We always seemed to be $2 or $3 behind everyone else then we would get a raise a couple of months before everyone else negotiated a new contract. And I would like to point out that we were the last airline to max out at 7 weeks vacation (2001) and then we lost that in 2003.
Bob Says
- Thread starter mwa
- Start date
And now we are as much as $19/hr below UPS (we made as much as them in 2002) and have the distinction of getting at least one week less vacation than similarly situated peers, less than one fifth the holiday pay our peers get and half the sick time. But not to worry, Dons gain sharing plan is going to make up for all that.
I agree. Crandall also brought in B-scale which helped set in motion the process which led us to where we are now.
Yeah, but you made a good point. It is better to be a few dollars behind rather than about 20 dollars behind.
TWU informer
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- Nov 4, 2003
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Like what Mr. Crandall said or not, he once again spoke his opinions and in my opinion is correct in his assessment of the situation. Sure many would rather be told what they want to hear, but the reason Bob is respected is not because he tells everyone what they want to hear! He tells it the way he sees it.
metopower
Veteran
- Nov 28, 2006
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What Bob said is the truth. American pilots have always dictated the terms of their merger seniority. This will be different unless they are able to get an agreement before a merger. What my AA friend thinks is that they really do not fear an arbitrators decision. Their reason is that there will be a wall not a fence between AA and US pilots. No US pilot now on the list will ever make it to the left seat of a 777. That is their expectation and from previous AA mergers not far from what they got.
Real tired
Veteran
You guys liked Bob, and we liked Ed. Here's what he had to say on the matter:
http://www.thestreet...first-four.html
http://www.thestreet...first-four.html
HEAR ! HEAR ! EXACTLY ! I'm 100% sure of it "the shared sacrifice" scam sold to labor and what Carty did never of went down under Crandals watch....would much rather have someone who will tell me like it is and won't lie and cheat as the last three have,....what Bob represents is what is foreign to AA as of late,.......PRINCIPLED LEADERSHIP ! , which people will rally behind if not lied to and manipulated as we have been since. .... now we are at a cross road as a company and current leadership is to blame,...everyone except management is asking themselves and, its a shame that this old adage applies...''FOOL ME ONCE SHAME ON YOU,FOOL ME TWICE SHAME ON ME'' but in our case its more like fool me thrice shame on me,...honest straight talk with open books could of gone along way with moral and trust. Most of all Leadership that is all inclusive.
WorldTraveler
Corn Field
- Dec 5, 2003
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Crandall is saying what has the best chances to generate the most money for all parties - based on the results other carriers have obtained in other mergers. But there really is not assurance that the benefits other carriers obtained will play out for AA/US. There quite frankly is no way of knowing for sure but there is alot of reason to believe that the last carrier to merge is NOT going to obtain the benefits of the 1st merger or two unless they pry the revenue those carriers obtained out of their hands. No one seems to be willing to answer the question of where AA/US are going to gain revenue that other carriers have already gained. The merger does not work w/o revenue benefits.
"Mergers work best when one (carrier) is weak and one is strong and the weak one appreciates being bought up so they can all survive," he added. "Merging two strong airlines is inherently a culture clash, particularly at the top."
absolutely true statement.
Like them or not, DL has the best history of doing mergers in the US airline industry - but their strategy is to very quickly move to impose their own culture, brand anything about the acquired carrier as their own, and remove all vestiges of the acquired carrier.
There are people on this board who will rightly attest to the draconian cultural
But it allows DL to successfully do mergers in a business in an industry where mergers are far more likely to fail than succeed.
No one at US or AA should realistically expect that there will be a "merger" of cultures if AA/US is to succeed long-term.
Failure to acknowledge the differences and honestly deal with them are a guarantee for failure of the merger as a whole.
Neither AA or US have a strong record of successful merger integration, including under Bob or his successors.
One culture or the other will be relegated to the scrap heap or the merger will fail.
You seem focused on revenues, profits are the objective no?
