OH vs LM in BK

[WorldTraveler]

All this comparison against one carrier to another on labor costs is pretty much spin. Complete BS!
It takes 4 times the mechanics to maintain widebody aircraft,I keep seeing U S air coming up 341 aircraft total.They have 16 widebody Aircraft total.How can you compair AA with US air? Its Apples and Oranges.....Just pick 34 of USAir aircraft and 34 of AA's one could say that AA''s costs are 50% higher due to labor costs.They Just fail to mention that AA were all widebodys and USAIR'S were narrow body...

which again is why DL or UA is a more valid comparison to AA than US.
.
US is a bottom feeder airline, poaching heavily from other carrier hubs.... the exact same strategy that HP had for years. While the fare difference in your case is fairly substantial, there are obviously people who will pay a premium for nonstop service... and also the ability to poach largely evaporates when a hub has intense low fare competition since the step up to the highest fares is not near as high.
WN understood well that the illusion of that super high fare is not that great when you consider that it has to be discounted so heavily and is more readily poached and the vast majority of people are willing to buy a fare 40% of that amount and remain loyal to WN.
.
it is correct that passengers could care less about widebody aircraft if they don't use them.. and even then the vast majority of people don't care if they are on a M80 or 777 if both can fly the same route. IN DL's case, which still is the highest user of domestic widebody aircraft, they serve DL's purpose of cost efficiently moving lots of people without congesting airports with multiple narrowbody flights. While DL doesn't use widebodies up and down the east coast the way they used to, there are still alot of widebodies from the west coast to ATL and they are being expanded to include DTW.

 

[Bob Owens]

Bob, all I did was compare the labor costs at US with the labor costs at AA. And no, I'm not claiming that US has a $1.34 billion cost advantage, as some of the difference (as I posted) is the AA labor cost of insourced overhaul (which, as you know, makes AA's labor cost line item higher than it would be if AA outsourced all its overhaul). I don't know how much of that $1.34 bilion difference is spent by AA on overhaul, but I do know that overhaul doesn't soak it all up - because AA's total maintenance expenses aren't even $1.34 billion.

You came here and threw out a BS number when you know that the number means nothing. USAIR has 340 aircraft and AA has over 600. AA didnt pay anything into the pension in 2009, they let the the payment build up then in early 2010 they dumped $500 million into the plan. Thats more than 1/3rd of your $1.34 billion.

AA Total Maintenance Expenses arent more than $1.34 billion? Well then AA is really getting a deal, because that would put AA Total maintenance expenses below 6% of total costs and UAL, which is closer in size and has a more similar operation than US pays 13% just on outsourced maintenance.

In 2010, US paid $661 million for maintenance materials and repairs. That includes outsourced maintenance plus parts for insourced line maintenance. AMR's maintenance materials and repairs line item was $1.33 billion. Add the labor costs for US together with its $670 million maintenance materials and repairs line item and do the same for AA. AA's labor costs plus maintenance materials and repairs far exceeds the number at US.

USAIR has 340 aircraft AA has 600 aircraft.

No matter how much you spin, the fact is that US has a huge cost advantage over AA.

So does Eagle, but what else does US have?

Do you know for certain that AA includes the labor expense for its MRO work for other airlines in its labor cost line item? Or are you just making things up? I don't know. Perhaps you do?

Thats what I heard directly from the company at Corporate headquarters in 2009. So the answer is NO, but thats what they claim and I dont see why they would lie about it.

Who cares what percantage of MRO chop shop revenue is used to pay their employees, Bob? I was comparing the labor expense of US and AA, you know, two competing airlines. I couldn't care less if those MROs paid their employees 5% of their revenue or 95%, since that trivia doesn't change the fact that US pays its employees substantially less (both absolutely and as a percentage of revenue) as AA pays its employees.

Its relevant because they do simialr work. You are like FOX NEWS, keep spreading the same misinformation until it becomes accepted as fact. When a carrier outsources they lower their labor costs but that does not automatically mean they become a more efficient corporation. I cant say with absolute certainty whether it does or doesnt because I dont have the info available to make that determination, neither do you and apparently niether does Arpey.

