Important message to AA employees

[Cosmo]

[blockquote]
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On 3/13/2003 1150 PM Bob H wrote:

From 1978 (first year of de-regulation) through 1993 (16 years)..

The average annual operating revenue for AMR was $7.58 billion.

The average annual profit was only $69 million.

The average annual profit margin was just 1.87%.
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[/blockquote]
Bob:

At the risk of asking you to do a few more calculations, what would the above numbers look like if:

1. You included the entire period from 1978 through 2002 for AMR?

2. You included the entire period from 1978 through 2002 for AMR and you also included the results of the three carriers that are now part of AMR via acquisition -- AirCal, Ozark and TWA -- for those years when they operated independently?

Thanks.

 

[Bob H]

[blockquote]
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On 3/14/2003 6:52:58 AM Cosmo wrote:

[blockquote]
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On 3/13/2003 1150 PM Bob H wrote:

From 1978 (first year of de-regulation) through 1993 (16 years)..

The average annual operating revenue for AMR was $7.58 billion.

The average annual profit was only $69 million.

The average annual profit margin was just 1.87%.
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[/blockquote]
Bob:

At the risk of asking you to do a few more calculations, what would the above numbers look like if:

1. You included the entire period from 1978 through 2002 for AMR?

2. You included the entire period from 1978 through 2002 for AMR and you also included the results of the three carriers that are now part of AMR via acquisition -- AirCal, Ozark and TWA -- for those years when they operated independently?

Thanks.
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[/blockquote]

I'm not quite sure I understood your question?

Once they become consolidated, there is no way to separate Air Cal, TW/OZ from AA/AMR's financial statements.

The last info on TW and AMR (separate) I have is based on a DOT41 for the year 2001.

If you were asking for the AMR averages from 1978 through 2002 (25 years) they are;

The average annual operating revenue for AMR was $11.21 billion.

The average annual profit was only $53.4 million.

The average annual profit margin was just 1.26%.

Let me know if I misunderstood your question.

Bob H

To those who said Hi and welcomed me above. Thanks

 

[Bob H]

[blockquote]
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On 3/14/2003 6:51:49 AM Hopeful wrote:

BOB H:

Two issues:

1)What do you think of Carty & Co. getting their country club dues paid for by AMR?


2)AA's ranks are loaded with former Eastern Airlines, PanAM, and TWA employees. Ask them if pay cuts and concessions work.

Nothing will change unless AA fundamentally changes the way it does business. As of yet, I see no changes in management's plan. They want to be the same AA they always were but at JetBlue costs. They want to be able to say "HEY, FLYING PUBLIC, OUR FARES ARE CHEAPER THAN JETBLUE AND SOUTHWEST, BUT WE OFFER YOU MEALS AND FREQUENT FLYER MILES."

Bob, the company speaks out of both sides of its mouth. They are constantly telling us that JetBlue and Southwest are kicking our asses because the customer has proved he or she just will not pay alot for a ticket. Well, you can't have your cake and eat it too, as AA desires.

One thing AA management continually fails to say in all their speeches and correspondence is that employees at JetBlue and Southwest have a diiferent place in the priority rankings. They are HAPPY and treated better than we are at AA. At AA, it's the stockholder, the passenger, upper mangagement, than everyone else.
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[/blockquote]

Your quest #1.

I think there would be a much better way for management to demonstrate a new culture change.

That being said.. Carty's 2001 (ACTUAL) compensation and exercised stock options.. equated to less than $38 per employee.

IMO, Executive compensation cannot be defended. It has gone so far out of line it has become an insult to the rank & file employees. It isn't just in the airlines it is EVERYWHERE.

Once the emotion is removed, the question must become; How much is each employee TOTALLY willing to lose to not pay the average $39 to Carty?

Based on 2001 data (latest available);

Carty's annual compensation was nearly the same as Herb Kelleher (SWA). Many of you have read about all of the stock options, LTIP's etc. for Carty..

Did you know that (12/31/01 data) Carty's exercised options/stock gains were $2.48 million.. Sounds like a lot until you look at Kelleher's **$40.8** Million.

