leelaw
Posts: 4520
Joined: Sat May 29, 2004 4:13 pm

Mexicana Seeks Labor Cost Cuts To Expand Fleet

Fri Sep 01, 2006 6:59 am

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
Lex Ancilla Justitiae
 
orbis
Posts: 199
Joined: Mon Dec 29, 2003 2:15 pm

RE: Mexicana Seeks Labor Cost Cuts To Expand Fleet

Fri Sep 01, 2006 7:07 am

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.
 
adriaticus
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RE: Mexicana Seeks Labor Cost Cuts To Expand Fleet

Fri Sep 01, 2006 9:04 am

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...

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[Edited 2006-09-01 02:07:01]
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civilav
Posts: 293
Joined: Sat Oct 16, 2004 8:51 am

RE: Mexicana Seeks Labor Cost Cuts To Expand Fleet

Fri Sep 01, 2006 9:13 am

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
 
cessnalady
Posts: 281
Joined: Tue May 25, 2004 7:12 am

RE: Mexicana Seeks Labor Cost Cuts To Expand Fleet

Fri Sep 01, 2006 9:46 am

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
 
navega
Posts: 467
Joined: Tue Nov 02, 1999 10:58 pm

RE: Mexicana Seeks Labor Cost Cuts To Expand Fleet

Fri Sep 01, 2006 9:52 am

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????
 
ghost77
Posts: 4461
Joined: Wed Mar 01, 2000 2:07 pm

RE: Mexicana Seeks Labor Cost Cuts To Expand Fleet

Fri Sep 01, 2006 10:12 am

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!
 
juventus
Posts: 2017
Joined: Tue Dec 07, 2004 11:12 pm

RE: Mexicana Seeks Labor Cost Cuts To Expand Fleet

Fri Sep 01, 2006 12:16 pm

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
 
fly727
Posts: 1752
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RE: Mexicana Seeks Labor Cost Cuts To Expand Fleet

Fri Sep 01, 2006 2:20 pm

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!
 
rojo
Posts: 2256
Joined: Tue Sep 05, 2000 6:08 am

RE: Mexicana Seeks Labor Cost Cuts To Expand Fleet

Fri Sep 01, 2006 2:35 pm

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!!!
 
KLM685
Posts: 1506
Joined: Sat May 21, 2005 12:41 pm

RE: Mexicana Seeks Labor Cost Cuts To Expand Fleet

Fri Sep 01, 2006 2:53 pm

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!
 
ghost77
Posts: 4461
Joined: Wed Mar 01, 2000 2:07 pm

RE: Mexicana Seeks Labor Cost Cuts To Expand Fleet

Sat Sep 02, 2006 2:47 am

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!
 
adriaticus
Posts: 989
Joined: Thu May 06, 2004 3:29 pm

RE: Mexicana Seeks Labor Cost Cuts To Expand Fleet

Sun Sep 03, 2006 2:07 am

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!!

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XA744
Posts: 630
Joined: Sat Mar 13, 2004 11:40 am

RE: Mexicana Seeks Labor Cost Cuts To Expand Fleet

Sun Sep 03, 2006 2:14 am

[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 !
 
N405MX
Posts: 1156
Joined: Sat May 01, 2004 1:46 pm

RE: Mexicana Seeks Labor Cost Cuts To Expand Fleet

Sun Sep 03, 2006 2:16 am

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
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