Wall St. takes a swipe at AMR

[Hopeful]

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.

Well thank you......But according to you, unions destroyed many a good company,,,and management is only inept when they agree to you union demands!

One thing left off that list.....INABILITY to manage! Sometimes people get in positions of leadership and authority SIMPLY because they know someone regardless of their ABILITIES!

 

[WorldTraveler]

It is absolutely a given that AMR needs new management. The fact that they have been unable to turn AA around in 8 years at the helm is way beyond the level of patience on Wall Street. It is only because AA has a core group of markets that generate premium revenue that have allowed AMR to avoid dealing with the problem for this long.

As AA's position in key markets is eroded, competitors move into its key markets, and AA's revenue numbers trail those of the industry, it will be much harder to argue that AA is better off just staying on the sidelines.

It is also true that there needs to be a housecleaning throughout AA including among its labor leaders who continue to hope for a return to what existed in 2003. The world has moved a great deal beyond where it was in 8 years; pretending that AA can go back is beyond unrealistic... it is the stuff of fairytales.

It is doubtful that Herb Kelleher or even Bob Crandall could turn things around ... there are different skill sets and Herb is a builder who can think outside of the box and build something new. WN has been a largely successful company for its entire existence. It has never had to make the tough choices that face AA now. IN many respects, Bob Crandall's iron rule kept AA in a pretty good position but it is doubtful that he has what it takes to turn things around.

The simple reality is that no management can do the job; there has to be a partnership between AA employees and a highly capable management team. I would dearly love to see AA employees take at least an ownership stake in the company in return for significant concessions IN THE FORM OF PROUCTIVITY INCREASES that are necessary to turn the company around and allow it to strengthen its position in key markets.

It should be apparent that labor union leaders are not going to agree to these types of concessions until AA people are willing to increase their union dues to keep the amount of money coming to the union the same - or else they need to get rid of the unions altogether - which if they own the company or a substantial portion of it, they should be able to control their destiny much better.

What AA cannot do is continue down the present road or take an approach to labor relations like what UA's employees did when it was employee owned which was to use the company as an ATM to increase their personal fortunes.

There are tough choices that need to be made at AA. I believe they include:
1. Getting rid of the unions or deciding that any restructuring will result in ensuring the unions are made whole in any restrucuring efforts = because they won't agree to anything that reduces their wealth.
2. Getting new management at AA/AMR who will take advantage of productivity based concessions to get AA's costs down not just to levels taht allow AA to compete w/ the highest cost network carrier but with EVERY network carrier in the US and every key market for AA AS WELL AS at least the largest and most significant low fare carriers.
3. Start yesterday with protecting AA's key markets from further low fare and network carrier incursion.
4. Move past the idea that we live in a world where there are megacarriers as AA's most direct competitors and where alliances serve THE GLOBE and not just key hubs on each continent to which AA can feed passengers for distribution throughout the globe.
5. Offer a significant number of buyouts/early outs in order to reduce the top 10% or more of AA's most senior workers - and then ensure their pensions are safe.
6. Develop a plan that will allow new hire people to be hired who will help to bring AA's costs down through growth, the same strategy of cost control that has allowed WN to remain profitable and which CO and DL have used to keep costs under control; the company has to grow faster than the natural progression of costs that comes as existing employees move up the payscale and existing employees obtain pay raises.
7. Invest in the product and customer service experience to allow AA to offer a competitive product... it's possible to be a niche airline (ie smaller than DL or UA) if AA offers a superior product from a competitive cost base in alliance with airlines that are as large as or larger than its competitors' alliances....

I could go on but hopefully the "marching orders" are clear.... if AA can achieve even half of these things in the next 12-18 months, there is potential to turn things around. For now, I'd be happy to see even one of them occur....

 

[WorldTraveler]

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?

And let me add to the list that if AA's labor unions would be less fixated with what AA's execs made and more focused on coming up w/ solutions, that would be a good place to start.

I'm not saying that AA execs don't need a little salary trimming... but take that message to Wall Street analysts and the board of directors and have AA labor focus on finding solutons - and enlist outside analysts and the board in finding those solutions instead of focusing on "they have something I don't"

RIght now, AA labor desperately needs a management team that can turn things around... and if they can do it, their pay will be well earned.

