I would be interested in reading your response. Link? It's a big world.
Who's really on top?
- Thread starter Birdman
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I would be interested in reading your response. Link? It's a big world.
I'm starting to get the feeling, due to the TWU's deafening silence, that they may have been made aware of some impending bad news. Could it be a spin-off, outsourcing, or RIF's? Everyone anticipates reductions in 2011 or 2012 and increased time between maintenance checks. Either way, the dues base is likely to spiral downward.
Hopeful
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Keep in mind that by this September, MCI will be closed and SFO will downgraded to a Class II from a Class I station, as well as other reductions throughout the system. The layoff will then happen end of summer.
As for the spin-off theory, it could happen. I see the move of MOC to DFW as clearing out of that operation from TULE.
I believe that the acquisition of the former Delta hangar in DFW was a preclude to making DFW the center of the M&E universe, freeing TULE to become anything but.
A spin off of TUL and/or AFW would be that major labor cost shift that no one likes to talk about.
http://twu562.org/
The company expects to lose 300 to 400 mechanics a year through attrition over the next several years(based on the age of our mechanics and because we've been losing at least that much for the last several years) not counting the closure and drawdowns in STL and SFO, DTW etc. We may see a layoff at those places but I dont think many people will have to hit the street, there will probably be more than enough slots throughout the system to absorb them, I think the company will actaully be short people by the end of the year.
Most of those at those stations will not relocate, instead they will probably leave the industry. Lets look at SFO for example, if they live there they probably either work two jobs or their wives work, and in many of those cases their wives earn more than they do. My wife just started working and her starting pay as an RN is$3 /hr more than our topped out rate. So how likely would it be that I would relocate when I know that everyone that I lknow who left surpassed what they were making here in less than two years? The average age for a mechanic at Local 562 AA is 47 with over 20 years of seniority. If we wanted to go to DFW or Tulsa we would be there.
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Very well said Bob. I would also like to see a direct challenge, from the TWU to all upper mAAnagement, to back uptheir claims with hard evidence.
I've never heard management claim that it costs AA more to do it in house. I asked Arpey that at the 2009 shareholders meeting and he said "The jury is still out on that". Six years and the Jury is still out?
I would say that doing it in house saves them money. The other carriers that dumped OH didnt have most of the cost savings that the TWU had long established at AA such as OSMs. Since our OSM program was put in without laying off mechanics or downgrading them it caused minimal disruption. If UAL or any of the other carriers had tried to do that in 2002 they would have taken guys with 30 years and cut their pay by around 50%, it would have been a disaster, so they simply just laid everyone off and sent the work out.
Many of us out here on the line have worked for other small carriers, and we know what those chop shops turn out, crap, it satisfies the FAA that they had the check done but in truth the planes would probably have functioned better if they had left them alone. It would take weeks to get them back in shape.
I have no doubts that our OH turns out the best product out there, but the question remains "why are our numbers so bad?".
Thats easy, because aircraft require constant attention. Even brand new airplanes have failures and require maintenance. Having a motivated Line Maintenance operation is essential and we are anything but motivated, not only did we lose 40% of our pay but we have dropped to near bottom of the industry in pay, so yea we will fix them, but its gonna take more time than ever before. Our engine changes have gone from as quick as 4 hours to an average of 24. These are the things the bean counters fail to see. They cut our pay by 40% but how much do they pay for their engine changes now? Before the concessions the plane would come in around 9pm on a live trip, get an engine changed and leave on another live trip at 8am. Now it sits out of service for at least a day.How much does that cost them? We have around 600 airplanes and they generate around $20 billion a year, that comes out to around $90,000 a day. Figure if they have 6 guys on it they used to pay 6 guys 8 hours, throw them a bone for 4 hours if it made the trip, so they would pay out 48 hours of straight time plus 24 hours of OT and not even lose a trip for an engine change, now they pay 144 hours and lose the plane for at least a day. So yea they save 40% in the hourly rate but they pay out more than double the amount of hours. Their labor cost for the engine change just went from $3780(if they paid us like SWA) to $6336(at our lower rate) . The way I figure they pay out $2556 more for labor and lose around $90,400 in revenue by paying us so much less on our hourly rate. Thats just one engine change, and JFK alone probably does around 4 engine changes a month, if not more. So how much does underpaying us really save them?
I'll bet that SWA still gets their overnight engine changes.
From a Gerard Arpey quote yesterday, it seems we are not just the highest cost labor group in the industry, but "We have SIGNIFICANTLY higher labor costs than our peers." The TWU will take out a full page ad to advertise, what they call "bonus" abuse, but are totally mum when countless management figures distort labor cost data. TWU = INCOMPETENCE
AA's labor costs are significantly higher than the other airlines. Labor cost per ASM: AA is the highest.
AA's wages (not costs) are not the highest. WN's wages are among the highest and its labor costs (per ASM) are among the lowest. AA's wages tend to be in the middle or lower middle of the peers, but its labor costs are the highest.
Sure, if we remove the payroll of TULE, AFW and DFW, AA's labor cost per ASM would decline. My guess is that The Goose and TWU Informer (and several thousand others) would prefer that AA not remove that payroll. It ain't the highest paying job in Tulsa, but it's a pretty good gig. The pay in Tulsa is a far sight better than the pay for line mechanics in the big high-cost cities (NYC, BOS, MIA, LAX, SFO, ORD, etc). Those guys are really taking it on the chin, living in relative poverty compared to those in Tulsa and Fort Worth.
