American Airline Mechanics couldn't have rejected a much better contract

[Bob Owens]

Bob, do you feel comfortable enough in your opinions and/or facts that you could win your arguements before a PEB or an Arbitrator?

Yes in part, but I think that I would prefer to share the information with a good lawyer and let him make the arguements, I dont consider myself to be a very good public speaker. I would have serious reservations about letting anyone from the AATD that came out of AA making our case as I've heard more negative stuff from them than I've heard from the company. We would need to get somebody from SWA who has no ties to AA management.

 

[eolesen]

Chuck, at the time that contract was ratified, the following was still true:

1. United still had a maintenance base at IND and OAK
2. Alaska still had a maintenance base at OAK
3. Northwest still had a maintenance base at DLH
4. US Airways still had a maintenance operation at TPA
5. Delta still had large maintenance operations in TPA and DFW
6. United hadn't declared bankruptcy
7. Delta hadn't declared bankruptcy
8. US Airways hadn't declared bankruptcy
9. Northwest hadn't declared bankruptcy
10. ATA hadn't declared bankruptcy or subsequently shut down
11. Hawaiian hadn't declared bankruptcy
12. Aloha hadn't declared bankruptcy or subsequently shut down
13. Continental hadn't decided to merge with United
14. Nationwide unemployment was still below 6%
15. AMR's fuel bill was just $2.8B and 13.5% of AMR's expenses. Today, it's 26.5% and $5.5B with fewer and more efficient aircraft.

It's a much different world today, Chuck.

 

[TWU informer]

Yes in part, but I think that I would prefer to share the information with a good lawyer and let him make the arguements, I dont consider myself to be a very good public speaker. I would have serious reservations about letting anyone from the AATD that came out of AA making our case as I've heard more negative stuff from them than I've heard from the company. We would need to get somebody from SWA who has no ties to AA management.

The only reason I ask Bob, is because some points I agree with you, some I disagree. You have admitted not knowing the cost difference between in-house and outsource maintenance. Given the company position of late I think those numbers would be required to present or defend some of your other positions. One thing that troubles me is that right after the "pajama party" there were supposed to be "open books". I would think the Union would have taken that offer and either have accumulated factual information regarding those cost differences by not accepting the company position as fact, but investingating their claims for verification. Didn't happen as best I can tell.

I don't see where this union is prepared at all for the current position we are in regarding negotiations. And surely they aren't prepared to be advanced to the next step under the RLA.

I do think however, it would be best that anyone that advocated advancing strike votes and 30 day cooling off periods should have had their ducks in a row ready for any direction these negotiations could turn. Based on the fact that I don't see that coming from any leadership within the TWU including yourself, I think that we are headed for a huge dissappointment.

It appears the International was caught off guard by the no vote, and most of those advocating a no vote are not prepared for the next step. Unless someone has factual data that counters the company cost claims in all aspects of our labor agreement, then any neutral party will accept the company position.

I just don't see where we are prepared at all and believe we are all basically hoping for a hail mary before our asses get handed to us.

The membership has NO DATA because the company and the union spent 2 1/2 years in SECRET negotiations. The membership VOTED on emotions not facts and still today nobody seems interested in presenting actual facts to those that vote.

Complete Negotiation Failure in my opinion.

 

[Bob Owens]

Chuck, at the time that contract was ratified, the following was still true:

1. United still had a maintenance base at IND and OAK
2. Alaska still had a maintenance base at OAK
3. Northwest still had a maintenance base at DLH
4. US Airways still had a maintenance operation at TPA
5. Delta still had large maintenance operations in TPA and DFW
6. United hadn't declared bankruptcy
7. Delta hadn't declared bankruptcy
8. US Airways hadn't declared bankruptcy
9. Northwest hadn't declared bankruptcy
10. ATA hadn't declared bankruptcy or subsequently shut down
11. Hawaiian hadn't declared bankruptcy
12. Aloha hadn't declared bankruptcy or subsequently shut down
13. Continental hadn't decided to merge with United
14. Nationwide unemployment was still below 6%
15. AMR's fuel bill was just $2.8B and 13.5% of AMR's expenses. Today, it's 26.5% and $5.5B with fewer and more efficient aircraft.

It's a much different world today, Chuck.

Yep and in 2001 AMR brought in $19 billion, had 129,000 employees and over 1100 airplanes, now they are set to bring in $22 billion (more than enough to cover the increase in fuel)with 50,000 less employees and 200 less airplanes. EO is right, things are much different, time for the few of us that are left to get a bigger piece of that bigger $22 billion pie.

