ASMs

[Bob Owens]

But simply having more airplanes does not make an airline more productive. If AA can find ways to use more assets efficiently, you win.

While some maintenance work is related to age, most is related to use - hours flown/cycles.

Yes and if you have fewer planes you will have fewer hours flown/cycles even if you are flying more people.

Also,, AA's productivity (ASMs produced per employee) is about 20% less than it is at CO, DL, or UA.

Yes but thats really not indicative of anything because those carriers simply transfered the work which produced a false increase in productivity, so their productivity gains can not be considered accurate, there is no way to detrmine if the company is actually running more effecient from those figures because the structure has been radically altered. Work was not eliminated it was transferred, so there is no way to determine if there was in fact an increase in productivity from those numbers. You would have to add in what the employer pays the vendor and other related costs.
However if we look at AA productivity that reflects real gains, in fact it understates the real gains in productivity because not only did we insource more of our own (which would falsely show a decrease in productivity if AA ASMs were the unit measured against) stuff but we do more 3P work as well (which would also show a decrease despite the fact that real productivity went up).

Average employee expense (salary plus benefits) per full-time employee (FTE) at AMR is comparable to that at CO, DL, and UA.

It is AMR's lower productivity that directly translates into AA's 20% higher labor CASM and thus lower profits than its network carrier peers.

The average employee costs are distorted, how could AMRs costs go up $10,000/year per employee when our compensation was cut 25%? Obviously they must have given management some big raises annd thrown other stuff, like the millions they pay "Consultants" into the mix.

The fact is that our compensation, a verifiable number where we can actually see everything thats thrown into it, is near the bottom of the industry. We lag SWA mechanics by around $21,000/year not including benifits.

AMRs CASMS are not 20% higher, according to the company their CASMs are "competative". They admitted as much, their labor costs may be 20% higher but thats because we do more in house and the company desires to staff their flights with more workers than some other carriers, so obviously this offsets and eliminates other costs that other carriers have since according to managementr most other costs are "fixed". The fact is that AA was able to increase the amount of ASMs produced per employee and revenue produced per employee without transferring work outside the company.

 

[MCI transplant]

<_< ------- But Bob! The dumb AMT's at AA ain"t supposed to know all that!!! :unsure:

 

[Rogallo]

Just the ones negotiating for us!!!

 

[MCI transplant]

Just the ones negotiating for us!!!

------- Touché!

 

[WorldTraveler]

Yes and if you have fewer planes you will have fewer hours flown/cycles even if you are flying more people.



Yes but thats really not indicative of anything because those carriers simply transfered the work which produced a false increase in productivity, so their productivity gains can not be considered accurate, there is no way to detrmine if the company is actually running more effecient from those figures because the structure has been radically altered. Work was not eliminated it was transferred, so there is no way to determine if there was in fact an increase in productivity from those numbers. You would have to add in what the employer pays the vendor and other related costs.
However if we look at AA productivity that reflects real gains, in fact it understates the real gains in productivity because not only did we insource more of our own (which would falsely show a decrease in productivity if AA ASMs were the unit measured against) stuff but we do more 3P work as well (which would also show a decrease despite the fact that real productivity went up).



The average employee costs are distorted, how could AMRs costs go up $10,000/year per employee when our compensation was cut 25%? Obviously they must have given management some big raises annd thrown other stuff, like the millions they pay "Consultants" into the mix.

The fact is that our compensation, a verifiable number where we can actually see everything thats thrown into it, is near the bottom of the industry. We lag SWA mechanics by around $21,000/year not including benifits.

AMRs CASMS are not 20% higher, according to the company their CASMs are "competative". They admitted as much, their labor costs may be 20% higher but thats because we do more in house and the company desires to staff their flights with more workers than some other carriers, so obviously this offsets and eliminates other costs that other carriers have since according to managementr most other costs are "fixed". The fact is that AA was able to increase the amount of ASMs produced per employee and revenue produced per employee without transferring work outside the company.

