He is not actively advocating concessions as he waits to see the outcome at United and USAir. If they succeed with astronomical concessions and paycuts, AA will be forced to follow suit and threaten the bankruptcy road. the reason we will be told is that it is bad enough we can't compete with JetBlue and Southwest, now we are a cost disadvantage compared to United and USAir and we will have no choice. I would say that after the holiday season we will be on concession and pay cut chopping block.
Pay Cuts
- Thread starter Hatu
- Start date
This was in the Chicago Tribune, the first line is about possible wage concessions;[BR][BR]
[DIV]American's chief: Pay may be cut[BR][FONT id=subhead]Carrier looking for billions more in cost savings[/FONT][BR][BR][!-- BEGIN RELATED CONTENT RAIL --][!-- END RELATED CONTENT RAIL --][FONT id=byline]By John Schmeltzer[/FONT][BR][FONT id=titleline]Tribune staff writer[/FONT][BR][FONT id=date]Published November 26, 2002[/FONT][BR][BR][FONT id=text][!-- START LEAD --]In what may be a harbinger of bad news for employees of American Airlines, the carrier's chairman and chief executive told Chicago-area workers Monday that wage concessions may be needed.[BR][BR]Donald Carty said it is becoming increasingly difficult to find places to cut expenses at the carrier and that contractual changes may be required to help American recover from the economic downturn and terrorist attacks that have crippled the nation's airline industry.[BR][BR][!-- END LEAD --][!-- START REST --]Since the Sept. 11 attacks, American has announced 7,000 layoffs, cut flights and grounded dozens of planes. But Carty, who has yet to seek wage concessions at American, said the cuts may not be deep enough to help the Ft. Worth-based airline.[BR][BR]We are hopeful that we will get some help from the economy, but we are not planning on it. Our plan for 2003 [assumes] that it stays a very, very tough year, Carty said before some of the airline's 12,000 local workers at O'Hare International Airport.[BR][BR]As a result of the continuing drive to cut costs and the failure of a recovery to materialize, Carty said he could not predict when American's operations will return to the black. Elk Grove Township-based United Airlines, however, has told a federal agency that it will return to profitability in 2004.[BR][BR]United predicted its return to profitability as part of an application for a $2 billion loan from the Air Transportation Stabilization Board. Of that amount, $1.8 billion would be federally guaranteed. Without the loan, United, which has a $375 million loan payment due Monday, has said it will file for bankruptcy.[BR][BR]If United's application is based upon a revenue rebound, then that's something that isn't going to happen, Carty said.[BR][BR]His comments came as documents attacking United's federal loan application circulated on Capitol Hill in Washington.[BR][BR]Rather than returning to profitability in 2004 as United predicts, the analysis shows that United will still be unprofitable in 2009. The documents were purportedly prepared by Northwest Airlines, but the carrier declined to comment.[BR][BR]Unlike many competitors, American so far has sought to focus on restructuring its business in the belief that it could cut costs sufficiently to allow the airline to recover from the downturn.[BR][BR]Thus far, American has identified $2 billion in annual savings, but Carty said it still needs to reach $3 billion to $4 billion in savings.[BR][BR]Carty said any recovery plan has to take into account the impact of low-cost carriers such as Southwest Airlines. Unlike when the airline industry was trying to recover from the Persian Gulf war, he said discount carriers now can be found on almost every route.[BR][BR]We have to be competitive with Southwest and carriers of that ilk long term or we won't survive, Carty said.[BR][BR]While he said he believes the U.S. economy will continue expanding, Carty said it is a mistake to assume airline revenue will recover dramatically at the same time, given competition from low-cost carriers and fewer-than-expected business travelers.[BR][BR]Whatever we are trying to accomplish in the long term, we also have to be cognizant that the company can't bleed cash in the short term forever, he said.[BR][BR]American will also reduce flight capacity by another 3.3 percent early next year, he said.[BR][BR]Most of those reductions will occur on Saturday afternoon and Sunday morning flights, which could result in even more layoffs. Currently, the airline has 122,000 employees.[BR][BR]By the end of March, Carty said American, the world's largest airline, will be operating 18 percent fewer flights than it was at the end of 2001. United has said it will have to cut about 25 percent of its flights.[BR][BR]This is very much tactical. It is very much addressing the short-term crisis, Carty said.[BR][BR][!-- END REST --][/FONT]
[P][FONT id=copyright]Copyright © 2002, [A href=http://www.chicagotribune.com/]Chicago Tribune[/A][/FONT] [/P][FONT id=line-spacer][BR][/FONT][/DIV]
[DIV]American's chief: Pay may be cut[BR][FONT id=subhead]Carrier looking for billions more in cost savings[/FONT][BR][BR][!-- BEGIN RELATED CONTENT RAIL --][!-- END RELATED CONTENT RAIL --][FONT id=byline]By John Schmeltzer[/FONT][BR][FONT id=titleline]Tribune staff writer[/FONT][BR][FONT id=date]Published November 26, 2002[/FONT][BR][BR][FONT id=text][!-- START LEAD --]In what may be a harbinger of bad news for employees of American Airlines, the carrier's chairman and chief executive told Chicago-area workers Monday that wage concessions may be needed.[BR][BR]Donald Carty said it is becoming increasingly difficult to find places to cut expenses at the carrier and that contractual changes may be required to help American recover from the economic downturn and terrorist attacks that have crippled the nation's airline industry.[BR][BR][!-- END LEAD --][!-- START REST --]Since the Sept. 11 attacks, American has announced 7,000 layoffs, cut flights and grounded dozens of planes. But Carty, who has yet to seek wage concessions at American, said the cuts may not be deep enough to help the Ft. Worth-based airline.[BR][BR]We are hopeful that we will get some help from the economy, but we are not planning on it. Our plan for 2003 [assumes] that it stays a very, very tough year, Carty said before some of the airline's 12,000 local workers at O'Hare International Airport.