Here comes the BK threat from the company

[limit]

I have a friend who had a Masters in Psychology. That qualified him to be a Jersey Turnpike Toll Collector. At least that paid more than all the clinical psychologist jobs...

I agree this is the way it is.
The point I am trying to make is that today's non social studies grads are not schooled the same way as in the past .
I am not for a min suggesting that a manager should not have a MBA,or similar degree.
Just that today's students are not as well rounded as in the past.
I believe that was a better system overall.

 

[WorldTraveler]

Tech,
It is easy to see the airline industry as a loser when you are focused solely on your situation... but remember that one of the tenets of airline deregulation in the US was that there would be the opportunity to create larger, but fewer airlines... after 35 years and now the DL/NW, UA/CO, and WN mergers, we are now very close to 4 major US airlines - AA included in that number - with several others than have 10% or less of the total market.
Despite the fact that AA mgmt has argued against further mergers - partly because it has yet to properly do one since deregulation - DL broke the paradigm that further consolidation in the industry was too difficult to pull off, esp. because of labor issues. While the labor issues are not resolved at DL, the airline is functioning well as is w/ the current labor situation and the chances of that changing are quite slim.
The success of the DL merger - including the fact that DL's market value jumped to the top of the network carriers - at times surpassing WN's - gave UA the incentive to go for the CO merger. WN/FL followed.. .and while there might be a few more mergers that round things out, the chances are that the big four are estabilshed. Only if AA is able to pull off a merger w/ someone that dramatically changes its network footprint - and that is going to be hard to do w/ what is left as merger candidates, does the overall US industry change.
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The significance of the mergers of the past few years is that the industry has FINALLY evolved such that enough of the capacity - AA, DL, UA/CO, and WN/FL control about 85% of the US' airline capacity.
Airline demand has always been highly variable by season and will continue to be - travel demand is related to when people can get out of town - and that usually happens in large amounts at specific times - supplementing the usual year round demand.
The big 4 can now control their capacity such that when you have 4 rational carriers managing capacity as the market demands instead of looking for opportunities to fly planes which shouldn't be operating, then prices can meet the level of demand.
There will always be people who will see pulling out of markets as a sign of weakness but in fact it demonstrates a recognition that it only makes financial sense to fly when you have some reasonable chance of making a profit.
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All forms of transportation have always been highly subject to losses - due both to the high costs of infrastructure/equipment as well as personnel and the dependence on fuel - which as you note is becoming even more volatile in price.
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but there are plenty of examples of companies that have figured out how to manage in the voltatility that is transportation, esp. by air. LH has long been a well-run company, due in part to the strength of the German economy. There are other global examples as well... but in the US, there are well run airlines now and will continue to be.
Despite the perception of AA now, it has long been regarded as a well run airline... and if you look at the industry, both DL and UA and some of their predecessors as well - also passed thru periods of being poorly run with the resulting impact on its finances and people. But both recovered and are proving that it is very possible to have a profitable network airline in the US.
DL's turnaround was very quick and dramatic - not much different from CO's after its 2nd BK....UA took almost twice as long as DL to finally begin running very well, and AA is likely to take longer than UA - and perhaps as long as DL and UA combined - but the chances are high that AA will turn around eventually.
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The problem is that time is not on AA's side, esp. because other competitors are in good shape right now - and the airline industry will continue to be highly competitive.
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And then you have the whole issue that people like Frank checked out a long time ago because people can only endure pain for so long... a person can survive an amputation if it is done fast enough and the proper healing is allowed to take place. AA mgmt has been hacking away w/ the same knife for 8 years - with a lot of blood lost and alot of scars that won't quickly heal.
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At this point, AA mgmt needs to get the process done and start the process of rebuilding. It would be nice if the company wasn't burned down in the process - but there are enough people who will be harmed even more who don't care.. the same thing as what occurred w/ Eastern.
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Unfortunately, Frank, there aren't people who are interested in what I have to say... because I don't sugarcoat much, I am deadly accurate in what I say, and I am beholden to no one - what I say this week might tickle your fancy but next week it will cut you to the core.
But when it comes to the airline industry, I have a pretty strong track record - there are 8 years worth of "transcripts" that can be reviewed on this site alone to verify that I do know what I am talking about.
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For a long time I railed against AA mgmt in hopes that someone would wake up and save the company before it was too late.... I'm not sure that too late hasn't already come. At this point, Frank, my desire is for people like you and other AA people just to get through whatever lies ahead of you whether AA's turnaround is a part of your personal plan or not... the turnaround will come in time and the company will succeed once again, but in a much different form than it would have been if the restructuring was started and completed years ago.
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A degree does give credibility in some fields - but it hardly means one understands life or can do anything w/ any degree of competence.
If you want to pursue a field where a degree helps, go for it... I have friends in the airline industry that I have strongly encouraged to get a degree because like many here - they are smart enough that the validation of a degree can change their outlook. They were smart before, have worked hard to build their respective companies, and will succeed based on who they are... a degree just provides more options and accelerates the potential they already had.
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Degree or not, figure out your personal strengths, do what you need to build on them, and work aggressively to bring it all together, esp. if you currently draw a salary - or in some cases a pension from AA.

