Here comes the BK threat from the company

[texasreb]

Again - AA can pay you less then what some workers in comparable jobs at some airlines are getting paid, but still have higher labor and maintenance costs in part because AA still does so much of this work! This isn't hard! It's fairly simple, and again why these arguments get a little academic. It may be that certain classes of workers are getting paid a bit more in similar jobs at other airlines, but if those airlines employ - as an example - 3,000 M&E employees at those wages and AA employs 10,000, who has the higher cost? Again - I don't think even the most radical unionist here would argue that, all else being equal, Tulsa will never be the same cost as El Salvador or Beijing. And if that is the cost that you are competing against, the math isn't hard to do.

And as for your suggestion that AA should do some big P.R. campaign to sh*t all over other airline's maintenance, and play up how all of AA's overhauls are done in the U.S., it's a noble idea but meaningless. U.S. consumers have shown again and again that they don't know, and when they do know, they simply don't care. They will continue to book the fare that is $5 cheaper whether the plane is maintained in Tulsa or TIMCO or El Salvador. The FAA may perform more oversight of AA (as I had one M&E guy put it to me, "they can show up here [Tulsa] whenever they want, but have to make an appointment when they go overseas") but, again, whether you like it or not, this is the reality AA has to operate with. FAA oversight is what it is - it may not be fair, but it is what it is - for AA and AAers.



So apparently you have never been to headquarters. AA has laid off thousands of management (again, I mean people level 1 and up, not 55 and below) in the last decade. If you have ever been to headquarters, then you obviously would know that I don't need "anything" to back up that statement - it's just reality. I was never commenting on the hiring and/or laying off of managers at specific locations - including Tulsa. Having never worked in Tulsa, I will of course take your word for it - I was simply speaking of the company as a whole. And, you obviously missed the part of my post where I lamented and criticized how AA has added numerous VPs and MDs in the last several years - which is absolutely ridiculous and inexcusable. AA should be reducing VPs, not adding them, and should have gotten rid of a lot of VPs years ago who are sadly still there. I'm not debating that point for a second.



Huh? This delusional comedy just lowers the entire credibility of organized labor. "When there was profit it was AMR when there was loss it was AA?" Seriously? This is such B.S.! AA is not hiding money anywhere - it's all reported publicly four times each year for all to see - including your union. AMR can't just make this stuff up - there are specific laws and regulations that govern how, when and where AMR must book investments, revenues, costs and investments. Since SABRE was an internally developed system without a determinable useful life or valuation, it was expensed, not capitalized. That's just how it works - at every publicly traded company, not just AMR. There is no such thing as profit at AMR, loss at AA - it's all AMR, and has been for every quarter since May 1982.



I what saddens me about this whole thread and just about every thread here is that you and so many others seem to see it as so black and white - if somebody doesn't agree with you, they clearly hate and want to screw you. You act as though you and your union, and your employer, operate within a vacuum without any competition and without any exposure to economic reality.

Here, in the real world, every single other major U.S. carrier has used bankruptcy to free and dump pensions, outsource overhauls to third parties and/or foreign countries, laid off thousands of additional workers, gutted union contracts and work rules, outsource more and more of their flying to regional operators, and on and on. In so doing, they now have a competitive advantage over AA. Whether you want to recognize that reality or not doesn't make it any less reality. Thus, all that some here are discussing is that somehow, some way, AA has to eventually match their competition, and perhaps it may - sadly - be inevitable that AA has to use bankruptcy to do it, just like their competitors.

Nobody is "salivating" or relishing bankruptcy - it is an astoundingly sad and tragic thing that will harm lots of people and livelihoods. But, alas, this is the definition of moral hazard in modern America: when every one of AA's competitors has used the bankruptcy process to abrogate contracts and default on obligations, how is AA (and its employees) to compete?

The other airlines still have maintenance costs too. They just pay someone else. I have seen Delta Airlines costs of overhaul for an outsourced aircraft and they do not save that much.

 

[Hopeful]

(1) Today more capacity in the U.S. than ever is flown by low-fare airlines that often don't have unions and/or have far lower labor costs than AA

Most airlines still union except Delta and Jetblue

(2) Today every single one of AA's legacy network competitors have filed for bankruptcy at least once, and used that bankruptcy process to abrogate commitments, default on obligations, freeze and/or dump pensions, outsource overhauls, outsource more and more flying to regionals, tear up work rules, and/or lay off thousands

Gotta love this statement......some have file bankruptcy at least ONCE....Gee you would have thought the first CH.11 filing would have been enough to screw employees..So the wonderful management file again!!!!!!!!! GOTTA LOVE it!

(3) AA's employees in just about all labor groups are near the top of the hourly pay scales in the U.S. airline industry, and even if not the top paid, are often the most expensive on a unit basis because AA labor is less efficient and productive (again, because hasn't outsourced work nor nearly as much flying as competitors)

Not AA mechanics my friend!

(4) Given (1), (2), and (3), and believing that the airline industry - for most customers - has now become largely a commodity business driven by price, I believe that someday, some way, some how, AA will have no choice but to find a way to lower costs and become more productive - and that will have to involve labor, just as it has at virtually every other U.S. airline that has either lower costs and/or higher labor productivity than AA.

Please tell us, Nostradamus, what is your answer to our bloated executive pay and their ranks in this equation?

