Looking Back

[NWANWA]

I generally love to fly American Airlines. I had a great customer service experience on a flight to Quito where I forgot about my flight in the American Admirals Club Lounge as I was traveling First for this trip. I showed up after they shut the door by a few minutes and the agent happily opened the door and asked where I was and they had been waiting for me all in a great manner. They did not have to do this for me. I have been flying American more and more since.

For the employees, do you think anything should have been down to avoid this bankruptcy? Maybe more sacrifice on your end? Or do you think enough was given and management needed to do more. What could they really do though when competitors at other airlines pay their employees less? Now it seems American will get what it wants using bankruptcy anyway. Would it have been smarter to comply when employees had the chance to? Depending on how American treats its employees is how I will decide if I will keep flying this airline. I would like to hear the emplyee perspective.

I only used to only use United to Asia. I was disgusted though to hear that their management gutted their retiree's pensions and many who retired at that airline in the 2000s lost everything. I won't fly an airline like that throws its employees under the bus and its junior employees stand by and watch as their peers sacrifice it all for the company and management. If this occurs at American they will lose my business. I hope not as I generally have enjoyed the service and the employees on American.

 

[JABORD]

Pal,all of these threads have answered your concerns. Either your new to the Forum or your trolling out some major BS.

 

[Barfbag]

I generally love to fly American Airlines. I had a great customer service experience on a flight to Quito where I forgot about my flight in the American Admirals Club Lounge as I was traveling First for this trip. I showed up after they shut the door by a few minutes and the agent happily opened the door and asked where I was and they had been waiting for me all in a great manner. They did not have to do this for me. I have been flying American more and more since.

For the employees, do you think anything should have been down to avoid this bankruptcy? Maybe more sacrifice on your end? Or do you think enough was given and management needed to do more. What could they really do though when competitors at other airlines pay their employees less? Now it seems American will get what it wants using bankruptcy anyway. Would it have been smarter to comply when employees had the chance to? Depending on how American treats its employees is how I will decide if I will keep flying this airline. I would like to hear the emplyee perspective.

I only used to only use United to Asia. I was disgusted though to hear that their management gutted their retiree's pensions and many who retired at that airline in the 2000s lost everything. I won't fly an airline like that throws its employees under the bus and its junior employees stand by and watch as their peers sacrifice it all for the company and management. If this occurs at American they will lose my business. I hope not as I generally have enjoyed the service and the employees on American.

A lot of baloney; the fact is that AMR is doing what is legal. Going through the revolving doors of the Bankruptcy court and returning to business as usual with new work rules, new employees and less debt to keep pricing down ( so that people like you who wouldn't normally be able to afford air travel can continue flying ) is legal in the USA..

Economist Alfred Kahn and Democrat Jimmy Carter are the architects of US airline deregulation and people like you are enjoying the fruits of our now debunked labor contracts.

It's a race to the bottom, with the end result being a McDonaldized airline industry.

Enjoy your chicken MacFare..

God Bless America...

 

[jimntx]

It was not airline deregulation per se that destroyed the airlines. It was the airlines deciding after deregulation that now that they could fly anywhere they wanted, they should fly everywhere. We went from situations, such as...4 airlines serving BHM, to 10 airlines serving BHM with attendant increases in cost and employees and frequencies to control the market and decreases in fares to try to run the others out of business or at least out of BHM, and now back to 4 airlines serving BHM, but unfortunately at fares that are lower than before deregulation 20+ years ago.

If the airlines had controlled their desires to screw each other, and had not practiced the predatory pricing that eventually ran Eastern, Pan Am, and Braniff out of business, we might be better off. (And, if they had realized that being the big dog in one area of the country with some presence in the rest of the country, instead of being the only dog in the whole country, was (or should have been) good enough.)

However, most of the above would have been dependent upon management willing to practice some restraint. The only restraint airline executives seem to be able to exert is restraint in paying employees other than themselves.