Capt. Sully made just $125/hr as a near-retirement A320 captain. AA's widebody First Officers all make more money per hour and every AA captain makes much more per hour than $125/hr; AA's MD-80 captains make $161/hr. US FAs make a fraction of AA's FAs. US fleet service make substantially less than your TWU bretheren in fleet service. In short, US employees make far less on average than AA employees. AA spends far more per employee than US, despite your desparate wish that it not be so.

More spin. Maybe our Crews do make more than twice BK USAIR and I'm not going into their rates, I'll let them do that, but there's more to the story than you choose to reveal.You left out the fact that it would take three CaptSullys to fly the same amount of people and cargo as one AA 777 Captain. With the ground workers are you factoring in work rules and benifits or just hourly rates?

Yes, Bob, your typical MO: when the facts aren't on your side, start with the name calling and your own misinformation campaign. Just par for the course from an ineffective union leader who thus far has failed to persuade his employer to pay him what he's worth. You guys are worth far more than AA is paying you - so why do you waste valuable time arguing with me about facts that can be found in varous public filings? Or are you now arguing that US is filing false info with the SEC as well?

Another FOX NEWS Tactic, feign victimization and go on the attack. Where's the name calling and misinformation?

As far as SEC filings, they are not designed to be used to accurately compare one company to another even though thats what they are often used for due to a lack of other data sources. . The intent was to protect investors from being mislead by management, specifically prevent management from posting an unjustly rosy picture of the financial condition of the company, without forcing management to make their business strategy public.

You've debunked nothing so far. I'm just glad that my negotiating team is more effective (and less skeptical of the facts) than you and the TWU. I think that helps them focused on thinking of ways to get their membership the results they want.

Your negotiating team?

Why not just answer my question from a month ago about where the billions between their lower labor costs , increased revenue and Fuel costs went?

 

[FWAAA]

You came here and threw out a BS number when you know that the number means nothing. USAIR has 340 aircraft and AA has over 600. AA didnt pay anything into the pension in 2009, they let the the payment build up then in early 2010 they dumped $500 million into the plan. Thats more than 1/3rd of your $1.34 billion.

For the benefit of your members, I implore you to become educated so you don't keep spouting ignorant nonsense like the above. I don't know jack about fixing airplanes and powerplants, but I do know numbers. You, on the other hand, know the first part and pretend to know the finance part. And your lack of knowledge about the finance part shows up again and again. Like in the paragraph above.

The number of aircraft is irrelevant; if AA paid the same portion of its revenue on wages as US did, AA's wages would be $1.34 billion less. Doesn't matter how many planes each airline flies - that's the beauty of ratios, Bob.

You don't understand pension accounting at all. AA's expense item for the pensions has nothing to do with the annual cash contribution required by the ERISA rules. AA's annual expense for the pensions comes from the payments made to beneficiaries - not the required minimum contributions. If you were correct, then AA's wage expense line item would fall by hundreds of millions when AA makes no contributions to the pensions and would increase the following year by hundreds of millions when AA has to contribute the $500 million. Check the 10-Ks; AA's wage line item does not fluctuate like that.

AA Total Maintenance Expenses arent more than $1.34 billion? Well then AA is really getting a deal, because that would put AA Total maintenance expenses below 6% of total costs and UAL, which is closer in size and has a more similar operation than US pays 13% just on outsourced maintenance.

Bob, I apologize. I misspoke. What I meant to say is that AA's total wages for all overhaul personnel don't add up to $1.34 billion, so insourced overhaul does not account for all the difference. Of course, AA does not spend $1.34 billion on all maintenance personnel either. How many employees are there? Just over 9,000?

USAIR has 340 aircraft AA has 600 aircraft.

Yes, and the maintenance materials and repairs expense line item is roughly proportional between AA and US (as the US item is about half the spending as the AA spend).

Its relevant because they do simialr work. You are like FOX NEWS, keep spreading the same misinformation until it becomes accepted as fact. When a carrier outsources they lower their labor costs but that does not automatically mean they become a more efficient corporation. I cant say with absolute certainty whether it does or doesnt because I dont have the info available to make that determination, neither do you and apparently niether does Arpey.

