Are Further Concessions Necessary

[BoeingBoy]

To All,

Two tidbits of information caught my eye today.

The first is AMR's forecast for 1st quarter and year unit cost. As many of you will remember, their employees gave concessions early last year to avoid bankruptcy, but those concessions amounted to a smaller percentage of total employee costs than were given here. AMR concurrently embarked on mission to reduce non-labor costs as much as possible. They are forecasting 1st quarter unit cost of 9.48 cents (down 17%) and 2004 unit costs of 9.34 cents (down 8%). This is at or below what Siegel says he wants our hub/spoke unit costs to be - 8 cents excluding fuel.

Article Here


The other tidbit was DAL's downgrade by S&P to B-, the same as ours. What was interesting is that S&P took all DAL's ratings off creditwatch and said that the outlook was "stable". Without massive employee concessions, especially the pilots, S&P presently believes no further downgrades will be warranted. Of course, you all know that our ratings are on creditwatch with a negative outlook.

Article Here

Jim

 

[USFlyer]

The revenue generation capability of AMR and DAL (and UAL, DAL and CAL) are way ahead of how much revenue UAIR can reasonably generate with its current route network and fleet.

 

[jimntx]

See also, Continental Airlines. While not out of the woods, they seem to be doing quite well. And, since 9/11, they have not furloughed a single flight attendant (not sure about pilots) nor have they asked for a dime in givebacks from their employee groups.

 

[BoeingBoy]

USFlyer,

You are right - they are much bigger than U and hence generate much more revenue and have much higher costs. What matters is revenue vs costs, usally CASM vs RASM. AMR has done a much better job of attacking ALL costs than U.

As for the route network and fleet, those details are the responsibility of.....

Jim

 

[airlineorphan]

jimntx wrote:

See also, Continental Airlines. While not out of the woods, they seem to be doing quite well. And, since 9/11, they have not furloughed a single flight attendant (not sure about pilots) nor have they asked for a dime in givebacks from their employee groups.


--------------------

Jim
AA F/A furloughed 02JUL03

Jim,
I thought CAL announced 10,000 job cuts on the Saturday or Sunday after 9/11. I remember working one of the first flights to operate out of BOS that Sunday and getting a call from one of my f/a bootcamp classmates letting me know about the CAL announcement. Did they offer a really superior voluntary program at CAL?

How're things in my home state of TX? Awefully nasty up here in Boston today!

-Airlineorphan

 

[orwell]

See also, Continental Airlines. While not out of the woods, they seem to be doing quite well. And, since 9/11, they have not furloughed a single flight attendant (not sure about pilots) nor have they asked for a dime in givebacks from their employee groups.

But weren't CO labor wages quite a bit cheaper than the other majors? I'm guessing this is a huge reason they didn't, as you say, ask for a dime. I know there were some layoffs, though.

I think they had lower labor costs thanks to bankruptcy maneuvers in the 90s - but Uncle Gordy is proud of them nonetheless.

 

[ClueByFour]

The revenue generation capability of AMR and DAL (and UAL, DAL and CAL) are way ahead of how much revenue UAIR can reasonably generate with its current route network and fleet.

And, if PSA and MDA are sold, the ability to generate revenue will get even weaker, as the former accounts for what is arguably the core of the US route network (RJs in the northeast/east coast) and the latter was supposed to be the "LCC competitive response" (just coining another poster's terminology here).

 

[BoeingBoy]

Orwell,

You are correct - at least as far as pilots go. CAL's pay was less than at least most of the other majors (don't know about NWA). Currently, their pay is more than our's - I would get an $8/hour raise, more vacation, longer minimum rest on trips, more per diem on trips, etc. under CAL's pilot contract.

Jim

 

[jimntx]

Jim,
I thought CAL announced 10,000 job cuts on the Saturday or Sunday after 9/11. I remember working one of the first flights to operate out of BOS that Sunday and getting a call from one of my f/a bootcamp classmates letting me know about the CAL announcement. Did they offer a really superior voluntary program at CAL?

How're things in my home state of TX? Awefully nasty up here in Boston today!

If they did, none of them were flight attendants. They "furloughed" 41 (might have been 47) flight attendants who were still in training or still on probation. AA simply released all the trainees and probationers. I have a friend who started flying for CO 2 months after I started at AA in SEP00. He's still flying and now has more time with CO than I have with AA. CO does have some flight attendants on voluntary leaves of absence, but I don't know how many.

Oh, and the weather report for Dallas today is bright blue sky with a high of 80 degrees, relative humidity 42%. In other words, gorgeous.

But weren't CO labor wages quite a bit cheaper than the other majors? I'm guessing this is a huge reason they didn't, as you say, ask for a dime. I know there were some layoffs, though.

What I know is that as of DEC03, the top of scale for CO flight attendants is about $7/hr higher than top-of-scale for AA flight attendants. (I'm not sure about that figure. Top of scale at CO is now about $48/hr. I thought top at AA was $44/hr now, but someone told me yesterday that it's actually about $41.) The main thing is that they make more than AA flight attendants. That was another interesting point. The scheduled raises for CO flight attendants in their current CBA have been honored by the company right along. The DEC03 was the last scheduled raise in the last contract.

 

[johnnyfleet]

But weren't CO labor wages quite a bit cheaper than the other majors? I'm guessing this is a huge reason they didn't, as you say, ask for a dime. I know there were some layoffs, though.

I think they had lower labor costs thanks to bankruptcy maneuvers in the 90s - but Uncle Gordy is proud of them nonetheless.

CO's Agents tos is 21.56 per hour after 10 years, which is about what US had for tos before the cuts. CO Mechs are Teamsters, and have one of the highest pay rates in the industry!

 

[diogenes]

As for the route network and fleet, those details are the responsibility of.....

Jim

Isn't it interesting that management and their apologists (their name is Legion, for they are many! ) NEVER,NEVER,NEVER address that point?

And until they do, in a candid and forthright manner, I, unlashed from the mast, am deaf to their pleadings.