I am not disputing any of the ills you say you've experienced over the years - I would have no way to since I haven't lived your experiences. "Some" want to bait me and are trying to put words in my mouth by suggesting that somehow I am a management stooge who parrots the company line and wants to screw the unions and labor. Trust me - I've been ignoring "that" for years. Nothing could possibly be further from the truth - I want so desperately for AA and its employees to succeed, but I also recognize that they need each other to succeed, and I also believe that in order for AA to succeed it will, again, ultimately have to lower its costs and change its business model, and that will ultimately require labor (again, just as it has at just about every other legacy carrier).

You will need better management than what we have now! When the team keeps losing, eventually they fire the coach.

Okay, I hear you, but in the meantime, other airlines are sending their aircraft to third parties and foreign countries for overhaul, and there are mechanics there that are willing to get paid far less than what you make for signing off. I don't know what they're signing off on - that's your area of expertise, not mine. But those airlines, their shareholders, the FAA, and perhaps most importantly their customers, all seem to be fine with that. So, again, in the meantime, what is AA to do to be competitive? As the saying goes - don't hate the player, hate the game.

The day will come when an air disaster is caused by 3rd party 3rd world work. Then these same passengers "who simply don't care" will all of a sudden care when they lose their loved ones and sue the airlines for millions.

If a tree falls in the forest and nobody is there to hear it, did the tree fall? If every other airline has now outsourced overhauls to third parties and/or foreign countries, and the planes aren't falling out of the sky, and shareholders/regulators/passengers don't care, does it matter? I know it does to you guys, and frankly it does to me too, but it doesn't seem to matter to a whole lot of other people. That's just reality.

Like i stated above, it will matter to them when a loved one dies in an air disaster...the their lawyers will care even more.

 

[OldGuy@AA]

The point I was trying to make (Maybe Bob can explain better than I) is that American Airlines pays for and creates SAABRE at a cost of millions of dollars. SAABRE is the envy of the airline industry and as a result other airlines sue because of AA having an advantage in a computer reservation system that they paid to develop and maintain. After settlements of more millions of dollars, paid by AA, AMR is created by Robert Crandall and SAABRE is spun off as a stand alone company. SAABRE is evetually sold with the money going to AMR. Therefore American Airlines pays the bills erroding profit, while the money that is paid for SAABRE which rightfully should be paid to American Airlines is now put into the AMR till thus denying American Airlines a return on the investment of the millions it has paid for SAABRE. Now AMR shows a bump in their bank account but the millions that have been syphoned off of American Airlines are never repaid. So there is what I am trying to say. Money is taken out of AA profit and put into SAABRE. SAABRE has legal costs and AA pays that too. Crandall claims that SAABRE is making AMR lots of money, (they are also gouging AA for computer service) but AA is paying their bills for them, as well as paying any expenses they incur. So logic would say if they are a stand alone company they shoud pay their own bills and, on the sale of SAABRE, at least the initial investment is deposited in American Airlines bank account. This did not happen and "business" people say this is the way companies operate. I say that is the way AMR operates so they can "hide" profit and continue to low ball their employees. It amounts to a shell game. Geeze I didn't even mention that SAABRE employees had unlimited A-10 travel to and from DFW making it next to impossible to non-rev even with your D-1. But that is just one more thing that old guys with good memories can be bitter about. I am not a "business" person. I am just a long time employee that sees all that I have worked for over the years being pissed away by a bunch of no brain, morally bankrupt executives while they continue to enrich themselves at my expense. I cannot afford to fund golden parachutes for millionaires. Do I believe them when they say we are not doing well? Yes, but I have to ask why Arpey and company are allowed to keep digging the hole deeper when they have proven beyond a shadow of a doubt that they are not capable of running this airline. I honestly think the plan was to run the company as close to the ground as they could in order to destroy the pay structure of the industry. But when it came time to take the company back into profitability, they realized they had no idea how to do so. This being the United States of America, anyone has the right to offer their opinion. There is mine. Also thanks for the assist Hopeful.

 

[commavia]

Most airlines still union except Delta and Jetblue

That's not all of what I said - I said non-union and/or have lower labor costs. AA's labor costs are, on a unit basis, pretty much the highest in the U.S. That's driven by both the costs and the unit. AA's labor costs are higher because AA's employees are near the top of the industry in terms of pay (yes, it's true, the data's available for anyone to see if they want), and also because AA's labor costs carry the burden of defined benefit pension plan contributions that other airlines have either frozen or dumped. On top of that, AA also generates fewer units of capacity (ASMs) from its fixed assets (airplanes) than many competitors, in part due to restrictions in labor contracts like on long-haul flying. And, finally, the Delta system overall, or the United system, overall also carriers overall lower unit labor costs because those airlines have gutted SCOPE in bankruptcy and the mix of capacity within their network has substantially more regional flying - and I don't think anybody here would dispute that AA's mainline labor costs (and pay) are higher than SkyWest, ExpressJet, ASA, Mesa, etc.

Gotta love this statement......some have file bankruptcy at least ONCE....Gee you would have thought the first CH.11 filing would have been enough to screw employees..So the wonderful management file again!!!!!!!!! GOTTA LOVE it!

As I said - don't hate the player, hate the game. I think it's sad that bankruptcy in and of itself has become such a common practice, let alone to the point where one company could do it twice in as many years, but alas, that's the world in which AA has to operate. AA has to compete with that somehow.

