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Mexicana Seeks Labor Cost Cuts To Expand Fleet  
User currently offlineLeelaw From , joined Dec 1969, posts, RR:
Posted (8 years 2 months 4 weeks 1 day 1 hour ago) and read 2592 times:

MEXICO CITY (Dow Jones)--Mexico's recently privatized airline Mexicana hopes to spend as much as $2.4 billion to expand its fleet, but first it must squeeze cost-cutting concessions out of its workers, a company official said Thursday.

The airline, which was sold by the government late last year to an investor group led by hotelier Grupo Posadas SA, has contacted Airbus SA about ordering 40 planes of the A320 family, said the official, who spoke on condition of anonymity.

Mexicana would initially place a firm order for 14 A320, A319 and A318 planes, with an option for 26 more.

"The order will be placed once we have reached the necessary productivity concessions that we need to get from our labor unions," he said.

While negotiations with pilots and ground workers unions are going well, talks have stalled with the union representing flight attendants, who have threatened to go on strike if an agreement can't be reached by Sept. 15.

Mexicana says it needs to cut costs by 25% across the board - including from its workers - to survive in an increasingly competitive industry. What was once a domestic duopoly, dominated by Mexicana and Aeromexico, has changed rapidly over the past year with the influx of a half-dozen low-cost carriers...

...The purchasing deal will be off if Mexicana isn't able to get concessions from its unions...


http://online.wsj.com/article/BT-CO-20060831-716433.html

14 replies: All unread, jump to last
 
User currently offlineOrbis From Mexico, joined Dec 2003, 244 posts, RR: 1
Reply 1, posted (8 years 2 months 4 weeks 1 day 1 hour ago) and read 2587 times:

already being discussed :

Is Mexicana Really In Risk Of Bankrupcy? (by Orbis Aug 29 2006 in Civil Aviation)
Mexicana Close To Airbus Order (by Manni Aug 25 2006 in Civil Aviation)

regards

fc



we should live our lives as if we were really alive!!! H.M.
User currently offlineAdriaticus From Mexico, joined May 2004, 1140 posts, RR: 18
Reply 2, posted (8 years 2 months 4 weeks 23 hours ago) and read 2543 times:

It'll be hard for MX to get anything significant from ASSA, the f/a union, since it would make MX's employee's conditions too different from those of AM. OTOH, I hear from insiders the supposedly "good talks" with the pilots are not as good as MX's spokesperson is intending to portrait.

The fact that MX is close on or around black numbers won't help the new owners' plans with the rank and file people; the average employee (the one who will be giving up benefits) or retiree (who still has a saying in the union) tends to believe the new owners are being too greedy to try to extract (extort?) the company's profit from their already not-excellent compensations and labor costs. The fact that AM´s pilots and f/a's usually make more money than those of MX already creates enough resentment and resistance to give up anything - most specially if this is not a death-or-life situation (like that we recently saw at DL).

MX's labor costs, with a huge army or retirees and other passives, is indeed a threat in the company's viability in the long run, but not that bad as to create a sense of cooperation in the people right away... Presently, the people see no valid reasons to give up hardly-won concessions... Good, long, difficult negotiations are ahead...

__Ad.

[Edited 2006-09-01 02:07:01]


A300/18/19/20/21 B721/2 B732/3/G/8 B741/2/4 B752 B762/3/4 B772/3 DC8/9/10 MD11 TU134/154 IL62/86 An24 SA340/2000 E45/90
User currently offlineCivilav From Mexico, joined Oct 2004, 391 posts, RR: 12
Reply 3, posted (8 years 2 months 4 weeks 23 hours ago) and read 2532 times:

Quoting Adriaticus (Reply 2):
and other passives

Adriaticus,

Just for the record and the sake of English-speaking forum members, "pasivos" in Spanish translates as "liabilities" in English.

As an Economist (I took my Masters Degree in London) I have never quite understood why in Spanish we use the term "passive" for things like liabilities which are anything but a "passive" element in a company's balance sheet !!
Still.

Thank you for your input on Mexicana. They are a doing things that really surprise the market like today's $ 355 MN (roughly US $ 33) ow fare from Cancun to Mexico. As ever.. time will tell.