[BR][BR]As a result of the continuing drive to cut costs and the failure of a recovery to materialize, Carty said he could not predict when American's operations will return to the black. Elk Grove Township-based United Airlines, however, has told a federal agency that it will return to profitability in 2004.[BR][BR]United predicted its return to profitability as part of an application for a $2 billion loan from the Air Transportation Stabilization Board. Of that amount, $1.8 billion would be federally guaranteed. Without the loan, United, which has a $375 million loan payment due Monday, has said it will file for bankruptcy.[BR][BR]If United's application is based upon a revenue rebound, then that's something that isn't going to happen, Carty said.[BR][BR]His comments came as documents attacking United's federal loan application circulated on Capitol Hill in Washington.[BR][BR]Rather than returning to profitability in 2004 as United predicts, the analysis shows that United will still be unprofitable in 2009. The documents were purportedly prepared by Northwest Airlines, but the carrier declined to comment.[BR][BR]Unlike many competitors, American so far has sought to focus on restructuring its business in the belief that it could cut costs sufficiently to allow the airline to recover from the downturn.[BR][BR]Thus far, American has identified $2 billion in annual savings, but Carty said it still needs to reach $3 billion to $4 billion in savings.[BR][BR]Carty said any recovery plan has to take into account the impact of low-cost carriers such as Southwest Airlines. Unlike when the airline industry was trying to recover from the Persian Gulf war, he said discount carriers now can be found on almost every route.[BR][BR]We have to be competitive with Southwest and carriers of that ilk long term or we won't survive, Carty said.[BR][BR]While he said he believes the U.S. economy will continue expanding, Carty said it is a mistake to assume airline revenue will recover dramatically at the same time, given competition from low-cost carriers and fewer-than-expected business travelers.[BR][BR]Whatever we are trying to accomplish in the long term, we also have to be cognizant that the company can't bleed cash in the short term forever, he said.[BR][BR]American will also reduce flight capacity by another 3.3 percent early next year, he said.[BR][BR]Most of those reductions will occur on Saturday afternoon and Sunday morning flights, which could result in even more layoffs. Currently, the airline has 122,000 employees.[BR][BR]By the end of March, Carty said American, the world's largest airline, will be operating 18 percent fewer flights than it was at the end of 2001. United has said it will have to cut about 25 percent of its flights.[BR][BR]This is very much tactical. It is very much addressing the short-term crisis, Carty said.[BR][BR][!-- END REST --][/FONT]
[P][FONT id=copyright]Copyright © 2002, [A href=http://www.chicagotribune.com/]Chicago Tribune[/A][/FONT] [/P][FONT id=line-spacer][BR][/FONT][/DIV]
Your right about concessions. You will never get your money back, and if you do, it will be years down the road. Then, your in the year 2008 and at pay rates of 2002. But, I agree that pay cuts should be done before any heads are rolling. The company says they look at every possbile avenue before layoffs occur, but obviously not. AMR is heading for it's second bankruptcy, they have been morally bankrupt for years.
WingNaPrayer
Veteran
[BR][BR][BR]
[BLOCKQUOTE][BR]----------------[BR]On 11/28/2002 11:29:42 AM [STRONG]TWAB717[/STRONG] [EM]wrote[/EM]: [BR][BR]AMR is heading for it's second bankruptcy, they have been morally bankrupt for years.----------------[/BLOCKQUOTE][BR][BR]I may be mistaken but........[BR] Don't you have to have [EM]had[/EM] morals in the first place before that can happen?
[BLOCKQUOTE][BR]----------------[BR]On 11/28/2002 11:29:42 AM [STRONG]TWAB717[/STRONG] [EM]wrote[/EM]: [BR][BR]AMR is heading for it's second bankruptcy, they have been morally bankrupt for years.----------------[/BLOCKQUOTE][BR][BR]I may be mistaken but........[BR] Don't you have to have [EM]had[/EM] morals in the first place before that can happen?
11/27/2002 - Updated 12:02 AM ET
United's struggles may reshape airline industry
By Dan Reed, USA TODAY
By Gary C. Caskey, Reuters
United Airlines is struggling to cut costs and avoid bankruptcy.
Vote could plot path of United's future
Money front page
United Airlines (UAL), struggling to slash costs and right itself financially, is poised to send big changes reverberating through the distressed airline industry.
The world's second-largest airline has been developing a restructuring plan to help secure a $1.8 billion government-guaranteed loan. Without the guarantee, Chapter 11 bankruptcy reorganization seems inevitable.
Either way, the airline must cut costs. And either way, its cost-cutting is going to affect its rivals.
Companies facing bankruptcy or restructuring rarely have the kind of potential United has to affect their industries, or consumers for that matter.
Kmart's walk through Chapter 11 involves one of the largest debtor-in-possession financing packages in history but is having little impact on rivals such as Wal-Mart and Target, says Alan Gover, a corporate restructuring attorney in the Houston office of Dewey Ballantine. Enron, for all its scandal-fed fascination, has become just a simple liquidation.
But United's financial makeover could help reshape nearly an entire industry, Gover says.
That's because United's competitors won't be able to ignore any cost advantages United gains through restructuring. Airlines can't charge higher prices than their competitors, because price is king to travelers. Any savings that United can squeeze out of its lenders, vendors and labor groups are certain to be copied.
Rather than worrying that a bankrupt United will drag them down too, its rivals are hoping the airline will go through a restructuring so radical that it will help them wrest concessions from their own workers, suppliers and financial backers. Some have been lobbying the government to turn down the loan guarantee, likely forcing the bankruptcy.
Don Carty, chairman of rival American Airlines (AMR), whose cost problem is only marginally less serious than United's, predicts that United will set the table for other carriers to cut their costs dramatically.
