AMR Faces Union Stalemate in Bid for $800 Million Labor Savings

[eolesen]

Let me clarify a bit... Inbreeding is a problem I specifically see within M&E, Frank. Everyone from the VPs on down to the soups need to have an A&P, so AMTs are the only source you have for managers. All they typically know is M&E. It's a highly insulated subset of management.

Look outside of that, and you routinely have managers who have worked in different cross sections of the company. The guys managing the bagroom or Cargo have also probably worked both areas, plus the ramp, and likely some time with passenger service. Lots more variation on the theme, lots more perspective to bring to the job. Throw a mechanic into that job as a manager, and it probably won't end as well. Not saying you're not capable, but if you've spent your whole life in one silo, it's a little hard to appreciate the stuff the other guys go thru on a daily basis.

I know one VP who started out as a res agent, worked his way up thru analyst and supervisory jobs, wound up as a GM at an airport, spent some time heading up one of the budget shops and more time working in policies & procedures. By the time he was made a VP, he had a seriously wide cross section of experience that he could pull from, and an appreciation for the operation that you just can't get from a guy whose entire career was spent on the docks, in the shops, and on the line.

The current CFO was over finance, airports, res, and AA.com before she became the CFO, bringing with her a lot different viewpoint than someone who spent their whole life within the Finance vertical like Arpey, Horton and Carty did. You've got a CMO who has worked in finance, sales, and outside the company at a tech firm.


I have no problem bringing in people from the outside, but we did that to a large extent with IT when the apron strings with Sabre were finally cut, and AA had to rebuild from virtually nothing. We wound up with a couple people like a VP who announced at a management conference that AA was really just a data communications company who happened to fly airplanes. Those VPs brought with them a bunch of mid-level managers who ran roughshod over the rest of the corporation, and wound up with salary packages that would make a tax attorney blush. At one point, it was like the rest of the company was there to serve IT, versus IT being there to support the rest of the company. That's finally worked itself out, but it was a painful couple years with a lot of carnage along the way.

My point with all that.... if you brought in some mid level guys from America West or Continental, it might work. But don't expect to bring in a bunch of guys from Cadbury, Exxon-Mobil or Frito-Lay and have them work a miracle. There's not a lot of time right now for a learning curve...

 

[737823]

Seriously Josh, lol. The airline industry is known as the ultimate "good old boys club". If they don't work at AA then they'll get a similar job at another airline. Women usually get the Flight Service and maybe Diversity or other customer service type executive positions BUT never the real hard hitting CEO, COO, CFO or even head of Legal positions. It is still "girls" in the back of the plane mentality. Clean house and get some b*** busting women in top positions to deal with this mess and quit talking about how good the current "talent" is... (speaking re: f/as but probably for all groups) You can have cost saving contracts without everyone feeling as if they've been hosed.

And I agree with a lot of what you posted. However, the problems you've identified are not unique to AA or unique to the airline industry. Research the management teams and corporate hierarchy that have been in place for decades (or centuries) at many companies. I'm of the belief that introducing people of different backgrounds ultimately benefits the company primarily though new ideas, different ways of thinking and of course greater sensitivity & awareness. The financial services business is very similar to AA in this regard with few exceptions. Eolesen is much closer to AA management than me so I'll go with what he's saying. However, to me AA does not appear to be the most dynamic, sensitive, and forward thinking organization. I think it would serve AA very well to have people from ethnic and racial minorities involved in management and strategic decision making. Over the years there have been snippets in the American Way (on-board magazine) highlighting employees and employee resource groups for ethnic minorities, the LGBT community, veterans, etc. Maybe its all spin or its really how AA operates. Who knows.

I will say that reviewing the biographies of AA's senior management that are publicly available online I'm less than fully convinced they've had much experience beyond AA, AT&T, North Texas, and SMU. Again, just my opinion.

Back to the topic of compensation-if AA wants to attract and retain top talent they need to offer competitive compensation. Much like Bob Owens and other union posters have said that slashing wages and benefits is bad for employee morale, its no different with management. You could make a compelling case that its actually more important for management since they make many key decision that impact AMRs stakeholder beyond employees.

Josh

 

[eolesen]

Money is great, but salary's not the primary motivator when you get to executives. It's the challenge of finding a way out of the mud.

As long as there's decent healthcare and an upside at some point via variable compensation, you'll find people willing to work for the salaries I proposed. $150-200K provides a fairly good lifestyle in North Texas, and waiting a few years for stock options (especially at $2) to mature means you have something to do while your kids finish school.

And don't go dissing North Texas. If you haven't lived there, you probably won't get why people stay there.