*I would not agree with the more efficient aircraft line without some supporting data, we got rid of Wide bodies and actually saw an increase in less efficient RJs. When it comes to ASMs AMRs fleet as a whole is probably less efficient now than it was then.

 

[Chuck Schalk]

Chuck, at the time that contract was ratified, the following was still true:

1. United still had a maintenance base at IND and OAK
2. Alaska still had a maintenance base at OAK
3. Northwest still had a maintenance base at DLH
4. US Airways still had a maintenance operation at TPA
5. Delta still had large maintenance operations in TPA and DFW
6. United hadn't declared bankruptcy
7. Delta hadn't declared bankruptcy
8. US Airways hadn't declared bankruptcy
9. Northwest hadn't declared bankruptcy
10. ATA hadn't declared bankruptcy or subsequently shut down
11. Hawaiian hadn't declared bankruptcy
12. Aloha hadn't declared bankruptcy or subsequently shut down
13. Continental hadn't decided to merge with United
    
14. Nationwide unemployment was still below 6%
15. AMR's fuel bill was just $2.8B and 13.5% of AMR's expenses. Today, it's 26.5% and $5.5B with fewer and more efficient aircraft.

It's a much different world today, Chuck.


Interesting you mention Bankruptcy of other airlines. We gave up the great concessions of 2003 to save us from the bankruptcy plan ( vermont plan) and we gave them the majority of it up to this point and if we would have passed theis TA it would just about complete the bankruptcy plan. read it for yourself. So add us to the list of bankruptcy but without going to court!

 

[Bob Owens]

The only reason I ask Bob, is because some points I agree with you, some I disagree. You have admitted not knowing the cost difference between in-house and outsource maintenance. Given the company position of late I think those numbers would be required to present or defend some of your other positions. One thing that troubles me is that right after the "pajama party" there were supposed to be "open books". I would think the Union would have taken that offer and either have accumulated factual information regarding those cost differences by not accepting the company position as fact, but investingating their claims for verification. Didn't happen as best I can tell.

I think the companys reluctance to release that information is an indication of what the truth is, I think our in house is more cost effective, if not in raw numbers but in operational reality. Its hard to measure the cost savings of a quality OH job and its improved reliability, along with the flexibility to schedule the work into AAs schedule instead of a 3P provider. Pat Kinnemon said he had the numbers that proved in house was cheaper before he was voted out. Normally if you have the volume of work you should be able to do things in house cheaper.
The only figure that I've been given by a company sympathizer in the unionis $55/hr for OH, however when Chuck did some research the only OH work that he could find at that rate was for Recips, Turbine hourly rates were higher. We charge closer to $85/hr for line maint.
Also I've never heard anyone from the company claim that doing OH in house costs us more, they simply say "Yea but we do our work in house". I asked Arpey at the Shareholders meeting, he would only say "The Jury is still out on that".

If it cost them more dont you think that they would say "Hey, it costs us x dollars more per hour to do it in house, but we are doing it anyway because we want control"?

One thing that nearly 25 years here has taught me, what they dont say is more telling than what they do say.

The membership has NO DATA because the company and the union spent 2 1/2 years in SECRET negotiations. The membership VOTED on emotions not facts and still today nobody seems interested in presenting actual facts to those that vote.

I agree that we havent been given enough facts but I think that we had enough to know that the deal on the table was inadequate. I would counter that many of the YES votes were driven by fear and not facts.

Complete Negotiation Failure in my opinion.

Absence of negotiations as well.

 

[TWU informer]

Bob $55 or $85 per hour is cheaper at outsource when you calculate all inclusive wages, health insurance, pensions, retirement medical, worker comp, legal liability, scrapping of repairable material during repair process. At the rate health insurance cost are rising alone has to be something that would cause your employer to want a stabilized long term contract with defined cost. AA medical cost cannot be predicted or defined year after year in advance but I bet each year the cost rise above what was budgeted.

Not to mention we have much outdated electronic equipment we are using for overhaul processing that is needing replaced and it is failing us daily. Who is going to pay the upgrade cost?

There are other cost associated with terminations, discipline or lack thereof that I would hate to see the company present.

I think you would be surprised when the company pulls their figures out for factual presentation.

Don't forget AA has had recent in-house third party work contracts. And have not been able to turn a profit on those contracts yet. Each of them has not been re-newed upon contract amendable date.

 

[Bob Owens]

Bob $55 or $85 per hour is cheaper at outsource when you calculate all inclusive wages, health insurance, pensions, retirement medical, worker comp, legal liability, scrapping of repairable material during repair process. At the rate health insurance cost are rising alone has to be something that would cause your employer to want a stabilized long term contract with defined cost. AA medical cost cannot be predicted or defined year after year in advance but I bet each year the cost rise above what was budgeted.