 

[Barfbag]

It was not airline deregulation per se that destroyed the airlines. It was the airlines deciding after deregulation that now that they could fly anywhere they wanted, they should fly everywhere. We went from situations, such as...4 airlines serving BHM, to 10 airlines serving BHM with attendant increases in cost and employees and frequencies to control the market and decreases in fares to try to run the others out of business or at least out of BHM, and now back to 4 airlines serving BHM, but unfortunately at fares that are lower than before deregulation 20+ years ago.

If the airlines had controlled their desires to screw each other, and had not practiced the predatory pricing that eventually ran Eastern, Pan Am, and Braniff out of business, we might be better off. (And, if they had realized that being the big dog in one area of the country with some presence in the rest of the country, instead of being the only dog in the whole country, was (or should have been) good enough.)

However, most of the above would have been dependent upon management willing to practice some restraint. The only restraint airline executives seem to be able to exert is restraint in paying employees other than themselves.

Regardless of where the airlines flew or frequencies, it was and will always be that person who sits in his pajamas by his desk in the still of the night and clicks away on his laptop seeking for the lowest fare.

There is no brand loyalty... Only how little I pay or how much I save? Wow $10.00 cheaper..I'll take. It.

That $10.00 later comes out of your pocket through decreased wages and benefits...

 

[cf6mech]

I generally love to fly American Airlines. I had a great customer service experience on a flight to Quito where I forgot about my flight in the American Admirals Club Lounge as I was traveling First for this trip. I showed up after they shut the door by a few minutes and the agent happily opened the door and asked where I was and they had been waiting for me all in a great manner. They did not have to do this for me. I have been flying American more and more since.

For the employees, do you think anything should have been down to avoid this bankruptcy? Maybe more sacrifice on your end? Or do you think enough was given and management needed to do more. What could they really do though when competitors at other airlines pay their employees less? Now it seems American will get what it wants using bankruptcy anyway. Would it have been smarter to comply when employees had the chance to? Depending on how American treats its employees is how I will decide if I will keep flying this airline. I would like to hear the emplyee perspective.

I only used to only use United to Asia. I was disgusted though to hear that their management gutted their retiree's pensions and many who retired at that airline in the 2000s lost everything. I won't fly an airline like that throws its employees under the bus and its junior employees stand by and watch as their peers sacrifice it all for the company and management. If this occurs at American they will lose my business. I hope not as I generally have enjoyed the service and the employees on American.

Ah......is that you Mr.Horton?

 

[commavia]

It was not airline deregulation per se that destroyed the airlines. It was the airlines deciding after deregulation that now that they could fly anywhere they wanted, they should fly everywhere. We went from situations, such as...4 airlines serving BHM, to 10 airlines serving BHM with attendant increases in cost and employees and frequencies to control the market and decreases in fares to try to run the others out of business or at least out of BHM, and now back to 4 airlines serving BHM, but unfortunately at fares that are lower than before deregulation 20+ years ago.

If the airlines had controlled their desires to screw each other, and had not practiced the predatory pricing that eventually ran Eastern, Pan Am, and Braniff out of business, we might be better off. (And, if they had realized that being the big dog in one area of the country with some presence in the rest of the country, instead of being the only dog in the whole country, was (or should have been) good enough.)

However, most of the above would have been dependent upon management willing to practice some restraint. The only restraint airline executives seem to be able to exert is restraint in paying employees other than themselves.

I don't necessarily disagree with much of what you're saying. Legacy airline employees have seen their pay and benefits decrease, relative to the deregulation era, largely as a result from the dramatic increase in competition and resulting decrease in air fares. (For better or worse, that was, after all, the whole point of deregulation.) Nonetheless, you didn't mention low-cost, new-entrant airlines and their low-cost, new-entrant employees - didn't they had an impact, too? Hasn't an influx of new airline industry workers, in many cases willing to work more hours, for lower wages, with less benefits, also put downward pressure on legacy airline compensation? Supply and demand? (And by the way I'm not talking specifically here about AA - more just the industry in general over the last 20-30 years.)

