Wall St. takes a swipe at AMR

[nbmcg01]

Combined with dumb management that agrees to their unreasonable demands, unions are the major source of harm/ruin for many companies. The landscape is littered with companies ravaged by unions. Peers in your industry, such as UA, DL, US and gems such as GM and Chrysler are perfect examples of the fine work unions have done for Americans.

It takes two sides to sign an agreement. Did corporate America think these defined benefit pension plans would disappear, fund themselves, never be used/needed? In the past the airlines had the "mutual aid pact" and unions had "self help". What a about the dumb, unreasonable demands a company makes during negotiations. Many times there are no cost-cost neutral quality of life enhancements that could be agreed upon. Having been a negotiator, I have found most mangt. want big bucks for these items regardless of no cost/cost neutral. The other fact is the price the company puts on an item. Value is established at the time something is negotiated. In most situations the value can only increase. Isn't it funny how much negotiated items are worth when the company announces a signed agreement but then how little value the have when the want concessions? And then when the company is in financial trouble all of these items become the staw that is breaking the company's back (until giveback time). How dare anyone blame the ills of the corporation on the unions. Isn't management supposed to manage? If my company (or department) fails, as a manager I would feel a huge responsibility. Not expect a bonus.

 

[FrugalFlyerv2.0]

How dare anyone blame the ills of the corporation on the unions. Isn't management supposed to manage? If my company (or department) fails, as a manager I would feel a huge responsibility. Not expect a bonus.

I said that combined with dumb management, unions are the bane of companies. It takes 2 to tango.

 

[WorldTraveler]

WT, please allow me to ask a questions as a mere layperson below the financial wizards of the world's pay grade.

If you and your neighbors' have identical houses on identical lots...are your costs IDENTICAL?
Is it necessary to compare yourself to your neighbors income and vice versa?
No two persons or entities are identical. I cannot subscribe to your far-more educated view that this is the end all.
I believe companies like to use the comparison argument to justify and even coerce cost cutting measures from the work force.
And believe me, I am well aware that the stock holder is numero uno.
I do not need to be reminded of that!

I will say this again, if AA truly wants the cost structure of its competitors, then file bankruptcy already rather than try to negotiate a deal with unrealistic union peons!
They could then force new wages and work rules on me, but can never force me to work against the license I hold.
And the way the FAA is feeling toward AA these days, I wouldn't count on many repercussions against mechanics going by the book.

Should AA go bankrupt to abbrogate their labor agreements and screw their creditors, then so be it.
But I can tell you that DL maybe your first choice in travel because the odds of your flight being cancelled due to a mechanical issue will increase ten fold the day after Chapter 11 is filed.

The simple and complete answer is that there are standards for comparing companies in the same industry as well as companies between industries. On all accounts, AA’s financials are at the bottom of the pack for airlines and very low for global companies as a whole.
AA’s revenue growth is below average for airlines. If AMR can explain to Wall Street why they should not be held to the same standards as other airlines, they should start talking. FAST.
There are valid reasons why AMR’s market value is ¼ of its competitors DAL, LUV, and UAL.

The fact that AMR mgmt knows that there are people like who will burn the company down than take another pay cut is why they haven’t done anything - but has that changed the problem in 8 years?

Can you again explain how DL, prior to the NW merger, survived for so long, being the #3 (or maybe lower in many US DOT regions lilke the Pacific), relying only on its formidable presence in ATL and CVG?

Because the airline industry was highly fragmented. All airlines had their niche markets. Now, AA has to compete with 2 megacarriers that not only have lower costs but also have much larger networks. In key markets, AA also has to compete against low fare carriers like WN that now have access to the same major business airports where AA has had some of its best revenue premiums.
The industry has consolidated exactly as the architects of deregulation predicted it would. AMR has stated they don’t need to merge – yet they aren’t delivering the network other carriers are and that is a big reason why AMR’s revenue numbers are trailing other airlines.

I've always wondered why DELTA got into ANY financial troubles at all...you know after all, they were NON UNION with the exception of the pilots.

Since, according to some posters here, unions are the bane and major problem companies can't be profitable. Delta was always free to operate without being restriced by costly union agreements.......Where did they go wrong? You think maybe management had a role?

Why does that argument not apply to DL?

