the exact numbers involved, but AA did have some voluntary programs as has UA, including since their merger and outside of BK.

AA’s restructuring started 10 years ago… how much of the total cuts that AA employees will take between 2003 and 2013 are you going to attribute to BK?

Second, the AMFA strike and subsequent end resulted in the loss of a large number of the jobs and reduction in costs that NW cut in the 2000s and the strike had nothing to do with BK; mechanics for NW then and in many cases still are for other airlines the highest paid non-pilot work group.

Third, the BK process provides a means for recovery for those who have suffered losses as part of a company’s restructuring plans. Employees are very much claimants and do have the right to recovery. UA and US employees had significant recovery leaving their BK; DL employees- non-contract and contract – received billions of dollars worth of stock in the new company as well as cash on emergence. Thus, when you talk about how much employees at any company “lost” during BK, you need to finish the calculation with what they gained in recovery at the end of the process. AA employees will have some recovery on emergence but it is not yet clear how much that will be.

Fourth, DL employees have had the largest and fastest post-BK financial recovery among any legacy airline employee group in the form of salary increases and profit sharing. DL has paid $1 billion in profit sharing over the past three years which works out to more than $14,000 for the “average” Delta employee. When you factor in multiple pay increases and profit sharing (which wasn’t there before BK), DL employees have indeed recovered large portions of what they lost. I would be thrilled if AA employees recovered just as much just as quickly or more so.

Fifth, health care cost increases have been one of the sore spots in the AA BK process just as they were for PMNW employees during the transition process with DL. The simple fact is that health care costs throughout the US doubled over the past ten years; holding onto a piece of paper in the form of a CBA that forced the company to continue to eat cost increases that the rest of America’s employees had to face is precisely the reason why companies seek BK protection in the first place. It is no more reasonable to expect the company to be able to buy jet fuel at five year old prices than it is to think they should or will pay five year old (or more) health care costs, including the employee contribution part of the equation. When you factor in the “normalization” of health care costs for airline employees that were kept below-market because airline employees are more heavily unionized than other industries, then the airline industry-specific increases in costs are a whole lot less.

Finally, you once again sidestepped the lack of growth in revenue at AA. The simple fact is that the minute AA or any company leaves BK, costs start to grow again. IN new AA’s case, just like what happened at UA, the costs will grow very quickly because the cost of merger integration in the form of pay raises to employees for them to agree to integrate is very expensive. UA spent two years deciding what routes couldn’t make money and then royally screwed up the customer-facing IT integration which stopped their revenue growth in the tracks – which resulted in huge losses because the employees have not been willing to sit around waiting for the paycheck. The simple fact is that revenue synergies have to be the basis for creating long-term financial stability post-BK and so far AA has not demonstrated where it is going to obtain increased revenue. Parker might be able to figure out ways to extract revenue from AA’s network that AA mgmt couldn’t figure out, but I doubt it; AA has long had some of the best revenue-minded leaders in the industry. IN the absence of significant increases in revenue, including turning AA’s Pacific operation into a profitable and sustainable entity and protecting DFW from WN’s growth at DAL and competitor growth in other key markets including Latin America, LHR, and DCA and it becomes even harder to expect that new AA’s revenue is going to grow anywhere close to the levels necessary to support the increased costs that will come with the merger.

On an apples to apples comparison basis, other carrier employees have indeed done well post BK. Since you have touted how great the AA BK would be in terms of recovery for shareholders and creditors, how about you throw just a little support behind the idea that AA and US employees could genuinely benefit as a result of the merger including thru financial recovery post BK. While you have argued for years that AA employee costs are the reason for the company’s problems and you now seem to enjoy the prospect that those cuts will never be restored, I will continue to hold out hope that real revenue increases at new AA can and will provide the basis for improved financial performance for individual employees – and I will hold out the example of companies whose employees have benefitted because of their company’s successes as evidence that a revenue-based recovery for the company is good for employees and provides the greatest potential for their long-term success.