Executives at other conventional airlines — those that existed before deregulation and which operate large, costly domestic and foreign route networks — haven't been quite so blunt. But they agree. Delta (DAL) spokesman John Kennedy concedes the obvious: If United comes up with big cost savings, Delta will find ways to reduce its costs to compete effectively.
Even lean, unconventional Southwest (LUV), the industry's low-cost icon, could be affected if United gets the huge concessions that most analysts and rivals say it really needs.
Big labor concessions at United would turn down the cost pressure considerably all around the industry, including here, where we've not been immune to the trend of rising labor costs, says Southwest CEO Jim Parker.
More cuts to come
If United and other conventional carriers succeed in narrowing their cost gap with Southwest, collectively estimated to be about $18 billion a year, the Dallas-based discounter will be forced to find ways to lower its costs even further. Maintaining our significant cost advantage is one of the keys to Southwest Airlines remaining on top, Parker says.
Most of the change in the industry is likely to come on the cost side. There's general agreement that the conventional carriers' complex pricing system is out of whack, but there's no obvious way to fix it. And there's a growing consensus that the boom days of the late 1990s won't be back anytime soon, if ever.
But Tom Plaskett, who ran Pan Am and Continental (CAL) in the 1980s when they were in or just emerging from bankruptcy reorganization, cautions against assuming that employees will provide all the cuts.
It's not just labor costs that will be lower, he says. Other stakeholders — lenders, aircraft lessors, vendors, Boeing, Airbus — all will have to take haircuts.
Since the Sept. 11 terrorist attacks, conventional airlines have implemented or announced cost cuts worth at least $5 billion and perhaps as much as $12 billion. They've cut flights, planes, workers, advertising and sales commissions. They've taken more food off planes, put more automation into airports and placed more emphasis on low-cost Internet ticket sales. They've tightened checked bag limits and ticketing change fees. Weak routes have been dropped, and service has been reduced even on popular ones.
As painful as those cuts have been — more than 50,000 people have lost their jobs — they're just the low-hanging fruit. Executives at the big carriers know they need to make deeper cuts, and they admit they've not figured out how to do it. American says it will have to trim $4 billion in the next five years but has identified just $2 billion so far. Delta has cut $1 billion and plans to trim an additional $2.5 billion in the next three years, but it has not determined how.
Where to slice
Some of those cuts will come from further capacity reductions and shifting service from high-cost mainline carriers to lower-cost affiliate airlines. Other savings are likely to come from eliminating more amenities and services, both in-flight and on the ground.
And there are three areas of potential savings in which analysts and industry executives expect United to be the uncomfortable trailblazer.
Reducing fleet ownership costs. Sources close to the talks say United is pressing to renegotiate about $7 billion worth of aircraft leases to drum up as much as $150 million in cash now, and stretch out and lower monthly payments. The lessors might have little choice. If it enters Chapter 11, United would be able to simply return airplanes without penalty if it doesn't get more advantageous terms from its lessors.
Rival airlines are rooting for United to be radically aggressive in restructuring its loans, leases and capital structure. Their reasoning: The more concessions United gets, the better their odds of winning similar deals from their lenders and lessors, many of whom are the same.
Lowering the cost of services and supplies bought from third parties. Since the terrorist attacks, most airlines have renegotiated supplier contracts or shifted business to lower-cost providers. But bankruptcy, or even the threat of it, gives a company the opportunity to go back for more, Gover says. And, again, any victories by United in that arena will open the door for rivals to seek similar savings.
Ratcheting down labor costs through wage reductions, productivity increases or both. Labor is every airline's biggest expense. It also has been the second-fastest growing cost for 20 years, up, on average, nearly 110% for the largest carriers. Only the costs associated with acquiring a fleet of planes have grown more in the same time, up 157%.
Airline labor costs always have been, and likely always will be, high compared with other industries. Pilots and mechanics are nearly impossible to replace. Pilots and flight attendants work fewer hours than most other workers.
But analysts say that in the past few years, the industry, led by United, has allowed the cost pendulum to swing too far in labor's favor. When United pilots' work slowdown in the summer of 2000 succeeded in landing them the biggest one-time raise in industry history — 28% immediately — Delta pilots pushed for and got new wage rates that slightly topped United's. Continental's pilots, who still trail the pack thanks to their employer's bankruptcies in the '80s and '90s, also made big gains in their latest contract. American's pilots, now in contract talks, want to close their gap vs. United pilots. Even Southwest's pilots got their biggest compensation boost ever this fall.
The pattern extends to other unions. Northwest's mechanics, American's flight attendants, ground workers and mechanics, and Southwest's flight attendants and ground workers all have scored big wins in contracts signed since United's pilot contract two years ago.
In many ways, United caused the industry's problem with costs, says consultant Jon Ash of Global Aviation Associates in Washington. Now, it looks like it's going to be up to United to start solving it.
While that process has begun, competitors say United hasn't yet sought big enough cuts from its workers.
So far, it has lined up $5.2 billion in labor cost savings over 5 1/2 years. More than 35,000 mechanics, agents and airport ground workers represented by the International Association of Machinists vote today on their $1.5 billion share of those cuts.
United hopes those savings, along with more than $7 billion in other cost cuts and projected $1.4 billion in annual revenue enhancements, all over 5 1/2 to 6 years, will secure approval of its application with the Air Transportation Stabilization Board for the federal loan guarantee.
Even if those concessions take effect, United's pilots' wage rates will remain 2% higher than American's, notes Carty, whose contract talks with his own pilots have gone nowhere for 16 months.
UBS Warburg analyst Sam Buttrick says most United cuts are reductions of future spending increases. The reality is not what you save, but what you spend, he says. And with its proposed labor savings, United will still be spending more in the future.
United CFO Jake Brace, who has played a central role in assembling the package of cost cuts designed to win the federal loan guarantee, says critics of United's plan aren't working with all the numbers.