I'm not a fan of the merger but all this talk about the need to increase revenues is BS. Revenues have increased, they are up by around $7 billion a year at AA, and they did that after shrinking the carrier by a third and the workforce even more than that.
The amount of revenue generated per worker more than doubled at AA in less than 10 years, a huge, unsustainable and unrewarded increase in productivity.
So for us Increased revenues, if there are any, will not go to us, they will go where the $7 billion in increased revenues and all our concessions went-to the banks. We already saw a huge increase in revenues on top of our painful concessions and what we got were more concessions, why would we expect a different result going forward?
WorldTraveler
Corn Field
- Dec 5, 2003
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Bob,
we've discussed this many times but 85% of the increased revenues went to pay for increased fuel costs over the decade.
With AA's $25B order of new aircraft, the increased revenues will indeed go to the banks; the increased interest costs - whether on leases or mortgages - on that amount of money could easily about to $1.5-2 billion.
Before AA can pay out profit-sharing, they have to cover all of those new costs - and as much as the AA fan club would like to tell you, the chances are indeed high that they will pay more in interest costs long term than they will save in fuel and maintenance costs relative to other competitors.
Yes, Bob, it is about revenue unless the focus continues to be to take out more costs.
AA and US are building the merger around the idea that more revenue can be generated -but it will have to be taken from somewhat.
Costs will more than likely be shifted from labor to aircraft manufacturers and banks - but will probably not be reduced by any significant degree.
we've discussed this many times but 85% of the increased revenues went to pay for increased fuel costs over the decade.
With AA's $25B order of new aircraft, the increased revenues will indeed go to the banks; the increased interest costs - whether on leases or mortgages - on that amount of money could easily about to $1.5-2 billion.
Before AA can pay out profit-sharing, they have to cover all of those new costs - and as much as the AA fan club would like to tell you, the chances are indeed high that they will pay more in interest costs long term than they will save in fuel and maintenance costs relative to other competitors.
Yes, Bob, it is about revenue unless the focus continues to be to take out more costs.
AA and US are building the merger around the idea that more revenue can be generated -but it will have to be taken from somewhat.
Costs will more than likely be shifted from labor to aircraft manufacturers and banks - but will probably not be reduced by any significant degree.
Yes and it seems that you EO and FWAAA like to cite how fuel ate up most of the increased revenue but fail to account for the elimination of 1/3rd of the carrier, thats labor (which contributed twice , reduced compensation and reduced heads), planes, landings, facilities, etc. So if AA had $20 billion in costs in 2003 and they dumped 1/3rd of the company then they dumped roughly 1/3rd of the costs as well, (yes I realize economies of scale etc thats why I said roughly) so AA should have seen a roughly $7billion cost reduction along with a $7 billion increase in revenues. So the fuel only took up less than half the swing, where did the other roughly $8 billion go?
WorldTraveler
Corn Field
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no, Bob, they shifted costs from one area of the company to another. If you want to analyze every cost and revenue item, we can go down that right but you have repeatedly said that AA's revenues went up by billions of dollars at which point it is most definitely accurate to say that its costs went up as well, 85% of which covered increased costs for jet fuel.
You also fail to mention that AA's AVERAGE employee costs are the highest in the industry -which doesn't mean that AA employees at top of scale were so well paid relative to other carriers but because AA had very few (relatively) low seniority employees. AA's average employee costs were so much higher because the airline didn't grow for 10 years while employees continued to gain scale pay increases and use more and more high priced health care coverage.
That is a big reason why AA's costs didn't go down even though thousands of employees were not at the company 10 years after restructuring began.
85%, Bob, 85%. Not half. 85%.
BTW, I can say w/ a very high degree of certainty that E and FWAAA don't want me lumped in the same camp w/ them.... I have said for years that AA had a revenue problem which they wanted to pretend didn't exist. Part of the reason why AA's costs have been far more problematic is because they haven't grown revenues over the past ten years anywhere near as fast as other carriers. AA now has one of the lowest average revenue per employee statistics among US airlines and a half year of fare growth didn't fix the overall problem. The only way to manage that revenue shortfall is with lower costs.
