I am all about "FU PAY ME." But I also want to have my job in five years. So tell me where they are going to get the money from will all these losses? How is demanding much bigger amounts going to benefit us in the longer term if we end up losing our jobs?
AMR/APA might be nearing a deal!
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I am all about "FU PAY ME." But I also want to have my job in five years. So tell me where they are going to get the money from will all these losses? How is demanding much bigger amounts going to benefit us in the longer term if we end up losing our jobs?
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The company claims that they are losing over a billion dollars a year. Please explain how $100,000,000 in employee concessions will "save" us. Even if all the workers collectively agreed to a half billion in concessions, where is the company going to come up with the other half billion? The gang that couldn't shoot straight is now going to become "super-managers" and dig us out of the hole? Yeah right.
I can't speak for the other workers on property, but every pilot on property could work for free and we would still be losing money.
If the company's financials are above board, then we have problems WAY beyond hourly wage employees.
Personally, I don't believe the company's financials are what they seem. Right before all of our contracts became amendable, the company went on (and continued) a CapEx spending binge. Long term debt has fallen i.e. company has been paying off debt. This hardly sounds like the actions of a company with "no money".
Don't you think that the company should have declared BK years ago if things were that bad? How about last year? Or the year before? Now, all of a sudden it is "critical" that they have concessionary labor deals in place or it's the end of the world. They are telling the pilots that unless we sign off on 1 & 3% raises, that they will declare BK. Excuse me? You mean that every other cost in the company cost structure is irrelevant? That extra 4% that they will pay us will just CRUSH this company's financials? Whatever.
Sorry. I don't buy it.
I presume the slight concessions given up by the pilots would be matched by even larger concessions by the FAs, Fleet and M&E, resulting in total savings of upwards of $600 million to $800 million. As in 2003, headcount reductions (possible if productivity is increased enough) would account for a portion of this savings. Add to that the fuel savings from new planes plus the inevitable better revenue once US takes over AA (or AA buys B6), and those three factors might get AA back in black. Or might not.
No, that's not accurate. You've posted it before, but it wasn't accurate then, either. My estimate is that pilots cost AA about $1.8 billion each year (pay and benefits). Today, Vaughn Cordle estimated the same number. If this year's loss is $1.2 billion (my estimate), then free pilots would equal a profit of approximately $600 million.
The CapEx spending spree doesn't factor into the net losses for this year. Or 2010. Or 2009. Or 2008. The new planes pay for themselves due to fuel and maintenance savings. Winglets have a two year payback (yet the investment is written off over a longer period of time).
And long term debt has not been falling; the company has not been paying off debt. It's actually the other way around - long term debt has been increasing. And in any event, paying off long term debt has zero effect on the net income or net loss. AMR has lost money every year since 2001 except for 2006 and 2007. Profit in 2000 and then nine losses in eleven years (including the estimated $1.2 billion this year).
As WT has pointed out, the timing has become critical because of the huge amount of debt that will mature next year for which AA lacks the cash to pay it off. Unless the creditors are willing to refinance it at affordable rates, it is likely that AA will run low on cash next year. On top of that, UA, DL and US are eating AA's lunch in the key markets because of AA's higher costs and smaller network. Can't merge with anyone to grow unless AA's costs are in line with the dance partners, and they all have much lower costs (including lower labor costs) than AA. If AA had US' labor costs, AA would save $2.2 billon each year, according to Cordle. Even if AA had DL's labor costs, that would save AA about $900 million per year.
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given that AMR's credit rating was downgraded again w/ negative implications, AMR's cost of borrowing gets even more expensive.
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Let's also factor in that if AMR's consolidated RASM increase for the year to date (under 6%) had been equal to DL's approx 9 1/2% RASM increase (the lower of DL or UA), AMR would have added over $300M in revenue to its income statement and would have had an operating profit instead of an operating loss.
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Fluf, the fact that AMR has held on as long as it has IS quite remarkable... AMR has long been known as a finance driven company and they have plugged holes in the side of the flooding ship for years but there is a limit to how long it can go on.
And despite the notion that AMR will waltz into BK the way the other network carriers did and come out in a couple years able to compete, the reality will very likely be far different. The competitive environment is far harsher; pension terminations are far more likely - AMR can't continue to spend $500M or more a year to fund pension plans while trying to figure out how to satisfy creditors but they also can't afford to give away huge chunks of the reorganized company to the PBGC and labor in order to satisfy termination claims.
Other carriers are replacing aircraft as well although not at the levels AA is so their costs will come down, negating part of the benefit AA is expecting. Other carriers have stronger alliances and are gaining key revenue in markets around the world, including in AA's key markets.
