Consumer Reports raises concerns about outsourced airline maintenance

[strikeforce]

Wow - reading through this thread is comical.

It's hysterical that people here simultaneously decry how AA's competitors are shipping maintenance work to El Salvador so allegedly unlicensed mechanics can do the job at $2/hour, and then in the same breath feign outrage and intrigue at the suggestion that their cost might have something to do with AMR's financial performance relative to competitors. One just has to laugh. It couldn't possibly be more clear: the two are connected!

AA's unit costs - both labor and maintenance/engineering - are among the highest in the U.S. for various reasons, including - yes - the costs of AA's employees. Your pay is higher than industry average (and certainly when one averages in the El Salvador/China wages of your competing mechanics), you have a defined benefit pension that is still being actively funded, you have medical benefits, etc. That reality is unavoidable.

As I said on another forum addressing this same topic: if a plane is sent to El Salvador for maintenance, and the plane doesn't crash and nobody dies, does anybody really care? Seems dramatic, but it's true. As it stands today, from my experience, for the vast majority of travelers, if the choice is to fly on AA, which performs 100% of heavy maintenance overhauls in-house with its own union employees in the U.S. or Airline "X," which outsources that work to mechanics in El Salvador, and Airline "X" is pricing out at $10 less, most people won't ever think twice about booking with Airline "X." That's just reality for most people.

Do you find it comical that AA management decides whether the airline will do in-house maintenance or farm it out. To date, the airline obviously believes it's more advantageous to do it in-house, or they would have farmed it out to 3P's, right? Therefore, you can only blame AA for accepting those higher labor costs, knowing full well they can't raise fares above their competitors. That's what I call.....reckless management, when you accept to pay a higher premium for labor, and then complain about it or threaten to farm it out?
Labor can only offer AA a contract proposal on what that in-house maintenance will cost the airline. It's up to AA whether to accept or reject those terms.


We all know that dollar for dollar, no U.S. based unionized labor organization can compete against overseas 3P hack shops. In addition, we have 3P hack shops in this country that undercut unionized labor.

So, would you be in favor of outsoucing pilots, plumbers, electricians or doctors for non-licensed, non-english speaking individuals? Don't YOU pay a premium for those services? I do!

 

[Birdman]

Wow - reading through this thread is comical.

AA's unit costs - both labor and maintenance/engineering - are among the highest in the U.S. for various reasons, including - yes - the costs of AA's employees. Your pay is higher than industry average (and certainly when one averages in the El Salvador/China wages of your competing mechanics), you have a defined benefit pension that is still being actively funded, you have medical benefits, etc. That reality is unavoidable.

What is comical is a novice coming on the board and making a broad statement about something that's much more complex than just looking at wages. Here is AA's own numbers on wages so your premise must start with below average wages for AA mechanics. http://www.aanegotiations.com/MechanicsWages.asp (UA T/A not included)
A true comparison must include the total billed cost of a check and the length of time the a/c was out of revenue service. Since none of us has seen the internal financial records of all the airlines, an average comparison of wages only falls woefully short of proving your statement. Not even our own CEO knows if it's cheaper to outsource so how could you?

 

[commavia]

Do you find it comical that AA management decides whether the airline will do in-house maintenance or farm it out. To date, the airline obviously believes it's more advantageous to do it in-house, or they would have farmed it out to 3P's, right? Therefore, you can only blame AA for accepting those higher labor costs, knowing full well they can't raise fares above their competitors. That's what I call.....reckless management, when you accept to pay a higher premium for labor, and then complain about it or threaten to farm it out?
Labor can only offer AA a contract proposal on what that in-house maintenance will cost the airline. It's up to AA whether to accept or reject those terms.

I don't disagree with you - AA has under-performed peers financially because the management decided not to follow the Continental, Delta, Northwest, United, USAirways, etc. path and file for bankruptcy, freeze and/or dump pensions, lay off thousands of additional employees, exact even deeper wage/benefit cuts, increase productivity even further (fewer people, more work, longer haul flying, etc.), outsource more and more of their flying to non-union and/or lower-cost regional operators, and outsource their heavy maintenance to third parties and/or foreign countries, among others. All of those things have been done - to varying degrees - at AA's legacy peers in the past, to the detriment of those airlines' employees (at least that's how I suspect you'd see it), and that is a very big part of the reason why those airlines are doing better today than AA.

