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New Round Of Concessions At AA?  
User currently offline777Purser From United States of America, joined Aug 2005, 219 posts, RR: 3
Posted (9 years 4 days 3 hours ago) and read 3221 times:

Pilots expect American to call for concessions
Union leader says airline has provided data on current plight


12:00 AM CDT on Wednesday, September 28, 2005


By ERIC TORBENSON / The Dallas Morning News


American Airlines Inc. expects its pilots' union to craft new concessions to help the Fort Worth-based carrier remain solvent, according to the labor group's president.

Ralph Hunter, president of the Allied Pilots Association, said in an address Monday to the union's board of directors that members have asked him when he expects American chief executive Gerard Arpey to ask for contract changes.

"My answer to you is that, in his own way, he already has," Mr. Hunter said.

"Mr. Arpey and his management team have chosen to provide us with virtually every bit of data we have requested with the hope that we will come to the right conclusions on our own," he said.

"If we are not able to understand the need for change with the data we have, no amount of asking or explanation from management will make any difference," Mr. Hunter said. "In short, if you are awaiting a formal invitation to examine change, don't."

American's vice president of employee relations, Mark Burdette, said he was "encouraged by the leadership role taken by Ralph Hunter."

The airline doesn't know what to expect from the pilots' union and hasn't specifically asked any of its unions for any concessionary plans, Mr. Burdette said. "I don't know what their plan is likely to be. I know they've had some fairly extensive strategic discussions."

American has used about 100 employees in recent months to benchmark American's performance against other airlines, and has left the unions to think about what might be the next step for the carrier.

"One of the most interesting things about this process is that when you give them detailed information about what's happening, that rational people come to the same kinds of conclusions," Mr. Burdette said.


Last of its kind

American finds itself the last traditional network airline that hasn't yet sought Chapter 11 bankruptcy protection. Both Northwest Airlines Inc. and Delta Air Lines Inc. filed for protection earlier this month, joining United Airlines Inc., which has been reorganizing for nearly three years. US Airways emerged from its second filing in three years on Tuesday through a merger with America West Airlines.

"Where do we go from here?" Mr. Hunter said. "First, we must recognize that 'here' is not a place that we want to remain much longer."

The pilots were briefed Monday by American chief financial officer James Beer on the airline's financials.

Though parent company AMR Corp. has a cash hoard of more than $3 billion, enough to survive at least until next year by most analysts' thinking, high fuel prices are likely to persist and drain those reserves until a filing becomes inevitable.

"There is a growing chorus of individuals throughout the financial, governmental and airline communities who advocate that American Airlines should go ahead and declare bankruptcy to 'fix' their business model," Mr. Hunter said. "I find this refrain particularly frustrating because the overwhelming evidence clearly demonstrates that bankruptcy does not fix an airline."

Here we go... Unfortunally, it was to be expected.

16 replies: All unread, jump to last
 
User currently offlineTrolley Dolley From , joined Dec 1969, posts, RR:
Reply 1, posted (9 years 4 days 2 hours ago) and read 3177 times:

If AA can avoid Chapter 11 by constructively engaging its employees in an open and honest way- which is definitely the impression I got from this article- then both the AA employees and mangement team deserve to be applauded.

Best wishes to all AA a.netters as they face the next round of challenges.


User currently offlineCommavia From United States of America, joined Apr 2005, 11709 posts, RR: 62
Reply 2, posted (9 years 4 days 2 hours ago) and read 3164 times:

Quoting Trolley Dolley (Reply 1):
If AA can avoid Chapter 11 by constructively engaging its employees in an open and honest way- which is definitely the impression I got from this article- then both the AA employees and mangement team deserve to be applauded.

Exactly.

If AA is completely willing to open its books to its unions, in the hopes that its unions will draw the logical conclusion that they need to give up more in order to save their company, I think it is not unreasonable that the unions should give up concessions. Considering that AA's employees are now relatively well paid (compared to their counterparts at DL, NW, UA, US, et al), considering that AA is insourcing -- not outsourcing -- more and more maintenance, and considering that AA is still faithfully contributing to employees' DB pension plans, I don't think its unreasonable that with oil and the competitive landscape the way it is for American to ask its unions for a little more.