We're the folks who have all the detailed information on our financial situation, he says. People who are not inside the company do not. We appreciate all the free advice we're getting. But fundamentally, we know our financial situation, and we have put forth a plan that meets the criteria of the loan board.
Even if United snares the loan guarantee, implements all the proposed cost cuts, and avoids bankruptcy, critics such as Carty say it will need even bigger concessions from labor, lenders and suppliers to truly resolve its cost problems.
I don't see that as a threat, Carty says. I see that as an opportunity for the industry to get at some of these cost issues.
United's struggles may reshape airline industry
By Dan Reed, USA TODAY
By Gary C. Caskey, Reuters
United Airlines is struggling to cut costs and avoid bankruptcy.
Vote could plot path of United's future
Money front page
United Airlines (UAL), struggling to slash costs and right itself financially, is poised to send big changes reverberating through the distressed airline industry.
The world's second-largest airline has been developing a restructuring plan to help secure a $1.8 billion government-guaranteed loan. Without the guarantee, Chapter 11 bankruptcy reorganization seems inevitable.
Either way, the airline must cut costs. And either way, its cost-cutting is going to affect its rivals.
Companies facing bankruptcy or restructuring rarely have the kind of potential United has to affect their industries, or consumers for that matter.
Kmart's walk through Chapter 11 involves one of the largest debtor-in-possession financing packages in history but is having little impact on rivals such as Wal-Mart and Target, says Alan Gover, a corporate restructuring attorney in the Houston office of Dewey Ballantine. Enron, for all its scandal-fed fascination, has become just a simple liquidation.
But United's financial makeover could help reshape nearly an entire industry, Gover says.
That's because United's competitors won't be able to ignore any cost advantages United gains through restructuring. Airlines can't charge higher prices than their competitors, because price is king to travelers. Any savings that United can squeeze out of its lenders, vendors and labor groups are certain to be copied.
Rather than worrying that a bankrupt United will drag them down too, its rivals are hoping the airline will go through a restructuring so radical that it will help them wrest concessions from their own workers, suppliers and financial backers. Some have been lobbying the government to turn down the loan guarantee, likely forcing the bankruptcy.
Don Carty, chairman of rival American Airlines (AMR), whose cost problem is only marginally less serious than United's, predicts that United will set the table for other carriers to cut their costs dramatically.
Executives at other conventional airlines — those that existed before deregulation and which operate large, costly domestic and foreign route networks — haven't been quite so blunt. But they agree. Delta (DAL) spokesman John Kennedy concedes the obvious: If United comes up with big cost savings, Delta will find ways to reduce its costs to compete effectively.
Even lean, unconventional Southwest (LUV), the industry's low-cost icon, could be affected if United gets the huge concessions that most analysts and rivals say it really needs.
Big labor concessions at United would turn down the cost pressure considerably all around the industry, including here, where we've not been immune to the trend of rising labor costs, says Southwest CEO Jim Parker.
More cuts to come
If United and other conventional carriers succeed in narrowing their cost gap with Southwest, collectively estimated to be about $18 billion a year, the Dallas-based discounter will be forced to find ways to lower its costs even further. Maintaining our significant cost advantage is one of the keys to Southwest Airlines remaining on top, Parker says.
Most of the change in the industry is likely to come on the cost side. There's general agreement that the conventional carriers' complex pricing system is out of whack, but there's no obvious way to fix it. And there's a growing consensus that the boom days of the late 1990s won't be back anytime soon, if ever.
But Tom Plaskett, who ran Pan Am and Continental (CAL) in the 1980s when they were in or just emerging from bankruptcy reorganization, cautions against assuming that employees will provide all the cuts.
It's not just labor costs that will be lower, he says. Other stakeholders — lenders, aircraft lessors, vendors, Boeing, Airbus — all will have to take haircuts.
Since the Sept. 11 terrorist attacks, conventional airlines have implemented or announced cost cuts worth at least $5 billion and perhaps as much as $12 billion. They've cut flights, planes, workers, advertising and sales commissions. They've taken more food off planes, put more automation into airports and placed more emphasis on low-cost Internet ticket sales. They've tightened checked bag limits and ticketing change fees. Weak routes have been dropped, and service has been reduced even on popular ones.
As painful as those cuts have been — more than 50,000 people have lost their jobs — they're just the low-hanging fruit. Executives at the big carriers know they need to make deeper cuts, and they admit they've not figured out how to do it. American says it will have to trim $4 billion in the next five years but has identified just $2 billion so far. Delta has cut $1 billion and plans to trim an additional $2.5 billion in the next three years, but it has not determined how.
Where to slice
Some of those cuts will come from further capacity reductions and shifting service from high-cost mainline carriers to lower-cost affiliate airlines. Other savings are likely to come from eliminating more amenities and services, both in-flight and on the ground.
And there are three areas of potential savings in which analysts and industry executives expect United to be the uncomfortable trailblazer.
Reducing fleet ownership costs. Sources close to the talks say United is pressing to renegotiate about $7 billion worth of aircraft leases to drum up as much as $150 million in cash now, and stretch out and lower monthly payments. The lessors might have little choice. If it enters Chapter 11, United would be able to simply return airplanes without penalty if it doesn't get more advantageous terms from its lessors.
Rival airlines are rooting for United to be radically aggressive in restructuring its loans, leases and capital structure. Their reasoning: The more concessions United gets, the better their odds of winning similar deals from their lenders and lessors, many of whom are the same.
Lowering the cost of services and supplies bought from third parties. Since the terrorist attacks, most airlines have renegotiated supplier contracts or shifted business to lower-cost providers. But bankruptcy, or even the threat of it, gives a company the opportunity to go back for more, Gover says. And, again, any victories by United in that arena will open the door for rivals to seek similar savings.
Ratcheting down labor costs through wage reductions, productivity increases or both. Labor is every airline's biggest expense. It also has been the second-fastest growing cost for 20 years, up, on average, nearly 110% for the largest carriers. Only the costs associated with acquiring a fleet of planes have grown more in the same time, up 157%.