Not AA mechanics my friend!

Yes, AA mechanics my friend.

As was already discussed, AA's maintenance employees - as a workgroup - are a bit below the average among U.S. carriers. But, alas, they are still among the most costly in the U.S. because there are so many of them and they are relatively much less productive than the maintenance staff burden other carriers are carrying. In 2010, AA outsourced 24% of its maintenance spend - the next lowest carrier was far more than that (Delta, 39%), and the average among legacies was 38% and for low-fare 59%. In addition, AA employs nearly double the maintenance employees relative to size as the industry average. So yeah, AA's maintenance people are paid somewhat less on average, but the overall composition of AA's maintenance wage payout is much higher since the vast majority of AA's maintenance work is performed in-house by those mechanics whereas at Delta or United or Southwest, a dramatically smaller maintenance workforce is paid at those higher rates while the vast majority of the work has moved to outsourced third-parties where people get paid dramatically less.

Please tell us, Nostradamus, what is your answer to our bloated executive pay and their ranks in this equation?

Compared with other major U.S. carriers, and other major U.S. companies of similar size, I don't believe AA's management is particularly overpaid. I think AA's management is bloated, though. There seems to be all these stupid B.S. new VP positions that have been created in recent years - "Airport Services Planning" and "Operations Planning & Performance" and such. And, again, that's on top of some of the useless waste-of-life VPs that were already in place before all this crap started, and that are still there. As I said upthread, there is no excuse for that. The place I'd start would be to return to the basic outline of the management structure from before: there's a head guy, and his direct reports include (among others) a finance guy, an operations guy, and a marketing guy, and each of those have a few clearly delineated direct reports with real job responsibilities. That seems much more sensible.

The day will come when an air disaster is caused by 3rd party 3rd world work. Then these same passengers "who simply don't care" will all of a sudden care when they lose their loved ones and sue the airlines for millions.

Like i stated above, it will matter to them when a loved one dies in an air disaster...the their lawyers will care even more.

You're preaching to the choir here. I, myself, have flown - by actual calculation - somewhere in the range of 920,000 miles in my life on AA aircraft. And I, myself, personally do like the fact that those planes are maintained where they are, and by whom they are. But, alas, would you honestly argue that most other U.S. consumers are like me? Whether you like it or not, most consumers either don't know, don't care, or don't care to know where their airplane is maintained, and you are absolutely right that until a plane crashes as a result of shoddy maintenance, nobody will care. And when that day comes, it will be a monumentally sad tragedy. But, in the interim, AA still has to compete with carriers overhauling planes with lower-cost third parties and/or in foreign countries, and AA mechanics still have to compete with those lower-cost mechanics who - to borrow somebody else's phrase - are willing to "sign off" for a fraction of the pay. Again - that's just reality.

 

[Mr Red]

That's not all of what I said - I said non-union and/or have lower labor costs. AA's labor costs are, on a unit basis, pretty much the highest in the U.S. That's driven by both the costs and the unit. AA's labor costs are higher because AA's employees are near the top of the industry in terms of pay (yes, it's true, the data's available for anyone to see if they want), and also because AA's labor costs carry the burden of defined benefit pension plan contributions that other airlines have either frozen or dumped. On top of that, AA also generates fewer units of capacity (ASMs) from its fixed assets (airplanes) than many competitors, in part due to restrictions in labor contracts like on long-haul flying. And, finally, the Delta system overall, or the United system, overall also carriers overall lower unit labor costs because those airlines have gutted SCOPE in bankruptcy and the mix of capacity within their network has substantially more regional flying - and I don't think anybody here would dispute that AA's mainline labor costs (and pay) are higher than SkyWest, ExpressJet, ASA, Mesa, etc.



As I said - don't hate the player, hate the game. I think it's sad that bankruptcy in and of itself has become such a common practice, let alone to the point where one company could do it twice in as many years, but alas, that's the world in which AA has to operate. AA has to compete with that somehow.



Yes, AA mechanics my friend.

As was already discussed, AA's maintenance employees - as a workgroup - are a bit below the average among U.S. carriers. But, alas, they are still among the most costly in the U.S. because there are so many of them and they are relatively much less productive than the maintenance staff burden other carriers are carrying. In 2010, AA outsourced 24% of its maintenance spend - the next lowest carrier was far more than that (Delta, 39%), and the average among legacies was 38% and for low-fare 59%. In addition, AA employs nearly double the maintenance employees relative to size as the industry average. So yeah, AA's maintenance people are paid somewhat less on average, but the overall composition of AA's maintenance wage payout is much higher since the vast majority of AA's maintenance work is performed in-house by those mechanics whereas at Delta or United or Southwest, a dramatically smaller maintenance workforce is paid at those higher rates while the vast majority of the work has moved to outsourced third-parties where people get paid dramatically less.



Compared with other major U.S. carriers, and other major U.S. companies of similar size, I don't believe AA's management is particularly overpaid. I think AA's management is bloated, though. There seems to be all these stupid B.S. new VP positions that have been created in recent years - "Airport Services Planning" and "Operations Planning & Performance" and such. And, again, that's on top of some of the useless waste-of-life VPs that were already in place before all this crap started, and that are still there. As I said upthread, there is no excuse for that. The place I'd start would be to return to the basic outline of the management structure from before: there's a head guy, and his direct reports include (among others) a finance guy, an operations guy, and a marketing guy, and each of those have a few clearly delineated direct reports with real job responsibilities. That seems much more sensible.