HB


User currently offlineCessnalady From Mexico, joined May 2004, 310 posts, RR: 4
Reply 4, posted (8 years 2 months 4 weeks 23 hours ago) and read 2510 times:

Close family members who fly in MX are telling me the employee morale is suffering. IMO, this will backfire in the form of a deterioration of on-board service. I flew MX for the last time last month, GUA-MEX, and I noticed the crew to be strangely aloof and distant.  Sad

Marie


User currently offlineNAVEGA From United States of America, joined Nov 1999, 741 posts, RR: 0
Reply 5, posted (8 years 2 months 4 weeks 23 hours ago) and read 2506 times:

Adriaticus,

I just few Aeromexico from JFK and Back and the flight attendants and service was very poor. They also seemed angry at something. Are they also going through the same problem????


User currently offlineGhost77 From Mexico, joined Mar 2000, 5226 posts, RR: 51
Reply 6, posted (8 years 2 months 4 weeks 22 hours ago) and read 2494 times:

Quoting Civilav (Reply 3):
Thank you for your input on Mexicana. They are a doing things that really surprise the market like today's $ 355 MN (roughly US $ 33) ow fare from Cancun to Mexico. As ever.. time will tell.

About time! The market is forcing them to do this things. 6A has a 199 NM (20 usd) one way without taxes fare THRU ALL ITS SYSTEM, today, tomorrow and a day after tomorrow!

From first hand, I have spoken with one of the top executives members of the counsel... things are tough but they will get thru it. MX will live many more years. I'm not worried, their financial situation is good. Its no RG, DL or US in here... whether people like it or not, there's one proud and loved mexican carrier which is in a more serious and worse scenario.

MX is adjusting, take a look on the crappy service of LCC's and still this revolution has just started, MX is just doing the right thing and moving fast...

g77 APM



Ricardo Morales - flyAPM - ¡No es que maneje rapido, solo estoy volando lento!
User currently offlineJuventus From United States of America, joined Dec 2004, 2835 posts, RR: 2
Reply 7, posted (8 years 2 months 4 weeks 20 hours ago) and read 2443 times:

Quoting Ghost77 (Reply 6):
things are tough but they will get thru it. MX will live many more years. I'm not worried, their financial situation is good.

Agree. My dear friend, flew for Mexicana for 15 years, now flies in Asia. He says this is something they've seen before and they'll do fine. I trust his judgment. MX is the last of the Mexican carriers I'm worry about. Viva MX


User currently offlineFly727 From Mexico, joined Jul 2003, 1789 posts, RR: 19
Reply 8, posted (8 years 2 months 4 weeks 18 hours ago) and read 2398 times:

Quoting NAVEGA (Reply 5):
Adriaticus,

I just few Aeromexico from JFK and Back and the flight attendants and service was very poor. They also seemed angry at something. Are they also going through the same problem????

WHERE'S THE BEEF?



I could not find relevance of your post. To you it's always A vs B.
RMarin.



There are no stupid questions... just stupid people!
User currently offlineRojo From Spain, joined Sep 2000, 2476 posts, RR: 9
Reply 9, posted (8 years 2 months 4 weeks 18 hours ago) and read 2390 times:

Quoting Ghost77 (Reply 6):
About time! The market is forcing them to do this things. 6A has a 199 NM (20 usd) one way without taxes fare THRU ALL ITS SYSTEM, today, tomorrow and a day after tomorrow!

MXP$199 fares from 6A are a good start to fill planes, but they are not that good, since you end up paying MXP$600 more of taxes, fees and fuel surcharge each way. Therefore, a roundtrip MEX-CUN-MEX ends up in MXP$1800

I hate that they keep advertising fares without taxes, fees and surcharges. Profeco should fine all airlines who still don't advertise their fares all included!!!


User currently offlineKLM685 From Mexico, joined May 2005, 1577 posts, RR: 18
Reply 10, posted (8 years 2 months 4 weeks 18 hours ago) and read 2383 times:

Quoting Rojo (Reply 9):
but they are not that good, since you end up paying MXP$600 more of taxes, fees and fuel surcharge each way.

Exactly what I just found out, it's always to good to be true. 180 USD to go to CUN is WAAAY much different than 58USD. Only 100 USD or more in taxes, fuel, etc... S#$"t as usual.

BTW, taxes in MEX are way high! Amazing...

Quoting Rojo (Reply 9):
I hate that they keep advertising fares without taxes, fees and surcharges. Profeco should fine all airlines who still don't advertise their fares all included!!!

