I LUV NY

[FWAAA]

You need to add in the Passenger Facility Charge as well. $4.50/pp

No, we don't need to add the PFC. PFCs are charged on a per-passenger basis (not a flat fee like landing fees) and are billed to passengers via ticket sales. They're a separate line item on tickets.

Additionally, the existence of a PFC at LGA will have no impact on WN. Southwest has thrived for many years at airports imposing PFCs, including BWI, BUR, MDW, LAX, LAS, PHX, SJC and OAK, among many others (all of the above are $4.50 but a few of WN's airports are only $3.00). That list above includes most of WN's busiest stations. In fact, nearly every aiport served by WN imposes PFCs except for DAL. Even ISP imposes a $4.50 PFC.

Here's a list prepared by WN showing PFCs imposed by airport:

http://www.southwest.com/travel_center/pfc.html

Bottom line: PFCs are a constant and thus, we don't need to "add them in" when discussing WN's advantages/disadvantages.

 

[eolesen]

Per worker, despite the fact that AA subs out less than most carriers-thus driving up its headcount, AA workers generate more revenue than SWA workers, over $26,000 a year more and currently AA pays their mechanics close to $20,000 a year less.

AA RASM (2007)was 13cents a mile
SWA RASM was 9 cents a mile

Ah, the good old days.... 13c is a pipe dream today.

AMR's RASM for 2008 was 11.15c

AMR's 1Q09 RASM is down to 9.4c per mile vs. 10.67 in 1Q08

Even with the capacity cuts, revenues simply aren't holding up.

 

[TWU informer]

Ah, the good old days.... 13c is a pipe dream today.

AMR's RASM for 2008 was 11.15c

AMR's 1Q09 RASM is down to 9.4c per mile vs. 10.67 in 1Q08

Even with the capacity cuts, revenues simply aren't holding up.

Well cut more capacity until a profit can be achieved or get out of the business.

Why is it that airline management that we cannot afford to get rid so we must pay them bonuses not to leave continue to provide a service at a loss? Simply take the seats out of the air until the revenue actually exceeds cost.

 

[eolesen]

Ah, the time honored "shrink your way to profitability" argument?

That worked really well for TWA, Eastern and Pan Am....

 

[FWAAA]

Informer: they've been cutting capacity pretty consistently now for several years. Problem is, AA can't force the others to cut capacity - and thus AA's capacity cuts don't automatically translate into higher fares for AA. Not only have Southwest, jetBlew and Air Tran grown like gangbusters over the past decade, but even CO has added capacity. Only UA has been more aggressive than AA in cutting capacity over the past year, but it still hasn't been enough.

And eolesen has a point - fixed costs tend to be, well, fixed, and thus increase as they're spread over fewer and fewer seat miles. Kind of a vicious circle - shrinking only makes the CASM go up further and further. Shrinking to profitability doesn't have a great track record.

On top of that, shrinking involves staff reductions, and many posters here have been complaining about FA and mechanic furloughs (if this place had a lot of pilot posters, I suspect we'd hear about the pilots on furlough as well).

We constantly read here that AA management has no care for its employees - it couldn't care less about them. Nevertheless, it appears that management does not want to cut headcount very aggressively. FA posters here have pointed out the obvious overages for the last couple of years, yet AA recalled some FAs and has been slow to furlough them. AA could have grounded more MD-80s and furloughed more pilots, mechanics and FAs, yet has been somewhat cautious. The ongoing retirement of the entire AB6 fleet (more widebody capacity than flown by all of US Air) was a notable exception.

 

[TWU informer]

Ah, the time honored "shrink your way to profitability" argument?

That worked really well for TWA, Eastern and Pan Am....

Sure it would be better management to keep taking bonus awards while flying at a loss, and then your angered employees will make AA look like TWA, Eastern, and PanAm.

I dont think shrink to profitability was the demise of TWA, Eastern, or PanAM. It seems more like AA type of management and angered low morale amongts employees was more the trigger to failure. I know in your mind AA management does no wrong and those failed airlines should have paid bonus awards to keep their "good" management around and then they would each still be flying today. In the end, you and I will obviously disagree. I can handle that.

 

[TWU informer]

On top of that, shrinking involves staff reductions, and many posters here have been complaining about FA and mechanic furloughs (if this place had a lot of pilot posters, I suspect we'd hear about the pilots on furlough as well).

We constantly read here that AA management has no care for its employees - it couldn't care less about them. Nevertheless, it appears that management does not want to cut headcount very aggressively. FA posters here have pointed out the obvious overages for the last couple of years, yet AA recalled some FAs and has been slow to furlough them. AA could have grounded more MD-80s and furloughed more pilots, mechanics and FAs, yet has been somewhat cautious. The ongoing retirement of the entire AB6 fleet (more widebody capacity than flown by all of US Air) was a notable exception.

Well then why not offer early out's in negotiations along with a new "B" scale solution cost of needed headcount and begin hiring as the elders leave?

Worked damn well for Crandall. Of course these new younger bonus earning superior management gurus have a better idea.

 

[FWAAA]

I completely agree with post #37 (I'd have quoted it but the management around here discourages that).

