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commavia
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RE: AMR Bankruptcy Court Thread Part 3

Tue Oct 09, 2012 11:06 pm

And for some good news (for a change), AA yesterday announced its September revenue numbers which were, for the sixth straight month, leading the pack among the four legacy carriers in terms of YOY RASM growth. AMR posted consolidated (mainline+regional) CASM growth of 4.0% YOY, and claimed that it would have been 4.4% (.4% higher) had it not been for the operational challenges that plagued the company for most of the month. This appears to be largely the result of capacity discipline (intended and unplanned) and substantial strengthening of AA's network financials - particularly internationally, likely bolstered to a good extent to the ATI/JVs that are just now starting to hit their run-rate.

This is against YOY comps that are essentially flat at Delta and USAirways, and down several points at United. Certainly AMR was coming off a somewhat lower base in 2011 than some of its competitors, but certainly AA has made massive progress in closing what revenue gap existed relative to its legacy peers.

I can already imagine Horton & Co. holding this up as "positive momentum" and "proof" that AMR is capable of growing profitably and staying competitive with or without a merger. And while I personally don't think a USAirways merger is a horrible idea (or a perfect one, either), I think Horton will have a point there to some extent - AA for successive months has now shown that its current network - even before many of the new revenue-generating features of its new union contracts are put into place - is capable of generating premium revenue on its own. Right or wrong, this will be the answer to the critics among Wall Street analysts and AA's union leaders that the company had a systemic revenue problem to address. Horton's answer: "if we did before, we don't anymore."

Of course the real question will be what happens in the next 1-2 months, as any potential bookaway from the September operational issues will start to show up. It will be very interesting to see if AA can keep this revenue growth up, and what it will look like when combined with AA's unit costs which are set to substantially decline in a number of areas - labor, maintenance, fuel - over the coming months as AA's new union contracts are put into full effect, and MD80s rapidly leave the fleet and are replaced by 737s.

Quoting aluminumtubing (Reply 149):
That, and a email to the pilots from the APA negotiating committee stated they would not present the pilots with any contract offer from AA that would not be industry standard.

As with everything - the devil will be in the details of how the APA Board, and APA members, define "industry standard."

Quoting aluminumtubing (Reply 149):
I honestly think you will see both sides compromise in the short term, and that we will have a industry standard contract. That of course includes the good and the bad. In other words, Delta/United pay, but their scope provisions as well.

Fascinating dynamics to watch from the sidelines - so many moving parts.

If you'll indulge me - let me paint a picture - purely hypothetical. (1) Let's say that a few weeks from now, the AA and APA announce some form of deal that the APA Board defines as "industry standard" (I agree that means probably a 2-3 year duration max, higher compensation, and meaningful concessions in the areas of productivity and scope). (2) Let's say AA management changes their tune, gets religion, starts "treating the pilots with respect" (as the pilots define that), and perhaps even still agrees to give some equity holding in the post-bankruptcy AA to the pilot group. (3) Let's say that all of the rumors of the infamous Jim Ream LAX base meeting were true, AA really does have a double-super-secret "alternative merger" plan (and the one I'm referring to would certainly be far less complicated from an integration and seniority list standpoint than USAirways), and AMR management "officially" let APA in on the secret, show them the business plan, including automatic "snapbacks" once said "merger alternative" takes place, and the APA Board likes what it sees. (4) Let's say, given (1), (2) and (3), that the APA Board is sufficiently impressed with what AMR management puts in front of them that they back off their ironclad commitment to the USAirways merger. And then, given all that, let's say AMR management and the pilots "ride off into the sunset" with AA not having merged with USAirways, but pursuing an "alternative" instead that the pilots and the company find acceptable.

Is the above plausible? Improbable? Totally impossible? Has Horton so summarily poisoned the well with the pilots as a work group that the APA Board will never come off the USAirways merger, or can Horton and the company doing the "right" things, with good timing, change pilots' "hearts and minds?"