DL mgmt does bear responsibility for not adapting faster from its domestic/FLA focused business where it connected tens of millions of passengers per year to FLA. That wasn’t labor’s choice as to where DL flew.
But it also is a mistake to say that DL’s network strategy was flawed for a long time. As late as the late 90s, DL was one of the highest margin and most profitable airlines in the world.
The industry changed very rapidly post 9/11. DL didn’t adapt and it did result in its need to reorganize including in BK. I don’t DL mgmt ever said that DL employees bore responsibility for putting DL into bankruptcy and if they did I sure don’t buy it.

Without a doubt, Delta's pilots caused the company enough grief to make up for the mechanics not being unionized [/sarcasm].

One must understand workers have no chance of presenting a rational argument to corporate shills and that's why I've placed most of them on ignore - do your mind and blood pressure a favor and do the same.

… because we know that tuning out the people we don’t like will result in the problem being fixed (also sarcasm)
You might also note that those corporate shills are the ones who have the ear of Wall Street analysts who decide whether investing in companies is worth it or not.

Frank, it wouldn't be so bad if the resident DeltApologist had the backbone to admit he's a former Delta employee, probably a manager.

Instead, he just hides behind the cloak of anonymity and hubris:



He's joined my ignore list as well. There's no point arguing with someone who goes to great extents to cheer-lead but makes no attempts to come clean as to their own biases.

Again, does it really matter what my history or credentials are if I am speaking the truth?
If I am a former manager at Delta, don’t you think that would add credibility to what I say? Bias has far less to do with the issue if the facts are valid.
The fact that you continue throw around your hypotheses as facts when they are clearly wrong might be part of the reason why I have no problem challenging you and winning. Stick to what you know, admit when you are wrong, and realize that your “team” might have some housecleaning that needs to be done. We’ll get along just fine on that basis.

I said that combined with dumb management, unions are the bane of companies. It takes 2 to tango.

And it would be really nice if both sides would tango their way to the negotiating table and figure out a way to get AA back on its feet before it is too late.
Going into a petroleum, Middle East, and Japan induced global downturn is mighty risky with as many outstanding issues as AMR/AA has.

 

[Mr Red]

All victims of the so called free market PONZI SCAM !!!

 

[700UW]

Woldcom, Enron, Tyco, GM, Chrysler, the banks, Madoff, Ichan, Lorenzo, Miliken, Rigases of Adelphia Cable.

Shall I go on?

 

[Hopeful]

I said that combined with dumb management, unions are the bane of companies. It takes 2 to tango.

Here's what you said..."Combined with dumb management that agrees to their unreasonable demands, unions are the major source of harm/ruin for many companies."

Sounds to me like your only saying they are dumb because they agreed to union demands.
Otherwise, in your eyes, management can do no wrong!

 

[FrugalFlyerv2.0]

Here's what you said..."Combined with dumb management that agrees to their unreasonable demands, unions are the major source of harm/ruin for many companies."

Sounds to me like your only saying they are dumb because they agreed to union demands.
Otherwise, in your eyes, management can do no wrong!

Correct. Unions make unreasonable demands and management is often stupid to agree. This leads to the destruction of many companies.

I don't always applaud AMR management (for example I think AMR wasted valuable years not getting ATI with BA/IB). I've said in the past that AMR and its employees were smart to avoid chapter 11 back in 2003. Doesn't look like it was such a good move today because now as a result of this the best thing that can happen to AMR is probably a strike or a chapter 11 filing or both. A strike will suck for the AA employees and a chapter 11 filing will screw over many others (in addition to the employees).

 

[WorldTraveler]

Correct. Unions make unreasonable demands and management is often stupid to agree. This leads to the destruction of many companies.

I don't always applaud AMR management (for example I think AMR wasted valuable years not getting ATI with BA/IB). I've said in the past that AMR and its employees were smart to avoid chapter 11 back in 2003. Doesn't look like it was such a good move today because now as a result of this the best thing that can happen to AMR is probably a strike or a chapter 11 filing or both. A strike will suck for the AA employees and a chapter 11 filing will screw over many others (in addition to the employees).

yes...

but the key point is that AA's restructuring efforts - should they actually take place instead of continuAAtion of the 8 year stalemate - will put AA at a competitive disadvantage relative to the rest of the industry which has completely its restructuring and moved on to consolidation which became possible because of their resructuring efforts.