I was simply stating that - for better or worse - while AA's management's choice has led to financial under-performance relative to peers, it has also led to a lot more AA employees keeping their job, and at higher total compensation levels (pay+benefits+pension) than many of their peers. That is what I think is sometimes lost on this board.

What is comical is a novice coming on the board and making a broad statement about something that's much more complex than just looking at wages. Here is AA's own numbers on wages so your premise must start with below average wages for AA mechanics. http://www.aanegotiations.com/MechanicsWages.asp (UA T/A not included)
A true comparison must include the total billed cost of a check and the length of time the a/c was out of revenue service. Since none of us has seen the internal financial records of all the airlines, an average comparison of wages only falls woefully short of proving your statement. Not even our own CEO knows if it's cheaper to outsource so how could you?

First off, I'm not a "novice." Just because I don't necessarily agree with everything that you and others here on this board say - though I don't disagree with all of it, either - doesn't make me a "novice," nor does it make my opinion any less valid than yours.

Second - read what I wrote. I started my entire comment with the term "unit costs" - that means cost per ASM, which is the metric that everyone in the industry uses, and the metric that AA labor unions have said is the genuine metric for comparison. On that metric, AA's costs - both labor and maintenance - are higher than many of their peers. You can save the defensiveness - I never said that I was referring only to wages - which are, of course, only one part of the equation, but miss some big drivers of cost like productivity and benefits.

 

[Mr Red]

Wow - reading through this thread is comical.

It's hysterical that people here simultaneously decry how AA's competitors are shipping maintenance work to El Salvador so allegedly unlicensed mechanics can do the job at $2/hour, and then in the same breath feign outrage and intrigue at the suggestion that their cost might have something to do with AMR's financial performance relative to competitors. One just has to laugh. It couldn't possibly be more clear: the two are connected!

AA's unit costs - both labor and maintenance/engineering - are among the highest in the U.S. for various reasons, including - yes - the costs of AA's employees. Your pay is higher than industry average (and certainly when one averages in the El Salvador/China wages of your competing mechanics), you have a defined benefit pension that is still being actively funded, you have medical benefits, etc. That reality is unavoidable.

I'm not saying that the solution is necessarily concessions, and certainly not that AA should outsource maintenance to a third party vendor, let alone another country. But, it is striking that labor can be so hot and bothered over competition from non-union, allegedly unlicensed mechanics in third world country stealing the work from their "profession" or "craft" and then stoutly refuse to acknowledge that they are simply not competitive with those mechanics (that all of AA's competitors are now using).

As I said on another forum addressing this same topic: if a plane is sent to El Salvador for maintenance, and the plane doesn't crash and nobody dies, does anybody really care? Seems dramatic, but it's true. As it stands today, from my experience, for the vast majority of travelers, if the choice is to fly on AA, which performs 100% of heavy maintenance overhauls in-house with its own union employees in the U.S. or Airline "X," which outsources that work to mechanics in El Salvador, and Airline "X" is pricing out at $10 less, most people won't ever think twice about booking with Airline "X." That's just reality for most people.

I, myself, fly on AA constantly, and I like the fact that those planes are maintained by licensed, English-speaking mechanics in the U.S. under the oversight of the FAA. But would most people be willing to pay AA a premium for the comfort of that knowledge? I think not. Thousands of people per day happily step onto U.S. airplanes that were overhauled in El Salvador, China, etc. without ever even knowing and/or caring. And until that changes - and, to be more direct, until organized labor figures out a way to demonstrate its value to the flying public and policy makers - the trend of lower-cost competition, greater cost pressure, and diminishing financial performance for AA will continue.

READ MY LIPS WE ARE BOTTOM OF THE BARREL ! MCFLY ARE U THERE !!!

 

[Birdman]

First off, I'm not a "novice." Just because I don't necessarily agree with everything that you and others here on this board say - though I don't disagree with all of it, either - doesn't make me a "novice," nor does it make my opinion any less valid than yours.

