Finally, AA mainline employee wage expense. In 2002, AA mainline wage expense was $7.954 billion across 97,800 mainline employees. In 2010, AA mainline wages expense was $6.25 billion, or $1.7 billion less than in 2002. That means that per-employee, AA mainline wage expense was $81,000 per employee in 2002 and $94,000 in 2010.
How can that be? Per employee wage expense is $13,000 more in 2010 than it was in 2002?
Two ways, and increased average costs are almost always the case when a company has layoffs but I'm sure you knew that. Obviously, even if your overall labor expense goes down, if you dont hire new employees your average costs per employee go up because as you pointed out you have people on steps, another factor was that the company gave Supervisors big raises through the "RISE" program. What they did was take the Supervisors and rename them managers, they did the same functions are before but now they got manager rates of pay instead of Supervisor rates of pay. Keep in mind that all of management is included in that figure. Their raises offset our savings, the also increased the ratio of managers per worker, further offsetting the savings. Obviously once the company starts hiring workers again the average cost will go down.
That said the cost went up $13000 but the revenue went up over $136,000(your numbers).Normally when companies shrink the challenge is that revenue falloff is larger than per unit expense increase. AA saw a huge revenue increase while shrinking the company, thats very favorable and uncommon.
The recall of TWA workers would also inflate the figure since those workers came in with full pay. We have a lot of guys at top pay with the full allottment of vaction, sick time etc that retired,this has the effect of lowering the amount of workers needed for coverage, this affects the total figure but not the average figure per worker because the max vaction would affect the number of workers needed but not the rate. This also helped increase the ratio of managers earning max rate to workers under concessions, thus inflating your figure for average cost per employee.
Finally, who cares how much per-employee revenue has increased? It's irrelevant. You have long posted that revenue is the sole province of management, not labor, as management decides how much or how little to charge in fares. Well, then, the increase of per-employee revenue is not because of anything attributable to labor, right? You can't have it both ways - if falling revenues are not your concern (because it's a management failure), then increasing revenues are similarly not your concern (because higher revenues must be a management success), right?
Wrong, I've said that
profits are of no concern to workers because we dont control what they do with the revenue we produce. Increased revenues simply show that the company has seen a huge increase in productivity from us, and the promise of Capitalism is that increased productivity is usually rewarded with increased living standards. We've seen the opposite. This promise was part of the sales pitch against the theory that Wages and Profits are inverse and the attempt to sell the theory that workers and capitals interests were complimentary rather than conflicting.
While we dont control the revenue either I cite this to counter the companys claims that we need to produce more just to keep what we have, the fact is we have already given the company a dramatic increase in productivity yet they are demanding further increases in productivity while offering nothing in return. Instead of being rewared for increased productivity we are being punished, continued behaviour and performace on our part will only result in continued behaviour and increased demands on their part. We've already earned our pay raises, its time to collect.
You dont like using the figure because it shows that the company has seen a vast improvement in productivity (which is very much relevant) and it doesnt support your arguement.
Per-employee revenue has certainly increased dramatically from 2002. But per-employee fuel expense has far outpaced those increases. On top of that, per-employee wage expense has also increased.
Ok, your claim, what is the per-employee fuel expense increase and what is the relevance? Should that ratio also apply against increased landing fees and other carrier costs or should it only be factored against labor?? What control does the employee have over fuel prices and arent employees also affected by higher fuel prices? Dont they in fact have to increase the price they charge for their labor to pay for increased energy costs as well as the company? What benifit does labor derive from increased fuel costs and why should it be a consideration of what labor should chanrge for what they provide?Doesnt the increased revenue of the smaller company prove that the company has already passed increased fuel costs on to the consumer through either higher fares and/or additional fees and more crowded planes?
Using your numbers, employee expenses are down $1.7 billion but fuel is up $3.2 billion, so the labor savings absorbed all but $1.5 billion of the increased fuel costs, where's the rest of it? AMR is bringing in over $4 billion more in revenue. Dont even attempt to bring up the $3 billion loss they claimed, $988 million of that was "Goodwill". We know that the revuenue is real and that losses are usually largely intangible, we call it cooking the books you call it legal business practices, we both know the numbers are bullshit when it comes to losses. Theres no way a company can lose real money(vs writedowns of intangible assetts, accellerated depreciation and all the other legal FASB approved ways our government gives corporations ways to avoid paying taxes) for as many years as airlines have and stay in business.
As far as the per employee cost increase perhaps the management raises were a mistake, and those costs should be extracted, the fact is that for mechanics their costs have gone down and the increase is an indicator of how much management costs have gone up, it not only absorbed all the savings from the union side but it brought the average up $13000, according to your figures. For the last seven years as headcount went down on the floor headcount in management was either maintained or increased. You may not care what management makes, or more likely dont want to hear it because it doesnt support your arguement but its most definately a relevent component in labor costs.
The "conumdrum" comment is nothing more than an attempt to cause division. I've already cited an example where AA saves a lot of money by doing work in house(painting) and the fact that AAs actions indicate that they save money by doing OH in house. They have brought more work back in house and they plan to add 900 more heads. They could in fact outsorce well over 1000 jobs and all of the work they are adding but they chose not to even though they know we will be demanding substantial raises. You have yet to produce any evidence that supports your claim that AA cant pay OH what SWA and other carriers pay their limited but still existing in house OH.
You conviently ducked the question of which employees took more from the company than was brought in on average per employee. That must be your legal training kicking in to duck and avoid a line of questioning that will inevitably lead to the exposure of something you dont want brought up.
The fact is the airline industry is a huge component of the oil industries market, if the airlines cant pay for the fuel the oil companies take a hit, they have an incentive not to overcharge still they have managed to sell the airlines a lot less fuel for a lot more money and post record profits during a recession that they caused. They will continue to raise the price of fuel as long as the airlines continue to pay it, the more concessions we give the more the airlines can continue to pay and the more the airlines will demand from us, the circle will just continue to go round and round until
we stop it .
The fact is the Airports make a lot of money by charging the airlines to do business at their airports, if the airlines cant pay the fees and go out of business the airports lose money but despite all the losses and capacity reduction the airports have managed to charge more.
The same goes for the banks and other vendors, nevermind all those that count on the service we provide, they all have just as much interest in keeping the airlines going as workers, but workers are the only ones making less, despite your figures. If workers go on strike they all lose money and if we want to get our share of the additional revenue, before everyone else takes a bite, thats what we must be prepared to do. If we dont they will continue to charge more, the airlines will continue to post losses and continue to demand more from us.