Airline labor costs always have been, and likely always will be, high compared with other industries. Pilots and mechanics are nearly impossible to replace. Pilots and flight attendants work fewer hours than most other workers.
But analysts say that in the past few years, the industry, led by United, has allowed the cost pendulum to swing too far in labor's favor. When United pilots' work slowdown in the summer of 2000 succeeded in landing them the biggest one-time raise in industry history — 28% immediately — Delta pilots pushed for and got new wage rates that slightly topped United's. Continental's pilots, who still trail the pack thanks to their employer's bankruptcies in the '80s and '90s, also made big gains in their latest contract. American's pilots, now in contract talks, want to close their gap vs. United pilots. Even Southwest's pilots got their biggest compensation boost ever this fall.
The pattern extends to other unions. Northwest's mechanics, American's flight attendants, ground workers and mechanics, and Southwest's flight attendants and ground workers all have scored big wins in contracts signed since United's pilot contract two years ago.
In many ways, United caused the industry's problem with costs, says consultant Jon Ash of Global Aviation Associates in Washington. Now, it looks like it's going to be up to United to start solving it.
While that process has begun, competitors say United hasn't yet sought big enough cuts from its workers.
So far, it has lined up $5.2 billion in labor cost savings over 5 1/2 years. More than 35,000 mechanics, agents and airport ground workers represented by the International Association of Machinists vote today on their $1.5 billion share of those cuts.
United hopes those savings, along with more than $7 billion in other cost cuts and projected $1.4 billion in annual revenue enhancements, all over 5 1/2 to 6 years, will secure approval of its application with the Air Transportation Stabilization Board for the federal loan guarantee.
Even if those concessions take effect, United's pilots' wage rates will remain 2% higher than American's, notes Carty, whose contract talks with his own pilots have gone nowhere for 16 months.
UBS Warburg analyst Sam Buttrick says most United cuts are reductions of future spending increases. The reality is not what you save, but what you spend, he says. And with its proposed labor savings, United will still be spending more in the future.
United CFO Jake Brace, who has played a central role in assembling the package of cost cuts designed to win the federal loan guarantee, says critics of United's plan aren't working with all the numbers.
We're the folks who have all the detailed information on our financial situation, he says. People who are not inside the company do not. We appreciate all the free advice we're getting. But fundamentally, we know our financial situation, and we have put forth a plan that meets the criteria of the loan board.
Even if United snares the loan guarantee, implements all the proposed cost cuts, and avoids bankruptcy, critics such as Carty say it will need even bigger concessions from labor, lenders and suppliers to truly resolve its cost problems.
I don't see that as a threat, Carty says. I see that as an opportunity for the industry to get at some of these cost issues.
[blockquote]
----------------
On 11/28/2002 11:29:42 AM TWAB717 wrote:
Your right about concessions. You will never get your money back, and if you do, it will be years down the road. Then, your in the year 2008 and at pay rates of 2002. But, I agree that pay cuts should be done before any heads are rolling. The company says they look at every possbile avenue before layoffs occur, but obviously not. AMR is heading for it's second bankruptcy, they have been morally bankrupt for years.
----------------
[/blockquote]
Wonder if they will use the same T.A.P term for the concessions that TWA did. (Turn Around Plan) Dont forget that it doesnt all have to be direct payroll percent cuts due to equivilent savings from productivity improvments.
TWA's TAP was about 15% I believe, and that WAS payroll not including productivity improvments...
----------------
On 11/28/2002 11:29:42 AM TWAB717 wrote:
Your right about concessions. You will never get your money back, and if you do, it will be years down the road. Then, your in the year 2008 and at pay rates of 2002. But, I agree that pay cuts should be done before any heads are rolling. The company says they look at every possbile avenue before layoffs occur, but obviously not. AMR is heading for it's second bankruptcy, they have been morally bankrupt for years.
----------------
[/blockquote]
Wonder if they will use the same T.A.P term for the concessions that TWA did. (Turn Around Plan) Dont forget that it doesnt all have to be direct payroll percent cuts due to equivilent savings from productivity improvments.
TWA's TAP was about 15% I believe, and that WAS payroll not including productivity improvments...
Doctor Zaius
Newbie
- Joined
- Nov 18, 2002
- Messages
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- 0
Caution!- Satirical Message to Follow:
You know, nothing feels more like Christmas to a former TWA employee than an impending fiscal crisis. Every year we wondered if the airline would be declaring bankruptcy again or if we'd even have a job next year.
But after a while, the threat of job loss only heightened our appreciation for the things we did have, like our families, our friends and our health.
Most of us came to realize that our airline careers were not our lives, but only a job that we do to pay our bills, (all be it, a well-paying job).
Ah yes, the snow is on the ground with pay cuts and productivity enhancements to follow. Where do I sign up for tree-training?? 'Tis the season!
Doctor Zaius
![9.gif']](/proxy.php?image=http%3A%2F%2F%5Bimg+src%3D%27http%3A%2F%2Fwww.usaviation.com%2Fidealbb%2Fimages%2Fsmilies%2F9.gif%27%5D&hash=7c964d57bf1a67b752c7d6719c1747f7)
You know, nothing feels more like Christmas to a former TWA employee than an impending fiscal crisis. Every year we wondered if the airline would be declaring bankruptcy again or if we'd even have a job next year.
But after a while, the threat of job loss only heightened our appreciation for the things we did have, like our families, our friends and our health.
Most of us came to realize that our airline careers were not our lives, but only a job that we do to pay our bills, (all be it, a well-paying job).
Ah yes, the snow is on the ground with pay cuts and productivity enhancements to follow. Where do I sign up for tree-training?? 'Tis the season!