Second - read what I wrote. I started my entire comment with the term "unit costs" - that means cost per ASM, which is the metric that everyone in the industry uses, and the metric that AA labor unions have said is the genuine metric for comparison. On that metric, AA's costs - both labor and maintenance - are higher than many of their peers. You can save the defensiveness - I never said that I was referring only to wages - which are, of course, only one part of the equation, but miss some big drivers of cost like productivity and benefits.

I consider most on this board as novices, including myself, as few us have airline managerial expertise and a formal business education. Sure I'm defensive when the M&R is singled out and vilified without supporting relative data to make ones case. ASM does not provide details but a very broad assessment. I've been waiting, without satisfaction, for details on maintenance costs for years.

 

[WorldTraveler]

I don't disagree with you - AA has under-performed peers financially because the management decided not to follow the Continental, Delta, Northwest, United, USAirways, etc. path and file for bankruptcy, freeze and/or dump pensions, lay off thousands of additional employees, exact even deeper wage/benefit cuts, increase productivity even further (fewer people, more work, longer haul flying, etc.), outsource more and more of their flying to non-union and/or lower-cost regional operators, and outsource their heavy maintenance to third parties and/or foreign countries, among others. All of those things have been done - to varying degrees - at AA's legacy peers in the past, to the detriment of those airlines' employees (at least that's how I suspect you'd see it), and that is a very big part of the reason why those airlines are doing better today than AA.

I was simply stating that - for better or worse - while AA's management's choice has led to financial under-performance relative to peers, it has also led to a lot more AA employees keeping their job, and at higher total compensation levels (pay+benefits+pension) than many of their peers. That is what I think is sometimes lost on this board.

problem is that that your theory isn't accurate any more. There was a point when it was true that AA employees fared no worse than their network peers but that has changed. Check the link out which Birdman posted. AA employee salaries ARE lower than several of their peers that went through BK. As much as you want to tell about the huge costs that those employees went through at other airlines, you seem to miss that AA employees have endured alot of paycuts and layoffs as well. And some of those other carrier employees did recover some of their losses through stock distributions and more recently profit sharing. When you add in that many of those employees are making more than AA employees now, it's pretty clear that the tide has turned - which is probably partly why AA labor is getting increasingly restless. Not only are other carriers doing better (they have completed their turnaround) but their employees have benefitted as well.
While it is true that AA laid off fewer employees during the past decade, keep in mind that alot of those employees at other airlines - esp. DL - left voluntarily and with benefits. Not all left on the same terms. Further, I'm not sure it is any consolation to current AA employees to know that there are still a higher percentage of AA employees but individually they are not as well off as many of their peers.

I consider most on this board as novices, including myself, as few us have airline managerial expertise and a formal business education. Sure I'm defensive when the M&R is singled out and vilified without supporting relative data to make ones case. ASM does not provide details but a very broad assessment. I've been waiting, without satisfaction, for details on maintenance costs for years.

curious as to what data you are looking for... the lowest level of data that is publicly available is maintenance costs per ASM... it is reported by all US carriers to the DOT and reported on a quarterly basis in Aviation Daily. On that basis, AA's maintenance costs per ASM (see Commavia above) are about 25% higher than CO and UA which are pretty close to the industry average and 60% higher than DL which is the lowest cost maintenance producer among large US airlines. Beyond that I'm nto sure what data you will see but there is enough data to show that AA maintenance costs are indeed above well above average....

 

[commavia]

As much as you want to tell about the huge costs that those employees went through at other airlines, you seem to miss that AA employees have endured alot of paycuts and layoffs as well. And some of those other carrier employees did recover some of their losses through stock distributions and more recently profit sharing.

Once again, do yourself a favor: don't make comments about things you have no clue about. I fully appreciate the sacrifices that AA employees have had to endure in the last decade - more than you could possibly know. I don't need anyone - least of all you - to tell me about AA's average annual wages versus competitors. I can go look at the same numbers as you, and I have.

As I have already made clear (but you - not surprisingly - have chosen to ignore), my comments were always - clearly, from the outset - about "unit costs," which in the airline industry means cost per ASM. They were not about wages singularly. That was the basis for my comment that AMR's unit costs, in both the labor and maintenance categories, are above industry average and many of their peers.

That is a fact that especially for you, who loves to continually extol us with your wisdom and "depth of intelligence" about why AMR is such a trainwreck and post-bankruptcy Delta is flawless and infallible, should not find any reason to dispute.

