Boston

[Hopeful]

The only flip-side is that, first off, other legacy airlines (that have used bankruptcy to reduce their labor costs dramatically below AA's) are bound to see their costs - not only labor - rise substantially in the future as their unions begin to claw concessions back. Plus, beyond that, airlines like Delta that are growing left and right in particular markets today are in no way guaranteed to make money on those flights tomorrow - only time will tell for those airlines.

United has been bleeding money hand over fist since bankruptcy. Gutted their labor agreements and still can't seem to be profitable.

I don't suppose you blame management for any of that? You seem to blame labor for airline's woes. Labor costs have nothing to do with AA at Boston.

 

[Bob Owens]

And yet, AMR's labor costs in the second quarter of 2009 were the highest, by far, of any major airline in the United States - 25% higher, for example, than United, or 9% higher than Southwest on a unit base.

You are either mentally challenged or determined in your mission to decieve.

Lets say it cost AA 10 cents to produce an ASM and all other things are equal.
Airline AA chooses to do all their maintenance in house so it costs them 5 cents in labor to produce one ASM.
Airline BB chooses to outsource all their maintenance and only pay the Flight Crews, gate agents and management so they pay 4 cents in labor costs but 3 cents in fees to contractors who do their maintenance. Which company is more profitable? Airline BBs total cost per ASM is 12 cents. According to you BB is doing better because their labor costs are 20% lower but their CASMs are are 20% higher. So you, brilliant businessman that you are will come here and say AA labor costs are 20% higher, they must cut labor costs, despite the fact that even though their labor costs per unit are higher their total unit costs are lower.

Now you will probably say that AAs CASMs are higher than SWA (but they are lower than most of its competitors) to which I will reply you are not considering the "all other things equal". For instance SWA lands their planes in Islip New York where it costs them around $250 per landing while AA operates out of JFK where they pay upwards of $4000 to land, that alone could add 2 cents to the CASM or 20% in higher operating costs.

Thats just two variables between different carriers business plans, there are many more and thats why we must compare apples to apples. We should be comparing how much AA pays per unit (measured in hours) for labor.

So I guess you can argue that other airlines pay higher than American, but it still doesn't change the fact that American spends more money on labor than any other airline in the United States on a unit basis, which either means that AA's employees are better compensated overall than their peers (when you include base pay, stock options, and the pension), or that AA's employees are less productive than their peers, or both.

To those ignorant of the facts it would mean that. To those who are more knowledgable they would say that from such limited parameters such a conclusion can not be made, because you do not consider all the variables you are in error on all counts.

Great argument - if you disagree or have a different view, you're a Nazi. And people wonder why the power of organized labor in the United States continues to decline with every passing year.

No if you lie when you know its a lie with the intent to decieve then you are utilizing a tactic of the Nazis.

Even if AA has labor costs that are higher due to employing many of the workers that other airlines have laid off and outsources - and I don't necessarily disagree with that, to an extent - AA's maintenance costs are still among the highest in the industry.

AA's unit maintenance expense in the second quarter was the second-highest among the legacy airlines, and higher than any of the low-cost carriers, all of whom outsource overhauls.

Thats not due to labor. Its due to many factors including the fact that AA has more planes, (If you have more planes than someone else its a reasonable assumption that you total maintenance costs will be higher than the guy who has less palnes to maintain), a diverse fleet type,(This drives costs up because you have to stock more parts, provide more training and buy more specialized tooling), the decision to do costly fuel saving and other mods (wingletts, MAUI, GOGo etc), hangar renovations , the decision to buy expensive equipement such as Goldhoffers and third party work. By doing third party work it drives up costs but also brings in additional revenue to offest those costs.

The fact is that AA is among the lowets in pay, their labor costs per hour are among the lowest in the industry but the amount of revenue generated per lower paid employee is among the highest in the industry, depite the fact that AA employs more workers per unit they generate more revenue per worker than even SWA.That means that not only are they paid less but they are more productive.

So AA pays less per hour and gets more revenue generated per hour than even SWA, so obviously the problem with AA's balance sheet does not lie with labor it lies with its other costs such related to where they operate, what they operate and how they operate.

 

[Ralph]

Well, the topic was AA service to/from BOS. But, since it has wandered off into another circular argument about cost structure and whose numbers are correct, the thread is closed.