User currently offlineStevenUhl777 From , joined Dec 1969, posts, RR:
Reply 3, posted (9 years 4 days 2 hours ago) and read 3147 times:

As a life-long UA man, I really have to hand it to AA here...going against the grain, the are willing to TALK and COOPERATE with the employees to ensure their long term survival.

I'd fly American Airlines and Delta Airlines any day of the week and twice on Sunday before I fly on an airline like Northwest, who views their employees as worthless shit. NW will never see a penny of my money. Not like it would make a difference, but on principle..

Here's to AA...hope you guys are around for the long haul so you can keep fighting us!  biggrin 


User currently offlineFlybyguy From United States of America, joined Jun 2004, 1801 posts, RR: 1
Reply 4, posted (9 years 4 days 1 hour ago) and read 3139 times:

Unions are so one minded... any concessions seem to be bad and they simply drive the airlines to the bankruptcy courts. I wouldn't be surprised if the union looks at all the data provided by AA and says "Eh... you got a cash reserve... everything's hunky dory... no paycuts necessary!"

On the other hand I think this 'open' policy that AA is adopting now is a heck of a lot better than Carty's multi-million dollar bonuses for executives while demanding for employee paycuts or Crandall's "my way or the highway" attitude.



"Are you a pretender... or a thoroughbred?!" - Professor Matt Miller
User currently offline777Purser From United States of America, joined Aug 2005, 219 posts, RR: 3
Reply 5, posted (9 years 4 days 1 hour ago) and read 3141 times:

Quoting StevenUhl777 (Reply 3):
I'd fly American Airlines and Delta Airlines any day of the week and twice on Sunday before I fly on an airline like Northwest

Agreed. I am shocked by the way NWA is handling its labor relations. I am concerned though that bankruptcy is making it so hard for AA to compete, and I do wonder when concessions will stop. Remember AA went through concessions already a couple years ago. While still paid decently, workrules have deteriorated. I do not know wheter pilots at Southwest make more money than those at AA, but their FAs do make more money than AA FAs after concessions...more will be revealed...


User currently offlineRyanAFAMSP From United States of America, joined Nov 2004, 155 posts, RR: 0
Reply 6, posted (9 years 3 days 15 hours ago) and read 2971 times:

People are right that the NWA situation is going to dramatically impact airlines like American. Northwest's plan is to employ VERY few people. Maybe 1,000 mechanics. CS and ramp only at the hubs. Flight attendants only on 757 and A320 flying, and pilots on aircraft larger than 100 seats. I personally don't think they'll be able to pull this off (for the people at all other airlines, lets hope they can't), but even the PROCESS is going to turn things upside down for everyone else.

Good luck to everyone at American during tough times. You all have given it a great go so far.


User currently offlineCommavia From United States of America, joined Apr 2005, 11709 posts, RR: 62
Reply 7, posted (9 years 3 days 14 hours ago) and read 2940 times:

Quoting Flybyguy (Reply 4):
Unions are so one minded... any concessions seem to be bad and they simply drive the airlines to the bankruptcy courts.

Unions simply must understand that the market is determining their salary -- not the CEO. And the market is pretty much telling every airline CEO, including AA's, that its employees are paid too much. It's sad to say, and I'm not trying to denegrate in any way the fine work that thousands of airline employees around the U.S. do each day, but the reality is that the free market is dictating that most of these people are overpaid, or are employed when their jobs should be outsourced.

Quoting Flybyguy (Reply 4):
I wouldn't be surprised if the union looks at all the data provided by AA and says "Eh... you got a cash reserve... everything's hunky dory... no paycuts necessary!"

I sincerely hope not.

I feel pretty confident that the pilots union is going to be more than happy to give up whatever AA asks, and then some. AA has been faithfully funding all the employees' pensions, including the pilots' huge pensions, and thus AA pilots recognize how lucky they are and are going to do anything to keep AA out of bankruptcy.