The cost per employee, Wages, even with health Insurance etc doesnt add up to what it used to. The old rule of thumb was take the wage and double it. The company released the figure to the union for UBC, roughly 10% over the hourly rate. Legal liability remains, even if you send the work out. Materials are seperate from labor, thats where the 3P providers really hammer their customers. The company claims that on average $8k is paid out per employeee for medical, less the $3k we pay , on average say $5k. The costs, including pension can be seen on JetNet on your Total value statement, my last one was around $1100 for the year 2008. If we had the SWA 8% 401K match it would have been $6000. For some reason, last time I looked they didnt post 2009.

Not to mention we have much outdated electronic equipment we are using for overhaul processing that is needing replaced and it is failing us daily. Who is going to pay the upgrade cost?

The stuff we have is probably better than what the 3P providers have. When I worked at AAR the emergency light batteries were supposed to be bonded to each other, spot welded straps, we were instructed to tear the straps off and solder them to the new batteries, they didnt want to purchase a small spot welder. As a welder I'm sure you can see the problem with trying to solder a strap on a metal cased battery.

I think you would be surprised when the company pulls their figures out for factual presentation.

Well I would rather have numbers to vett out than just rely on implications and innuendo.

 

[FWAAA]

Bob $55 or $85 per hour is cheaper at outsource when you calculate all inclusive wages, health insurance, pensions, retirement medical, worker comp, legal liability, scrapping of repairable material during repair process. At the rate health insurance cost are rising alone has to be something that would cause your employer to want a stabilized long term contract with defined cost. AA medical cost cannot be predicted or defined year after year in advance but I bet each year the cost rise above what was budgeted.

Exactly. Add in the employment taxes AA pays (its share of the FICA and Medicare taxes) plus the costs of managing the maintenance operation. No doubt AA's management ranks are bloated, but as you point out below, the outsourcing figures (be they $55 or $85) include management costs. Plus utilities costs (electric, gas, water, sewer, stormwater, communications, etc).

Not to mention we have much outdated electronic equipment we are using for overhaul processing that is needing replaced and it is failing us daily. Who is going to pay the upgrade cost?

There are other cost associated with terminations, discipline or lack thereof that I would hate to see the company present.

I think you would be surprised when the company pulls their figures out for factual presentation.

Don't forget AA has had recent in-house third party work contracts. And have not been able to turn a profit on those contracts yet. Each of them has not been re-newed upon contract amendable date.

Excellent post. You have a much better grasp of the issues than many others who post here.

 

[TWU informer]

I have a different view of overhaul than Bob because I work in it first hand everyday. I see equipment broke down everyday that cost productivity. I see outdated equipment and a union that insist on upgrading unskilled workers into skilled postions that is costing the profession and the company.

The only thing good I see coming out of our current situation is that in the end Bob will be blaming a neutral party instead of those of us in Tulsa once the dust all settles.

 

[Ken MacTiernan]

This is what I have been saying. I didn't like the contract or want to vote for it, but I did because the alternatives and even future possibilities looked the same or worse. They are not going to give us a contract that increases the company's costs right now, end of story. If they do they will have to do the same for APA and APFA, and that risks sinking the ship. So while I didn't like it, it was the "best" we were going to get now, and will still be the best we are going to get in a year when we ratify the same deal.

Spoken like a true died in the wool sheep. Not attacking the poster here, since I don't know WHO the poster is. I am attacking the negative attitude. "Oh me, oh my! We have to take what they offer us or the sky will fall." Grow a set please!

This is the typical mind set the union and company want you to have. With this fearful attitude there WILL ALWAYS be an excuse to roll over onto his back and expose the white underbelly of cowardice.

 

[Vortilon]

Wrong on all counts.

Lets look at some facts here.

-Since the concessions, on average, the annual revenue for AMR has increased by around $4 billion a year.
-Our compensation was slashed by 25%, giving AA an annual savings of $310million.
-AA savings were further enhanced through the elimination of 35% of the M&R workforce, this would equate to an additional savings of approximately $338million(wages only, all AMTs at top rate).

If $310 million represented 25% of the M&R labor cost then their total cost for labor going in to 2003 would have been $1,240 million. (4x 310)

So immediately after the concessions their costs dropped to $930 million.

By reducing the headcount 35%, around 4500 workers, they save an additional $338 million. (4500x$75213)(not counting benifits but assuming that all were top paid AMTs).