 

[eolesen]

On an hourly rate, AA's employees may be paid less, but I'm not sure that is the case on a total compensation basis (wages plus the company's portion of healthcare and funding a retirement plan).

It's hard to guess what the pension obligations really are on a per employee basis per year, since it is a crapshoot as to how many years a retiree will be drawing their pension or using healthcare. You can average, but people are living longer, which affects both.

WN knows exactly how much obligation they have at retirement: zero. They only fund the 401K while the employee is on payroll, and have no retiree healthcare....

 

[Birdman]

I'm not trying to burn anybody's buns here. There are many dynamics to "maintenance costs" as Bob has pointed out many times. How each airline calculates and reports costs, i.e. outside contract work revenue/manpower needs, maintenance programs/procedures, etc., from what I'm hearing varies from airline to airline. You can't compare apples to oranges if that is truly the case. I believe a detailed breakdown of how expenses are reported would be the only way to put this debate to rest. Those have not been produced. I also know that AA's a/o mechanics fix everything without regard to cost, adhering to very strict manual tolerances which I believe is a higher standard than MRO's adhere to.

 

[commavia]

I'm not trying to burn anybody's buns here. There are many dynamics to "maintenance costs" as Bob has pointed out many times. How each airline calculates and reports costs, i.e. outside contract work revenue/manpower needs, maintenance programs/procedures, etc., from what I'm hearing varies from airline to airline. You can't compare apples to oranges if that is truly the case. I believe a detailed breakdown of how expenses are reported would be the only way to put this debate to rest. Those have not been produced. I also know that AA's a/o mechanics fix everything without regard to cost, adhering to very strict manual tolerances which I believe is a higher standard than MRO's adhere to.

And nor am I trying to incite anything or offend anyone.

This is extremely personal, and extremely emotional, for a lot of people. I totally get that - believe me. I fully appreciate the sacrifices AA employees, including mechanics, have made and are making, and I am not denigrating that one bit.

I was simply reflecting on the top-line unit labor and maintenance numbers which are, indeed, above the industry average and above some of AA's legacy (and just about all of AA's low-cost) peers. But, as you very rightly say, those numbers factor in lots of things that vary from airline to airline, and provide little insight into the detailed numbers for specific work groups, union groups, etc. On those more detailed numbers for AA's maintenance costs specifically, I have seen some numbers - some public, some not - that suggest that AA's maintenance costs are at best above industry average, and at worst, near the top of the industry, but I have been attacked here before for not presenting the non-public (i.e., non-sharable) numbers, which I simply cannot do. Either way, it doesn't matter - the detailed numbers are highly proprietary to AA, and I at least - can't speak for anyone else here on this forum - don't have access to them. In their absence, we only have a few data points to go on - it's true.

Nonetheless, the points we do have are those top-line numbers - flawed as they are. And those numbers present the reality that I don't believe is particularly controversial and that even AA's own unions (at least the flight attendants) publicly acknowledge: AA's unit labor costs are among the highest in the U.S. The debate is merely why. Cost per ASM measures both cost, and the ASMs produced for that cost, and I think that in both areas AA has some issues.

AA's overall, all-in labor cost, is, indeed, well above many of its competitors based on the fact that AA has higher wages than many peers, still has a defined benefit pension, and didn't wipe out as many non-wage benefits in bankruptcy as some peers. On the ASM side, AA generates fewer ASMs with its fleet, and has more people for its fleet, than many of its peers (again, due in large part to not filing bankruptcy).

And, in both areas - cost and ASMs - both management and the unions deserve credit for the monumental amount they have achieved, and have responsibility for the work they still need to do. Costs can and should be attacked in areas like distribution, better management of fuel, and targeted capital investment in cost reduction, and productivity (as in ASMs) can and should be improved through more flying with 90-seaters at competitive rates, more long-haul flying at competitive rates, and improved utilization of AA's existing widebody fleet. Just a few ideas that I think would have a huge impact on the cost per ASM number - for all employees, and indeed, even in non-labor cost categories - and make AA far more competitive immediately.

 

[MCI transplant]

On an hourly rate, AA's employees may be paid less, but I'm not sure that is the case on a total compensation basis (wages plus the company's portion of healthcare and funding a retirement plan).