Quoting aluminumtubing (Reply 149):
In my heart of hearts, I think something may come out of this. It has to, because the alternative is pretty damn ugly. The good news, is that things are pretty quiet right now. Quiet is always good. It usually means something is going on.

Yes. Let's hope.
 
aluminumtubing
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RE: AMR Bankruptcy Court Thread Part 3

Tue Oct 09, 2012 11:23 pm

Quoting commavia (Reply 150):
As with everything - the devil will be in the details of how the APA Board, and APA members, define "industry standard."

Delta and United.

Quoting commavia (Reply 150):
and perhaps even still agrees to give some equity holding in the post-bankruptcy

Equity piece is via the UCC and is still supported. There are some "investors" who apparently are willing to buy out the pilots stake. APA is banking (no pun intended) on a 6 figure payout to the pilots from the equity piece in 2013.

Quoting commavia (Reply 150):
Has Horton so summarily poisoned the well with the pilots as a work group that the APA Board will never come off the USAirways merger, or can Horton and the company doing the "right" things, with good timing, change pilots' "hearts and minds?"

Time heals all wounds???? Hmmmmmm. Only time will tell.
 
commavia
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RE: AMR Bankruptcy Court Thread Part 3

Tue Oct 09, 2012 11:30 pm

Quoting aluminumtubing (Reply 151):
Delta and United.

And what, exactly, does that mean?

Delta and United pilots have higher base rates, but between them the two carriers have hundreds of large RJs flying around with non-owned regional operators, a less restrictive (or no?) international baseline, and are permitted substantial domestic codesharing. You seem to be willing to accept the "good" with the "bad." Do you believe most pilots, and the APA, will be as well?

Quoting aluminumtubing (Reply 151):
Equity piece is via the UCC and is still supported.

Has the UCC indicated that it still supports an equity position for the pilots even if the pilots get a contract proposal substantially improved versus the LBFO?

Quoting aluminumtubing (Reply 151):
There are some "investors" who apparently are willing to buy out the pilots stake. APA is banking (no pun intended) on a 6 figure payout to the pilots from the equity piece in 2013.

6-figure payout with or without a merger?

Quoting aluminumtubing (Reply 151):
Time heals all wounds???? Hmmmmmm. Only time will tell.

"Hmmmmmm" indeed.

[Edited 2012-10-09 16:34:20]
 
aluminumtubing
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RE: AMR Bankruptcy Court Thread Part 3

Tue Oct 09, 2012 11:38 pm

Quoting commavia (Reply 152):
And what, exactly, does that mean?

Delta and United pilots have higher base rates, but between them the two carriers have hundreds of large RJs flying around with non-owned regional operators, no international baseline, and are permitted substantial domestic codesharing. You seem to be willing to accept the "good" with the "bad." Do you believe most pilots, and the APA, will be as well?

As I mentioned in my post just a bit earlier, it will more than likely include the pay, and their scope provisions as well. Industry standards are industry standards....the good, the bad and the ugly. It would be extremely disingenuous to call their pay industry standard, but not their scope provisions.

Quoting commavia (Reply 152):
Has the UCC indicated that it still supports an equity position for the pilots even if the pilots get a contract proposal substantially improved versus the LBFO?

Yes, in writing. They stated they will definitely support the 14% equity stake based on a timely agreement. In other words, if this were to go on indefinitely, in other words, after bankruptcy exit, they would not.

Quoting commavia (Reply 152):

6-figure payout with or without a merger?

My understanding is either or. It is to compensate us for what we have lost just like any other creditor. Definitely if we exit as a stand alone. If there is a merger before hand, I am not sure exactly how that would play out. We would probably obtain 14% of stock in the new company just like we would in a stand alone plan. The same as the UCC members.
 
commavia
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RE: AMR Bankruptcy Court Thread Part 3

Tue Oct 09, 2012 11:45 pm

Quoting aluminumtubing (Reply 153):
As I mentioned in my post just a bit earlier, it will more than likely include the pay, and their scope provisions as well. Industry standards are industry standards....the good, the bad and the ugly. It would be extremely disingenuous to call their pay industry standard, but not their scope provisions.