 

[WorldTraveler]

It is also worth noting that legacy airlines are network businesses which means that size matters. Airlines grow because they need to develop the mass necessary to try to gain an advantage over their peers.
There are no examples of a viable niche network airline. Being a nice carrier works for point to point airlines but doesn't work for network airlines.
All of the legacy airlines have evaluated whether it was worth their while to ditch their hub based network business models in favor of point to point models and have all come to the conclusion that they cannot make money doing so.
All have also considered running airline within an airline models in order to go after the point to point business - and all have pulled back on that model, leaving only a limited amount of point to point flying outside of the primary hub based model.
If rumors are true that AA will use its 319s to add point to point flying alongside its hub based network, then there will be yet one more attempt to go after the point to point market.... and it will be interesting to watch what AA does this time that will make their efforts turn out differently than it has for other carriers.
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What is clear is that business models have to evolve and improve - and the combination of strategies AA uses to exit BK as a thriving company should reflect all of the strengths and advantages AA has developed over 80 years while pushing into new territory that has the promise to do things AA and perhaps the industry has never tried before.

 

[Barfbag]

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What is clear is that business models have to evolve and improve - and the combination of strategies AA uses to exit BK as a thriving company should reflect all of the strengths and advantages AA has developed over 80 years while pushing into new territory that has the promise to do things AA and perhaps the industry has never tried before.

In this business 80 years = day one..

All you need is to build a cheaper airline and the mice will fill the seats.

 

[jimntx]

Nonetheless, you didn't mention low-cost, new-entrant airlines and their low-cost, new-entrant employees - didn't they had an impact, too? Hasn't an influx of new airline industry workers, in many cases willing to work more hours, for lower wages, with less benefits, also put downward pressure on legacy airline compensation? Supply and demand? (And by the way I'm not talking specifically here about AA - more just the industry in general over the last 20-30 years.)

Well, yes and no. Yes, the low-cost airlines had (and have) an impact. The mistake the "legacy" airlines made is not responding to them at all for some time. We all had the idea, "our customers want the amenities like meals on board and assigned seating. They will never fly Southwest." Then after 9/11, we tried charging them the same (ok, a little less, but let's not pick nits) but with substantially less amenities than before.

When you say lower wages and less benefits, you must realize that the wages and the benefits are not that much less. In fact, in the case of Southwest, their employees in a number of areas--particularly pilots and flight attendants--are the highest paid or near to the highest paid employees in the U.S. airline industry. So, employee remuneration is not the final answer on whether or not an airline makes money. Management and good management decisions figure into the equation as well. The difference at AMR is that management is not willing to own up to having made any mistakes. Their ideas are perfect, therefore the problem must be that we pay the employees too much. Continuing a route for 10 years (ORD-DEL) that was losing $45 million/year was a good idea. It would have been better if we hadn't paid the employees so much.

WT, have no fear of that rumor of the A319s. From what I have heard from people who attended the company presentations on the "business plan," they intend to do nothing different 2012-2017 other than cut staff and employee pay and benefits.

 

[WorldTraveler]

while all true, Jim, what allowed WN employees to justify the labor rates they have had is their productivity. You are right that the employee cost cuts wasn't what resulted in the swing in profitability for the former BK carriers - it was much higher productivity that came from growth that was put in place after emerging, productivity which came from new labor agreements.
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thanks for the update on the 319s.... I have a hard time understanding how AA will make them work in a hub and spoke environment when every other large US airline, WN included, is shifting their fleet to higher capacity aircraft and away from the 130 seat 73G/319s. Perhaps AA is counting on averaging the benefits since the 321s should be lower CASM aircraft compared to the current 140-160 seat aircraft while the 319 CASM advantage will come from lower labor rates and may be lower than current CASMs but higher than CASMs on other AA aircraft.

 

[commavia]

Well, yes and no. Yes, the low-cost airlines had (and have) an impact. The mistake the "legacy" airlines made is not responding to them at all for some time. We all had the idea, "our customers want the amenities like meals on board and assigned seating. They will never fly Southwest."