If the company goes down in flames, the size of what they made will be inconsequential compared to the damage that is left behind.

 

[700UW]

You dont get rid of unions in bankruptcy, that is against the law, DL and US have given raises, US is unionized so they negotiated it.

You really dont know about labor management relations in the airlines.

Its not a union's job to come up with solutions to run a company, that would be management.

 

[eolesen]

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?

I agree that nobody's worth millions of dollars per year, but I'd like to point out that UPS's CEO has been bringing in around $6.5M per year for the past three years. $1M base salary, and the rest as variable compensation.

Since they're profitable and pay their employees well, does he gets a pass?

You dont get rid of unions in bankruptcy, that is against the law, DL and US have given raises, US is unionized so they negotiated it.

You really dont know about labor management relations in the airlines.

Its not a union's job to come up with solutions to run a company, that would be management.

You mean there's nothing in union contracts which limits management's ability to change how the company is run?..

It's a symbiotic relationship. Management has limited control over how the company is run, and many of the boundaries on what they can do are controlled by the unions.

They can come up with the ideas, but if the unions don't sign off on it, all management can do is try to come up with Plans B, C, D, E, F, and G... That's the point AMR has been at for the past eight years.

Checks and balances are a good thing, but when it gets to the point where the various contracts box in management's ability to innovate while also keeping costs at a sustainable level, then everyone loses.

 

[Frank Szabo]

And let me add to the list that if AA's labor unions would be less fixated with what AA's execs made and more focused on coming up w/ solutions, that would be a good place to start.

I'm not saying that AA execs don't need a little salary trimming... but take that message to Wall Street analysts and the board of directors and have AA labor focus on finding solutons - and enlist outside analysts and the board in finding those solutions instead of focusing on "they have something I don't"

RIght now, AA labor desperately needs a management team that can turn things around... and if they can do it, their pay will be well earned.

If the company goes down in flames, the size of what they made will be inconsequential compared to the damage that is left behind.

If labor is the group that management expects the 'turn-around' ideas from, management is not necessary and becomes nothing more than British Royalty - eg, an exteme and unaffordable expense only for the sake of tradition.

Many of us have spent lifetimes learning our trades, now to be told be the likes of you that we have to come up with ideas that will do nothing but help our royalty?

If AA's execs want to continue showing up every day at Centrepork, I'd make them pay for the privelege as they certainly aren't earning their keep.

Back in your hole, WT - Bugger off.

 

[Veritas]

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:

I do not work in any aspect of the airline industry - but have been involved in it enough in the past and have the education to know what I am talking about

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.

Eric does not hide who he is. Most of the regulars on this forum know his professional background and are able to tell the difference facts and opinions in his posts.

You, on the other hand, refer to figments of your imagination as undisputed facts. That is most likely the reason that you refuse to corroborate what you claim to be the facts or reveal your sources (with the exception of the occasional Delta press release).

No one is asking for academic level citations, but revealing sources will enhance your credibility.

 

[WorldTraveler]

Eric does not hide who he is. Most of the regulars on this forum know his professional background and are able to tell the difference facts from opinions in his posts.

You, on the other hand, refer to figments of your imagination as undisputed facts. That is most likely the reason that you refuse to corroborate what you claim to be the facts or reveal your sources (with the exception of the occasional Delta press release).

No one is asking for academic level citations, but revealing sources will enhance your credibility.

It's all public data... there are no secrets.

Acknowledging basic stuff like RASM performance which is given in press releases by all of the US airlines would be a starter for the discussion.

AA's history as well as the rest of the industry is well documented.

Tripping up over key facts as to hub size and when carriers initiated service are pretty basic items that anyone who claims to have any knowledge of the industry should be capable of handling.

The real issue is that you and others really don't like the mesasge so instead try to shoot the messenger - despite the facts that I present are quite well documented.