No matter how you cut it, the outlook for AA is very dark - BK will be incredibly more difficult than for any other carrier and the only way AA can succeed is through far deeper pay cuts - probably putting AA employees on pay levels comparable to US. The chance of AA being forced to shrink to a size that allows others to either increase their success in raiding AA revenue or eventually buying the company are very high.
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I can't tell you what scenario is less painful but I don't think there is a scenario any longer in which AA employees or the company can be assured of long-term success and stability.
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Let's also factor in that if AMR's consolidated RASM increase for the year to date (under 6%) had been equal to DL's approx 9 1/2% RASM increase (the lower of DL or UA), AMR would have added over $300M in revenue to its income statement and would have had an operating profit instead of an operating loss.
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Fluf, the fact that AMR has held on as long as it has IS quite remarkable... AMR has long been known as a finance driven company and they have plugged holes in the side of the flooding ship for years but there is a limit to how long it can go on.
And despite the notion that AMR will waltz into BK the way the other network carriers did and come out in a couple years able to compete, the reality will very likely be far different. The competitive environment is far harsher; pension terminations are far more likely - AMR can't continue to spend $500M or more a year to fund pension plans while trying to figure out how to satisfy creditors but they also can't afford to give away huge chunks of the reorganized company to the PBGC and labor in order to satisfy termination claims.
Other carriers are replacing aircraft as well although not at the levels AA is so their costs will come down, negating part of the benefit AA is expecting. Other carriers have stronger alliances and are gaining key revenue in markets around the world, including in AA's key markets.
No matter how you cut it, the outlook for AA is very dark - BK will be incredibly more difficult than for any other carrier and the only way AA can succeed is through far deeper pay cuts - probably putting AA employees on pay levels comparable to US. The chance of AA being forced to shrink to a size that allows others to either increase their success in raiding AA revenue or eventually buying the company are very high.
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I can't tell you what scenario is less painful but I don't think there is a scenario any longer in which AA employees or the company can be assured of long-term success and stability.
If upper mgmt quits granting themselves bonuses/raises while crying poor, I would consider a pilot contract that is currently being offered. How can a company on the brink continue to pay those in the know such outlandish salaries?
Many years ago, I worked for a company that was in some financial distress. The managers all took pay cuts, rank and file workers were frozen in pay. We were all happy because management led by example.
Many years ago, I worked for a company that was in some financial distress. The managers all took pay cuts, rank and file workers were frozen in pay. We were all happy because management led by example.
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We all heard this same stuff in 2005, almost to the letter. Remember the big push for PLI? The PLI was rejected and nothing happened.
As far as the pilot salaries, if you used a source other than scab Vaughn Cordle or AA management we may have a discussion. Did you realize that AA includes hotel costs and training costs when the company talks about the cost of the pilot contract? I didn't realize that a hotel room on a layover was a negotiated benefit. If the company wants, I will also give up all future recurrent training and trips to DFW for FREE! 🙄
Of course a hotel should be included as it is a cost imposed on the company. The APFA and APA have hotel committees that review properties and set standard to ensure crews receive adequate rest.
Josh
OK, Scab Cordle's numbers aren't to be believed because he once scabbed at UAL. How about Bob Herbst? Didn't he used to fly for AA? His numbers confirm that AA's pilot costs are the highest (pilot costs, not hourly pay rates, which I realize are not industry-leading). What about UAL's assertion that AA's pilot costs are the highest? In 2009, UAL provided a 56 or so page .pdf to employees that showed that AA's pilots and FAs were the most expensive. Bob Owens will email it to you if you ask. Even if you subscribe to the belief that your employer would lie to you, why would someone else's employer fib about your costs? If UAL was going to exaggerate, why didn't UAL say its employees were the most expensive? Instead, UAL cried poor-mouth despite its employee costs being in the middle of the pack. The APFA's own economist has admitted what everyone already knew: AA's FAs are the most expensive per ASM. If you do the math, so are AA's pilots. I understand that when you're asking for substantial restoration of earlier concessions and your employer is reporting billion dollar losses and doesn't want to pay, you're not happy about evidence that you're already the most expensive in the industry. I get that.
I realize that the AA pilot concessions were costly and the absence of real pay raises for a decade has hurt. Many pilots moved from the left seat to the right seat and many additional pilots were furloughed. AA retired 34 widebodies and has sort of replaced them with 738s, which of course pay less than AB6s did. None of that changes the fact that as a group, AA's pilots cost their employer more per ASM (or block hour) than pilot costs at the competition.
While AA pays for crew hotel rooms, those expenses are not included in wages, salaries and benefits on the financial statements. Besides, crew hotel costs are a trivial expense out of the $24 billion AA will spend this year. I'm sure that someone with the APA and APFA have a good idea how much AA spends, on average, per room per night. My guess is that the average is less than $50 per. If AA buys 3,000 rooms per night, at $50 each, that adds up to a whopping $55 million total for the year. Drop. In. The. Bucket. AA pays about six times more than that to credit card processors for accepting MC, Visa and Amex.