I don't think anybody could really argue with that point. The network airlines in the 1990s were sitting on top of huge (if ultimately fleeting) profits and were far to slow to recognize the fundamental shift in consumer behavior as the market became more and more competitive and more and more airlines successfully entered the market.

Nonetheless, though, the question now becomes: what do the airlines do about it? To date, all of AA's legacy peers have followed roughly the same path:

* bankruptcy
* lay off thousands
* reduce benefits and relax work rule/flexibility restrictions in the union contracts
* outsource (including heavy maintenance and plenty of flying to regionals)
* freeze and/or dump most if not all defined benefit pensions
* leverage the lower costs from above to grow and expand their networks
* also use some of the billions in freed up cash to plow back into investment in fleet, facilities, etc.
* merge

Will AA follow the same path? It appears Horton & Co. largely want to.

When you say lower wages and less benefits, you must realize that the wages and the benefits are not that much less. In fact, in the case of Southwest, their employees in a number of areas--particularly pilots and flight attendants--are the highest paid or near to the highest paid employees in the U.S. airline industry.

They are "that much less" in many cases. Southwest is but one example - and I know it's the one AA's unions prefer to talk about because it makes a good comparison for the point the unions are trying to make, but Southwest is going to have their own labor cost challenges to deal with ahead of them, as their CEO has recently acknowledged. I don't even really consider Southwest a low-cost airline anymore. They are now basically just 1 or 2 notches down the airline spectrum from AA/Delta/United/USAirways.

I was speaking in my original comment more specifically about some of the other huge U.S. airlines with which AA, and by extension AA's employees and unions, increasingly find themselves competing. I'm talking about JetBlue, Frontier, Virgin America, and of course all the regionals that Delta, United and USAirways have outsourced far more of their networks to than AA has to Eagle/Connection - airlines like Mesa, SkyWest, Republic, etc.

So, employee remuneration is not the final answer on whether or not an airline makes money. Management and good management decisions figure into the equation as well.

No question about that. What the last decade has taught us, I believe, is that airlines need both visionary leadership and competitive costs (including, but most definitely not limited to, labor) to succeed.

Continuing a route for 10 years (ORD-DEL) that was losing $45 million/year was a good idea. It would have been better if we hadn't paid the employees so much.

But wait - hasn't Ms. Glading been going on for months about how AA has to stop shrinking, and needs to start growing again? An airline (or, for that matter, any company) can't grow in its market if it has the highest costs among its competitors. AA has - for several years - had a cost disadvantage relative to the industry, driven in part by the union contracts. With lower costs - including lower labor costs - AA should be able to expand and grow once again, just like its competitors did when they exited bankruptcy.

WT, have no fear of that rumor of the A319s. From what I have heard from people who attended the company presentations on the "business plan," they intend to do nothing different 2012-2017 other than cut staff and employee pay and benefits.

Frankly, I think the A319 thing is pretty visionary - and I think that vision has the very real potential to substantially help AA's employees, too, if the company and the union can come to some agreement. AA's post-bankruptcy network competitors - Delta, United and USAirways - have all shifted substantially more of their fleets to regionals than AA has - obviously at the loss of plenty of mainline jobs. At the same time, the economics of smaller jets is deteriorating, and that phenomena appears to be creeping upward even to the 70-90 seater level (which is where Delta, United and USAirways have such a huge advantage versus AA). What I believe AA recognized is that while A319s may have a worse CASM than, say, a new 737-800 or A320, they still have a better CASM than a CRJ700, CRJ900, Embraer 175, etc.

So, the company may have been trying to avoid shifting more and more of their MD80-size flying to RJs - as their competitors have done - and instead try and manage the shift down towards more flying at the A319-size level. This obviously represents a huge opportunity for AA's mainline unions, if they can compromise on the economics of the A319 to make it more attractive.

