Uneaten food in DFW

[Bob Owens]

Bob,
I am okay with looking at the present situation. Believe we should learn from the past to help plan for the future as well.
 
So then including WN in the total picture, the total cost of maintenance includes the bill for internal and outsourced costs. The total cost to keep our 737s in the air is issue. How do you reconcile the difference in heavy maintenance costs between AA and WN? They do most heavy work outside for less total cost, we do ours in-house for more or less cost? Do you know?

We don't have to match WN costs because AA gets a premium on air fares. Actually heard that one from a couple of AA's CEOs over the years. 
 
So let them sell their $69 seats and we sell $100 seats. 
 
The thing is that SWA has the largest fleet of 737s in the world, as such even if we outsourced as much or more we would not enjoy the discount they see with vendors, the company admitted that in negotiations, said they expected to actually pay a premium if they tried to outsource their NB work. So there is no way that AA or any carrier that has multiple fleet types can match WNs effeciency and costs, but they dont have to, WN competes primarily with Greyhound and Amtrak (or American Eagle and Frontier). 
 
The downside to the WN business plan is less flexibility and what would happen to SWA should the 737 ever get grounded like the DC-10 was? There was a concern over that back when US and UAL? each had a 737 flip over and nosedive into the ground.  WN was built around the 737, what happens when that model of aircraft becomes obsolete?

 

[Overspeed]

That WN charges less than other legacy carriers is a fallacy now. WN is arguing that point with their unions now. Because all legacies have now filed BK, WN no longer has a cost advantage.
 
WN has caught and past us on yield. So even if WN is selling the tickets for less, they are making a greater yield on the fares they charge. Right now that is domestic route system problem but will grow in the Caribbean and Mexico as WN expands.
 
Airline yields
 
1995
 
American 12.97 Continental 12.16 Delta 13.37 Northwest 12.39 United 11.65 US Airways 16.45 America West 10.84 Southwest 11.61
 
2003
 
American 11.83 Continental 11.38 Delta 11.49 Northwest 11.08 United 10.17 US Airways 13.04 America West 9.91 Southwest 11.68
 
2013
 
American 15.24 Delta 14.92 United 14.48 US Airways 14.38 Southwest 16.01
 
On 737 costs you are correct. WN does have an advantage due to the single fleet type and economies of scale. We will have to see how that pans out once they expand internationally.
 
In the aggregate, AA's maintenance costs should be declining going forward and outsourcing becomes less of an advantage in the near term. Since AA will gain more newer aircraft the company gains an advantage on maintenance costs with fewer overhauls. So how to take advantage of that cost savings now in the form of more dollars in our paycheck is what I expect the TWU to exploit during CBA negotiations.
 
And my honest answer on who I want negotiating my contract is the TWU. I was not a pro-merger advocate but we are faced with the current situation and resolving it was obviously not an easy decision.

 

[Bob Owens]

What did you resolve?  

 

[Overspeed]

The fact that there is no simple solution and that no comparison is perfect.

 

[Bob Owens]

The fact that there is no simple solution and that no comparison is perfect.

The solution is not so complicated but I agree no comparison is perfect.
 
Videtich should think that way, he cherry picked anything that would bolster the argument that we should agree to work for less. He would cite that AA pays more for maintenance, and omit the fact that was driven by the fact AA had an old fleet that they got much cheaper, so its like the decision to buy a new car, trade maintenance for car payments. Don would only cite the higher maintenance cost and omit that AA was saving money overall with cheaper old planes instead of making payments on newer ones. It was that way on pretty much every topic. He would cite that we have more mechanics so we should think of ourselves as a commodity like pork bellies and give our labor at a discount, and leave out the fact that we had more mechanics because we had old airplanes that required more maintenance, and our labor was in fact saving them money elsewhere on the balance sheet. Every morning if fuel went up a penny a gallon he would make sure we knew exactly how many millions more AA was paying, when it went down he would say nothing. 

 

[Rogallo]

How is Don?  Is he back to work yet?