What we do know is that US spends a far smaller proportion of its revenues on wages + outsourced maintenance than AA spends on wages + outsourced maintenance. Dunno whether the path US has chosen was the wiser choice, but we can see that it is cheaper. Much cheaper.

More spin. Maybe our Crews do make more than twice BK USAIR and I'm not going into their rates, I'll let them do that, but there's more to the story than you choose to reveal.You left out the fact that it would take three CaptSullys to fly the same amount of people and cargo as one AA 777 Captain.

No, Bob, I left nothing out that's relevant. Sully made $125/hr while AA's small narrowbody captains make $161/hr (MD-80s) and $166/hr (738s). Similar differences exist in every USAirways pilot pay rate. AA flies widebodies and US flies widebodies. AA's widebody captains make substantially more money than US' widebody captains on similar equipment. Sully's pay was just barely above Eagle's CRJ-700 pay rates. Every USAirways East pilot earns substantially less than the AA pilot on similar equipment. Simple as that. US has a huge wage advantage over AA.

Your negotiating team?

Yes, Bob. The team negotiating on my behalf. I'm a member of the AFT. I've posted that before.

 

[Bob Owens]

You don't understand pension accounting at all. AA's expense item for the pensions has nothing to do with the annual cash contribution required by the ERISA rules. AA's annual expense for the pensions comes from the payments made to beneficiaries - not the required minimum contributions. If you were correct, then AA's wage expense line item would fall by hundreds of millions when AA makes no contributions to the pensions and would increase the following year by hundreds of millions when AA has to contribute the $500 million. Check the 10-Ks; AA's wage line item does not fluctuate like that.

So you are claiming that Payments to the Pension do not get added to Labor Costs? That only what the plan pays out to retirees does?

If so what happens when a company turns the plan over to the PBGC? Now the carrier would not be paying the benificiaries, the PBGC would and that would look like a huge savings. That would really throw the numbers off because payments from the plan to benificiaries would be coming from the funds in the pension plan and not from Revenues.

Bob, I apologize. I misspoke. What I meant to say is that AA's total wages for all overhaul personnel don't add up to $1.34 billion, so insourced overhaul does not account for all the difference. Of course, AA does not spend $1.34 billion on all maintenance personnel either. How many employees are there? Just over 9,000?

No there are 9500 Title I, around 13000 total TWU M&R and Stores plus a few thousand non-union and management. So counting everyone probably around 15000. Who cares about USAIR? Their Hubs are in lower cost cities like Charlotte, Pheonix and Philly. They have half the planes yet they have eight different fleet types, maybe they need the low wages to make up for their inefficient fleet structure. Does Tiffany's compare their wage structure to Walmart? USAIR went BK twice and wiped out their shareholders equity, it's unrealistic for AA's shareholders to want to see USAIR costs without their equity being wiped out as well.

No, Bob, I left nothing out that's relevant. Sully made $125/hr while AA's small narrowbody captains make $161/hr (MD-80s) and $166/hr (738s). Similar differences exist in every USAirways pilot pay rate. AA flies widebodies and US flies widebodies. AA's widebody captains make substantially more money than US' widebody captains on similar equipment. Sully's pay was just barely above Eagle's CRJ-700 pay rates. Every USAirways East pilot earns substantially less than the AA pilot on similar equipment. Simple as that. US has a huge wage advantage over AA.

What you left out is that USAIR only has 26 Widebodies while AA has 120. That AA choses to provide three class service on their 767-200s, reducing the capacity of the aircraft (168 vs 204)and making AA figures, such as ASMs etc skewed, that AA chooses to staff their flights with more FAs. These are things that make AA workers appear less productive along with the facts I've provided on maintenance such as insourcing and 3P work where the company does not break out the numbers. So yes USAIR has a wage advantage over AA and AA has a wage advantage over Southwest. So USAIR has an even bigger wage advantage over SWA than AA does. Dont see SWA sweating about USAIR and their fleet of crappy Airbuses.