It's hard to guess what the pension obligations really are on a per employee basis per year, since it is a crapshoot as to how many years a retiree will be drawing their pension or using healthcare. You can average, but people are living longer, which affects both.

WN knows exactly how much obligation they have at retirement: zero. They only fund the 401K while the employee is on payroll, and have no retiree healthcare....

<_< ------ As far as retiree health care, at least after your 65, United Heathcare will end for us and our spouse, as supplemental to Medicare by 2014 when Obama Care kicks in! We've received letters to that affect some time ago.----- If Obama Care is recinded, or just not funded, AA will be off the hook, and I guess we'll just be just S.O.L.!!!

 

[WorldTraveler]

Once again, do yourself a favor: don't make comments about things you have no clue about. I fully appreciate the sacrifices that AA employees have had to endure in the last decade - more than you could possibly know. I don't need anyone - least of all you - to tell me about AA's average annual wages versus competitors. I can go look at the same numbers as you, and I have.

As I have already made clear (but you - not surprisingly - have chosen to ignore), my comments were always - clearly, from the outset - about "unit costs," which in the airline industry means cost per ASM. They were not about wages singularly. That was the basis for my comment that AMR's unit costs, in both the labor and maintenance categories, are above industry average and many of their peers.

That is a fact that especially for you, who loves to continually extol us with your wisdom and "depth of intelligence" about why AMR is such a trainwreck and post-bankruptcy Delta is flawless and infallible, should not find any reason to dispute.

You know, Com, there are times when I could sit down and have a beer with you and think we could probably pass hours together and enjoy it.
Then there are times when you get on your high horse and I want to do nothing but knock you off of it so fast your head doesn’t even have time to spin.
If you are so familiar about what AA employees went through, then you don’t know with anywhere near as much clarity what anyone else went through and have no business commenting about it.
If on the other hand, you don’t take it QUITE so personally and admit that maybe some things are numbers which you and everyone else can see, then there is indeed a basis for you to compare AA employees to others (you don’t seem to have a problem doing it when YOU provide the numbers) and so can anyone else do it the other way around too.
The bottom line is that you want to hold onto this moral superiority thing about bankruptcy – but seem unable to comprehend that AA employees don’t have the advantage you would like them to have – because then it would blow your whole moral superiority argument.
BK – despite what you want to believe – is a dollars and sense financial decision. Companies that used it didn’t do it because they wanted to “sin”. They did it because it was legal and because it was what was necessary to turn their companies around.
The sooner you can get through your head the idea that BK is not an argument about moral superiority but about money and finances, the sooner you can gain the respect that you otherwise merit.
It would also help your argument if you could demonstrate that AA and its employees are indeed in a superior financial position but the simple fact is that AA employees ARE NOT the highest compensated network airline employees any longer. There are ample facts to prove that.

On an hourly rate, AA's employees may be paid less, but I'm not sure that is the case on a total compensation basis (wages plus the company's portion of healthcare and funding a retirement plan).

It's hard to guess what the pension obligations really are on a per employee basis per year, since it is a crapshoot as to how many years a retiree will be drawing their pension or using healthcare. You can average, but people are living longer, which affects both.

WN knows exactly how much obligation they have at retirement: zero. They only fund the 401K while the employee is on payroll, and have no retiree healthcare....