You also fail to mention that AA's AVERAGE employee costs are the highest in the industry -which doesn't mean that AA employees at top of scale were so well paid relative to other carriers but because AA had very few (relatively) low seniority employees. AA's average employee costs were so much higher because the airline didn't grow for 10 years while employees continued to gain scale pay increases and use more and more high priced health care coverage.
That is a big reason why AA's costs didn't go down even though thousands of employees were not at the company 10 years after restructuring began.
85%, Bob, 85%. Not half. 85%.
BTW, I can say w/ a very high degree of certainty that E and FWAAA don't want me lumped in the same camp w/ them.... I have said for years that AA had a revenue problem which they wanted to pretend didn't exist. Part of the reason why AA's costs have been far more problematic is because they haven't grown revenues over the past ten years anywhere near as fast as other carriers. AA now has one of the lowest average revenue per employee statistics among US airlines and a half year of fare growth didn't fix the overall problem. The only way to manage that revenue shortfall is with lower costs.
Wrong, revenues normally increase along with the size of the operation, but AA dumped over 300 airplanes and over 35% of its workforce after 2003, so they should have cut their fuel consumption by around a third, their leases by a third, their landing fees by a third but obviously they didn't, which only proves that giving concessions is fruitless, especially outside of BK because all that will happen is the banks and oil companies will simply take more. The Airline increased revenues while shrinking the operation, something that almost never happens, usually the challenge is to shrink the costs faster than the revenue shrinks and do so by reducing waste, the airlines were able to increase revenue by producing less, a double bonus. The banks, oil companies, Airports etc are just as dependent on our labor as the airline and the industry itself has never shown consistent profits, and it never will because its too labor intensive. If they show profits then they cant stop labor from getting their share. Thats why airlines pay $1000 for a $20 toilet seat or $4000 just to land plus a per person fee , plus millions in lease fees without batting an eye. The industries that feed off the airlines are the ones that reap the benefit. If labor gives concessions the savings will be shifted to the oil companies, the banks, the airports etc as our concessions simply provide them the opportunity to take more.
As far as the Average costs, in reality thats an apples to oranges comparison, competitors cant make an accurate calculation on productivity because they outsourced, which is a cost shift thats no longer accounted for. AA actually increased insourcing and doubled the amount of revenue produced per employee so AA is really the only carrier where productivity can be compared between years. At those other carriers the labor costs are still there, they are just factored in somewhere other than labor. We've gone over this time and time again but you still keep clinging to the same discredited lines. Even if you found a carrier that didnt change to outsourcing just looking at one thing doesnt tell the whole story. If one carrier has old planes and pays more in labor to maintain them but enjoys lower debt servicing and lower lease rates, lower parts and supplies etc their higher labor costs may be more than offset by those savings. There are scores of small carriers that survive using that strategy. AA had an old fleet, but they were also paying for planes they hadn't flown, in some cases for nearly 10 years, so maybe thats why they weren't seeing the savings they should have. They reduced their operations but were still paying for hubs in RDU and BNA. There are all sorts of variances that should affect the conclusion but that requires thoughtful analysis and its easier to just say "AA's labor costs are out of line" without ever taking into account that the labor costs provided AA the opportunity to reduce other costs that AA never exploited. Its also more convenient when your interests are better served by seeing money that should go to labor instead going someplace where you can profit by it. Shareholders owning shares in a company that leases redundant equipment and still collects rent on that worthless property are getting a really good deal.
AA's out of line labor costs were not the problem, what they paid per unit of labor was near the bottom of the industry, the problem was how come AA didn't translate that low labor unit cost advantage into an advantage in other expense categories?
My guess is AA had more new hires than UA or DL over the last ten years. UA still has mechanics on Recall.
BTW Eo and FWAAA don't decide for me where I categorize people So if its "Friend of Labor" or "Foe of Labor" you get lumped in with them in my book.