The mechanics and rampers, as well, will probably be willing to give up some things. They won't go along as easily as the pilots, but the mechanics also recognize how lucky they are that AA is insourcing maintenance while their counterparts at almost every single legacy competitor is being laid off.

The tough nut to crack, IMO, is going to be the flight attendants. They have always been AA's most militant union, by far, and they are likely going to be far from willing to give AA anymore than what they already have. They have made it quite clear that they feel their concessions they gave in 2003 were more than enough (under tumultuous circumstances given the APFA's internal politics). In addition, the APFA's new leader is Tommie Hutto-Blake, is extremely militant and, while she has said that Arpey is someone she thinks she can work with, I simply don't see her getting behind any more concessions, and I really don't see the rank and file APFA members going along with any more givebacks.

The challenge for AA is that unlike its competitors, which have already exacted far more severe wage cuts on its labor groups than AA has, and/or have used the threat of bankruptcy to get its unions to wake up, AA can't use bankruptcy as a threat. With a $3.4B cash cussion (a very prudent fiscal management move), the unions and everyone else knows that bankruptcy is not right around the corner.

IMO, AA's unions need to wake up and realize that -- even given what happened in 2003 with Carty -- they really got off easy. AA is still funding all their pensions, with no plans of wiping them out. AA is still paying them what have now become near-industry-leading wages. AA is insourcing maintenance, even while all its competitors are getting rid of most or all of their maintenance. AA is still flying around with its only flight attendants, even while some of its competitors (NW) want to pretty much outsource international and small-jet flight attendant staffing. AA is not bankrupt, all its competitors are. The unions simply must recognize that when AA went through the $1.8B in concessions back in 2003, they simply could never have planned for $70/barrel oil, and if they had, the unions would never have gone along with the millions more in concessions.

Quoting Flybyguy (Reply 4):
On the other hand I think this 'open' policy that AA is adopting now is a heck of a lot better than Carty's multi-million dollar bonuses for executives while demanding for employee paycuts or Crandall's "my way or the highway" attitude.

Say what you will about Crandall's strategy, but it sure as h*ll worked, and it sure added more voting, dues-paying members to the ranks of AA's unions than any other CEO before or since.

Quoting RyanAFAMSP (Reply 6):
CS and ramp only at the hubs.

With the way the market and fuel are right now, I see this is simply inevitable. Within 10-20 years, I really doubt that most airlines in the U.S. will be doing their own passenger departure and ramp control at outstations. It's simply not economical or necessary anymore, sad as that is.


User currently offlineAa777flyer From , joined Dec 1969, posts, RR:
Reply 8, posted (9 years 3 days 13 hours ago) and read 2867 times:

These rumors started WAAAAY back in February and March. The general consensus is though, never out side of CH11. AA will not just ask the pilots without also asking FA's, Ramp, Customer Service, and Management. I really doubt the TWU and the APFA will ever give it up again outside of CH11.

User currently offlineTAN FLYR From United States of America, joined Aug 2000, 1909 posts, RR: 0
Reply 9, posted (9 years 3 days 13 hours ago) and read 2814 times:

As a shareholder & longtime customer (AAPlat.), I sure as heck hope that all the employee groups can use their own eyes to read the financials and God given intelligence to undertand the situation. I am proud that their pensions are still being funded. The employees are at the mercy of a situation that currently is beyond anyones control.

But let us realize the most important factor here..FUEL- JET-A!!. Without AFFORDABLE supplies of fuel eventually some airlines will just fall to the side and take many jobs with them. You can only go BK so many times.

So permit me to get on my soap box again...America must cast aside extremist environmental positions & policies as well as political considerations and come up with a common sense plan for energy.
1. We must embark on a program, working with the oil companies (they are the ones with the expertise) to build additional refining capacity and build it inland away from hurricane prone areas. Perhaps Bush's idea of using old military bases makes good sense..the land is already there and available. I'd suggest building refineries closer to more consumers to lessen demand on long pipelines of supplies. Candidates would include Atlanta, Charlotte, Indianapolis.
Additionaly build more storage for refined product.