Since you're such a brilliant numbers guy, why not just answer my question from a month ago about where the billions between their lower labor costs , increased revenue and Fuel costs went?

 

[Chuck Schalk]

To all involved:

I have been with the AA for 20 years and they have always cried the blues no matter what year or decade. In the late 90's, the company was netting hundreds of millions of dollars and refused to share it with employees. Our contracts have been huge dissapointments due to meager increases and huge give backs year over year. The bottom line is that you can spin it any way you want but no one else is to blame but management for the financial problems within AA! The employees have no say in mangements decisions only keep giving concessions for their mismanagement. The idea of creating more tiers of management is a brilliant one that has failed before with other airlines. So lets do it too! To increase costs by hiring more management to increase productivity is cost ineffective. It is like adding a 5th engine to a 747! (to obvious to explain any more).
to keep blaming labor at AA is a broken record and unfounded. We have given concession after concession and still the company claims they are no better off. Let me say this once again and listen carefully, Concessions at AA will not save the airline! I repeat, concessions at AA will not save the airline. Fix the tiers of mismanagement and improve moral with the employees and concessions may not be a factor.

 

[Deleted member 14439]

To all involved:

I have been with the AA for 20 years and they have always cried the blues no matter what year or decade. In the late 90's, the company was netting hundreds of millions of dollars and refused to share it with employees. Our contracts have been huge dissapointments due to meager increases and huge give backs year over year. The bottom line is that you can spin it any way you want but no one else is to blame but management for the financial problems within AA! The employees have no say in mangements decisions only keep giving concessions for their mismanagement. The idea of creating more tiers of management is a brilliant one that has failed before with other airlines. So lets do it too! To increase costs by hiring more management to increase productivity is cost ineffective. It is like adding a 5th engine to a 747! (to obvious to explain any more).
to keep blaming labor at AA is a broken record and unfounded. We have given concession after concession and still the company claims they are no better off. Let me say this once again and listen carefully, Concessions at AA will not save the airline! I repeat, concessions at AA will not save the airline. Fix the tiers of mismanagement and improve moral with the employees and concessions may not be a factor.

Well stated Chuck. I completely agree.

 

[700UW]

US doesnt have eight different fleet types

A320 Family

B737s

A330 family

757/767 Family.

 

[strikeforce]

To all involved:

I have been with the AA for 20 years and they have always cried the blues no matter what year or decade. In the late 90's, the company was netting hundreds of millions of dollars and refused to share it with employees. Our contracts have been huge dissapointments due to meager increases and huge give backs year over year. The bottom line is that you can spin it any way you want but no one else is to blame but management for the financial problems within AA! The employees have no say in mangements decisions only keep giving concessions for their mismanagement. The idea of creating more tiers of management is a brilliant one that has failed before with other airlines. So lets do it too! To increase costs by hiring more management to increase productivity is cost ineffective. It is like adding a 5th engine to a 747! (to obvious to explain any more).
to keep blaming labor at AA is a broken record and unfounded. We have given concession after concession and still the company claims they are no better off. Let me say this once again and listen carefully, Concessions at AA will not save the airline! I repeat, concessions at AA will not save the airline. Fix the tiers of mismanagement and improve moral with the employees and concessions may not be a factor.

problem is the TWU can't fix management, and has lost control of it's membership. too late in the ball game, Chuck!
What's the twu doing to get US a contract? nothing. we need to solve our internal issues within our organization, like Line & OH, before we solve AA's problems. AA knows we're a disorganized bunch of one-ways and when you're disorganized, the company can sit there and wait! There's no push to bring AA to negotiate in good faith.

 

[Chuck Schalk]

problem is the TWU can't fix management, and has lost control of it's membership. too late in the ball game, Chuck!
What's the twu doing to get US a contract? nothing. we need to solve our internal issues within our organization, like Line & OH, before we solve AA's problems. AA knows we're a disorganized bunch of one-ways and when you're disorganized, the company can sit there and wait! There's no push to bring AA to negotiate in good faith.