Which would the mainline unions rather have? Option A: AA follows Delta, United and USAirways in replacing tons of MD80s with 70-90-seat regional jets operated by non-owned, perhaps non-union operators, or Option B: agree to more competitive costs on the A319 (call it a "B scale" if you want) and see that flying stay at mainline, operated by mainline union employees? Previous arguments have focused on the fact that those mainline jets would still carry the other mainline "cost burden," which is true, but now - with much of that "cost burden" quite possibly soon to be outsourced to near-Eagle cost levels anyway, the unions can really set a massive precedent here for mainline unions across the industry, and keep this flying at mainline.

 

[jimntx]

Which would the mainline unions rather have? Option A: AA follows Delta, United and USAirways in replacing tons of MD80s with 70-90-seat regional jets operated by non-owned, perhaps non-union operators, or Option B: agree to more competitive costs on the A319 (call it a "B scale" if you want) and see that flying stay at mainline, operated by mainline union employees? Previous arguments have focused on the fact that those mainline jets would still carry the other mainline "cost burden," which is true, but now - with much of that "cost burden" quite possibly soon to be outsourced to near-Eagle cost levels anyway, the unions can really set a massive precedent here for mainline unions across the industry, and keep this flying at mainline.

The company has so poisoned the well over the past 8 years that getting either of the crew unions to agree to lower pay for an airplane that requires the same FAA minimum staff as the S80 or the smaller 73's is not going to happen. Your proposed "B" scale is not going to happen. Quite frankly, I think the unions are nearing the point of shutting it down rather than concede much more.

They might agree to such if the company would agree to, oh say, the executives take the same percentage cuts in pay and benefits, and their pension turned over to the PBGC (and we all know the limitations there for payments) and no executive bonusses or raises until the company shows a profit. While I am at it, let's throw in, any executives hired in the future will be hired at 1996 executive wages (like the flight attendants are currently being paid), and they will have no pensions--just a contribution to a 401-K no greater than the average contribution to the 401-Ks for the remaining lowest 25% of the employee staff. No funny money under the table agreements to circumvent. You think they would go for this in return for the blood they want out of us turnips?

 

[Wretched Wrench]

Quite frankly, I think the unions are nearing the point of shutting it down rather than concede much more.

1........ I don't think they can.

2. .......I don't think they want to. That would be killing the goose that lays the golden dues egg. The TWU is just like most other organizations. It is run for the benefit of the top tier of management. Corporations, charities, government, unions. All the same.

 

[WorldTraveler]

Don't think for a minute that because the company is in BK and the unions can't strike, the labor situation will just magically improve.
AA employees now join US and CO before as having been thru the ringer twice and in losing enormous amounts... you don't just implement another round of cuts - some of which will push entire departments out the door and people who have been on day shift for a decade back to afternoons or nights - and expect employees to just bound into work the next day happy and ready to give their best to the company.
There is a transition period that has to take place and based on what Jimntx is saying, the company is probably wise not to expect anything radically different from the employee group for several years - and that may well mean starting a point to point service that would clear be targeted at WN whose employees have less to be upset about than most employees in the industry.
Forcing a B scale for one particular aircraft type or function (as is happening in MTC) might well be enough for some people to say they just won't do anything more than the motions - and that is NOT what AA needs to emerge and survive. AA's emergence requires that its employees muster every ounce of energy and will they have to rebuild the company in the midst of an enormously competitive environment where there are many other airlines that can viably fight for the same passengers AA is carrying.
AA mgmt is not unaware of what they are asking their people to do - but they also know that if it doesn't happen, AA is probably finished.
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DOT data shows that regional carriers are providing regional jet services on the 76 passenger configured CR9 at CASMs comparable with mainline operated 150 seat class aircraft.
If AA gains the ability to operate 88 seat RJs, there is actually far less incentive for them to use 319s... and they might well choose to convert their order to 321s and avoid the labor fight anyway.
Keep in mind, they had not revealed their intention to have regional carriers operate 88 seat jets for them when they announced the Airbus order.