2. Build more nuclear power ( very clean..see Japan & France-over 60% of electrical power is nukes.) Lessen reliance of power plants use of natural gas..free up more natural gas for homes and business where the use is more economical. Some areas of the US that use substantial amounts of Natural gas to generate power could see increases of 70% this winter.

My point is this...ALL employees of every airline should be writing, calling their US Congressman and Senator and hold them accountable for coming up with workable, common sense plans that increase supplies of refined products so their airline can afford the fuel without always going Chapter 11 or having to ask for givebacks. Everytime a job is lost, or income goes down, tax revenue is lost. Politicians understand taxes!!!LOL!

Higher fuel costs hurt everyone..including customers ability to purchase tickets! Because eventually the consumer (or Taxpayer) pays the bill.

So. GOOD LUCK AA!

Thanks! God Bless!


User currently offlineKen777 From United States of America, joined Mar 2004, 8299 posts, RR: 8
Reply 10, posted (9 years 3 days 13 hours ago) and read 2808 times:

I believe that the union members will try to work AA to keep it out of Ch 11. A lot of members (especially pilots and mechanics) are working in complex areas and have the ability to understand the situation when it is fully presented to them.

The first step, however, is for the senior executives and directors to take cuts in their compensation - and at a larger percentage than the union members will need to take. That type of good faith demonstration will kill off a lot of anger towards the well paid at AA.

The next thing to look at is the savings that may be possible from changes to the work rules. Savings from that area means smaller cuts on direct wages.

I'm also a strong believer in agreeing to give hourly workers a percentage of the profits (when there are profits) as it helps everyone understand the need to work towards profitability. It also reduces the need to re-negotiate agreements when things get better.


User currently offlineCkfred From United States of America, joined Apr 2001, 5251 posts, RR: 1
Reply 11, posted (9 years 3 days 11 hours ago) and read 2753 times:

A friend of mine is an AA F/O. Obviously, he knows a number of captains who are starting to actively plan their retirements within the next few years. A number of them have the same firm handling their financial planning. I don't offhand remember the name, but firm managers has been very impressed with Arpey's performance since replacing Carty as CEO. So far, Arpey hasn't made a single mistake in terms of strategic moves, as well as labor relations.

To me as an AMR shareholder, that says a lot, since Wall Street loves to second guess CEOs.

The big unknown is the price of oil. For every knowledgable person who predicts $100 a barrel oil by the end of '06, there is another who predicts $40 a barrel, or even lower, by the end of '05 or 1stQ '06. Even if oil gets down to $50 a barrel, the airline industry, as a whole, will be much better off. There are a number of "experts" who cite statistics showing that, prior to Katrina, there was more oil and gas supplies in the U.S. that at the same time in '04, and that speculators had driven the price up. The belief was that the oil bubble would burst before the real estate bubble.

Two interesting points from former AMR CEOs. I heard Don Carty several weeks ago on CNBC say that even if oil does stay above $60 a barrel well into '06, the long-term picture is that oil will become more affordable, simply because oil companies will have the capital to search for new oil or develop technology to make hard-to-extract oil economically viable. He cited the boom in production of oil from oil sands in Alberta as an example.

I also heard Bob Crandall, several months ago, say that airline employees must accept the fact that the market will no longer allow for generous compensation and work rules. Even for today's LCCs, as employees gain years of service, they may have to accept meager increases in pay, because of future LCCs coming into the market. In listening to Mr. Crandall, it sounded as if any teenager who was planning a career in the airline industry, whether as a pilot, mechanic, CSA, F/A, or manager ought to consider another line of work.


User currently offlineCommavia From United States of America, joined Apr 2005, 11709 posts, RR: 62
Reply 12, posted (9 years 3 days 9 hours ago) and read 2681 times:

Quoting Ken777 (Reply 10):
The first step, however, is for the senior executives and directors to take cuts in their compensation - and at a larger percentage than the union members will need to take. That type of good faith demonstration will kill off a lot of anger towards the well paid at AA.

They have already done that. AA's management took sizeable pay cuts post-9/11, and the post-2003 concessions, and AA's senior officers did not collect a salary for 2001 after 9/11, and for all of 2002. AA's management team is already among the lowest-paid in the industry, which is why other airlines have been slowly picking off many AA officers.