 

[Overspeed]

I would have to say "cheaper old planes" is not always true. Like anything mechanically it becomes 1) inefficient at doing its job as technology gets better, 2) requires more maintenance as parts wear out, and 3) the cost to replace old planes with new ones grows every year with inflation. Deciding when is the right time to replace is a balancing act. AA needed to replace the MD80s, 767-200s, and older 757s and there is a benefit of lower maintenance costs plus lower fuel consumption that does help the bottom line.
 
So again, since overhaul work will decline just because we have newer aircraft how will the TWU get some of that savings in our pockets? And when for that matter?

 

[Vortilon]

How is Don?  Is he back to work yet?

 
He is still sandbagging, I hear he got himself a wheel chair for effect.  Not quite the Christopher Reeve edition, but moving in that direction.  Trying to get a medical retirement, the guy has the guts of a burgler.

 

[Vortilon]

I would have to say "cheaper old planes" is not always true. Like anything mechanically it becomes 1) inefficient at doing its job as technology gets better, 2) requires more maintenance as parts wear out, and 3) the cost to replace old planes with new ones grows every year with inflation. Deciding when is the right time to replace is a balancing act. AA needed to replace the MD80s, 767-200s, and older 757s and there is a benefit of lower maintenance costs plus lower fuel consumption that does help the bottom line.
 
So again, since overhaul work will decline just because we have newer aircraft how will the TWU get some of that savings in our pockets? And when for that matter?

 
 
TWU will redistribute the wealth, leaving the AMTs short on pay and benefits.  As Bob has pointed out - because of the negotiating structure having auto and fac maint in fleet locals - we end up with fleet local presidents sitting in on AMT negotiations.  Not only that, but outnumbering the AMT presidents - so what could go wrong?  We can't even get overhaul mechanics to understand the plight of the line AMT, and somehow you would trust fleet service local presidents to understand, and do right by us?  Really????

 

[Rogallo]

 
He is still sandbagging, I hear he got himself a wheel chair for effect.  Not quite the Christopher Reeve edition, but moving in that direction.  Trying to get a medical retirement, the guy has the guts of a burgler.

 
What a piece of work!
 
I'm sure they'll grant him some type of early out. Or maybe a mgmt position for all the hard work he did for the company.
We all know he will not be back on the floor working!.

 

[bigjets]

So are any DFW mechs getting Christmas off ?

Is Tulsa closed for the week?

 

[Rogallo]

Yup......cough, cough!

 

[dfw gen]

Just lost 4% of my appetite. .m

 

[Realityck]

So if the numbers were NOT subjective AND NEGOTIABLE as Videtich and Richard claimed then how did they get to 20% (17%) in bankruptcy when they had already given up prefunding?
 
I agree, we should have asked to be released after we rejected the deal in 2010. Yes if we had accepted the deal Line maint would have been at a higher rate going into BK but the two other groups, Title II and Tulsa saw next to nothing in 2010, thats why they rejected it. It was a zero cost contract, and if the other one had passed those two would have gone in pissed at us, and still being the majority at the time we likely would have seen our pay cut to be the same as theirs, and never would have received even our own contributions to prefunding let alone the match. You keep forgetting that 2010 was a zero cost contract. 
 
After just posting that the IAM agreed to 54% outsourcing you want them to be in charge of our contract negotiations? 

 
 
You blew it with the rejection of the 2010 Agreement. You can fabricate all kinds of reasons why your VOTE NO campaign was the way to go, but your crystal ball prophecy that AA would never file for bankruptcy was the beginning of the end. Blame everyone but yourself, and I agree there is a lot of blame to go around, but don't think for a minute that you didn't contribute to the problem because you did.

 

[Duke787]

The vote NO know nothing, is now saying the APFA should not accept 4% raise. They have cost us a lot of money over the YEARS, and now we will have to wait more years because they know better. What a bunch of fools. I wonder if the APFA leadership ever asked the advice of any twu official, if they did ask, the APFA probably did the opposite.

Thanks for the 4% raise DP, if my union ever gets its act together. Hopefully with AMFA and without these know nothing's involved with negotiations.