Doctor Zaius
I have been cruising these boards for awhile now and this is one of the most intelligent answers yet. Whatever happens to AA, We, the workers, cannot do anything about it, because after 17 years in the airline industry, 3 years with the original Midway, and 14 years with AA, I have learned 2 things.
1. We don't know the big picture.
2. We don't know the bottom line.
Enjoy your family and be thankful for what you have.
1. We don't know the big picture.
2. We don't know the bottom line.
Enjoy your family and be thankful for what you have.
WingNaPrayer
Veteran
[P]
[BLOCKQUOTE][BR]----------------[BR]On 11/30/2002 5:46:12 PM [STRONG]B737NG [/STRONG][EM]wrote[/EM]:
[P] I have learned 2 things.[BR]1. We don't know the big picture.[BR]2. We don't know the bottom line.[BR]Enjoy your family and be thankful for what you have.[/P]----------------[/BLOCKQUOTE]
[P][/P]As employees, you are the backbone of the airline, it doesn't fly without it's employees. Therefore, [EM]you create the big picture[/EM], and make it all possible. Since employees are responsible for creating the big picture, then it serves to reason that [EM]they are the bottom line![/EM]
[BLOCKQUOTE][BR]----------------[BR]On 11/30/2002 5:46:12 PM [STRONG]B737NG [/STRONG][EM]wrote[/EM]:
[P] I have learned 2 things.[BR]1. We don't know the big picture.[BR]2. We don't know the bottom line.[BR]Enjoy your family and be thankful for what you have.[/P]----------------[/BLOCKQUOTE]
[P][/P]As employees, you are the backbone of the airline, it doesn't fly without it's employees. Therefore, [EM]you create the big picture[/EM], and make it all possible. Since employees are responsible for creating the big picture, then it serves to reason that [EM]they are the bottom line![/EM]
Doctor Zaius
Newbie
- Joined
- Nov 18, 2002
- Messages
- 7
- Reaction score
- 0
[blockquote]
----------------
On 11/30/2002 7:03:58 PM WingNaPrayer wrote:
[/P]As employees, you are the backbone of the airline, it doesn't fly without it's employees. Therefore, [EM]you create the big picture[/EM], and make it all possible. Since employees are responsible for creating the big picture, then it serves to reason that [EM]they are the bottom line![/EM]
----------------
[/blockquote]
WingNaPrayer's observation is reminiscent of TWA's Tree Training courses offered during CEO Jeff Erickson's tenure. One of his solutions was to teach TWA-ers the airline business (RASM's and CASM's) and what was needed for TWA to survive. Fundamental to this process was teaching employee empowerment and ownership of the process of improvement.
In some ways bankruptcy was good in that we examined all aspects of the airline's operation for cost effectiveness. TWA was forced to adopt things that were concessionary to some labor groups, but helped the airline survive and actually improve it's operation.
Don Carty has only to learn from TWA's experiences how to work with (and build the trust of) employees instead of dominating them. United's impending bankruptcy can then be an opportunity instead of a harbinger of what is to come. However, it takes is a change in attitude on both sides.
Doctor Zaius
----------------
On 11/30/2002 7:03:58 PM WingNaPrayer wrote:
[/P]As employees, you are the backbone of the airline, it doesn't fly without it's employees. Therefore, [EM]you create the big picture[/EM], and make it all possible. Since employees are responsible for creating the big picture, then it serves to reason that [EM]they are the bottom line![/EM]
----------------
[/blockquote]
WingNaPrayer's observation is reminiscent of TWA's Tree Training courses offered during CEO Jeff Erickson's tenure. One of his solutions was to teach TWA-ers the airline business (RASM's and CASM's) and what was needed for TWA to survive. Fundamental to this process was teaching employee empowerment and ownership of the process of improvement.
In some ways bankruptcy was good in that we examined all aspects of the airline's operation for cost effectiveness. TWA was forced to adopt things that were concessionary to some labor groups, but helped the airline survive and actually improve it's operation.
Don Carty has only to learn from TWA's experiences how to work with (and build the trust of) employees instead of dominating them. United's impending bankruptcy can then be an opportunity instead of a harbinger of what is to come. However, it takes is a change in attitude on both sides.
Doctor Zaius
[blockquote]
----------------
On 11/30/2002 10:15:35 AM Doctor Zaius wrote:
Caution!- Satirical Message to Follow:
You know, nothing feels more like Christmas to a former TWA employee than an impending fiscal crisis. Every year we wondered if the airline would be declaring bankruptcy again or if we'd even have a job next year.
But after a while, the threat of job loss only heightened our appreciation for the things we did have, like our families, our friends and our health.
Most of us came to realize that our "airline careers" were not our lives, but only a job that we do to pay our bills, (all be it, a well-paying job).
Ah yes, the snow is on the ground with pay cuts and productivity enhancements to follow. Where do I sign up for tree-training?? 'Tis the season!
Doctor Zaius
[img src='http://www.usaviation.com/idealbb/images/smilies/9.gif']
----------------
[/blockquote]
Amen; it's nice to see that Carty is now spreading the holiday cheer.
----------------
On 11/30/2002 10:15:35 AM Doctor Zaius wrote:
Caution!- Satirical Message to Follow:
You know, nothing feels more like Christmas to a former TWA employee than an impending fiscal crisis. Every year we wondered if the airline would be declaring bankruptcy again or if we'd even have a job next year.
But after a while, the threat of job loss only heightened our appreciation for the things we did have, like our families, our friends and our health.
Most of us came to realize that our "airline careers" were not our lives, but only a job that we do to pay our bills, (all be it, a well-paying job).
Ah yes, the snow is on the ground with pay cuts and productivity enhancements to follow. Where do I sign up for tree-training?? 'Tis the season!
Doctor Zaius
[img src='http://www.usaviation.com/idealbb/images/smilies/9.gif']
----------------
[/blockquote]
Amen; it's nice to see that Carty is now spreading the holiday cheer.