You're preaching to the choir here. I, myself, have flown - by actual calculation - somewhere in the range of 920,000 miles in my life on AA aircraft. And I, myself, personally do like the fact that those planes are maintained where they are, and by whom they are. But, alas, would you honestly argue that most other U.S. consumers are like me? Whether you like it or not, most consumers either don't know, don't care, or don't care to know where their airplane is maintained, and you are absolutely right that until a plane crashes as a result of shoddy maintenance, nobody will care. And when that day comes, it will be a monumentally sad tragedy. But, in the interim, AA still has to compete with carriers overhauling planes with lower-cost third parties and/or in foreign countries, and AA mechanics still have to compete with those lower-cost mechanics who - to borrow somebody else's phrase - are willing to "sign off" for a fraction of the pay. Again - that's just reality.

Oldest Fleet =highest maintenace cost ,pretty simple. also all airline payscales are online if u search. AA got BK wages and renegotiated all vendor contracts without spending millions on lawyers !

 

[eolesen]

Having had to deal with Sabre quite a bit, I believe divesting of them was probably one of the best things AA could have done, in that it freed AA to be able to actually find vendors who offered better products, lower prices, and higher quality.

Their technology is far from cutting edge right now, and not even close to what I'd consider best in breed, which is part of why they didn't even make the shortlist to win the business when AA finally went forward with a new PSS (Amadeus and HP were the shortlist).

Oldest Fleet =highest maintenace cost ,pretty simple. also all airline payscales are online if u search. AA got BK wages and renegotiated all vendor contracts without spending millions on lawyers !

Yes, but they didn't change the workrules or scope. That's where AA is no longer able to compete.

Y'all have two choices --- the least painful would be to find ways to ease up the work-rules and make AA as agile as their peers. Frankly, you need to stop bitching about what management has done during the past 10 years, and focus more on where your next two years paychecks are going to come from.

 

[commavia]

The point I was trying to make (Maybe Bob can explain better than I) is that American Airlines pays for and creates SAABRE at a cost of millions of dollars. SAABRE is the envy of the airline industry and as a result other airlines sue because of AA having an advantage in a computer reservation system that they paid to develop and maintain. After settlements of more millions of dollars, paid by AA, AMR is created by Robert Crandall and SAABRE is spun off as a stand alone company. SAABRE is evetually sold with the money going to AMR. Therefore American Airlines pays the bills erroding profit, while the money that is paid for SAABRE which rightfully should be paid to American Airlines is now put into the AMR till thus denying American Airlines a return on the investment of the millions it has paid for SAABRE.

Right - I understood the point you were making, but the point I'm making is that your recounting of history misses several important points:

First, AMR isn't a slush fund. You act as if AMR is just a big money laundering operation to move money from the American Airlines ledger to the ledger of other AMR subsidiaries. That just isn't the case. AMR is a holding company, and since AMR holds more than 20% of the outstanding stock in American Airlines (100% actually), it is required by law to consolidate American Airlines' earnings. The same went for all other AMR subsidiaries - including Eagle, SABRE, AMR COMBS, AMR Consulting, etc. (there were a lot of subsidiaries back in the 1980s/1990s).

Second, back in the early 1980s, when all the litigation was going on, SABRE was NOT a "standalone company" - it was part of American! It was part of American - not AMR, not a separate subsidiary. Up until 1986, SABRE was just another department within AA - just like Purchasing, Cargo, Sales Performance, etc. Only after 1986 was SABRE separated legally from American and became its own wholly-owned subsidiary of AMR. Thus, up until 1986, of course American - which had paid to develop SABRE internally and was running SABRE as a department - would cover SABRE's legal bills. This isn't unusual. SABRE was a part of AA, but acted as a vendor to lots of outside third parties (other airlines, hotels, car rental companies, railroads, etc.), and thus any litigation would naturally flow back to the parent company, which at the time was AA. This would be no different than today M&E doing outside work for third parties as a vendor, but still being an integral department/division within AA - naturally, any litigation that arises from third party work would naturally flow to AA, not Tulsa.

Finally, I'm not quite sure what your big rub is with SABRE and supposedly siphoning money from AA. That seems like a bad example to make the case you're trying to make, since for all the litigation and R&D cost spent to develop SABRE, SABRE - at its peak - made such astronomical sums of money for AA it's not even funny. The SABRE system itself was profitable, but the real value of SABRE or AA was giving AA broad influence over thousands of travel agencies at a time when travel agencies still ruled travel distribution. The market share and incremental spend that SABRE brought to AA is truly incalculable - but I would venture that, over the course of the mid 1980s through mid 1990s, it is probably in the hundreds of millions if not billions of dollars.

Oldest Fleet =highest maintenace cost ,pretty simple. also all airline payscales are online if u search. AA got BK wages and renegotiated all vendor contracts without spending millions on lawyers !

AA's fleet is only marginally older than Delta's and United's, and yet those airlines' maintenance bills are a fraction of AA's, and their maintenance workforces are dramatically smaller than AA's. So perhaps part of the equation isn't just that AA has old planes, but also that they still do the work in-house. But yeah, old planes cost money, which is why it's good to see AA getting hundreds of brand new planes (although of course there are some elements apparently unhappy about that, too).