Seems entirely moderate, realistic and fair. Let's hope the "teach Horton a lesson" crowd does not overrule that moderation.

Quoting aluminumtubing (Reply 153):
Yes, in writing. They stated they will definitely support the 14% equity stake based on a timely agreement. In other words, if this were to go on indefinitely, in other words, after bankruptcy exit, they would not.

My understanding was that the UCC's stated position was they did not support transferring any additional economic value to the pilots beyond what was included in the LBFO - including the 13.5% equity stake.

Quoting aluminumtubing (Reply 153):
My understanding is either or. It is to compensate us for what we have lost just like any other creditor. Definitely if we exit as a stand alone. If there is a merger before hand, I am not sure exactly how that would play out. We would probably obtain 14% of stock in the new company just like we would in a stand alone plan. The same as the UCC members.

Interesting. So if AMR emerges standalone of course the pilots would get whatever chunk of equity they were expecting to get, at whatever value that carries, and if AMR merges in bankruptcy, the pilots might plausibly get that same equity stake, although likely diluted by the overall transaction.

As I said - fascinating dynamics to watch ...
 
aluminumtubing
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RE: AMR Bankruptcy Court Thread Part 3

Tue Oct 09, 2012 11:50 pm

Quoting commavia (Reply 154):
Seems entirely moderate, realistic and fair. Let's hope the "teach Horton a lesson" crowd does not overrule that moderation.

While there are certainly a few numbnuts soaring high above us, I truly think there are enough moderates among the thousands of pilots.

Quoting commavia (Reply 154):
My understanding was that the UCC's stated position was they did not support transferring any additional economic value to the pilots beyond what was included in the LBFO - including the 13.5% equity stake.

They did INITIALLY say that the LBFO was all the economic value they would consider. Me thinks they changed their minds. Let's leave it at that. And the equity value is in fact 13.5%. I just figure if the IRS can round, so can I.  
Quoting commavia (Reply 154):
As I said - fascinating dynamics to watch ...

I am trying to get some Hollywood producers to back a new soap opera for daytime TV,. "As the ONEWORLD turns".

[Edited 2012-10-09 16:51:15]
 
av8r915
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RE: AMR Bankruptcy Court Thread Part 3

Wed Oct 10, 2012 7:13 pm

Interesting read on this subject:
http://www.slate.com/articles/busine...n_keep_its_seats_bolted_down_.html

"The bankruptcy process gave American management leverage with which to extract concessions from its labor unions. American got those concessions, except from the pilots’ union, with which no agreement could be reached. So American decided to call the pilots’ bluff and got a bankruptcy judge to void the pilots’ contract.
It turns out that the pilots weren’t bluffing. Organized labor in the United States—especially in the private sector—has been in decline for so long that management seems to have forgotten that a disciplined union can exert a ton of pressure under the right circumstances, even if the legal environment is hostile. American pilots weren’t allowed to strike over the contract voiding, so instead they did something clever: They started following the rules."

"The reason, as Andrew Ross Sorkin explained in July before the pilots’ situation really blew up, is that CEO Tom Horton and the rest of his executive team can earn a huge payday by keeping the company independent. During bankruptcy, Horton earns a relatively modest $660,000 salary. But “in an odd twist of the bankruptcy process, airline management teams have typically managed to extract 5 percent to 10 percent of the company’s shares for themselves upon exiting Chapter 11,” a stake that could be worth hundreds of millions of dollars."
 