WingNaPrayer
Veteran
[P]
[BLOCKQUOTE][BR]----------------[BR]On 12/6/2002 9:24:36 PM Boomer wrote:
[P]eolesen,[BR][BR]... Boomer, I wasn't there, so I didn't hear him say it. The person from ORD who was there didn't hear him say it, and the actual quotes attributed to Carty didn't say it. [BR][BR]When Carty brings that presentation to DFW next week, I'll let you know if he does or doesn't say it...[BR]----------------------------------------[BR][BR]Eric, being asked to give up a CONTRACTUAL PAY RAISE is the same thing as being asked to cut your pay. Although you didn't hear it, do you think it could be true?[BR]----------------[/P][/BLOCKQUOTE]
[P]Of course it's true.......he said it again!! :[BR][BR][EM]To close the gap between the savings we've already identified and what we need to achieve, we really do need your help. Today, we're announcing that management will not get a pay increase again in 2003 and support staff pay will be frozen for the year, as well. In addition, we've already today approached the leadership of our three unions - asking the TWU and APFA to forgo 3 percent pay raises scheduled for 2003. It would be irresponsible, given our cash crisis, to make matters worse by digging the hole even deeper.[BR][BR]We are still negotiating a new contract with the APA, but we are engaged in a dialogue with their leadership as well. [/EM][EM][STRONG]And we will be talking with our agents about the need to defer scheduled increases in 2003 to stem our daily losses.[BR][/STRONG][BR]Simply forgoing pay increases in 2003 is going to help us avoid adding a whopping $130 million dollars in new costs. That's a significant amount - and it's absolutely essential - [/EM][FONT color=#ff3300][STRONG][EM]but it is still unfortunately far short of the very substantial savings we need.[BR][BR][/EM][/STRONG][/FONT][FONT color=#000000]Grab your balls boys....this is just the tip of the iceberg of what you will be asked to give up. Can you say.... [EM]Temporary Reductions in pay[/EM]?[/FONT][/P]
[BLOCKQUOTE][BR]----------------[BR]On 12/6/2002 9:24:36 PM Boomer wrote:
[P]eolesen,[BR][BR]... Boomer, I wasn't there, so I didn't hear him say it. The person from ORD who was there didn't hear him say it, and the actual quotes attributed to Carty didn't say it. [BR][BR]When Carty brings that presentation to DFW next week, I'll let you know if he does or doesn't say it...[BR]----------------------------------------[BR][BR]Eric, being asked to give up a CONTRACTUAL PAY RAISE is the same thing as being asked to cut your pay. Although you didn't hear it, do you think it could be true?[BR]----------------[/P][/BLOCKQUOTE]
[P]Of course it's true.......he said it again!! :[BR][BR][EM]To close the gap between the savings we've already identified and what we need to achieve, we really do need your help. Today, we're announcing that management will not get a pay increase again in 2003 and support staff pay will be frozen for the year, as well. In addition, we've already today approached the leadership of our three unions - asking the TWU and APFA to forgo 3 percent pay raises scheduled for 2003. It would be irresponsible, given our cash crisis, to make matters worse by digging the hole even deeper.[BR][BR]We are still negotiating a new contract with the APA, but we are engaged in a dialogue with their leadership as well. [/EM][EM][STRONG]And we will be talking with our agents about the need to defer scheduled increases in 2003 to stem our daily losses.[BR][/STRONG][BR]Simply forgoing pay increases in 2003 is going to help us avoid adding a whopping $130 million dollars in new costs. That's a significant amount - and it's absolutely essential - [/EM][FONT color=#ff3300][STRONG][EM]but it is still unfortunately far short of the very substantial savings we need.[BR][BR][/EM][/STRONG][/FONT][FONT color=#000000]Grab your balls boys....this is just the tip of the iceberg of what you will be asked to give up. Can you say.... [EM]Temporary Reductions in pay[/EM]?[/FONT][/P]
eolesen,
... Boomer, I wasn't there, so I didn't hear him say it. The person from ORD who was there didn't hear him say it, and the actual quotes attributed to Carty didn't say it.
When Carty brings that presentation to DFW next week, I'll let you know if he does or doesn't say it...
----------------------------------------
Eric, being asked to give up a CONTRACTUAL PAY RAISE is the same thing as being asked to cut your pay. Although you didn't hear it, do you think it could be true?
... Boomer, I wasn't there, so I didn't hear him say it. The person from ORD who was there didn't hear him say it, and the actual quotes attributed to Carty didn't say it.
When Carty brings that presentation to DFW next week, I'll let you know if he does or doesn't say it...
----------------------------------------
Eric, being asked to give up a CONTRACTUAL PAY RAISE is the same thing as being asked to cut your pay. Although you didn't hear it, do you think it could be true?
[blockquote]
----------------
On 12/6/2002 9:58:07 PM WingNaPrayer wrote:
[BLOCKQUOTE]
----------------
On 12/6/2002 9:24:36 PM Boomer wrote:
eolesen,
"... Boomer, I wasn't there, so I didn't hear him say it. The person from ORD who was there didn't hear him say it, and the actual quotes attributed to Carty didn't say it.
When Carty brings that presentation to DFW next week, I'll let you know if he does or doesn't say it..."
----------------------------------------
Eric, being asked to give up a CONTRACTUAL PAY RAISE is the same thing as being asked to cut your pay. Although you didn't hear it, do you think it could be true?
----------------[/P][/BLOCKQUOTE]
Of course it's true.......he said it again!! :
[EM]To close the gap between the savings we've already identified and what we need to achieve, we really do need your help. Today, we're announcing that management will not get a pay increase again in 2003 and support staff pay will be frozen for the year, as well. In addition, we've already today approached the leadership of our three unions - asking the TWU and APFA to forgo 3 percent pay raises scheduled for 2003. It would be irresponsible, given our cash crisis, to make matters worse by digging the hole even deeper.
