You wouldn't have to work for free, but there would definitely be a significant hit to overall compensation for US Airways' employees if the company were able to reach the goal of a 2 cent per ASM reduction in labor cost, either through wage/salary cuts or productivity improvements.
In 2003, US Airways' labor costs worked out to be roughly 5.16 cents per ASM. Dropping that number by 2 cents means that overall compensation for employees must decrease by just under 40% to reach the stated goal, and that just doesn't seem achievable to me. Then again, jetBlue's labor cost per employee stood at roughly 60% of UAIR's in 2003, and with far better productivity, B6's labor cost per ASM of 1.96 cents was 62% lower than US's. By comparison, WN's labor cost per asm was 3.10 cents in 2003 -- not coincidentally 2 cents lower than US's, with per-employee compensation that was 68% of US's number.
It's clear that US Airways needs to make some sort of progress on labor costs, but I can also understand the reluctance to commit to wage concessions when management hasn't yet identified the areas in which it will achieve the other 2 cents in cost reductions. I think that American's management set a good example when they first restructured the company's operations to reduce non-labor costs *before* putting pressure on their labor groups. The real question is whether or not the company's recent misdeeds have harmed labor relations enough to make concessions impossible. I certainly think the company will find it VERY difficult to get anything from the IAM given what seems to be a clear violation of the contract in regard to Airbus outsourcing -- whether or not they win the arbitration.
In 2003, US Airways' labor costs worked out to be roughly 5.16 cents per ASM. Dropping that number by 2 cents means that overall compensation for employees must decrease by just under 40% to reach the stated goal, and that just doesn't seem achievable to me. Then again, jetBlue's labor cost per employee stood at roughly 60% of UAIR's in 2003, and with far better productivity, B6's labor cost per ASM of 1.96 cents was 62% lower than US's. By comparison, WN's labor cost per asm was 3.10 cents in 2003 -- not coincidentally 2 cents lower than US's, with per-employee compensation that was 68% of US's number.
It's clear that US Airways needs to make some sort of progress on labor costs, but I can also understand the reluctance to commit to wage concessions when management hasn't yet identified the areas in which it will achieve the other 2 cents in cost reductions. I think that American's management set a good example when they first restructured the company's operations to reduce non-labor costs *before* putting pressure on their labor groups. The real question is whether or not the company's recent misdeeds have harmed labor relations enough to make concessions impossible. I certainly think the company will find it VERY difficult to get anything from the IAM given what seems to be a clear violation of the contract in regard to Airbus outsourcing -- whether or not they win the arbitration.