SJUSXM
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RE: AMR Bankruptcy Court Thread Part 3

Wed Oct 10, 2012 8:19 pm

With the "me too" clause in the other contracts (APFA, TWU), if the pilots are given anything beyond the LBFO2 (17% cost savings vs. the 20% in the imposed contract), that must be amended in the APFA and TWU contracts, even further reducing the cost savings. Would the UCC-the real people in charge of allocating addition givebacks-be ok with that?
AT7, ER3, ER4, ER5, CR7, E70, E75, F100, M82, M83, 722, 732, 738, 752, 762, 763, AB6, 320, 321, 772, 77W
 
futureualpilot
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RE: AMR Bankruptcy Court Thread Part 3

Wed Oct 10, 2012 8:41 pm

Quoting av8r915 (Reply 156):
Organized labor in the United States—especially in the private sector—has been in decline for so long that management seems to have forgotten that a disciplined union can exert a ton of pressure under the right circumstances, even if the legal environment is hostile. American pilots weren’t allowed to strike over the contract voiding, so instead they did something clever: They started following the rules."

  

Labor groups seem to have an increasingly worsening case of Stockholm Syndrome in this country. There is a fine line between working with a company to ensure survival, which I can certainly understand and support, and companies being downright greedy at the expense of the employees. Increasing loyalty to Wall St rather than Main St is doing far more harm than good.

Quoting av8r915 (Reply 156):
"The reason, as Andrew Ross Sorkin explained in July before the pilots’ situation really blew up, is that CEO Tom Horton and the rest of his executive team can earn a huge payday by keeping the company independent. During bankruptcy, Horton earns a relatively modest $660,000 salary. But “in an odd twist of the bankruptcy process, airline management teams have typically managed to extract 5 percent to 10 percent of the company’s shares for themselves upon exiting Chapter 11,” a stake that could be worth hundreds of millions of dollars."

Greed and poor leadership, plain and simple.

Since when is $660k annually a "modest" salary? By the metric of other bankruptcy CEOs? I'd sure love that kind of modesty.



An interesting read:

http://www.examiner.com/article/amer....likes%22%7D&action_ref_map=%5B%5D


[Edited 2012-10-10 13:48:19]
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commavia
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RE: AMR Bankruptcy Court Thread Part 3

Wed Oct 10, 2012 10:25 pm

Quoting futureualpilot (Reply 158):
Greed and poor leadership, plain and simple.

  

Not that plain, and not that simple. Far more complicated. There is plenty of blame to go around, and people just repeating the same falsehood (everything is management's fault) over and over doesn't make it anymore true.

Quoting futureualpilot (Reply 158):
Since when is $660k annually a "modest" salary? By the metric of other bankruptcy CEOs? I'd sure love that kind of modesty.

That compensation isn't out of line at all for the CEO of a corporation the size of AMR - in bankruptcy or not. If you would "love that kind of modesty," then go become the CEO of a Fortune 500 company.

Quoting futureualpilot (Reply 158):
An interesting read:

http://www.examiner.com/article/amer...5B%5D

"Interesting" in the sense that it is biased, disingenuous and in multiple places false.

[Edited 2012-10-10 15:31:40]
 
futureualpilot
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RE: AMR Bankruptcy Court Thread Part 3

Wed Oct 10, 2012 11:00 pm

Quoting commavia (Reply 159):
Not that plain, and not that simple. Far more complicated. There is plenty of blame to go around, and people just repeating the same falsehood (everything is management's fault) over and over doesn't make it anymore true.

If you read my other posts about the AMR bankruptcy in the number of threads where it has been discussed, you'll see that I've stated multiple times that there are several parties to blame, and that I've acknowledged the complexity of the scenario. My comment was in regard to a CEO of a bankrupt company making more than half a million dollars and setting themselves up to get much more. Context  
Quoting commavia (Reply 159):
If you would "love that kind of modesty," then go become the CEO of a Fortune 500 company.

Can't, I have a soul.

In all seriousness, even if it were as easy as you make it sound to "go become a CEO" I have no desire to be a CEO. I do realize the irony, however, that I'll call out a CEO for being over-paid and call for pilots to make more when the common person thinks us to already be overpaid. That being said, I have no issue with a CEO making more than the rank-and-file, but the extent to which it has gone IMO is grossly inflated and overpays most CEOs for the jobs they do in any industry. Particularly when they're failures on the scales that several airline CEOs have been. Discussion for another thread, perhaps.