We are still negotiating a new contract with the APA, but we are engaged in a dialogue with their leadership as well. [/EM][EM][STRONG]And we will be talking with our agents about the need to defer scheduled increases in 2003 to stem our daily losses.
[/STRONG]
Simply forgoing pay increases in 2003 is going to help us avoid adding a whopping $130 million dollars in new costs. That's a significant amount - and it's absolutely essential - [/EM][FONT color=#ff3300][STRONG][EM]but it is still unfortunately far short of the very substantial savings we need.
[/EM][/STRONG][/FONT][FONT color=#000000]Grab your balls boys....this is just the tip of the iceberg of what you will be asked to give up. Can you say.... [EM]Temporary Reductions in pay[/EM]?[/FONT][/P]
----------------
[/blockquote]
Been there, done that.
If it is needed then I am ready to do my part. Better to start a little early than to wait until more drastic measures are needed.
----------------
On 12/6/2002 9:58:07 PM WingNaPrayer wrote:
[BLOCKQUOTE]
----------------
On 12/6/2002 9:24:36 PM Boomer wrote:
eolesen,
"... Boomer, I wasn't there, so I didn't hear him say it. The person from ORD who was there didn't hear him say it, and the actual quotes attributed to Carty didn't say it.
When Carty brings that presentation to DFW next week, I'll let you know if he does or doesn't say it..."
----------------------------------------
Eric, being asked to give up a CONTRACTUAL PAY RAISE is the same thing as being asked to cut your pay. Although you didn't hear it, do you think it could be true?
----------------[/P][/BLOCKQUOTE]
Of course it's true.......he said it again!! :
[EM]To close the gap between the savings we've already identified and what we need to achieve, we really do need your help. Today, we're announcing that management will not get a pay increase again in 2003 and support staff pay will be frozen for the year, as well. In addition, we've already today approached the leadership of our three unions - asking the TWU and APFA to forgo 3 percent pay raises scheduled for 2003. It would be irresponsible, given our cash crisis, to make matters worse by digging the hole even deeper.
We are still negotiating a new contract with the APA, but we are engaged in a dialogue with their leadership as well. [/EM][EM][STRONG]And we will be talking with our agents about the need to defer scheduled increases in 2003 to stem our daily losses.
[/STRONG]
Simply forgoing pay increases in 2003 is going to help us avoid adding a whopping $130 million dollars in new costs. That's a significant amount - and it's absolutely essential - [/EM][FONT color=#ff3300][STRONG][EM]but it is still unfortunately far short of the very substantial savings we need.
[/EM][/STRONG][/FONT][FONT color=#000000]Grab your balls boys....this is just the tip of the iceberg of what you will be asked to give up. Can you say.... [EM]Temporary Reductions in pay[/EM]?[/FONT][/P]
----------------
[/blockquote]
Been there, done that.
If it is needed then I am ready to do my part. Better to start a little early than to wait until more drastic measures are needed.
WingNaPrayer
Veteran
[P]
[BLOCKQUOTE][BR]----------------[BR]On 12/7/2002 12:01:07 AM [STRONG]rampguy[/STRONG] [EM]wrote[/EM]:
[P]
[BLOCKQUOTE]Been there, done that.[BR]If it is needed then I am ready to do my part. Better to start a little early than to wait until more drastic measures are needed.[/BLOCKQUOTE]
[P][/P]----------------[/BLOCKQUOTE]
[P]Then sorry to say, you're being a fool. With thousands more slated to be laid off, that means a doubling of the workload for those remaining, and to ask them to double up their workload while taking a hefty paycut at the same time is just unconscionable![BR][BR]9/11 is no longer an excuse, the government more than paid the airlines for their 3 day losses. The shape the airlines are in right now is nothing short of the result of bad management. All of the airlines got fat on gouging their customers, and when the customers decided they weren't going to pay anymore (a trend that was coming forward more than a year before 9/11) no one in airline management knew what to do, they just sat back hoping that the business travelers would return, and kept spending money and crusing on a piss-poor business model. The proof is in the $4 billion goal! If AA knew they were overspending by $4 billion annually, then why didn't they take care of that when business was better? Can you imagine the shape they would be in today if they had?[BR][BR]I don't support any kind of wage concessions for you guys, a wage freeze perhaps, but no reductions in pay. I DO support busting ALL union contracts and letting the airlines run themselves without interference for a while, that, IMHO, would result in a marked improvement overall.[/P]
[BLOCKQUOTE][BR]----------------[BR]On 12/7/2002 12:01:07 AM [STRONG]rampguy[/STRONG] [EM]wrote[/EM]:
[P]
[BLOCKQUOTE]Been there, done that.[BR]If it is needed then I am ready to do my part. Better to start a little early than to wait until more drastic measures are needed.[/BLOCKQUOTE]
[P][/P]----------------[/BLOCKQUOTE]
[P]Then sorry to say, you're being a fool. With thousands more slated to be laid off, that means a doubling of the workload for those remaining, and to ask them to double up their workload while taking a hefty paycut at the same time is just unconscionable![BR][BR]9/11 is no longer an excuse, the government more than paid the airlines for their 3 day losses. The shape the airlines are in right now is nothing short of the result of bad management. All of the airlines got fat on gouging their customers, and when the customers decided they weren't going to pay anymore (a trend that was coming forward more than a year before 9/11) no one in airline management knew what to do, they just sat back hoping that the business travelers would return, and kept spending money and crusing on a piss-poor business model. The proof is in the $4 billion goal! If AA knew they were overspending by $4 billion annually, then why didn't they take care of that when business was better? Can you imagine the shape they would be in today if they had?[BR][BR]I don't support any kind of wage concessions for you guys, a wage freeze perhaps, but no reductions in pay. I DO support busting ALL union contracts and letting the airlines run themselves without interference for a while, that, IMHO, would result in a marked improvement overall.[/P]