Airlines almost always have to shrink in BK as they get rid of costly, low performing assets.... shrinking further drives up costs which temporarily makes the company less able to compete. The upside comes after BK when a company can expand and "grow into" its new financial structure.

The $20B question is whether AA can successfully restructure with so many competitors circling looking for opportunities to prey on the wounded but if AA doesn't restructure, the wounds just fester more.....

what to do, what to do.

 

[Hopeful]

yes...

Airlines almost always have to shrink in BK as they get rid of costly, low performing assets.... shrinking further drives up costs which temporarily makes the company less able to compete. The upside comes after BK when a company can expand and "grow into" its new financial structure.

And at one point after BK, there comes a time to change the leadership as well.
It takes one helluva dynamic personality to fix morale. It starts at the top and works it's way down into the company culture.
Can you say HERB KELLEHER? Geez, he dealt with unions ok....
And those like frugal flyer who believe it is ALL the unions of the world's fault, all you need to do is look at non union firms and see that their management gets replaced when the company nose dives.
The don't blame their non-union workforces because there are no contracts and "unreasonable" demands made.
I say let AA file bankruptcy, and let's see how great AA can be. Some of you might be in for a surprise.
They can force new workrules and pay and benefits on the workforce, but they cannot make anyone work any differently than they do now.

 

[Hopeful]

Correct. Unions make unreasonable demands and management is often stupid to agree. This leads to the destruction of many companies.

I don't always applaud AMR management (for example I think AMR wasted valuable years not getting ATI with BA/IB). I've said in the past that AMR and its employees were smart to avoid chapter 11 back in 2003. Doesn't look like it was such a good move today because now as a result of this the best thing that can happen to AMR is probably a strike or a chapter 11 filing or both. A strike will suck for the AA employees and a chapter 11 filing will screw over many others (in addition to the employees).

So they file bankruptcy to abbroate union contracts,....ok...then what?
What will you say when the company still loses money? Will you say it's because of the "write offs" and "special charges" due to restructuring?
Will you say, "This is normal for a company to show more losses for a year or two follwing their exit from BK?"
Will my taking another $20,000 a year paycut for another 8 years be enough for you? or do you want employees blood? or just union blood?

Tell us, please!

a good management team will come up with a unique and prfound way of getting contracts.

Just rememeber, Chapter 11 does not decertify a union. There will still be negotiations and contracts. Look at USair, UA, and CAL......still have unions and contracts to deal with...And those employees want some payback as well.....
Also keep in mind that poor morale affects big shot travelers like yourself.
Ann until you can fly a Jetblue A320 or a Southwest B737 around the world, you are stuck with us evil union people!
You know the types, the lowlifes who clean the crap from your first class seat, the lowlifes that dump the lavatories after your royal butt used the facilities,
the lowlife flight attendants who have to kiss your first class ass so you don't write a letter to Arpey about how you are a platinum member, blah, blah blah...
the low life people who load your luggage, the low lifes who were up all night in inclimate weather making sure you have a safe aircraft......and, oh yes, those lowlife union drives in the front of the aircraft....

that's right , FRUGSY, all us union people destroyed many a good company....

 

[700UW]

Hey dont forget, Southwest has the highest percentage of unionized workers and they are the highest paid in the industry, and have been profitable for over 30 years straight.

How can that be if those low life unionized people work there? (sarcasm)

 

[Hopeful]

Combined with dumb management that agrees to their unreasonable demands, unions are the major source of harm/ruin for many companies. The landscape is littered with companies ravaged by unions. Peers in your industry, such as UA, DL, US and gems such as GM and Chrysler are perfect examples of the fine work unions have done for Americans.

Tell me FF, how many of these guys had unions to deal with?


What Motivates Rich, Powerful CEOs to Commit Fraud?