As for the pay scales, AA's average maintenance salary is within 2-3% of the weighted average for the legacy carriers, so I'd hardly call that a dramatic "bankruptcy wage" difference. Those airlines didn't extract "bankruptcy wages" - they just exited bankruptcy with "bankruptcy workforces," which is to say that they cut pay down to basically the same as AA did (again, within 2-3% on average), but they also laid off thousands upon thousands of maintenance employees that AA didn't.

The key point here is that the comparison between AA and the legacy carriers is largely meaningless - at least for Tulsa (not so much for line). When it comes to overhaul, it's meaningless to compare AA's average wage to the average wage of Delta or United or USAirways since those airlines don't do overhauls anymore - the apt comparison is AA vs. TIMCO/Aeroman/HAECO, etc. And while I don't have any data for the average hourly wages at those companies, I'm guessing Tulsa's average mechanic stacks up fairly well. So yeah, AA's maintenance employees are - on average - paid slightly less than the industry (legacy airlines), but AA also has roughly double the maintenance staff per airplane as any legacy carrier (and almost 10x as many as some low-fare airlines). So which would the AA union membership rather have: average wages 2-3% below other legacy carriers, or overhauls outsourced?

 

[Super FLUF]

Yes, but they didn't change the workrules or scope. That's where AA is no longer able to compete.

Folks, empty platitudes like this is why this airline is dying a slow and painful death through managerial incompetence. This TeAAm has shown that they are incapable of actually running an airline. Much easier to run a bean-counter version of an airline; a virtual airline. Slap the AA code on someone elses planes and collect revenue for doing nothing. None of those pesky labor bricks around to deal with.

Management admits that we are losing market share in key markets, but fails to deal with the reality of why that is. Rather than deal with the reality of on-time issues, lost bags, no parts and the "Bob Reding maintenance program", gate micromanagement, staffing issues etc., the answer is always to outsource more flying to regional airlines, who, ironically, have an even worse product than we do. The pax get stuffed into an RJ can, then end up leaving us all together after they discover a competing airline will roll out the red carpet for them with their FF status and they will fly on a mainline airliner for less money.

These issues are constantly brought up to the current "management" team and all we ever hear are lame-a$$ platitudes like the ones above - "we need to be able to compete. We need to be agile". When asked to expand on how this benefits the current employees or how it fixes current problems, we get a non-answer that falls into the "you're too stupid to understand" category.

Frankly, you need to stop bitching about what management has done during the past 10 years, and focus more on where your next two years paychecks are going to come from.

You have swerved into the truth. If we give away any more ground on scope, some zit-popping 20 year old at a regional airline will be collecting a check, and I will be on the unemployment line. If the company wants more scope latitude, they can petition in bankruptcy court for it. While they are doing that, the employee groups will be more than happy to lay out the case of the breathtaking incompetence of this management team and petition for a complete house cleaning starting at the top.

 

[WorldTraveler]

The key point here is that the comparison between AA and the legacy carriers is largely meaningless - at least for Tulsa (not so much for line). When it comes to overhaul, it's meaningless to compare AA's average wage to the average wage of Delta or United or USAirways since those airlines don't do overhauls anymore - the apt comparison is AA vs. TIMCO/Aeroman/HAECO, etc. And while I don't have any data for the average hourly wages at those companies, I'm guessing Tulsa's average mechanic stacks up fairly well. So yeah, AA's maintenance employees are - on average - paid slightly less than the industry (legacy airlines), but AA also has roughly double the maintenance staff per airplane as any legacy carrier (and almost 10x as many as some low-fare airlines). So which would the AA union membership rather have: average wages 2-3% below other legacy carriers, or overhauls outsourced?

actually it is quite appropriate to compare average WAGES for a group between airlines... because 1. there isn't the huge wage difference between overhaul and line at other airlines that some people want to believe exists - nowhere near the difference between US and overseas labor rates. and 2. because some of AA's other airline peers DO in fact do some overhauls... even if not in entirety.
The simple fact is that AA's labor productivity is WAY beyond its other peers - and it doesn't extend to maintenance alone.
It doesn't take a rocket scientist to read AA's annual or quarterly reports compared to other network airline peers and see that AA has about 10,000 more employees than DL or UA when equalized for the number of ASMs that are generated.
If it takes 10,000 employees to do the part of overhauls that AA does but other carriers don't, then the entire process SHOULD BE outsourced... but it doesn't.
AA's labor productivity is well below its peers in virtually every labor category.
While this forum is heavily frequented by AA mechanics, the issue of AA's productivity is far larger than mechanics - and trying to defend AA's increased headcount solely because of in-house maintenance is completely inaccurate.
.
It is true that AA has not laid off the number of employees that other airlines laid off - or left under voluntary programs - during their reorganizations but other airlines have grown such that their labor forces more closely matched their network. AA has laid off about 25% of its workforce over the past 10 years, DL has laid off about 38%, NW (prior to the merger) was about 40%, and UA and US were both at 50%. CO was less than 25%... but the key takeaway is that CO and DL both aggressively grew their int'l operations during the 2000s which allowed them to generate lots of new ASMs and increase their labor productivity - and revenue.
.
AA did not lay off near as many people but they also did not grow.... the only way you keep employee costs from growing is by growing the company at a faster rate than the normal escalation in pay that comes with the movement of airline employees up the pay scales.
.
The only way to FIX the problem is to lay off lots of people initially and then grow once a stable growth rate has been achieved.