 

[Frank Szabo]

I agree this is the way it is.
The point I am trying to make is that today's non social studies grads are not schooled the same way as in the past .
I am not for a min suggesting that a manager should not have a MBA,or similar degree.
Just that today's students are not as well rounded as in the past.
I believe that was a better system overall.

As I said, a degree's function is not to derail whatever common sense one was born with but to teach a person how to think critically and how to do the research sometimes necessary to answer one's questions.

In short, any degree is supposed to teach a person the fine art of critical thinking vs: reacting. I see little (no pun intended) of that result coming out of schools now.

 

[Frank Szabo]

So many examples this Sunday of opening one's mouth (or typing on one's keyboard) and removing all doubt . . .

Aw - poor baby - did I step on your tootsies? Did I sully up your piece of paper?

Good.

 

[strikeforce]

Where did you get the impression that I "believed" that most AMT's did not work safely and efficiently?

I was one of those for 20 years prior to going on strike for you all left out there. We at NWA (the non-scabs) fought for what the TWU loves to give away.

I am now able to see the industry from an outsiders view and not as a disgruntled employee who loves what they do, yet they hate who they do it for.

You sound like you would make a good manager. I do agree that a college degree does not automatically make you a good leader or manager. Most places now have that as a minimum requirement to apply for the position. I assume AA is that way.

Well, thanks for fighting for the AMT, something the TWU will not do.

I'm not a disgruntled employee, but I am a concerned employee that's watching a once healthy company going down the tubes. I'm also concerned that management is more interested in gutting their own employee's than fixing the real problems.

 

[tech2101]

So many examples this Sunday of opening one's mouth (or typing on one's keyboard) and removing all doubt . . .

I do not normally engage in this type of dialogue here.

I am thinking about using AA in some of my case study work.

This dialogue is part of my research.

 

[commavia]

<< Apologies in advance – truly – for the length >>

Reading through these discussions, hearing differing perspectives, listening to the alleged “deadly accurate” self-appointed experts, I invariably keep coming back to the same question: what was the alternative? It’s a simple question without a simple answer. In the now-almost-exactly-ten-years (as unbelievable as that seems) since the September 11, 2001 attacks, which U.S. airline’s business model do AAers here wish AA had followed, instead of the path AA actually did chart for itself?

I ask that because in all of this back-and-forth, getting down to the detail and minutiae of contract language and negotiations (for very good reason, of course, because it has a very real impact on peoples’ lives), it seems that it isn’t often considered what the alternative might have been.

Should AA have followed the Southwest model? AA would have made a killing mid-decade off fuel hedges, and that would have taken some pressure off labor costs – as it has at Southwest; every AA employee would be making around 11% more today, on average. But, of course, there would be fewer AA employees. AA could have gone to all 737s and parked hundreds of other jets; closed up longhaul flying and concentrated only on domestic. No more high(er)-time bid sheets, purser pay, no more employees to support longhaul flying and widebodies, and of course no overhauls – those would all be outsourced. AA wouldn’t need as many flight attendants – especially when average stage length is half as long, and the average flight attendant works 25% more hours per month. In general, following the Southwest model, AA would have laid off still more employees to match Southwest’s legendary productivity which produces 20% more capacity per employee. By my math, AA’s narrowbody-only fleet operating at Southwest’s productivity would mean around 6,500 fewer AAers.

Should AA have followed the model of JetBlue/Frontier/AirTran? That would of course have meant not just a frozen pension, but probably a dumped one. Productivity? Yep – AA sure would need a lot fewer people if they were carrying double the passengers per flight attendant, and employing 1/6 the number of maintenance personnel per aircraft – so obviously overhauls would be done in El Salvador, Mexico, or at TIMCO, anywhere but TULE/AFW. AA certainly wouldn’t need pilots, since the ones they had would each be flying 15-30% more per month, and they would also be getting paid 10-45% less for doing it.