My pay will not be cut nor do I have any Advantage miles to lose nor do I have any financial attachment to American Airlines.
The people who do have a vested interest are the ones who should break the culture of denial and stalemate that has gripped AA and AMR for 8 years are the ones who have something to lose.

When you and others can engage the actual issues using facts, we have the potential for a conversation.

How about we start with the 10 items I listed as indicators of AA's financial performance? All are obtained from publicly available data such as press releases, financial statements - all of which are filed with the SEC. No one needs any industry experience or graduate training to be able to accurate discuss them.

Frank,
I never for one minute said that AA mgmt should be entitled to sit in their headquarter's offices collecting checks to maintain the status quo. The fact that I have said that many times and you still don't get what I am saying is precisely why AA and its labor unions can't get anything accomplished.

If you and anyone else want to change anything, you need to hear what is actually being said and not what you think or want to be said.

 

[Veritas]

AA's history as well as the rest of the industry is well documented.

(snip)

The real issue is that you and others really don't like the mesasge so instead try to shoot the messenger - despite the facts that I present are quite well documented.

Except that you have repeatedly and stubbornly refused to document your so-called "facts."

P.S. No one is asking for academic citations, just links to sources.

 

[eolesen]

I don't have a problem with the message, WT. But you have no standing, and the way you continually position DL as all being just short of hand picked by God to be the best airline in the world does nothing to convince people of your sincerity.

You're not a customer ("I have no AAdvantage miles to lose") and you're not an employee or supplier (" nor do I have any financial attachment to American Airlines"). At least I've flown on both Delta and AA in the past three months...

 

[FrugalFlyerv2.0]

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?

When communists were taking over eastern European countries like Hungary Poland and Czechoslovakia after world war 2 they also spewed similar class envy comments like you to sir up people. How can you continue to spew the hogwash of 'nobody is worth what most of these executives make'. I can easily turn that around and say that no mechanic is worth $50/hr. AA and even SW cannot affort to pay you or any of their mechanics $50/hr. To achieve your dream apply at UPS, put yourself out of your misery.

 

[FrugalFlyerv2.0]

It is absolutely a given that AMR needs new management. The fact that they have been unable to turn AA around in 8 years at the helm is way beyond the level of patience on Wall Street. It is only because AA has a core group of markets that generate premium revenue that have allowed AMR to avoid dealing with the problem for this long.

While AA certainly has not been turning heads and setting trends the last 8 or so years, I think you're a little harsh in your criticism. AA did not have luxury of a mulilgan (chapter 11). Ofcourse you could argue that they should have filed, but that decision, not to file and only get some concessions seemed like a good idea at the time.

The simple reality is that no management can do the job; there has to be a partnership between AA employees and a highly capable management team. I would dearly love to see AA employees take at least an ownership stake in the company in return for significant concessions IN THE FORM OF PROUCTIVITY INCREASES that are necessary to turn the company around and allow it to strengthen its position in key markets.

How did the experiment of UAL employees owning a piece of the airline work out ? Not just for the employees but for the company too. An employee is not going to work harder just because they're a 0.000001% owner of a company. There has to be a tangible reward for the harder work, but also punishment for failure.

 

[jersey777]

I think Arpey needs to change the name Flight Plan 2020 to Bankrupt by 2020. He is guiding a sinking ship and not doing anything about it. We are all going to suffer for it.

 

[nbmcg01]

I think Arpey needs to change the name Flight Plan 2020 to Bankrupt by 2020. He is guiding a sinking ship and not doing anything about it. We are all going to suffer for it.

AA wants the pension plans.. it will be up to the unions as to how AA gets them. Freeze and go to an age weighted 401k, all new hires will not be defined benefit eligible, or even more drastic a pre-packaged bk.

 

[Maark767]

AA wants the pension plans.. it will be up to the unions as to how AA gets them. Freeze and go to an age weighted 401k, all new hires will not be defined benefit eligible, or even more drastic a pre-packaged bk.

Good luck getting our pensions.... No way will I vote in an agreement that gives up our pension....
BK will be the only way to get them.....
Can you answer me this....how did TWA lose their pensions??? Did the union negotiate them away for better pay and work rules or did the pension go away because a judge remove them from the contract.