.
Part of the reason why AA is likely not interested in negotiating with the TWU is because it knows full well that it will not need near as many mechanics in the not too distant future as new airplanes come online and older maintenance heavy aircraft leave the fleet.
Also, AA will have the opportunity to reject contracts for facilities in BK, further providing flexibility to resize the maintenance operations to what AA believes it needs.
.
It is correct that the choice a few years ago would have been to change the workrules to have allowed AA to increase productivity (not just for mechanics but across the board) to rates of productivity competetive w/ the industry. But AA is too broken at this point to fix the problem w/o drastic measures - and given the "freedom" the company will have in BK, they will reduce the headcount, reduce wages and benefits, and change workrules.... while, in its 2003 restructuring AA reduced headcount less than other carriers, reduced wages but perhaps not benefits as much as other carriers, and largely only negotiated fairly "mild" changes in workrules, all three will be on the table this go around and the cumulative total of wage and staffing cuts will be far more for AA employees after this round than they have been for other carriers, who once again, are not discussing further cuts but rather seniority integration and how future work will be allocated among work groups.

Fluf,
you are correct that a big part of the reason AA's revenue growth is shrinking is that they cannot keep revenue within the AA system. Codeshares on domestic carriers - other than regional carriers where AA owns all of the capacity - cannot be shared.. ie AA cannot share revenue with B6 - who passengers know full well that it is not AA... and no rational person is going to choose an AA/B6 connection at JFK over a single carrier connection with another airline that doesn't involve a terminal change for the same price.
AA has no choice but to leave markets that they cannot economically compete in but don't you find it more than ironic that AA chooses as its partner the very same airline that is driving AA out of many of the markets? it shouldn't be lost on anyone that B6 is now the largest low fare carrier in most of the Caribbean markets which AA has left or reduced service in. B6 now has its sights set on ORD where it is increasing its service to BOS, another city where AA has reduced its presence.
You truly have to ask what a mgmt team is thinking in signing an agreement with an airline to replace AA's presence after that competitor runs AA out of those markets.
Maybe the grand plan is for AA and B6 to merger after an AA bankruptcy... but it is far from certain that AA will be the surviving carrier if in anything other than name.

 

[commavia]

Folks, empty platitudes like this is why this airline is dying a slow and painful death through managerial incompetence. This TeAAm has shown that they are incapable of actually running an airline. Much easier to run a bean-counter version of an airline; a virtual airline. Slap the AA code on someone elses planes and collect revenue for doing nothing. None of those pesky labor bricks around to deal with.

Management admits that we are losing market share in key markets, but fails to deal with the reality of why that is. Rather than deal with the reality of on-time issues, lost bags, no parts and the "Bob Reding maintenance program", gate micromanagement, staffing issues etc., the answer is always to outsource more flying to regional airlines, who, ironically, have an even worse product than we do. The pax get stuffed into an RJ can, then end up leaving us all together after they discover a competing airline will roll out the red carpet for them with their FF status and they will fly on a mainline airliner for less money.

These issues are constantly brought up to the current "management" team and all we ever hear are lame-a$$ platitudes like the ones above - "we need to be able to compete. We need to be agile". When asked to expand on how this benefits the current employees or how it fixes current problems, we get a non-answer that falls into the "you're too stupid to understand" category.

For the fiftieth time - you're arguing over how you want the world to be, not how it actually is. You may deplore the "solution" of just shifting more and more of the system ASMs to regional carriers with dramatically lower costs (including labor). You may think that it is a sub-optimal solution, or indeed not a solution at all, and that it actually degrades the overall customer experience - and in many instances, I would wholeheartedly agree with you.

But, again, it is - to varying extents - what just about everyone else is doing. One way or another, AA has to compete. And if Delta, United, USAirways, etc. have responded to their mainline cost problem by outsourcing more functions and/or simply handing more and more flying to regionals, what is AA supposed to do? In the broad sense, they only have two options: (1) follow suit by outsourcing and/or shifting capacity to regionals, or (2) at least somewhat lower the costs of mainline itself. Which would the AA mainline unions prefer?

As for some of the operational issues - I don't disagree with you. I will say that, on balance, given the experiences I've had on lots of airlines in the U.S. and around the world, AA actually still gets more right than wrong when it comes to the basics of operations, largely (in my experience) because AA's workforce is much more senior and thus more experienced. AA's basic IT and operational systems, while perhaps antiquated, are solid as a rock and AA's employees know them backwards and forwards. AA fails miserably in the branding and aesthetics department compared with, say, Delta, but my experience is that - for example - Delta sucks at the "basics" of IT functionality, website utility/stability, FF program, etc. So it's a trade-off. Overall, I honestly do think AA and AAers still do quite well at the basics.

But, yeah - AA is definitely not the 'On-Time Machine' it once was. I think that has largely to do with the spreadsheetization of the company. In the Crandall era, the company was pretty much run by a healthy competitive balance between the finance guys, the operations guys, and the marketing guys. My personal opinion based on personal experience is that AA has lost that operational voice at the table at the top levels, and actually severely degraded the marketing presence as well compared with the Gunn days.