So now their labor costs are down to roughly $592 million or half of what they were going into 2003.

The 1.5% increases add up to around $33 million but the company recouped most of that by increasing what we pay for medical by around $24 million so they could offset the costs of the pilot and FA plans.

So the company has seen their revenues increase on average by around $4 billion/year while at the same time their labor costs for maintenence has gone from around $1.24 billion to around $600 million.

"Restore", thats the 2003 rate of pay off the 2001 contract, all the workrules, benifits, vacation, sick time, IOD , all of it, would only cost the company around $187 million over what they are paying now,(because there are 35% less of us, 65% X $310million minus the 1.5% raises), peanuts, less than 1% of AMRs revenue.

AA labor costs for M&R would go up at the most to $800 million. Still $400 million less than $1.24 billion. Less than 4% of AAs revenue, plus we bring in millions through 3P work and the company outsources less (in other words shares less of their revenue with other companies) than anybody else.

The TA was a zero cost offer.

Yes, we expect more.

Restore would be a huge bargain for the company, but they were greedy and demanded even more concessions and the members said NO.

I want an inflation adjusted "Restore". Which is only fair. The company cant cry poverty, since 2003 their revenues have gone up on average nearly $4 billion a year and they are paying half of what they used to pay for M&R labor.

Inflationary adjustments to base (3% per year)
Year Adj Base Total(day AMT Line)
2003 30.61 36.16
2004 .91 31.52 37.07
2005 .95 32.47 38.02
2006 .97 33.44 38.99
2007 1.00 34.44 39.99

Retro to 2008.
2008 1.03 35.47 41.02
2009 1.06 36.53 42.08
2010 1.09 37.62 43.17
2011 1.13 38.75 44.30
2012 1.16 39.91 45.46

This may look like a lot, when you're in the sewer the gutter looks high (either location is no longer acceptable)but you have to remember that this would only bring our earnings up to around where they were in 2002 and is around what SWA gets and lower than what UPS ($46.99) offered their guys. In total it comes out to around a $304 million annual increase over what they are paying now, thats less than what they took away ($310million) and it would still leave the companys costs hundreds of millions less than what they were going into 2003.

We wouldnt even be touching any of that $4 billion in extra revenue they take in.

Maybe your Boss needs to accept a little less, or end up getting nothing out of AA.

Thought I would take a walk down memory lane....
This is what I recall when I voted no Mr. Bigjets.
There were plety of reasons to vote NO..

 

[CMH_GSE]

Vort, this is an epic bump that was needed.
I also got to post#5 and stopped reading, Bob hits a lot of high points as to why it sucked but there were many other things about the contract that , in the whole sum of it, was an insult.

I said in an earlier post to Overspeed, referencing this TA and the so called "vote no" coalition.
This thing went down in flames, not by just a few votes.

That TA, was certainly not one of the finer moments for the TWU.

The thing I remember about the TWO YEARS of negotiating (our last raise prior to that was May 1, 2008) was, what the hell is taking so long?
My mindset was, we did our part, we took our medicine, saved the company, they got profitable, let's go, give us back what we gave up.

My take from it is, the TWU was played for fools , by any measure, it wasn't a good look.

Let's put this TA into its full context.
It came to us 2 years and 4 months after a 40 cent per hour raise in 2008, and it was concessionary.

 

[Overspeed]

CMH_GSE,
And because you were so pissed you voted down many incremental improvements that would have taken place prior to BK and improved the baseline going in to BK. So we ended up getting no improvements and ending up worse in BK than others that accepted the TA. The MCTs kept all items in the 2010 TA plus got the same raises we got in the BK (3% annual). We started lower pay-wise.
 
So you are right the 2010 TA was not great, but what we ended up with from 2010 until BK was far worse. We got nothing. Yeah CMH_GSE you outsmarted AA and gave them our labor for less. Big win there buddy.

 

[MetalMover]

CMH_GSE,
And because you were so pissed you voted down many incremental improvements that would have taken place prior to BK and improved the baseline going in to BK. So we ended up getting no improvements and ending up worse in BK than others that accepted the TA. The MCTs kept all items in the 2010 TA plus got the same raises we got in the BK (3% annual). We started lower pay-wise.
 
So you are right the 2010 TA was not great, but what we ended up with from 2010 until BK was far worse. We got nothing. Yeah CMH_GSE you outsmarted AA and gave them our labor for less. Big win there buddy.

Do you really think we would haven't gotten the same contract the MCTs got? How many of them were there at that time? They are all in one location with nothing to divide them against each other. No way were the mechanics getting the deal they got.