Parker makes low-ball offer to AMR creditors to merge US with AA

[Glenn Quagmire]

You missed the point. AA hasn't had (before now) that many people leaving for greener pastures, either. However, AA has not had new hires coming in on a regular basis (none whatsoever for flight attendants since 2001) like WN has had. The new hires at WN lower the overall average seniority for a workgroup.

Thanks Jim.

I guess the AA F/A group would raise that seniority number. After the layoffs and buyouts, do you think AA will again start the hiring process anew to get some on board at the new cheap labor rates? Or do you think they will wait until after the USAir merger mania stops. (The thread topic is about that I think)

(also see that WT has yet again spun this into a pro DL sound bite. Funny, for a moment, I thought we were on the AA Forum.)

 

[WorldTraveler]

there is no spin.. it is an honest discussion of the facts.

CO figured out how to grow dramatically by adding new staff and keep costs down just like the low fare carriers have done.

DL wasn't in a position to dramatically grow but they have kept employee costs down by continually offering the ability for high seniority employees to leave early.
AA's position now is more similar to DL's post BK than to CO's or any LFC.

US has kept employee costs low overall in order to maintain an advantage relative to their peers.

pmUA's employee costs have gone right back up since their BK and are growing near to AA's... it was the lower average pay of CO employees that brought UA overall pay levels down post-merger. UA is not growing but is handing out expensive pay raises.. it doesn't take an expert to figure out that UA is headed for a labor cost problem in a few years.

Understanding how employee costs are kept down -regardless of who does it - is necessary for those who want to understand how AA will succeed at reducing its currently industry highest labor costs.

It's not just FAs... it's all workers... there have been endless posts on here about the seniority among all workgroups at AA being much higher than at other airlines.... and that is exactly what has happened over the past 10 years as AA has not grown and existing employees have just moved further and further up the pay scales - and are using more and more costly medical benefits as they age.

 

[Bob Owens]

1. The half (or more) empty airplanes on the DFW-ATL route for AA has been going on for several years now. I brought the point up at a public meeting over 3 years ago that we seemed to be kidding ourselves that we were competing with DL on that route.
2. Up until about 6 months ago or so, most of the DL a/c at Terminal E were RJs; so, since about the only place you could go on DL from DFW was to ATL, I assumed those rjs were going there. I don't ever remember AA flying rjs on that route.
3. The service standard at AA for several years has been to give the whole can.
4. I have taken another pay cut to subsidize those empty flights (and others that AA flies "to compete"), and you want me to enjoy them? I think not.

Note to company cheerleaders FWAAA and E: don't even think of jumping in and pointing out that I got a 3% raise on date of signing of the latest screw over of the flight attendants. For an 80-hour month, that "raise" grosses me almost $90/month. 5.5% of my paycheck is now going to the 401-K (which I'm sure the company is getting a kickback on). Effective 01JAN13, my insurance premium is increasing from about $40/month to $115/mo and my annual deductible is increasing from $150/yr to $750/yr. Show me the raise.

For the first 30 years of my career I was told by both the company and the Union that our benefits were pay, and they were right. So for many many years we accepted less than we should have in wages in order to retain benefits which increased in value regardless of the wage (except the pension-the pension was cut whenever the wage was cut). You correctly cite the fact that we took a big paycut with the loss of the pension. In order to minimize the loss of the Pension we have to cut our pay by 5.5% in order to get the company match, no doubt that the company recovers some of that 5.5% through kickbacks on fees we are forced to pay the company they pick to manage our funds. The impact that you feel with the Medical will likely wipe out any "wage rate increases" you see, you were more fortunate than we were as we saw all the percentage increases dissapear into medical since 2003.

So now the company spin masters, and even some so called union reps, run around saying that they did a good job in BK because we did not see our "W-2 wage cut". Highly misleading, we took massive cuts, sure the W-2 wage may not show a cut, but for years the company claimed that the W2 only reflected around half our total compensation, well that other half has been nearly wiped out and our hourly wage represents can represent more than 90% of our total compensation, a loss of 40%. They have turned Health Benefits into the modern version of the "Company Store".

 

[Bob Owens]

You missed the point. AA hasn't had (before now) that many people leaving for greener pastures, either. However, AA has not had new hires coming in on a regular basis (none whatsoever for flight attendants since 2001) like WN has had. The new hires at WN lower the overall average seniority for a workgroup.

In the maint group what they are going to end up with is new hires on the bottom end, old timers who cant retire on the top end , nobody in the middle and tons and tons of OT. Since new hires cant work OT for six months most of the OT will be worked by topped out mechanics negating any cost savings by continually having new hires (training costs are going to go through the roof as AA trains mechanics for the rest of the industry). My guess is most new hires will never get to top scale because they will not stay at AA long enough to get there with just one week of vacation and only 20 hours extra pay per year for working the Holidays compared to competitors who offer double the vacation and at least five times the Holiday Pay, That plus they would be able to make the same annual gross at other carriers without working OT and do so with better medical and better workrules.

The only other carrier that has treated its mechanics this poorly was Peoples Express, and they didnt last. Peoples Express (Butler) was the dumping ground for terminated mechanics from other carriers and the training ground for Kids out of school. In their short existance they bent a plane in half by incorrectly jacking it, ran one off the runway because they did a high speed taxi with the trim full nose up and had another one roll into a ditch because they didnt chock it right, those are just a few of the horror stories from what became known as "Peoples Distress". The old guys wont care and the new hires wont know, that means planes sit on the ground instead of making money, even new ones.

So if they do save anything in labor costs it will more than likely be offset through aircraft damage and lost revenue from cancellations and delays.