Quoting commavia (Reply 159):
"Interesting" in the sense that it is biased, disingenuous and in multiple places false.

Where is it false? Just curious, because to my knowledge, it seems pretty accurate. A few errors to be found but for the most part, accurate.

I do find it interesting that so many on here will post links to articles going after labor, and support the view points without question, but an article speaking against management gets written off as biased, disingenuous, and false. Different strokes, I suppose.



[Edited 2012-10-10 16:16:48]
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pu
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RE: AMR Bankruptcy Court Thread Part 3

Wed Oct 10, 2012 11:14 pm

Quoting commavia (Reply 159):
There is plenty of blame to go around, and people just repeating the same falsehood (everything is management's fault

.
If labour equally shares the blame for the past failures and current turmoil at AA, then labour likewise shares the credit for past success, correct?

...and if management is so liberally sharing the responsibility for the condition of AA with labour, especially where shortcomings are concerned, it is only logical that a group with so much effect on the company's wellbeing (like labour) should have equal say as to the future direction of the company, right?

Pu

In other words, if, according to management, labour has had such a profound effect on AA, why would anyone listen to management's plan to the exclusion of labour's, given that labour's influence on AA's destiny is equally as powerful as management's?
 
commavia
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RE: AMR Bankruptcy Court Thread Part 3

Wed Oct 10, 2012 11:28 pm

Quoting futureualpilot (Reply 160):
My comment was in regard to a CEO of a bankrupt company making more than half a million dollars

Well that's what CEOs make. Given the substantial financial and legal responsibilities they take on, and given the training that is required in order to get to that position, that is the going rate the market has determined is appropriate for that type of work. $660K in base pay for the CEO of a $25B corporation is hardly outside the mainstream in terms of CEO compensation.

Quoting futureualpilot (Reply 160):
Its surprisingly accurate

I respectfully disagree. Some of the decisions that Mr. David defines as "mistakes" simply were not mistakes, and instead made entirely logical economic sense then and now.

But either way, writing a blog post about "mistakes" - as he defines them - with the benefit of literally decades (in some cases) of hindsight doesn't strike me as "surprisingly accurate." It strikes me as surprisingly disingenuous. It's very easy for us, today, to sit back and second guess decisions made decades ago by people with a far different set of information than we now have.

If AMR management had known in 2003 that within a decade the wars in Iraq and Afghanistan would drag on indefinitely, various pandemics would strike around the world, fuel would spike to record levels, the U.S. economy would suffer the worst or second-worst recession since the Great Depression, 4 out of AA's 5 legacy competitors would use bankruptcy 1-2 times each, and the federal government would reverse a decade of public policy and allow 4 of those 5 legacy competitors to merge into 2 megacarriers, do you suppose they might have approached the 2003 concessions differently? Do you suppose they would have approach their long-term plans for capital investment, fleet renewal, network and capacity planning, etc. differently? Of course they would have. But they were working with what they had in front of them at the time.

It can be said - fairly, I think - that AMR management was too slow to react and adapt once they did clearly see the direction things were heading, but I think it is also fair to state that AMR management was, in some very key ways, incapable of fully reacted and adapting to the evolution of the competitive landscape because of the strictures placed on the company by the union contracts (particularly with the pilots).

AMR management has certainly made numerous mistakes, and missed numerous opportunities, in the past decade. But I am left to wonder - what would Mr. David, being the airline management guru that he apparently is, have preferred? AA's management and unions tried to be proactive in 2003 with their restructuring while AA's competitors waited longer, to the point of being in a far weaker financial position, and then filed Chapter 11. Delta, Northwest, United and USAirways all used bankruptcy once (or twice) to, among other things, exact substantially deeper concessions - in various ways - from their labor groups than AA did in 2003. Now it's true, some of those concessions were returned to labor in subsequent years through mergers, but for much of the last decade many of AA's employees were doing relatively far better than their peers at bankrupt carriers. But it seems that some AA union members, perhaps including the blog's author, now want to participate in labor's upside of industry restructuring without any recognition of the more-severe downside that labor at other legacy carriers endured in the last decade.