That being said, I do agree with you -- while I don't think it's right, AA's management is definitely going to have to give up more compensation before labor will even give them the time of day.

Quoting Ken777 (Reply 10):
The next thing to look at is the savings that may be possible from changes to the work rules. Savings from that area means smaller cuts on direct wages.

Agreed. No doubt this is going to be topic #1 for the airline and the unions. I highly doubt that AA is going to want to reduce the salary of any employees if they could get equal savings from work rule changes. The reason: salary cuts apply to people based on a range of variables, including training, experience, age and seniority. Work rule changes, on the other hand, apply to all workers covered under that collective bargaining agreement. My guess is that the first thing AA is going to ask for from all its unions is more hours of work each month from members, plus some more flexibility in certain operational and logistics situations, etc. If there are to be more concessions from the unions, I think that work rules will be amended first, and then wage cuts will make up the difference.

Quoting Ken777 (Reply 10):
I'm also a strong believer in agreeing to give hourly workers a percentage of the profits (when there are profits) as it helps everyone understand the need to work towards profitability. It also reduces the need to re-negotiate agreements when things get better.

AA is already doing that too, although because of the way the deal is structured, AA's employees won't be seeing any profit sharing for a long while. They don't get anything unless AA makes a $500M net profit. The way fuel is going, AA won't see that number for a decade. That will probably be one of the contract negotiation openers from the unions: if the company wants them to cough up more $, then they're gonna want the company to cough up more $ in profits, at a lower profit threshold.

Quoting Ckfred (Reply 11):
I also heard Bob Crandall, several months ago, say that airline employees must accept the fact that the market will no longer allow for generous compensation and work rules.

The man knows of what he speaks!

[Edited 2005-09-29 22:24:22]

User currently offlineJAXFLL From United States of America, joined Sep 2005, 93 posts, RR: 0
Reply 13, posted (9 years 3 days 9 hours ago) and read 2664 times:

Quoting Ken777 (Reply 10):
I'm also a strong believer in agreeing to give hourly workers a percentage of the profits (when there are profits) as it helps everyone understand the need to work towards profitability. It also reduces the need to re-negotiate agreements when things get better.

American does this. I believe the last time profit sharing occured was 1999 or 2000.


User currently offlineAa757first From United States of America, joined Aug 2003, 3350 posts, RR: 8
Reply 14, posted (9 years 3 days 8 hours ago) and read 2618 times:

Quoting 777Purser (Reply 5):
I do not know wheter pilots at Southwest make more money than those at AA, but their FAs do make more money than AA FAs after concessions...more will be revealed...

I don't know all of Southwest's work rules, but I do know they clean the plane. And I don't think they get crew meals either.

Quoting JAXFLL (Reply 13):

American does this. I believe the last time profit sharing occurred was 1999 or 2000.

I can't think of a single airline that doesn't do this. Maybe a tiny fly-by-night, but most major/national carriers have such a system.

AAndrew


User currently offlineFutureFO From Ireland, joined Oct 2001, 3132 posts, RR: 21
Reply 15, posted (9 years 3 days 6 hours ago) and read 2530 times:

And now that CHQ is no longer paying fines to AA for the 170 being on the certificate, that takes a little of the money away from AA.



Sean from MCO and IND



I Don't know where I am anymore
User currently offlineFlewGSW From United States of America, joined Oct 2004, 148 posts, RR: 0
Reply 16, posted (9 years 3 days 6 hours ago) and read 2512 times:

The TWU, representing Machanics, are also on board with this approach. The rest of the TWU rank outside the AFW, MCI and TUL maintenace bases, and other work groups represented by the TWU might still be behind the curve.

The Flight Attendant Union, APFA, is not yet up to speed with the pilots or TWU unions, but they are also getting the same information.

Also, AA will announce on September 30 their plan to reduce service to Japan, just as UA and NW have done in the past weeks (UA will drop a second daily LAX-NRT and NW is getting out of the JFK-NRT business). AA will drop one daily flight effective on or about October 29. All I've been exposed to is that SJC and JFK are safe. That leaves..... well, y'all know....


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