Today - finance rules entirely, which is to a certain extent understandable given the financial troubles of the last decade. But I agree that AA could definitely afford better marketing and branding input at the top, and definitely much more operational focus. No arguments there.

You have swerved into the truth. If we give away any more ground on scope, some zit-popping 20 year old at a regional airline will be collecting a check, and I will be on the unemployment line. If the company wants more scope latitude, they can petition in bankruptcy court for it. While they are doing that, the employee groups will be more than happy to lay out the case of the breathtaking incompetence of this management team and petition for a complete house cleaning starting at the top.

While I understand the point you're making - I respectfully think your vision of how a hypothetical bankruptcy would go is a bit naive. Traditionally these things don't necessarily work out the way you describe. Other airlines have filed with management teams that I would characterize as far more "incompetent" than AA's allegedly is, and they have left unscathed, while union contracts were eviscerated. If the last ten years is any guide, AA would probably not face much trouble in demonstrating why its pension obligations, SCOPE clauses, in-house overhauls, etc. are all placing AA at a competitive cost disadvantage. Whether you agree with those things or not, other airlines have been quite successful in jettisoning those things in bankruptcy.

 

[WorldTraveler]

Be done with the endless defense of AA and face the cold hard reality that AA is NOT running a industry leading company in any category. Your attempts to slam those companies that are actually doing a decent job show how incapable you are of understanding what really drives the industry - and how AA fails to deliver what others can.
.
Whether it comes to AA's antiquated IT which really doesn't do any better job by any reasonable statistic as measured by an indepdendent organization that measures performance within a sector to onboard product to fleet deployment, AA lags its peers - badly. And the advantages AA should be gaining from a senior workforce have all but been sacrificed by AA's endless efforts to demoralize those people.
Your statement is correct that ALMOST everyone else is shifting capacity to regionals since DL is bucking the trend and adding lower CASM mainline flying which also happens to be good for DL employees - and which also explains why DL is able to compete and grow its domestic operation to twice the size of AA's, in part because DL is reaping the benefits of its NW merger. The fact that AA - once a leader in network mgmt - has allowed a company which had far less historical access to the nation's top markets invade AA's top markets shows how badly AA has slipped.
WN and B6 don't have to farm out their flying to regional carriers to compete and make money.. in fact, they just need to wait for AA to abandon markets and then start flying those markets and making money hand over foot. Have you seen a graph of how qiuckly WN's STL revenue ramped up at the very same time that AA decided to fold the hub - and didn't bother to fight for the local market? It's no surprise that AA's premium revenue is slipping as fast as it is.
Ultimately, airlines are for profit enterprises but it is completely inaccurate to say that the bottom line and the customer and employee can't benefit at the same time. The reason why AA has failed is because their mgmt cannot figure out how to do things that benefit anything other than the bottom line.

We don't even need to start discussing AA's financial performance which has lagged the industry not just since 2009 but long before that....
.
You as a supposed premium AA passenger might like the giveaways from the AAdvantage program but last time I checked loyalty programs exist to create value for the company by keeping loyal passengers flying and bringing in new customers. Since other airlines are growing their premium revenue a whole lot faster than AA - and AA's RASM growth is trailing the network carriers, then perhaps the loyalty programs aren't the only answer as to how to generate premium revenue - and other carriers have a far better sense of how to balance loyalty programs, corporate contracts, onboard service and a host of other factors that drive customer preference.

Spare the spin and face the reality for what it is.....
AA has a great history, will return in some form, but AA as a company and its employees will pay a very high price for mgmt's unwillingness to deal with problems that should have been dealt with 8 years ago.

.
When AA mgmt, its online fAAnclub, and those employees in denial recognize that AA/AMR is a very broken company and be willing to look to other companies- inside and outside of the airline industry just like other airlines have had to do, then perhaps AA can begin to return to what it once was... and AA's employees can see a bright future.

 

[strikeforce]

Be done with the endless defense of AA and face the cold hard reality that AA is NOT running a industry leading company in any category. Your attempts to slam those companies that are actually doing a decent job show how incapable you are of understanding what really drives the industry - and how AA fails to deliver what others can.
.
Whether it comes to AA's antiquated IT which really doesn't do any better job by any reasonable statistic as measured by an indepdendent organization that measures performance within a sector to onboard product to fleet deployment, AA lags its peers - badly. And the advantages AA should be gaining from a senior workforce have all but been sacrificed by AA's endless efforts to demoralize those people.
Your statement is correct that ALMOST everyone else is shifting capacity to regionals since DL is bucking the trend and adding lower CASM mainline flying which also happens to be good for DL employees - and which also explains why DL is able to compete and grow its domestic operation to twice the size of AA's, in part because DL is reaping the benefits of its NW merger. The fact that AA - once a leader in network mgmt - has allowed a company which had far less historical access to the nation's top markets invade AA's top markets shows how badly AA has slipped.
WN and B6 don't have to farm out their flying to regional carriers to compete and make money.. in fact, they just need to wait for AA to abandon markets and then start flying those markets and making money hand over foot. Have you seen a graph of how qiuckly WN's STL revenue ramped up at the very same time that AA decided to fold the hub - and didn't bother to fight for the local market? It's no surprise that AA's premium revenue is slipping as fast as it is.
Ultimately, airlines are for profit enterprises but it is completely inaccurate to say that the bottom line and the customer and employee can't benefit at the same time. The reason why AA has failed is because their mgmt cannot figure out how to do things that benefit anything other than the bottom line.