So that's what AA's competitors - the ones Mr. David is holding up as the example - all did: they cut pay and benefits deeper, laid off more people, froze and terminated pensions, outsourced more work. Would that have earned AMR management a more favorable Monday morning quarterbacking blog post a decade later? Perhaps AMR management's ultimate "mistake" was not filing for bankruptcy sooner, but the reality is that thousands of AA union members benefited enormously - in the form of higher pay, better work rules, bigger pensions, more jobs, and/or less outsourcing - as a result of that "mistake." Yet somehow I missed that angle in Mr. David's "analysis."

Quoting futureualpilot (Reply 160):
I do find it interesting that so many on here will post links to articles going after labor, and support the view points without question, but an article speaking against management gets written off as biased, disingenuous, and false.

An article is one thing. This is not an article. This is a blog post, and a one-side, disingenuous and biased one at that.

It was written by a former unionized AA flight attendant - clearly not an objective, dispassionate source, and likely not one fully qualified to be passing judgement on corporate financial decisions, either (although if the author was in fact present for AMR board meetings, and internal financial modeling and reviews of these decisions, and had access to the data behind these decisions, then I do stand corrected).

If Gerard Arpey wrote a blog post about the non-competitiveness of AA's union contracts and the intransigence of its union leadership, that, too, would be labeled in some quarters - including from me - as just as biased as this blog post you've linked to.

Quoting pu (Reply 161):
If labour equally shares the blame for the past failures and current turmoil at AA, then labour likewise shares the credit for past success, correct?

I never said "equally." This isn't tort law - I'm not assigning percentages of fault here. But absolutely yes - AA management and its labor unions both deserve some measure of blame for the things that have gone wrong at AA in the last decade, but they both also absolutely deserve enormous credit for all that has gone right (and while hard to find through all the negativity these days, there was very much that definitely went very right).

Quoting pu (Reply 161):
...and if management is so liberally sharing the responsibility for the condition of AA with labour, especially where shortcomings are concerned, it is only logical that a group with so much effect on the company's wellbeing (like labour) should have equal say as to the future direction of the company, right?

Equal say? No - in general, I don't believe so, personally. Human capital is among the most strategically critical assets that any enterprise has, but that doesn't mean labor should have "equal say" in the direction of the company.

There is a reason why worker-owned and/or worker-managed firms tend to generally under-perform. The interests of labor are not always directly correlated with the interests of shareholders and creditors, and as such the company in general benefits from a healthy dynamic tension between the two. The ideal situation is for a firm with a strong, well-disciplined and talented management team setting company direction and workers executing that direction and participating in its success.

To be clear: this is not an endorsement or denunciation of AMR management specifically. I'm simply saying that I do not buy into your logic that solely because labor is an important piece of the equation of a company's success, it therefore gets "equal say" with management as to the company's direction.

[Edited 2012-10-10 16:33:22]
 
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pu
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RE: AMR Bankruptcy Court Thread Part 3

Thu Oct 11, 2012 12:00 am

Quoting commavia (Reply 162):
Equal say? No - in general, I don't believe so

Then management deserves the BULK of the blame for AA's situation...
....because you can't say labour is equally to blame for past successes and failures but also say labour should have LESS say for any future success. Just face it: management is largely to blame, not labour.


Quoting commavia (Reply 162):
mistakes" simply were not mistakes,

.
A mistake is still a mistake whether or not it seemed like the right thing to do at the time.
.
Other airlines were able to build a domestic hub at JFK, hedge their fuel, declare bankruptcy, merge and so forth and yet some make it sound like the only rational decision at the time was the decisions AA management in fact made, even though the decisions were wrong! and other airlines made better choices.