AA doesn't have to have the lowest labor costs. As Arpey and Horton reminded everyone yesterday, AA enjoys a revenue premium to the rest of the industry. Only problem is that under today's contracts, that revenue premium is more than absorbed by the labor cost premium. Despite the constant claims that AA refuses to bargain in good faith, it is trying to find a way to satisfy employees' demands for more money with the need to keep the wage cost premium from growing.
AA's wages (not costs) are not the highest. WN's wages are among the highest and its labor costs (per ASM) are among the lowest. AA's wages tend to be in the middle or lower middle of the peers, but its labor costs are the highest.
Sure, if we remove the payroll of TULE, AFW and DFW, AA's labor cost per ASM would decline. My guess is that The Goose and TWU Informer (and several thousand others) would prefer that AA not remove that payroll. It ain't the highest paying job in Tulsa, but it's a pretty good gig. The pay in Tulsa is a far sight better than the pay for line mechanics in the big high-cost cities (NYC, BOS, MIA, LAX, SFO, ORD, etc). Those guys are really taking it on the chin, living in relative poverty compared to those in Tulsa and Fort Worth.
AA doesn't have to have the lowest labor costs. As Arpey and Horton reminded everyone yesterday, AA enjoys a revenue premium to the rest of the industry. Only problem is that under today's contracts, that revenue premium is more than absorbed by the labor cost premium. Despite the constant claims that AA refuses to bargain in good faith, it is trying to find a way to satisfy employees' demands for more money with the need to keep the wage cost premium from growing.
T
The Goose
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Ah, but there's one thing never addressed - executive costs (salaries, benefits and perks) are added into the supposed labor costs for accounting and quoted as being simple "worker compensation" for propaganda purposes. It's not difficult to understand why this is never broken out but danced around every time it's brought up. Remove that dollar figure from the labor equation and account for labor's dollar cost/benefit fairly and I believe the financial picture would change quite radically, and not to the benefit of management.
I know - GAAP doesn't require it, but most of us aren't interested in bookkeeping tricks and methods.
As far as preferring AA "not remove that payroll", I would be quite happy to retire and leave to business to the younger group as I'm eligible anyway, but need a fews more years to get the finances straight. If the company would provide a decent incentive (3+3+1, minimum), I'd be gone tomorrow. So would many others.
By the way - I'll not deny that AA is without a doubt the best "gig" available in the Tulsa area without going to "the dark side", but - that in no way excuses the corporation for its lies. I personally would have more respect for the devils if they just came out and said, when asked for a raise, (Deleted by moderator), rather than spending millions on outside management firms to create an illusion of cooperation. It probably would have been cheaper for the company to simply be fair to the workers.
Isn't greedy management expense a constant? Do the greedy executives at DL, UA, CO and US make significantly less than the greedy bastards at AA? I'll admit that I haven't researched it, because I'm too lazy, and AA doesn't disclose total management comp. From cursory reviews of Bob Herbst's numbers, I've always assumed that greedy management expense was a constant. If it is a constant (or nearly so), then it wouldn't have any meaningful impact on labor cost per ASM when comparing AA to the other legacies. What am I missing?
You make a good point there. Crandall probably would have said it, and I think Herb would have when he ran WN. Straight shooters are far too rare these days.
T
The Goose
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You're not missing anything - the impact on labor cost relative to other airlines, assuming greed is a constant for calculation purposes and no different than gravity, atomic weights and all that other good stuff, the numbers would be identical.
Just musing though, and wondering out loud if the SOBs have the 'nads to break it out and be open re: their oft repeated propAAganda, BS and lies.
Verily I say unto thee, if they're telling everyone the truth, they wouldn't mind a further breakdown of their figures. Right?
I think we all know the company won't do this and I believe the TWU/Jim Little is paid not to pursue to matter so basically, neither the company, corporate board of directors, nor union has what it takes to lead themselves out of a wet paper bag.
Rally 'round the slop trough, boys, for another bucketful of compensation! SOOEEEE!
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There are few perks left anymore aside from reserved space travel and perhaps a financial/tax advisor. Stuff like the lease cars, club memberships, etc. all disappeared about ten years ago. Carty had a personal driver, but he paid that out of his own pocket since he could easily afford to....
I forget exactly what I'd guessed before, but assuming everyone in the privileged 1000 employees in the PUP were making $125K per year (averaged across that large of a number, it's probably close), you're "only" talking about 125M per year in salaries.
AA's labor cost is going to be between $6.5B and $7B this year. Those management salaries comprise less than 2% of what AA pays out annually in wages & benefits.....
2%. The variance due to overtime from the winter storms and volcanic ash is probably double that.
Let's go onto the next burning pitchfork theme: "Fire 'em all and we can finally get raises"
Cut their salaries by 50%, distribute the difference evenly amongst the other 60,000 or so employees, and that's about $1000 per year. Eliminate all those jobs, and it's $2000 per employee.
Is a $2000 raise really going to fix your outlook?...
Sorry, but the reason nobody focuses on the exec compensation component of labor costs is because it isn't large enough to skew the numbers as you're alleging.
So in other words when AA says it has the highest labor costs it means absolutely nothing. I just wish some of our International Reps and their so called economist could see that.
Well, thats an unrealistic objective, the majority of their other costs have gone up significantly over the last 7 years, so have ours, so have other airlines. Hawiian Airlines just agreed to a 15% inccrease for their mechanics. The fact is they havent offered anything towards a fair settlement.
I'm willing to be fair, make us number one and we will do everything we can to make AA number one, however they are doing everything they can to put us at the bottom so we are forced to do the same.