Greed. Corporate America is often characterized as the land of greed; why shouldn’t the folks at the top be the greediest of all? Actually, these CEOs risked way more wealth than they stood to gain by their fraudulent actions. I don’t think any amount of money or power would have fulfilled the needs that made them commit these acts.
Arrogance. Sam Waksal of ImClone described himself as arrogant in an interview after his conviction. Perhaps all that power and money makes CEOs feel invincible, untouchable, above the law. And maybe they got caught because, on some level, they knew what they were doing was wrong and wanted to be punished for it. Hmm.
Evil. Well, evil is sort of a philosophical concept. In this context, perhaps it describes the effect the CEO’s actions had on shareholders and employees, but I don’t think it actually describes their behavior. I mean, they didn’t torture little puppies or murder anybody.
Stupidity. Maybe they’re just plain stupid. No, I don’t think so. Most of these people didn’t just fall off the turnip truck. Look at Computer Associates, Enron, ImClone, Qwest, Tyco, WorldCom. These CEOs built huge, successful companies. I don’t buy that any of them were anything but brilliant businessmen.
Personality Disorder. Delusional, narcissistic psychopaths, call them what you want, it sounds like a no-brainer to me. I mean, most of these folks maintained their innocence to the end. That implies compartmentalization so they didn’t actually feel empathy for those affected by their actions. Denial is a powerful thing. Sure sounds like a behavioral disorder to me. Anyway, there’s no denying that each of these men functioned, and functioned exceptionally, until their issues caught up with them.
So, if it’s a behavioral disorder, that sort of begs the biggest question of all: Can you somehow identify these people before they actually commit the crime? Any thoughts on that?

In any case, here are my Top 10 CEOs in Prison:


Jeff Skilling, former CEO of Enron
Serving 24 years for fraud, insider trading, and other crimes related to the collapse of Enron
Bernie Ebbers, former CEO of WorldCom
Serving 25 years for accounting fraud that cost investors over $100 billion
Dennis Kozlowski, former CEO of Tyco
Serving 8 to 25 years for stealing $134 million from Tyco
John Rigas, former CEO of Adelphia Communications
Serving 25 years for bank, wire, and securities fraud related to the demise of Adelphia
Sanjay Kumar, former CEO of Computer Associates
Serving 12 years for obstruction of justice and securities fraud
Walter Forbes, former CEO of Cendant
Serving 12 years for fraud
Richard Scrushy, former CEO of HealthSouth
Serving 7 years for bribery and mail fraud
Joseph Nacchio, former CEO of Qwest Communications
Serving 6 years for insider trading
Sam Waksal, former CEO of ImClone
Served 7 years for securities fraud (released last year)
Martin Grass, former CEO of Rite Aid
Served 6 years for fraud and obstruction (just released this year)

 

[FrugalFlyerv2.0]

So they file bankruptcy to abbroate union contracts,....ok...then what?
What will you say when the company still loses money? Will you say it's because of the "write offs" and "special charges" due to restructuring?
Will you say, "This is normal for a company to show more losses for a year or two follwing their exit from BK?"

Will my taking another $20,000 a year paycut for another 8 years be enough for you? or do you want employees blood? or just union blood?

Tell us, please!

I'm hoping that if/when they do chapter 11 and destroy your cushy contracts, you'll realize of how relatively good you've had it, or finally move on to all those better jobs out there that are waiting for you. Or not. Its a free country.

And yes, I do wnat union employee blood, especially B+

a good management team will come up with a unique and prfound way of getting contracts.

And you'll probably cite Southwest. The unions there understand the business and are not asinine like the ones at AA. And yes, the management at AA is not as sharp as the one at SW.

Just rememeber, Chapter 11 does not decertify a union. There will still be negotiations and contracts. Look at USair, UA, and CAL......still have unions and contracts to deal with...And those employees want some payback as well.....
Also keep in mind that poor morale affects big shot travelers like yourself.

I have limited experience flyling on UA or US. But among the north american carriers there is no difference in the work ethic between carriers that at some point experienced bankruptcy (NW/DL, AC, CO) and AA and even SW. It seems to be, like elsewhere in society, just do the minimum to get the job done. Fine with me, I'll just pay the minimum for the service/product I'm offerred.

Ann until you can fly a Jetblue A320 or a Southwest B737 around the world, you are stuck with us evil union people!
You know the types, the lowlifes who clean the crap from your first class seat, the lowlifes that dump the lavatories after your royal butt used the facilities,
the lowlife flight attendants who have to kiss your first class ass so you don't write a letter to Arpey about how you are a platinum member, blah, blah blah...
the low life people who load your luggage, the low lifes who were up all night in inclimate weather making sure you have a safe aircraft......and, oh yes, those lowlife union drives in the front of the aircraft....

that's right , FRUGSY, all us union people destroyed many a good company....