And if anyone has serious concerns about the financial statements accuracy, then your union should hire an auditor to find the discrepancies and with that evidence, go to the SEC and help send Horton and Arpey to prison for violations of Sarb/Ox. Then your union could sue AA and its accounting firm and collect piles of money for violations of the securities laws.
[quote name='FWAAA' timestamp='
And if anyone has serious concerns about the financial statements accuracy, then your union should hire an auditor to find the discrepancies and with that evidence, go to the SEC and help send Horton and Arpey to prison for violations of Sarb/Ox. Then your union could sue AA and its accounting firm and collect piles of money for violations of the securities laws.
I agree.
[/quote]
And if anyone has serious concerns about the financial statements accuracy, then your union should hire an auditor to find the discrepancies and with that evidence, go to the SEC and help send Horton and Arpey to prison for violations of Sarb/Ox. Then your union could sue AA and its accounting firm and collect piles of money for violations of the securities laws.
I agree.
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Look, you have obviously made up your mind based upon information provided by corporations, scabs, and guys running "analyst" operations on a home computer in their basement. If you want to throw your lot in with them, be my guest.
The bottom line is, anyone can claim we are "industry leaders" in pay, however, the KNOWN/FACTUAL pay rates, retirement packages, other benefits, and W2's coming from other pilots at other carriers blow this argument completely out of the water.
If you want to take a pay cut to "save" the company, have at it.
For the pilots, it is "restore or restructure". End of discussion.
The bottom line is, anyone can claim we are "industry leaders" in pay, however, the KNOWN/FACTUAL pay rates, retirement packages, other benefits, and W2's coming from other pilots at other carriers blow this argument completely out of the water.
If you want to take a pay cut to "save" the company, have at it.
For the pilots, it is "restore or restructure". End of discussion.
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part of the problem w/ these cost comparisons is that they are based on 2 year old DOT data. AA's formerly bankrupt competitors have regained a lot of ground in the past couple years. And AA's position didn't look near as bad two years ago as it does now.
Yep, when the evidence is unanimous, start calling people names and disparaging their living arrangements. I'll have you know that my mom's basement is very comfortable and the rent is affordable. 😀
I'm not talking about pay rates or the info that's shown on your W-2 or anyone else's W-2. It's clear that you are having diffficulty distinguishing between pay rates/wages/salaries v. pilot labor costs. The inefficiencies that are the fault of labor and management means that AA employs more pilots at more pay than the competition. That alone helps to make AA's pilot costs the highest. But if you want to talk payrates, only DL and WN pilot pay rates are higher than yours. UA/CO? Lower. USAir? A lot lower. AA's proposal to the APA would (except for the B scale for new small planes not on the property at AA) increase APA pay rates above the DL pay rates.
I don't work for the failing company you work for - so I'm not facing a paycut or bankruptcy-imposed contract abrogation or company pay proposal that's not as large as I'd like.
Yes, some of the comparisons are based on aged data.
And other than DL, which other formerly-bankrupt network competitors have negotiated higher pilot pay? Yes, DL pilots have regained a small portion of their $1.3 billion annual concessions thru higher hourly rates. But their hourly rates are still far below their pre-concession levels.
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remember that CO was twice bankrupt and their people are doing relatively well even w/ their separate contracts.
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I don't think there is any doubt that the industry will return to the levels of pay and benefits it once had - and those who think WN will continue to shell out substantial premiums over their peers now that WN is a nationwide airline will probably be in for a surprise.
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Part of the "benefit" for airlines that has come thru consolidation is that there are fewer companies and thus they have stronger control over all aspects of business, including the rates they are willing to pay labor.
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But you can still argue that there is a difference between how carriers have viewed their employees coming out of their restructuring; even if AA is forced to file, there is no reason for AA employees to relegate themselves to the bottom of the industry with expectations that they have to stay there.
If AA can turn its business around quickly and build on the historic network strengths which have given AA access to some of the top industry revenues, AA people can and should participate in that success.
And I would bet that the creditors will recognize it is in THEIR best interest to have a mgmt team that can bring some peace to a company that has been wracked by labor unrest for far too long... rebuilding from a philosophy of rewarding employees for their sacrifices that helped turn around the company and keep it successful could do wonders to restoring the mgmt-labor relationship at AA.
Not surprisingly, that type of philosophy existed at CO during its best post BK years, is being used by DL again after having been core to DL's historic philosphy yet which was thrown out for a couple decades, and is central to the way WN has always treated its people.
I'm not certain, but I think you left out a "never" between the two bolded words. Otherwise, the sentence reads like you believe that the very high pay of the old days is on the horizon.
And I agree about WN. The storm clouds just haven't gathered over LUV and its happy workforce yet. Someday they may.