How about "Exercisable stock options";

Carty had $3.45 million.. Kelleher's were nearly 20 times that at **$64.96 million**.

No one will argue the difference between Carty and Kelleher. However does ANYONE here think there is ~$100 million difference?

---------

Your quest #2.

NO employee WANTS concessions. Most of us can provide credible arguments as to why we should be earning even more than we do.

The CURRENT question isn't about politics or what's fair or right.. It's all about making the choice to concede some amount now or have a judge take (probably) considerably more through the bankruptcy process.

Each of the airlines you mention above has some unique circumstances. EAL was doomed when Lorenzo took over and the most obvious direction was his transfer of EA assets to his new non-union CAL. As I recall, the end of EAL came when the IAM refused to provide concessions not after.

PAA never adjusted to the deregulated environment to get domestic feed for their MOSTLY International system.

TWA had many years of mis-management and in the 1984-85 takeover of TWA between Lorenzo & Icahn.. Icahn seemed like the lessor of two evils.

History will show that TWA should have shut down nearly every year from ~1988 to 2000. There is NO doubt the TW concessions were in VERY LARGE part the ONLY reason TWA lasted for the ten years.

I agree and disagree (a little) with some of your other comments.

(Please don't read any of the above that I'm FOR concessions or pro management. IMO, There is a time & a place to make a stand.. This is not one of them.)

Bob H

 

[Hopeful]

BoB H:

I think Frank Lorenzo is salivating right now knowing that all he can do is watch from the sidelines. He is missing the golden opportunity to finally break the airline unions. Carty is a staunch supporter of changing the Railway Labor Act and forcing "baseball style arbitration" on the unions. He will soon be, as United and USAir already are, using the bankruptcy courts to determine labor's fate. What a perfect combination: Bankruptcy Courts and the Congress destroying the unions.

To answer your Carty-Kelleher compensation comparison I would have to say is that Carty does not deserve what the former Southwest's chairman receives. Southwest is a unionized airline and yet they remain profitable. You don't hear Southwest blaming labor for its woes. You do realize that AA is losing 5 million dollars a day. Well multiply that 5 million by 360 days (almost a year)and you get 1.8 billion dollars. THE SAME AMOUNT THAT AA WANTS FROM EMPLOYEES! So what you see is that AA WANTS to be profitable on the backs of its employees WITHOUT changing its business plan. If AA wants to be profitable, I say SHRINK to achieve that goal. Even if I lose my job or be forced to work under the terms that AA seeks, I would rather seek employment in some other field. I realize I will no longer see the wages I enjoy now, but guess what? IF I STAY WITH AA UNDER THEIR TERMS, I WILL NEVER SEE THE WAGES I SEE TODAY.

 

[Connected1]

We don't cover variable costs on most of our routes, so shrinking is not the only solution.

 

[Hopeful]

True to an extent. But if AA shrinks in size, simplifies its structure, reduce the headcount and fleet and gets out of unprofitable routes and hubs, it will have reduced its cost structure immensely.

 

[WXGuesser]

[blockquote]
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On 3/14/2003 8:05:56 AM Bob H wrote:

That being said.. Carty's 2001 (ACTUAL) compensation and exercised stock options.. equated to less than $38 per employee.

[/blockquote]

Hey, no fair going and ruining the perfectly good whine-and-complain party going on around here with any actual facts!


[blockquote]

(Please don't read any of the above that I'm FOR concessions or pro management. IMO, There is a time & a place to make a stand.. This is not one of them.)

Bob H
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[/blockquote]

"Only a fool fights in a burning building." -- Capt. Kang

TANSTAAFL.

 

[FWAAA]

[blockquote]
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On 3/14/2003 6:51:49 AM Hopeful wrote:

1)What do you think of Carty & Co. getting their country club dues paid for by AMR?
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[/blockquote]

No matter how you slice it - the CEO of any airline employing you will be more highly compensated than you.

Does it really matter to you HOW the executives take their (larger) piece of the pie home with them??

His pension is fatter than yours.

He probably gets more vacation than you.

He probably gets a company-provided car.

So what if his country club dues are paid by the company?