Actually, it is not at all difficult to calculate total employee costs. It is reported to the DOT along with other data, even though employee salary data is reported on a fairly delayed basis.
Every publicly traded airline has financial statements on a quarterly basis that break out employee costs. There is not consistency between how mainline and regional carrier employees are reported but there is enough other information to be able to calculate fairly accurately the average compensation (including benefits) for each employee group. Airlines like AMR and DAL which have owned regional carriers create some challenges in picking out what is mainline but there is still enough outside data to be able to calculate mainline employee costs.
Further, productivity is very easy to calculate from current data – and it explains fairly accurately the difference between AA and other carriers in terms of labor costs.
That is why I am far from the only person who has noted that AA’s labor cost DISADVANTAGE is driven by productivity – and when you see the effects of productivity, there mathematically isn’t room to also have the increased total compensation that you want to believe exist.
You and others would do well to remember that other carriers DO HAVE retirement benefit costs, even if it doesn’t come in the form of defined benefit contributions. IN fact, in many cases, defined CONTRIBUTION costs MORE THAN defined benefit plans… but the company loses the uncertainty and long term liabilities with defined benefit plans.
Further, DL DID NOT terminate most of its pension plans. Of the combined DL/NW pension plans, only the DL pilot plan was terminated. DL continues to have obligations to fund all of the PMNW plans and all PMDL plans except for the pilot plan.
I would strongly bet that if you combined DL’s defined contribution pension costs per employee today and combine it with DL’s pension obligations from its defined benefit plans, the amount PER EMPLOYEE (the equal basis for comparing two different sized companies) is actually greater for DL. The difference is that DL and NW obtained permission to stretch out the repayments for its defined benefits plans while AA and CO which also requested the same treatment was denied. There isn’t such a great moral superiority argument about what AA is contributing to its pension plans if AA (and CO asked for the same plan that DL and NW asked for) but just happen to be denied, now is there.
UA and US may have terminated their pension plans which mean they no longer have responsibility for those plans but DL did not terminate everything.
Dealing with the facts as they exist – for both of you – will go along ways toward allowing you to contribute something to the conversation.
You both have a lot of knowledge and information you do contribute. If you stick to the facts and let them fall where they may – even if it makes AA or DL or anyone else look bad – then your information will be taken seriously.

I'm not trying to burn anybody's buns here. There are many dynamics to "maintenance costs" as Bob has pointed out many times. How each airline calculates and reports costs, i.e. outside contract work revenue/manpower needs, maintenance programs/procedures, etc., from what I'm hearing varies from airline to airline. You can't compare apples to oranges if that is truly the case. I believe a detailed breakdown of how expenses are reported would be the only way to put this debate to rest. Those have not been produced. I also know that AA's a/o mechanics fix everything without regard to cost, adhering to very strict manual tolerances which I believe is a higher standard than MRO's adhere to.

Come on, Birdman. Do you really think that every other carrier cuts corners to the point of sarcrificing safety while AA spends whatever it wants to on maintenance? That is just not even realistic to consider.
Again, your moral superiority about AA’s inhouse maintenance belies the fact that other carriers obviously do a very good job at maintenance and are able to do it while operating on a budget.
If carriers who performed contract maintenance did such a bad job of maintaining their own planes, don’t you think that would be apparent to others?
I’m not sure how much in-sourcing UA does but DL is the largest airline MRO in the Americas and has received a number of awards for the quality of the work it does, in addition to the work that other carriers pay DL to do.
You might find supporters for your cause if you, like Bob Owens, could accept that other carriers actually can manage to do a decent job at what they do – even if they do use a different business model.
The fact that every other carrier is able to outsource at least some of their maintenance makes AA, not everyone else, the exception. It also places the burden on AA and its employees to justify that the increased costs for in-house maintenance are worth it. Given that everyone else in the industry manages to operate safe airlines – and stay out of trouble with the FAA better than AA – you might want to reconsider the whole notion that “spending more for maintenance makes AA better.”

And nor am I trying to incite anything or offend anyone.

And, in both areas - cost and ASMs - both management and the unions deserve credit for the monumental amount they have achieved, and have responsibility for the work they still need to do. Costs can and should be attacked in areas like distribution, better management of fuel, and targeted capital investment in cost reduction, and productivity (as in ASMs) can and should be improved through more flying with 90-seaters at competitive rates, more long-haul flying at competitive rates, and improved utilization of AA's existing widebody fleet. Just a few ideas that I think would have a huge impact on the cost per ASM number - for all employees, and indeed, even in non-labor cost categories - and make AA far more competitive immediately.

Now we’re trying to sound like a diplomat.
The reality is that AA’s costs outside of labor ARE competitive with the rest of the industry. AA has always done a good job of cost control. And a big reason why they are holding onto that wad of cash they have is because they need it to hold onto the fuel hedges and without those hedges, AA’s costs fuel costs could skyrocket.
AA could do a lot of things to improve its network and reduce costs as you note, but many of those things require a fairly substantial rework of its core business model and you can’t do that stuff when you are operating at a significant cost advantage.
That is why AA mgmt is focusing on replacing high operating cost MD80s with 738s, even if the result is an even greater leveraged balance sheet (planes generally can be resold fairly easily so there is little risk of default). And the use of the 773 which is a low CASM long haul aircraft (have we determined if the APA will fly it beyond the MTOW of the 772ER?)
Yes, there are a lot of things that AA can do to turn itself around. It does require some out of the box thinking – as well as a return to some of the basics. But the same mindset must exist w/ labor as well. We wouldn’t be having this discussion if both parties were tired of 8 years of the status quo.