Bob,
If AA can't make money flying 100 seat airplanes (which apparently neither can any other US network carrier - as well as many foreign network carriers as well) - then, they will fly the airplanes that can make money... and if that means fewer small airplanes like the F100, then that is what it will be. Labor has to work w/ mgmt to figure out how to make operating those planes economical.
AA also added the seats it took out w/ MRTC back - and then more - because more seats on airplanes is what makes money... flying a bunch of airplanes around doesn't if there aren't enough seats on those planes.

You can hold onto this silly notion that AA's costs are higher because they do maintenance work in-house but the simple fact is that at the end of the day, ALL costs, including outsourcing costs - go into calculating CASM for a carrier. Every other carrier has lower CASMs and that includes the outsourcing they do.

Other carriers and AMR separate their contract work from their own costs and revenues and report it separately because investors need to know how AMR is really operating on its own... regardless of what insourcing it does.

AMR has repeatedly said its labor costs are not competitive..... and whether you or AA wants to admit it, Wall Street analysts fully recognize that AA's costs are way above competitive levels - because if they were competitive, AA would have reported a profit on par w/ its peers in this last quarter - and in the one that is going to end in a couple weeks.

AA still has far more employees producing less revenue at higher costs than its network carrier peers. AMR's losses - or much smaller profits - and its shrinking presence (absolute and relative to competitors) in many markets proves it.

 

[Bob Owens]

You can hold onto this silly notion that AA's costs are higher because they do maintenance work in-house but the simple fact is that at the end of the day, ALL costs, including outsourcing costs - go into calculating CASM for a carrier. Every other carrier has lower CASMs and that includes the outsourcing they do.

I agree, it is a silly notion thats our costs are higher, and if you were to actually read what I've posted numerous times I've said as much. AA's labor costs are higher, but they pay less, our labor costs are higher because we outsource less and the company opts to staff higher, their choice not ours. AAs decision to insource drives up labor costs but offsets other costs such as what they would pay the vendor to do that work that AA employees could do, the fuel burned to fly the plane to a vendor, the time lost having to work around the vendors schedule, crew costs, higher material costs, higher parts costs, poorer post check reliability and costs associated with that. If other carriers have lower CASMs and provide the exact same service to the exact same places then there may be a problem but then you have to compare RASMS as well. Sure AA could lower costs big time by switching all their flights out of ISP instead of JFK, LGA and EWR, where they would pay a fraction of what they pay for landing fees (Over $4000 per 777 landing, not including passenger tax etc etc), leases and rents but they probably could not get the same fares they get out of those three stations. If AA cant make money despite the fact they pay less then our wages are not the problem.

Other carriers and AMR separate their contract work from their own costs and revenues and report it separately because investors need to know how AMR is really operating on its own... regardless of what insourcing it does.

Show me. Show me where they break it down. The company actually told us they dont know if they are profitable in the 3P market. So are they lying or are you blowing smoke?

AMR has repeatedly said its labor costs are not competitive..... and whether you or AA wants to admit it, Wall Street analysts fully recognize that AA's costs are way above competitive levels - because if they were competitive, AA would have reported a profit on par w/ its peers in this last quarter - and in the one that is going to end in a couple weeks.

Is that why they are saying its a moderate buy?
http://moneycentral.msn.com/detail/stock_quote?Symbol=amr

You keep talking about profits as if they are the end all for all businesses, well if you post profits you have to pay taxes on those profits, but if you take all that revenue you generated and roll it back into the company(while giving yourself a nice salary and a bunch of perks) you dont. You ever notice how they say "show a profit" instead of simply "made money"? The banks, they dont really care about profits either, they just want you to pay their double digit interest charges, maybe apply for refinancing that debt so they can hit you up for a couple of million in fees as well. The investment firms, well if the equity in the company goes up, even when they dont "Show" or "report" a profit, then the value of the company goes up, even if it doesnt they need the airline industry like the body needs a heart, to keep money flowing. Thats why despite BK most of the big carriers that filed back in 2002-3 are still here, in fact the money masters were falling over themselves to provide financing and get some of those newly issued shares. Why didnt they simply let the industry consolidate? Because the more consolidated the industry becomes the more power labor has and they dont want to share with labor. AMR is bringing in around $4 billion a year more than they were in 2003, they have around 30,000 less employees (making 25% less) and 200 less airplanes, how could they not be "making money"?