IMO, AA should have aggressively pursued early outs a couple years ago when its cash balance was nearly $6 billion. Problem is, now the unrestricted cash balance is down to about $2.6 billion and revenue is tanking. If AA can find a lender to backstop the declining cash (like the recent discussions with Citi), then AA really should try to push out the older workers with offers of money, of course.

 

[FA Mikey]

The problem being, there are not a lot of options in this economy to take the money and run. Do you think there could be enough of a turn over to make it worth there while?

 

[eolesen]

I don't think a buy-out would work. Look at how flight attendant attrition slowed down in 1Q09. Sure, some of it is offset by the VRB's from last fall, but I've seen voluntary turnover grind to a halt at most of the companies I work with.

 

[Hopeful]

I don't think a buy-out would work. Look at how flight attendant attrition slowed down in 1Q09. Sure, some of it is offset by the VRB's from last fall, but I've seen voluntary turnover grind to a halt at most of the companies I work with.

Eric, tell us about the executive BUYOUT program...You know the one where an extremely valuable executive threatens to leave the company, and winds up getting an increase in his/her compensation package....It's called a REVERSE buyout package if you're an executive.

You know, the same executives who tell the workers "IF YOU DON'T LIKE IT HERE AT AA, QUIT."

 

[Bob Owens]

Ah, the good old days.... 13c is a pipe dream today.

AMR's RASM for 2008 was 11.15c

AMR's 1Q09 RASM is down to 9.4c per mile vs. 10.67 in 1Q08

Even with the capacity cuts, revenues simply aren't holding up.

Then charge an extra penny and a half a mile. That comes out to just $15 per 1000 miles, or around the same as Tolls from Brooklyn to EWR airport, a distance of around 20 miles. For the past four months that I've been flying (at least once a week) the planes have been at or near capacity.

Fuel, their biggest expense has dropped by 2/3s.

I remember reading a book years ago (Hard Landing maybe?)and IIRC back in the 30s the CASMs werent much lower, if at all, than they are today and thats in unadjusted figures.

 

[FWAAA]

For the past four months that I've been flying (at least once a week) the planes have been at or near capacity.

Full flights don't equal profitable flights. You'd think you'd be the one telling everyone else that after nearly 30 years in the industry. Odd that the outsiders have to remind you of that.

Fuel, their biggest expense has dropped by 2/3s.

Nope, fuel expense fell by 36.7% in the first quarter; that's closer to a 1/3 drop:

http://finance.yahoo.com/news/AMR-Corporat...s-14932536.html

 

[Bob Owens]

Full flights don't equal profitable flights. You'd think you'd be the one telling everyone else that after nearly 30 years in the industry. Odd that the outsiders have to remind you of that.
http://finance.yahoo.com/news/AMR-Corporat...s-14932536.html

These days no one can make money on the goddamn airline business. The economics represent sheer hell.
— C. R. Smith, President of American Airlines.

Smith retired 40 years ago, he came back briefly in 73 but either way it was a long time ago. Managements tune hasnt changed, yet since then the industry has continued to expand and it still exists. As workers we have to realize that if profitability was really all that important this industry would have never even come into existince. The industry generates economic activity and the profits are generated by the parasitic industries that survive off the economic activity that the industry produces.

 

[eolesen]

Eric, tell us about the executive BUYOUT program...You know the one where an extremely valuable executive threatens to leave the company, and winds up getting an increase in his/her compensation package....It's called a REVERSE buyout package if you're an executive.

I could tell you about the Easter Bunny and the Tooth Fairy, but it doesn't mean they exist.

You can believe there's a secret "pay me more or I walk" program for senior management and executives, but the fact is anyone walking away from stock options that haven't vested yet is likely to be looking at a 25-50% increase (if not more), and AA's not in a position to match that economically, nor do they want to set the precedent.

Maybe things are different in Maintenance because the options are more limited for those folks to go somewhere else, but it ain't happening with the people who can find similar work in other industries.

First of all, you'd wind up with a bunch of people making more than their boss. Match higher, and they're making more than their boss's boss. I can tell you that ain't gonna happen.

Second of all, if you start increasing salaries by 25-50% at the VP level, it start to displace people who fall under SEC required reporting for top executive's compensation. That gets filed by dollar amount, not position.

Third.... executives who leave aren't leaving for the money; they're looking to climb up the ladder, and if they know they're not going to be able to do that at AMR anytime soon, they're going to leave regardless of what AMR tries to match.

Fourth.... and this is the important point..... For all the bashing you want to make about incompetence, AMR has what many consider one of the deepest benches of management talent around. There's a reason that UAL, Jetblue, and others try to recruit people away from AMR. And for every VP in a chair today, there are three or four MD's who are just as capable (if not more) and can step into their position without losing a beat. Likewise, for every MD, there are five or six managers who can step into their job.

AMR doesn't worry about losing the senior people because they actually have succession plans in place for directors and above. They start grooming L6's to replace the L8's, L5's to replace the L6's, and L4's to replace the L5's... Smart companies do this. Companies like UAL and DAL don't, and that's why they created retention programs during their bankruptcies, and why DAL had to create incentives for the NWA managers and execs to stick around thru the transition period.


It does makes for a nice soundbyte to grind the axe against, but all it amounts to is an breakroom legend from what I've seen firsthand.