 

[FrequentFlierCA]

eolesen makes an interesting point. What's the value of a defined benefit plan and medical over a retiree's lifetime? If you amortize that over an employee's career, how much does that add to annual compensation?

 

[WorldTraveler]

eolesen makes an interesting point. What's the value of a defined benefit plan and medical over a retiree's lifetime? If you amortize that over an employee's career, how much does that add to annual compensation?

those costs do exist for sure but he also acts as if other carriers aren't contributing anything to their employees' retirement which is clearly not true.
Given that AA is changing even the insurance coverage it offers now and is looking for a way out of paying for retiree medical, I don't think there is any basis for saying that AA will offer anything substantially better than other carriers over an extended period of time.
If AA continued to offer those benefits, then you could argue that AA is clearly providing better long term pay and benefits.
But as we have seen w/ so many thigns about AA, the story is not that AA is doing anything substantially better than other carrers, it is just that AA has been alot slower to implement cuts that other carriers have implemented.
The reality is that AA has made plenty of cuts just like other carriers... current management has been alot slower to "lower the boom" and get costs down... but then the result is an unfinished state of business that leaves everyone threatened w/ when the other shoe will drop (sorry for all the metaphors).
.
experience shows that people would rather get the bad news over quickly and get on with rebuilding. AA hasn't finished cutting which means the rebuilding phase can't possibly begin.
No one can honestly believe that what AA employees have today will be what they have long term and that being the case, there is no basis for arguing about how much better AA is when the benefits you are looking at are long term and will change for the worse - much like the rest of the industry has - in a fairly short period... they have to because AA cannot afford to remain in the uncompetitive position it is in.

 

[Birdman]

Come on, Birdman. Do you really think that every other carrier cuts corners to the point of sarcrificing safety while AA spends whatever it wants to on maintenance? That is just not even realistic to consider.
Again, your moral superiority about AA’s inhouse maintenance belies the fact that other carriers obviously do a very good job at maintenance and are able to do it while operating on a budget.
If carriers who performed contract maintenance did such a bad job of maintaining their own planes, don’t you think that would be apparent to others?
I’m not sure how much in-sourcing UA does but DL is the largest airline MRO in the Americas and has received a number of awards for the quality of the work it does, in addition to the work that other carriers pay DL to do.
You might find supporters for your cause if you, like Bob Owens, could accept that other carriers actually can manage to do a decent job at what they do – even if they do use a different business model.

I was referring to MRO's south of the border and no, AA's AMT's are not superior to other AMT's in this country. Many who are not familiar with aircraft overhaul have no idea how complex repairing aircraft can be and how imperative reading and understanding the manuals are. It's not realistic to consider anyone without a firm grasp of the english language could, with just third world common sense, properly perform maintenance without manual guidance. I have no doubt that many south of the border who work on American carriers aircraft cannot read and understand the same manuals that are, by FAA mandate, required to use in every inspection, repair, adjustment, replacement, or testing of every component. I've addressed the safety issue on another post and won't repeat it again.

The fact that every other carrier is able to outsource at least some of their maintenance makes AA, not everyone else, the exception. It also places the burden on AA and its employees to justify that the increased costs for in-house maintenance are worth it. Given that everyone else in the industry manages to operate safe airlines – and stay out of trouble with the FAA better than AA – you might want to reconsider the whole notion that “spending more for maintenance makes AA better.”

Mechanics don't justify costs or manage the maintenance packages of our aircraft. We go to work and are given a task to perform. We research the manuals and do whatever necessary to bring the aircraft up to a serviceable standard. I challenge you to produce data that would support you statement that AA is in more trouble with the FAA due to lax or substandard maintenance practices. Don't make me go over the aux pump wiring fiasco again either.