Don't misread me, I am not trying to solve AA's problems or say that the TWU as an organization has teeth in our negotiation process. I agree with you as we are disorganized and seperated as locals. I have been to several locals and each one has it's own way of doing things and we do not talk enough between locals to make stands system wide where they need to be. We also as an organization do not put enough effort into the lead contract negotioation for our industry. Who ever is the first contract up for re-negotiation should be supported by all other airlines.
Another factor that hurts us is that we do not use the railroad, trucking,and airlines to bargain from a position of strength.

I could go on and on but you get the picture, I just do not want people thinking that concessions is the only answer to mismanagement

 

[strikeforce]

Don't misread me, I am not trying to solve AA's problems or say that the TWU as an organization has teeth in our negotiation process. I agree with you as we are disorganized and seperated as locals. I have been to several locals and each one has it's own way of doing things and we do not talk enough between locals to make stands system wide where they need to be. We also as an organization do not put enough effort into the lead contract negotioation for our industry. Who ever is the first contract up for re-negotiation should be supported by all other airlines.
Another factor that hurts us is that we do not use the railroad, trucking,and airlines to bargain from a position of strength.

I could go on and on but you get the picture, I just do not want people thinking that concessions is the only answer to mismanagement

I agree!
Concessions are ok if EVERYONE shares in the pain. That's not what happened here, and yes, I blame the TWU for allowing these to continue.

 

[Deleted member 14439]

I agree!
Concessions are ok if EVERYONE shares in the pain. That's not what happened here, and yes, I blame the TWU for allowing these to continue.

Concessions are NEVER OKAY as not EVERYONE will share the pain. This place is slowly dieing a death of a thousand cuts...............................

 

[Bob Owens]

US doesnt have eight different fleet types

A320 Family

B737s

A330 family

757/767 Family.

http://www.airfleets.net/flottecie/US%20Airways.htm

Why not just say they have two fleet types, Airbus and Boeing?

757s and 767s are different airplanes. One is a widebody and one is a narrowbody. They may share a lot of electronics nut pretty much everything else is different.

According to this website they currently operate eight fleet types.
Airbus A319
Airbus A320
Airbus A321
Airbus A330 (2 series) (they could reasonanbly called Family)
Boeing 737 (3 series) (same here)
Boeing 757
Boeing 767
Embraer 190

While there may be some interchangibility of parts, usually electronics, most of the parts are different with each fleet type, when you operate with so many different fleets you have to stock more parts, different service equipment (such as towbars) and your mechanics can not become as proficient on so many fleet types as they can with one fleet type like Southwest has. This means that your operation becomes less efficient and it drives up costs.

 

[Bob Owens]

I agree!
Concessions are ok if EVERYONE shares in the pain. That's not what happened here, and yes, I blame the TWU for allowing these to continue.

I dont believe concessions are OK, even if everyone shares the pain(which never happens). Who is ultimately responsible for the performance of the company? The Executives, they are extremely well paid and they should be the ones to bear the brunt of it when the company does not perform yet the BOD decided that even if AA doesnt perform(make a profit) that they get bonuses. Obviously the BOD does not consider profits to be all that important, nor do they see profits as a prerequisite to increased compensation, so why should we?

AA is bringing in $5 billion a year more than they did when we took the concessions and they have 40,000 less employees than they used to. Thats at least $2.6 billion less in wages they have to pay with a $5billion increase in Revenue. Not counting 200 less airplanes they have to pay for, thats a shift of nearly $8 billion to AA's bottom line. We know that fuel ate up around $4 billion or so, where's the rest of it?

We've been taught to believe that company's must show a profit in order to exist, well if that was the case probably 90% of the companies in this country would be liquidated. The fact is that if you show a profit you have to pay tax, and why pay tax if you dont have to? With the airlines another factor has to be weighed in as well, Employees. Airlines are hugely labor intensive and their workers have highly specialized skills which means that they have considerable bargaining power, if airlines show profits workers are not likely to accept, or continue to accept concessions.