We don't even need to start discussing AA's financial performance which has lagged the industry not just since 2009 but long before that....
.
You as a supposed premium AA passenger might like the giveaways from the AAdvantage program but last time I checked loyalty programs exist to create value for the company by keeping loyal passengers flying and bringing in new customers. Since other airlines are growing their premium revenue a whole lot faster than AA - and AA's RASM growth is trailing the network carriers, then perhaps the loyalty programs aren't the only answer as to how to generate premium revenue - and other carriers have a far better sense of how to balance loyalty programs, corporate contracts, onboard service and a host of other factors that drive customer preference.

Spare the spin and face the reality for what it is.....
AA has a great history, will return in some form, but AA as a company and its employees will pay a very high price for mgmt's unwillingness to deal with problems that should have been dealt with 8 years ago.

.
When AA mgmt, its online fAAnclub, and those employees in denial recognize that AA/AMR is a very broken company and be willing to look to other companies- inside and outside of the airline industry just like other airlines have had to do, then perhaps AA can begin to return to what it once was... and AA's employees can see a bright future.

The mechanics on this forum have expressed management's incompetence for at least a year since I joined this forum. We see it first hand everyday. I have given my kids college tuition to an incompetent team of crooks, idiots and do nothings that parade around and like to call themselves "management". There is NO sensible way of fixing AA.....let me repeat myself....There is NO sensible way of fixing AA, unless the current management team is shown the door. Recently, a team of Dependability managers....I'm talking level 6 managing directors, engineers and parts guys....these guys came to ORD to get suggestions from AMT's on how to fix the dependability problem that is absolutely horrible regarding critical flights.....I told these guys the dependability problem stems from a maint. program that is absolutely horrible. The planes are broken for a reason.....we don't do the simplest maint. like walk arounds....how can you expect a plane to be dependable if it's not being looked at......this level 6 told the amt's that dependability is not the same as reliability.....really!!! Why is AA paying these managers six figures, but they need suggestions from lowly AMT's to do THEIR job???? If they can't fix the dependability problem.....GET RID OF THEM!!!!

WE know this airline is slowly, but surely becoming a lawn dart.....WE have done our part, and going BK may be a blessing in disguise. Don't kid yourself, the employees of AA know problems exist with the company, but if management can't figure out how to fix the lost bag, dependability, and on time problems......GET RID of THEM....or BK will do it for us! It can't come soon enough!!!!

 

[Mr Red]

The mechanics on this forum have expressed management's incompetence for at least a year since I joined this forum. We see it first hand everyday. I have given my kids college tuition to an incompetent team of crooks, idiots and do nothings that parade around and like to call themselves "management". There is NO sensible way of fixing AA.....let me repeat myself....There is NO sensible way of fixing AA, unless the current management team is shown the door. Recently, a team of Dependability managers....I'm talking level 6 managing directors, engineers and parts guys....these guys came to ORD to get suggestions from AMT's on how to fix the dependability problem that is absolutely horrible regarding critical flights.....I told these guys the dependability problem stems from a maint. program that is absolutely horrible. The planes are broken for a reason.....we don't do the simplest maint. like walk arounds....how can you expect a plane to be dependable if it's not being looked at......this level 6 told the amt's that dependability is not the same as reliability.....really!!! Why is AA paying these managers six figures, but they need suggestions from lowly AMT's to do THEIR job???? If they can't fix the dependability problem.....GET RID OF THEM!!!!

WE know this airline is slowly, but surely becoming a lawn dart.....WE have done our part, and going BK may be a blessing in disguise. Don't kid yourself, the employees of AA know problems exist with the company, but if management can't figure out how to fix the lost bag, dependability, and on time problems......GET RID of THEM....or BK will do it for us! It can't come soon enough!!!!

AMEN !!!!

 

[limit]

I believe its indescribably naive if not outright stupid to believe that bankruptcy will get rid of an incompetent management team.
Many of our co workers will be out on the street bankrupt themselves before management ever comes close to feel even discomfort.
It seems that many of you have been living a different reality the last 10-15 years,and have not learned anything from the events that took at other US corporations ,not just aviation.
While I wish ,the current team must be changed ,I do not want to have anything to do with the bankruptcy courts,and I have more seniority than 87% of the guys on payroll.

 

[Flying low]

Once management gets up to level 6 and gets his/her soft cushy chair with a nice office, Why would they even want to come out to the hangers/line to see how things are being operated. When was the last time anyone has seen our CEO out in the field? Does he really know what's happening, how things are being run? Does he know which manager is where and doing what?

I remember one of Crandells last presidents conferences, someone asked him a question about a serious problem on their dock. Crandells response was Which dock do you work on? When the mechanic told which dock, Crandell said So you work for so&so (I forget the name). But I was impressed that he did know which manager was where.

Didn't CR Smith drop in unannounced at different stations to see how things are run at all times of the day. I understand that our CEO is an extremely busy person, but I feel that him and our president of AA are just so far disconnected that they are clueless in the everyday operation.