If this issue is the sticking point I'm sure I can round up people who are ready, willing and able to pay all of Carty's country club dues so AA doesn't have to.

Would that help the medicine go down??

 

[Connected1]

[blockquote]
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On 3/14/2003 11:23:50 AM Hopeful wrote:

True to an extent. But if AA shrinks in size, simplifies its structure, reduce the headcount and fleet and gets out of unprofitable routes and hubs, it will have reduced its cost structure immensely.
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[/blockquote]
Agreed. I don't have anything more to add - I just wanted to show you that I am capable of agreeing with you!

 

[Hopeful]

I don't have a problem with any CEO making the big bucks. But when they become criminally outrageous, I have a problem. We're being asked to take the "MEDICINE" to make the company profitable while Carty has his country dues paid? I doubt very much if these "dues" and other goodies are in lieu of salary. They are "extras." I have no problem with the upper class getting their perks, but accepting them while you are asking the rest of the lower class to "suck it up" during these bad econmic times is arrogant, plain and simple.

Funny thing though. The company wants to eliminate the cleaning of uniforms for mechanics but they won't eliminate Carty and upper execs' country club dues.

Fair, don't you think?


Oh, and by the way! I was only asking about country club dues!

 

[AAmech]

What ever happened to "You can't shrink your way to profitability". That was pretty popular before "Concessions have never saved an airline"!

 

[Hopeful]

I beleive the "you can't shrink your way to profitablity" logic is an airline management view, while "concessions never saved an airline" was penned by employees who have worked for Eastern, PanAM and TWA.

 

[extwacaptain]

Captain Herbst,

Your presence on this board is like a breath of fresh air. The true concern you have for the airline industry and ALL of its employees will forever be appreciated.

Makes me proud to say: “Yeah, I worked for the same airline as Bob Herbstâ€￾.

Randy Kramer

 

[atabuy]

Bob H,
Enjoyed your posts and agree that BK should be avoided at all costs.
I just retired from Ual and tried for a long time to get Ual employees to realize they will give the money up one way or the other.
In Bk, Ual's legal fees are all ready 2.8 billion.

You guys are running up against the same problem we did. Not enough time to do anything, and no control over any issues.

The first thing you have to do is stop the bleeding. Cut all wages by whatever it takes to just break even.
This will give you time to get a plan you all can agree on.
Eventually tie wages to revenue so you never have a loss.

Purchase AA stock to offset wage loss, and as AA becomes more profitable, the stock will rise and employees make back their lost wagess.

These are just some ideas to keep AA solvent.
It is imperative, everyone be in this together. Otherwise it won't work.

I suggested a graduated reduction in pay similar to how the tax system works. Starting at 20,000 it would be 5% with a 1/4% per 1,000 increment increase.
Thus: 21,000 x 5.25%. 22,000 x 5.5%. and so on.

I wouldn't depend on management to figure out anything that will help you all. The employees will have to do it.

Good luck to you all.

 

[Bob H]

[blockquote]
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On 3/14/2003 7:55:06 PM extwacaptain wrote:

Captain Herbst,

Your presence on this board is like a breath of fresh air. The true concern you have for the airline industry and ALL of its employees will forever be appreciated.

Makes me proud to say: “Yeah, I worked for the same airline as Bob Herbst”.

Randy Kramer

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[/blockquote]

Dear Captain Kramer-

A few months ago, the APA had a dinner and provided recognition to the recent STL/TW pilot retirees.

As a complete surprise to me, retired Captain Jack Irwin (Smilin Jacks.com) and myself were also presented a leather jacket and recognized for the input and contributions we have made through the AA/TW integration.

As I stood at the podium and looked out at the worn faces of many TWA/OZ pilots; with a shaking voice, I spoke how their careers had gone to heaven and back as they had used their knowledge and experience to carry our customers safely around the World for decades.

I told them I was not a youngster myself as I started my flying lessons in the early 60's.

What I thanked them AND you for, is teaching me how to have respect for our profession our industry our fellow employees and most of all OUR customers.

Pilots such as yourself set a standard and a goal for all of us that I can only hope to get close to.

It is I who thanks you and those who showed me the way.

Very respectfully-

Bob Herbst