Our tax laws are very complicated, and its intentional. The fact is that politicians dont write Tax laws, lobbyists working for big business does and they write it so they dont have to pay taxes evn if they generate tons of revenue. Ficticious- but legally recognized losses and writedowns ensure that big business gets to avoiud sharing their revenue with the rest of society, we are not so fortunate, we have to pay tax on our revenue while most of our real losses and /or costs are no longer recognized.So when a company declares that they lost money, dont get too concerned about it, especially when they are sitting on billions in cash.

Look at whats been happening in this industry. Output (capacity) has decreased yet revenues have increased. This is really the best of times for the airlines, increases in revenues and decreases in labor costs are even outpacing the increased cost of fuel, by a considerable margin. So where is all that extra capital going? They keep tellling us that fuel costs are eating up everything, but thats simply not the case, costs other than labor must have risen dramatically as well.

If you owned an airline and several other businesses (like the Banking and finance industry does) would you allow the airlines to show high profits? With its high dependance on scarce labor with specialized skills? Or would you siphon that capital off to places where labor isnt a significant factor?

The fact is that if you are in the Banking and Finance industry the last place you want to see capital go is to workers, because you arent able to make as much money off that money. Remember "wages and profits have an inverse relationship", if you want to keep a lid on wages keep a lid on profits by siphoning off the revenue to places where the wages are not as much of a factor.

Bankers want us in debt, so we have to pay them interest, increased wages and lower debt loads means less profits for them. High debt load has another side perhaps even more important benifit, it scares workers and makes them more agreeable to longer hours, even at lower wages, this sets in place a vicious cycle, by being willing to work more hours it increases the supply of labor without adding more people and benifit costs per hour worked are reduced, by supplying more hours it actually puts more downward pressure on wages. Two key components for worker leverage is low debt and resistance to working more hours.

 

[Hopeful]

I dont believe concessions are OK, even if everyone shares the pain(which never happens). Who is ultimately responsible for the performance of the company? The Executives, they are extremely well paid, they should be the ones to bear the brunt of it when the company does not perform yet the BOD decided that even if AA doesnt perform(make a profit) that they get bonuses. Obviously the BOD does not consider profits to be all that important, nor do they see profits as a prerequisite to increased compensation, so why should we?

Bob, I'll try to speak over the pro company violins playing here.....
Poor Arpey and Co. need to be compensated more in line with their peers..............But the mechanics can remain below the midpoint of our peers...

 

[strikeforce]

I dont believe concessions are OK, even if everyone shares the pain(which never happens). Who is ultimately responsible for the performance of the company? The Executives, they are extremely well paid, they should be the ones to bear the brunt of it when the company does not perform yet the BOD decided that even if AA doesnt perform(make a profit) that they get bonuses. Obviously the BOD does not consider profits to be all that important, nor do they see profits as a prerequisite to increased compensation, so why should we?

AA is bringing in $5 billion a year more than they did when we took the concessions and they have 40,000 less employees than they used to. Thats at least $2.6 billion less in wages they have to pay with a $5billion increase in Revenue. Not counting 200 less airplanes they have to pay for, thats a shift of nearly $8 billion to AA's bottom line. We know that fuel ate up around $4 billion or so, where's the rest of it?

Don't think for one second that I'm a proponent of employee concessions because I'm not. But, we can't dispute the fact that corporate america, as a whole, has turned to employee concessions to bailout management of their fiduciary responsibility to running an efficient operation, and one that's fiscally responsible. It's clear to me that labor organizations have been forced to accept concessions as an alternative to outsourcing jobs overseas, and non-union employees are at the mercy of management.
What I meant by my statement is... IF the company needs to resort to employee concessions in order to survive, then Everyone needs to sacrifice, including management. You and I know that AA raped their employees through deception, and one day management will pay dearly for treating us like dogs, and I just hope it's soon.
The crazy thing that bothers me the most is that I don't see the hatred and fire burning anger from our leaders towards Arpey and his negotiating henchmen. Why the place hasn't burned down is beyond belief.
I'm just fortunate that I'm not on your negotiating team because I would most likely be in jail. I wouldn't be able to hold back without telling management where to go or throw a chair across the table. They're just a bunch of canniving, backstabbing, and greedy bastards.