 

[eolesen]

AMR is bringing in around $4 billion a year more than they were in 2003, they have around 30,000 less employees (making 25% less) and 200 less airplanes, how could they not be "making money"?

You're a like broken record, Bob....

Whenever someone goes and gives you any shred of evidence to back up the notion that AMR's costs are out of whack, you immediately break out into another verse of "$4B with Less"...

And then someone will remind you how much things like fuel, health care, rent, etc. have risen. Which you will then point out are things you're having to pay more for, too...

And then you'll probably say something like "the oil company gets theres, so we should get ours!" which will result in lots of "harumps!" from the chorus...

Did I miss anything?...



You keep insisting that the company is behind the decision to insource. That's brilliant, except that the only reason they insource is because they're complying with a 50 year old clause in the current contract.

If the company really had the flexibility to send work outside to the degree that others do, I suspect they'd have done it already.

 

[Mr Red]

You're a like broken record, Bob....

Whenever someone goes and gives you any shred of evidence to back up the notion that AMR's costs are out of whack, you immediately break out into another verse of "$4B with Less"...

And then someone will remind you how much things like fuel, health care, rent, etc. have risen. Which you will then point out are things you're having to pay more for, too...

And then you'll probably say something like "the oil company gets theres, so we should get ours!" which will result in lots of "harumps!" from the chorus...

Did I miss anything?...



You keep insisting that the company is behind the decision to insource. That's brilliant, except that the only reason they insource is because they're complying with a 50 year old clause in the current contract.

If the company really had the flexibility to send work outside to the degree that others do, I suspect they'd have done it already.

Eolesen,
Do u really believe the things u come up with,
this is the company that started buying #### paper rolls that are to small for the holders
because they wanted to save a dime. Give me a break.

 

[Bob Owens]

You're a like broken record, Bob....

Whenever someone goes and gives you any shred of evidence to back up the notion that AMR's costs are out of whack, you immediately break out into another verse of "$4B with Less"...

And then someone will remind you how much things like fuel, health care, rent, etc. have risen. Which you will then point out are things you're having to pay more for, too...

And then you'll probably say something like "the oil company gets theres, so we should get ours!" which will result in lots of "harumps!" from the chorus...

Did I miss anything?...

Yea, you missed the fact that you guys keep making the same disproven misleading claims. The answer doesnt change because you keep making the same claim. Want a different answer, come up with a new reason we should accept more concessions and bottom pay. I notice that you dont dispute what I said, you just complain that you keep hearing it, well we are sick of hearing the same twisted claims as to why we should accept more concesions and being near the bottom of the industry in pay.

You keep insisting that the company is behind the decision to insource. That's brilliant, except that the only reason they insource is because they're complying with a 50 year old clause in the current contract.

If the company really had the flexibility to send work outside to the degree that others do, I suspect they'd have done it already.

As far as compliance with a 50 year old clause we both know that the Smith letter is vague. Up until the bankruptcy wave started in 2002 AA was one of the leaders in outsourcing under that clause. The 1989 letter is much clearer, we have to prove to a company dominated committee that it makes economic sense to insource any work that the company outsourced. This is an industry were technology and equipment are constantly changing and that constant change gives the company a continuous opportunity to send out work because there isnt a clause that requires that the company update their facilities and train us on new stuff.