PS Hateful,
No need for you to be jeleous of others who are more blessed than you and have the ability to purchase a first class seat.

 

[FrugalFlyerv2.0]

Tell me FF, how many of these guys had unions to deal with?


What Motivates Rich, Powerful CEOs to Commit Fraud?

Greed. Corporate America is often characterized as the land of greed; why shouldn’t the folks at the top be the greediest of all? Actually, these CEOs risked way more wealth than they stood to gain by their fraudulent actions. I don’t think any amount of money or power would have fulfilled the needs that made them commit these acts.
Arrogance. Sam Waksal of ImClone described himself as arrogant in an interview after his conviction. Perhaps all that power and money makes CEOs feel invincible, untouchable, above the law. And maybe they got caught because, on some level, they knew what they were doing was wrong and wanted to be punished for it. Hmm.
Evil. Well, evil is sort of a philosophical concept. In this context, perhaps it describes the effect the CEO’s actions had on shareholders and employees, but I don’t think it actually describes their behavior. I mean, they didn’t torture little puppies or murder anybody.
Stupidity. Maybe they’re just plain stupid. No, I don’t think so. Most of these people didn’t just fall off the turnip truck. Look at Computer Associates, Enron, ImClone, Qwest, Tyco, WorldCom. These CEOs built huge, successful companies. I don’t buy that any of them were anything but brilliant businessmen.
Personality Disorder. Delusional, narcissistic psychopaths, call them what you want, it sounds like a no-brainer to me. I mean, most of these folks maintained their innocence to the end. That implies compartmentalization so they didn’t actually feel empathy for those affected by their actions. Denial is a powerful thing. Sure sounds like a behavioral disorder to me. Anyway, there’s no denying that each of these men functioned, and functioned exceptionally, until their issues caught up with them.
So, if it’s a behavioral disorder, that sort of begs the biggest question of all: Can you somehow identify these people before they actually commit the crime? Any thoughts on that?

In any case, here are my Top 10 CEOs in Prison:


Jeff Skilling, former CEO of Enron
Serving 24 years for fraud, insider trading, and other crimes related to the collapse of Enron
Bernie Ebbers, former CEO of WorldCom
Serving 25 years for accounting fraud that cost investors over $100 billion
Dennis Kozlowski, former CEO of Tyco
Serving 8 to 25 years for stealing $134 million from Tyco
John Rigas, former CEO of Adelphia Communications
Serving 25 years for bank, wire, and securities fraud related to the demise of Adelphia
Sanjay Kumar, former CEO of Computer Associates
Serving 12 years for obstruction of justice and securities fraud
Walter Forbes, former CEO of Cendant
Serving 12 years for fraud
Richard Scrushy, former CEO of HealthSouth
Serving 7 years for bribery and mail fraud
Joseph Nacchio, former CEO of Qwest Communications
Serving 6 years for insider trading
Sam Waksal, former CEO of ImClone
Served 7 years for securities fraud (released last year)
Martin Grass, former CEO of Rite Aid
Served 6 years for fraud and obstruction (just released this year)

Greed. Stupidity. Arrogance. All are characteristics that every human being posses. From the evil banker and airline CEO to the hourly employee and lowlife union thug. Even you and me.

 

[Bob Owens]

Correct. Unions make unreasonable demands and management is often stupid to agree. This leads to the destruction of many companies.

I don't always applaud AMR management (for example I think AMR wasted valuable years not getting ATI with BA/IB). I've said in the past that AMR and its employees were smart to avoid chapter 11 back in 2003. Doesn't look like it was such a good move today because now as a result of this the best thing that can happen to AMR is probably a strike or a chapter 11 filing or both. A strike will suck for the AA employees and a chapter 11 filing will screw over many others (in addition to the employees).

Unreasonable demands. Like millions of dollars a year for one person? Nobody is worth what most of these executives make. The reason why they make so much is because they sit at both sides of the table. They lavish extravagances on themselves, make bad decisions then tell workers that the workers need to make sacrifices. UPS pays their mechanics $50/hr. Is that unreasonable? How much do you pay to have your car fixed, or to have a plumber come and fix your pipes, or even the cabby to drive you to the airport per hour?