Or perhaps AA should have followed the strangely-mythologized path of its failed network peers? Since 2001, Delta, Northwest, United and USAirways (twice) legally failed as going concerns, and thus they had to seek court protection from their creditors. If you or I had that happen to us, perhaps we would feel a bit ashamed about it, but it’s now a business strategy in the airline industry – like it or not. But that’s neither here nor there. During their (in some cases multiple) trips through bankruptcy, these airlines used the reorganization process to dramatically alter their business models, default on obligations and commitments, and abrogate contracts (including CBAs). And just what would AA have looked like if it had followed the same path?

Well, for starters, MBVs would be done at third parties and in foreign countries (think Hong Kong, Beijing, Seoul, El Salvador), so AA would have virtually eliminated its heavy maintenance employees as happened at several legacy carriers (a la Northwest/AMFA/2005). So there’s thousands of pink slips. (No wonder AA employs roughly double the maintenance employees per airplane as other network carriers.) Now, it’s true, the few that remained might be getting paid more (about 30% more on average at United, about 20% less on average at Delta). But, again – much like with Southwest – there would be a fraction of the people left collecting those potentially-higher wages (about 42% fewer people per airplane at Delta, or about 47% fewer people per airplane at United).

Then, of course, SCOPE would have been eviscerated. Today 8% of AA’s system is Eagle; it’s 11% at United and 14% at Delta. There are today – by my count – roughly 150 United-branded and 230 Delta-branded large regional jets flying around. Eagle has 47. Think of all the former United 737 pilots and Northwest DC9/Delta 737 pilots whose flying is now done at SkyWest/Mesa/Shuttle America, etc. And all that reduced SCOPE APA would have given up “in defense of the profession” wouldn’t exactly have amounted to a windfall in compensation, either – seeing as the average AA pilot in 2010 made (total wages, salaries, benefits) 14% more than at Delta, 15% more than at United, and 31% more than at USAirways. And your defined benefit pensions? Well, needless to say, unlike at AA, odds are the pension would have been frozen (best case) or dumped altogether (worst case).

So – again – I guess my question is: which path would AA employees have preferred? Which other airline’s pilot contract would APA pilots rather be working under today, all things considered? Which other airline’s maintenance contract would TWU mechanics rather be working under today, all things considered? Which other airlines flight attendant contract would the APFA rather be working under today, all things considered?

I am not defending the many ridiculous decisions and stupid crap that goes on at AA. I know it – I’ve seen it – I don’t dispute it for one second. But, all that being said, even if Arpey got more stock options than you (which he did), and even if the shift supervisor at TULE is an incompetent and unethical moron (I’ve no doubt many are), aren’t you still better off – on balance – than most of the people who were doing the same job 10 years ago at other airlines? Overall, isn’t it fair to say that as bad as you’ve had it at AA, it may well have been worse at other carriers? In the spirit of union solidarity, isn’t it better that AA’s compensation is at or near the top among network carriers, and far above any low-fare airline except Southwest, and AA still employs thousands more people that would otherwise have been laid off at any other U.S. carrier?

This is not about a race to the bottom, and I am not advocating that unions just roll over and give the company El Salvador wages and Chinese productivity – not for a second. But what I am suggesting is that when you look around the industry at your peers, perhaps that perspective offers a bit of a cautionary tale in trying to make ongoing negotiations with AA into some kind of moral crusade for the entire middle class. The deal AAers have gotten at AA has been far from perfect, but – overall – which other airline’s employees (especially the legacies) have gotten a closer-to-perfect deal?

And even beyond that, if you still really believe that you would have been better off at another airline, or in another industry, than – pardon the cliché – why not leave? I can’t count on both hands the number of people I know who have left AA and gleefully never looked back. If you are so unhappy with the situation at this point, why not leave? Why now insist on keeping the company uncompetitive with its low-fare and/or post-bankruptcy competitors, and potentially bringing the company and its other employees down? Or, at this point, is bringing the company down now the goal?

 

[odie01]

Yawn, apology accepted! Now back to Hillbilly Handfishin' on Animal Planet!

 

[Buck]

Yawn, apology accepted! Now back to Hillbilly Handfishin' on Discovery.

Yea, I think the I and Q were burned kleen right outta my alphabit soup....