From the CBA
The Company has agreed to create a joint committee for each Branch Manager’s area
at Tulsa. The committee will meet periodically to review contracting out practices. Such
items as cost considerations, turn times, training, facilities and return on investment will
be reviewed. Each committee will be made up of three (3) management and two (2)
TWU members with the Branch Manager as the Chairperson.[/

 

[eolesen]

Eolesen,
Do u really believe the things u come up with,

I'm not coming up with anything you can't read for yourself in a 10-Q and a 10-K. It's all there. Take an intro to accounting class if you can't figure it out, or look at Wikipedia, which does a fairly good job at explaining this: http://en.wikipedia.org/wiki/Income_statement

Think about it. If the outsiders, industry analysts, and the investment community are all coming to the same conclusion, maybe, just maybe, there's a shred of truth to it.

What do World Traveler, FWAAA, or myself gain from trying to spin anything? It's not like I'm betting on airline stock -- that's a more useful thing to try out on your too-small toilet paper holders (??). We have no stake in this (aside from my paltry pension some day, which is no doubt guaranteed), aside from trying to point out fact that are missing from the breakroom myths.

Or, you can just trust what your union is telling you. Really.

 

[Mr Red]

I'm not coming up with anything you can't read for yourself in a 10-Q and a 10-K. It's all there. Take an intro to accounting class if you can't figure it out, or look at Wikipedia, which does a fairly good job at explaining this: http://en.wikipedia.org/wiki/Income_statement

Think about it. If the outsiders, industry analysts, and the investment community are all coming to the same conclusion, maybe, just maybe, there's a shred of truth to it.

What do World Traveler, FWAAA, or myself gain from trying to spin anything? It's not like I'm betting on airline stock -- that's a more useful thing to try out on your too-small toilet paper holders (??). We have no stake in this (aside from my paltry pension some day, which is no doubt guaranteed), aside from trying to point out fact that are missing from the breakroom myths.

Or, you can just trust what your union is telling you. Really.

Thats the problem, we don't have a UNION at AA.
The only bright spot is we have guys like Bob Owens,
wish he was running the show at the International !

 

[Bob Owens]

I'm not coming up with anything you can't read for yourself in a 10-Q and a 10-K. It's all there. Take an intro to accounting class if you can't figure it out, or look at Wikipedia, which does a fairly good job at explaining this: http://en.wikipedia.org/wiki/Income_statement

Funny but when I qouted Wiki didnt you refute its reliablity?

Think about it. If the outsiders, industry analysts, and the investment community are all coming to the same conclusion, maybe, just maybe, there's a shred of truth to it.

You mean the talking heads employed by the investment community who claimed back in the 90s that the business cycle was a thing of the past? No, they could never be wrong. The fact is the corporate media is an echo chamber, they keep bouncing the same stuff around until it sticks. Millions of Americans invested based on advice from these same sources and the vast majority lost money, so now you are saying they cant be wrong? Didnt one of your outsiders, analysts or whatever claim that we would ratify the TA?

What do World Traveler, FWAAA, or myself gain from trying to spin anything? It's not like I'm betting on airline stock -- that's a more useful thing to try out on your too-small toilet paper holders (??). We have no stake in this (aside from my paltry pension some day, which is no doubt guaranteed), aside from trying to point out fact that are missing from the breakroom myths.

Tell us who you are, who you work for and what you do and that will give us an idea into your motives. The amount of time spent here indicates that whatever your motives are they are very strong, that , 9 times out of 10, boils down to the motive being economic.

 

[eolesen]

Ah, yes, I left out that verse of your same old tired song & dance routine... "who are you and why does your opinion matter???"

Been there, done that. Google me if it matters so much, Bob. Maybe you'll discover if it was me at that midnight picnic with O'Donnell...

 

[FrequentFlierCA]

If AA wanted to "outsource" work so much you overhaul guys would have lost your jobs to South Koreans a long time ago.

 

[Hopeful]

If AA wanted to "outsource" work so much you overhaul guys would have lost your jobs to South Koreans a long time ago.

Exactly! Why haven't that they?

Because they thought they would have a contract in place to pay 3P wages to TULE and base workers.
Now with the no vote, methinks they will start playing the outsource card again.