They should! It's always a big dissapointment to see the real fare! Apparently the EU is going to do something about this. I think the problem was with Ryanair and Easyjet announcing their 1 pound fair to somewhere and being way much more at the end.

Also they are announcing this 58USD or so fair, one way of course...which gives us a Grand Total not that attractive at the end...

Quoting Leelaw (Thread starter):
Mexicana says it needs to cut costs by 25% across the board - including from its workers - to survive in an increasingly competitive industry.

Of course, one cannot see for their own interests and act freely in the "free market" with Unions giving you this HUGE restriction with the efficient balance point.



KLM- The Best Airline in the World!
User currently offlineGhost77 From Mexico, joined Mar 2000, 5226 posts, RR: 51
Reply 11, posted (8 years 2 months 4 weeks 6 hours ago) and read 2302 times:

Mexican and international carriers are doing it the wrong way. They should ALL get together and force mexican airports to lower the taxes in a 25 to 50% and you'll see a higher revolution and boost traffic in levels of 7/15% of real growth each year...

180USD to CUN I see it fair and affordable for a 4 hour leg r/t. But still many more routes need more airlines!!!

g77 APM



Ricardo Morales - flyAPM - ¡No es que maneje rapido, solo estoy volando lento!
User currently offlineAdriaticus From Mexico, joined May 2004, 1140 posts, RR: 18
Reply 12, posted (8 years 2 months 3 weeks 6 days 6 hours ago) and read 2213 times:

Thanks to all for your replies... And Civilav, yes, I meant liabilities... I stand corrected...

Quoting Ghost77 (Reply 6):
I have spoken with one of the top executives members of the counsel... things are tough but they will get thru it. MX will live many more years. I'm not worried, their financial situation is good.Its no RG, DL or US in here...

And that's exactly the point: the labor unions know this and thus see no point in granting the owners the concessions they want... Just as they did in RG or DL... ASSA insiders believe a strike in MX is likely and near, if for anything else, just to make a "display of strenght" directed to the ownership... Isn't this nonsense? I would only say that "He who plays with fire..."

Quoting Fly727 (Reply 8):
I could not find relevance of your post.

Thanks, Cap'n! I couldn't find it either... ANY crew on ANY airline can have a bad day, can't they? Just as grumpy, irky, picky passengers get on bord every day,don't they?

Quoting Civilav (Reply 3):
They are a doing things that really surprise the market like today's $ 355 MN (roughly US $ 33) ow fare from Cancun to Mexico.

And I wonder what's the break-even point on those... There are many strange ways of making money!!

___Ad.



A300/18/19/20/21 B721/2 B732/3/G/8 B741/2/4 B752 B762/3/4 B772/3 DC8/9/10 MD11 TU134/154 IL62/86 An24 SA340/2000 E45/90
User currently offlineXA744 From Mexico, joined Mar 2004, 734 posts, RR: 3
Reply 13, posted (8 years 2 months 3 weeks 6 days 6 hours ago) and read 2211 times:

[quote=Adriaticus,reply=12]And that's exactly the point: the labor unions know this and thus see no point in granting the owners the concessions they want.

Well, it should be a give an take thing from both sides.

Productivity certainly needs a boost from everyone in the industry !!!

Best regards



No matter how you fly...just never get your wings clipped !
User currently offlineN405MX From Mexico, joined May 2004, 1378 posts, RR: 9
Reply 14, posted (8 years 2 months 3 weeks 6 days 6 hours ago) and read 2205 times:

Quoting Rojo (Reply 9):
I hate that they keep advertising fares without taxes, fees and surcharges. Profeco should fine all airlines who still don't advertise their fares all included!!!

Just checked aviacsa.com, aeromexico.com and mexicana.com for a trip for my aunts, aviacsa.com showed $800mxp, but when you´re going to pay , they give you all the taxes and etc, and then it goes to $1760 mxp per person, I got a deal with MX for $1200 tax included.

MX is now cutting costs to a new level to compete against the new LCC´s and to keep passengers, F/A´s say that they don´t get it, as they see full flights but no money, and they wont, as the fare keeps low, the gain margin is reduced.

Quoting Adriaticus (Reply 12):
And I wonder what's the break-even point on those... There are many strange ways of making money!!

Not at all, as they are loosing money there, but they are gaining passengers that the next time they bill be stranged as the fare went really high.

Saludos



Life is what happens when you have other plans.....
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