AA is doomed.

 

[WorldTraveler]

1. The half (or more) empty airplanes on the DFW-ATL route for AA has been going on for several years now. I brought the point up at a public meeting over 3 years ago that we seemed to be kidding ourselves that we were competing with DL on that route.
2. Up until about 6 months ago or so, most of the DL a/c at Terminal E were RJs; so, since about the only place you could go on DL from DFW was to ATL, I assumed those rjs were going there. I don't ever remember AA flying rjs on that route.
3. The service standard at AA for several years has been to give the whole can.
4. I have taken another pay cut to subsidize those empty flights (and others that AA flies "to compete"), and you want me to enjoy them? I think not.

Jim,
while most of us have been conditioned to believe that it takes full flights in order to be profitable, there is a very good chance that AA is quite profitable on DFW-ATL even with a 65% load factor in the summer.
FL forced fares down and LFs increased as AA and DL matched fares. DL made sure it had enough capacity in the market in order to limit FL's ability to take DL passengers.... now with FL out of the picture, AA and DL have almost identical shares of the local market but, as I noted, DL's higher LF comes from its larger hub and its ability to connect more passengers at ATL than AA does at DFW. The LF on DFW-ATL for both AA and DL is below their system averages so you can bet that if DL - who has the largest amount of capacity - wasn't making money, they would reduce capacity. ATL-DFW like alot of DFW routes is a business travel heavy route which means there is alot of "dead" capacity in the middle of the day and middle of the week. As long as DL keeps capacity in the market, AA has no choice but to do the same...

DL obviously does fly from DFW to its other hubs and most recently added LGA service and most of DL's service EXCEPT for ATL is on RJs. DL upgraded some SLC, MSP, and DTW flights to mainline over the past several months - coincidentally when "operational issues" surfaced at AA but AA still has the larger share of traffic from DFW to all of DL's other hubs, because of the "largest hub" principle I noted above.

DFW, like MIA, is a solidly profitable hub for AA and they really don't have a lot to worry about from DL, other than the return of LGA service. DL is picking up some traffic bound for DFW but AA continues to control the local Texas market quite well.

The real threat to AA comes from NK's one or two flights a day into dozens of markets; some want to write them off but NK is a very low price carrier and will pull just enough passengers off to make a difference on their few flights - and then will add another frequency.... and then another. And there are passengers - business and leisure alike - who will always be driven by low fares.

And then there is the whole Wright Amendment that has the potentially reshape the N. Texas aviation market and allow WN the opportunity to pick up alot of AA business traffic; unlike MDW and HOU, DAL is between the largest business market (the city of Dallas) and the major airport in the region (DFW). Even w/ the limitations on growth at DAL, geography has the potential to significant alter the results seen in other two airport cities.

AA's future is dependent on keeping WN in a pretty small box at DAL when the Wright Amendment falls (in addition to the mechanic issues which Bob cites).

Merry Christmas to you!

 

[robbedagain]

i remember back in the 80s and early to mid 90s DL had a hub at DFW and i remember in 99 or 00 they used to run the Tristar to DFW and ATL from BOS just wondering if they still run any widebodies to DFW I know the Tristar has long since retired and does AA operate widebodies from DFW to US cities like BOS or JFK

 

[777 / 767 / 757 Love]

Someone gets it....

 

[jimntx]

i remember back in the 80s and early to mid 90s DL had a hub at DFW and i remember in 99 or 00 they used to run the Tristar to DFW and ATL from BOS just wondering if they still run any widebodies to DFW I know the Tristar has long since retired and does AA operate widebodies from DFW to US cities like BOS or JFK

IIRC, DL did not close the DFW hub until after 9/11. No, they do not operate widebodies to DFW. The only domestic widebody service from DFW to anywhere is on a DFW-MIA-LAX-DFW 3 day trip, a DFW-LAX turn, and a DFW-SFO turn.

Oh, forgot, the 767 is also used on DFW to Hawaii stations

 

[robbedagain]

thanks jim i did not know AA does not use widebodies very much on the domestic runs in the us. i remember DL used to run widebodies such as the Tristar to DFW including 191 which crashed at DFW it sounds like AA utilities their widebodies strictly for intl runs only with the exception of what u mention the mia dfw lax 3 times trip and the hnl flight

 

[Bob Owens]

thanks jim i did not know AA does not use widebodies very much on the domestic runs in the us. i remember DL used to run widebodies such as the Tristar to DFW including 191 which crashed at DFW it sounds like AA utilities their widebodies strictly for intl runs only with the exception of what u mention the mia dfw lax 3 times trip and the hnl flight

They used to fly DC-10s between LGA and DFW as well, but with cheap labor they have switched to smaller planes with more frequency.

 

[robbedagain]

I DID NOT KNOW AA had DC-10 at LGA let alone i always thought LGA runways were short for the DC10s

 

[Bob Owens]

I DID NOT KNOW AA had DC-10 at LGA let alone i always thought LGA runways were short for the DC10s

Its the footprint, the runways weren't strong enough for some aircraft because of weight and yea they are short, lots of smoking brakes but they had them at LGA, remember sitting up on the platform changing a generator and IDG on #2 on a cold , windy night in December just after probation, got some serious frostbite on my hands and windburn on my face. Skin was cracking and bleeding for weeks but we had to clear that MEL. Young and stupid. Would not happen now.

 

[WorldTraveler]

There's probably a reason why hangars at LGA don't hold widebodies.

 

[Bob Owens]

There's probably a reason why hangars at LGA don't hold widebodies.

Yes, because they were built in the 30s and are too small.

 

[WorldTraveler]

like LGA airport itself