 

[WorldTraveler]

AA could have picked any strategy it wanted.... but it had to pick some strategy and make it work.
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They have screwed around - and with their employees for 8 years and FAILED at the strategy they chose - which was to try and "do it on their own".
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Despite the moral superiority that you have looking down on everyone else's BK, there is nothing LESS FAILING about what AA has done than what airlines who sought BK have done.
You conveniently make up your own definitions of FAILING to protect the FAILED AA mgmt group and its strategies. There is no definition that says that BK is a failure but years upon years of billion dollar losses is not. And if you want to try to call billions and billions of dollars of losses a success, then you truly have no business talking about anything even remotely related to business.
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Standing still and allowing your competitors to mow you down is not success.
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Screwing your employees out of billions of dollars for nearly a decade and being no closer to restoring those wages a decade later is no measure of success.
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As snearingly as you want to look at everyone else, they at least had the moral fortitude to make the tough calls, do the dirty work, and move on and their employees don't have the threat of continued pay cuts - which were in fact not significantly larger than AA employees' cuts; those carriers' employees are not facing the prospect of having to fund their employer's continued incompetence.
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Lest you think otherwise, inaction only adds to a greater tab that has to be paid at some point. Those debts that AA has racked up are due to LOSSES - they started to make progress on reducing their debt, then have erased all that progress with losses - losses that are collateralized by their assets.... so the debts WILL only go away with the assets that are attached to them.
That is why the brAAin trust is going to LEASE a bunch of new airplanes... because they can't take on any more debt, they will own nothing after years of paying for those airplanes, and their employees will be denied the possibility of pay raises far longer than their peers because AA's money will all be going to pay for leases.
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That is no definition of success in any business case book.
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And it is no measure of success for the men and women of AA who have watched while the company has slowly and systematically been destroyed - not as much by intentionally allowing a wrecking ball to start whacking away at the edifice but by allowing termites to chew away and water to erode the foundation until all it takes is a relatively minor event - or a good push from a competitor - to wash the whole wretched empire off its cracked foundation.
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THAT is why AA employees have no faith in mgmt or in the future of the company - and are thus completely detached from doing anything to help turn it around.
Once they let go of the little bit they still have, the chances are very high they will never see any return on it again...so the rational thing to do is not let go until it is ripped from their bleeding palms - or they let go when they are ready to grasp until something of their choosing which is far more stable and financially profitable for them.

 

[tech2101]

AA could have picked any strategy it wanted.... but it had to pick some strategy and make it work.
...so the rational thing to do is not let go until it is ripped from their bleeding palms - or they let go when they are ready to grasp until something of their choosing which is far more stable and financially profitable for them.

Stop piling on.

 

[strikeforce]

Reading through these discussions, hearing differing perspectives, listening to the alleged “deadly accurate” self-appointed experts, I invariably keep coming back to the same question: what was the alternative? It’s a simple question without a simple answer. In the now-almost-exactly-ten-years (as unbelievable as that seems) since the September 11, 2001 attacks, which U.S. airline’s business model do AAers here wish AA had followed, instead of the path AA actually did chart for itself?

Should AA have followed the Southwest model?

AA had a chance to follow Southwest by going to an ALL 737 Domestic Fleet and 777 INTL fleet. Instead they chose to have 737, Scare bus, 787 and 777......which equates to more parts and training costs.

Southwest has a generic business model......no power ports, entertainment systems or internet systems on board. These systems tie up lots maintenance time AA AMT's can spend fixing other items.

How much do these customer conveniences cost AA and does the airline ever recoup these costs when they have to match Southwest's typically lower fares??? I don't know?

Look, SWA obviously believes it's passengers can go without the use of laptops, IPhones, and In flight Entertainment in exchange for cheap fares.....and it works well because they're profitable. Why can't the legacy airlines do the same?

 

[Flying low]

AA had a chance to follow Southwest by going to an ALL 737 Domestic Fleet and 777 INTL fleet. Instead they chose to have 737, Scare bus, 787 and 777......which equates to more parts and training costs.

Southwest has a generic business model......no power ports, entertainment systems or internet systems on board. These systems tie up lots maintenance time AA AMT's can spend fixing other items.

How much do these customer conveniences cost AA and does the airline ever recoup these costs when they have to match Southwest's typically lower fares??? I don't know?

Look, SWA obviously believes it's passengers can go without the use of laptops, IPhones, and In flight Entertainment in exchange for cheap fares.....and it works well because they're profitable. Why can't the legacy airlines do the same?

Because some people just can't live without those things and are willing to pay for it. Just look at all the people texting/talking on their stupid phones while driving.

 

[Buck]

Because some people just can't live without those things and are willing to pay for it. Just look at all the people texting/talking on their stupid phones while driving.

Does the TWU have an APP yet?

 

[strikeforce]

Because some people just can't live without those things and are willing to pay for it. Just look at all the people texting/talking on their stupid phones while driving.

Yes, they can't live without them, but most passengers are not paying extra because AA typically has to match other low cost carrier fares in order to compete, and most passengers usually shop for the lowest fares, anyway! I say remove the power ports & entertainment systems from domestic fleets. Typical portable video players and laptops on battery power last several hours, don't they? Fully charge them while waiting for your delayed flight. This would save you & AA lots of money. I'm just sayin!