Pu
 
commavia
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RE: AMR Bankruptcy Court Thread Part 3

Thu Oct 11, 2012 12:13 am

Quoting pu (Reply 163):
Then management deserves the BULK of the blame for AA's situation...

Again - you can assign percentages if you want. I'm not. I'm simply saying that there is plenty of blame to go around, and that "percentage of blame" does not automatically, directly, translate into "percentage of say in the future."

Quoting pu (Reply 163):
....because you can't say labour is equally to blame for past successes and failures

You're right - you can't say that, which is why I didn't.

Quoting pu (Reply 163):
A mistake is still a mistake whether or not it seemed like the right thing to do at the time.

Got it.

What I'm saying is that some of his list of "mistakes" were simply not mistakes. Not only did they seem like the right thing to do at the time, but history has proven that they were the right thing to do in hindsight.

Quoting pu (Reply 163):
Other airlines were able to build a domestic hub at JFK, hedge their fuel, declare bankruptcy, merge and so forth

No arguments here. Other airlines made good decisions, and bad ones. AA, too, made good decisions, and bad ones. However, the decision of management in 2003 to avoid bankruptcy, and by extension also avoid union concessions as deep as what ultimately occurred at other legacies, did - without question - limit the range of choices (good or bad) that management had available to them later on. That is very true.

Quoting pu (Reply 163):
yet some make it sound like the only rational decision at the time was the decisions AA management in fact made

The point I'm making is that I do not know what the choices were AMR management had in front of them at the time that some of these decisions were made. Given the information available to them at the time, some of these decisions likely were entirely economically rational, and some likely were not. But none of us is fully qualified to make that judgement given what we know now versus what we know then. What we can judge, however, is - regardless of what made sense at the time - whether the decisions in the long-run were right or wrong, and it's true that many were wrong. I'm not disputing that.

Quoting pu (Reply 163):
other airlines made better choices.

True. And - among those choices were to cut pay and benefits further, freeze and dump pensions, outsource overhauls and lots of regional flying.
 
futureualpilot
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RE: AMR Bankruptcy Court Thread Part 3

Thu Oct 11, 2012 12:23 am

Quoting commavia (Reply 162):
Well that's what CEOs make. Given the substantial financial and legal responsibilities they take on, and given the training that is required in order to get to that position, that is the going rate the market has determined is appropriate for that type of work. $660K in base pay for the CEO of a $25B corporation is hardly outside the mainstream in terms of CEO compensation.

Yet the years of training, the financial, legal and much more importantly, safety responsibilities of pilots mean they should be paid less, despite already working under a concessionary contract? In one of your paragraphs you mention strictures on AMR with regard to pilots, but it is a two way street. The market forces acting on pilots are skewed by the Railway Labor Act, and the nature of pilot contract negotiations and the NMB.

Quoting commavia (Reply 162):
I respectfully disagree. Some of the decisions that Mr. David defines as "mistakes" simply were not mistakes, and instead made entirely logical economic sense then and now.

Now we're debating opinions. Nevertheless, the road to hell is paved with good intentions. I'm sure AA execs thought they were making smart decisions at the time, and fully intended to keep the company on track but that does not change the fact that those decisions did not work out.

Quoting commavia (Reply 162):
But either way, writing a blog post about "mistakes" - as he defines them - with the benefit of literally decades (in some cases) of hindsight doesn't strike me as "surprisingly accurate." It strikes me as surprisingly disingenuous. It's very easy for us, today, to sit back and second guess decisions made decades ago by people with a far different set of information than we now have.

Several of the decisions listed were options available to competitors, yet they did not make those same decisions. They weren't all perfect either, but that does not change the end result.

Quoting commavia (Reply 162):
If AMR management had known in 2003 that within a decade the wars in Iraq and Afghanistan would drag on indefinitely, various pandemics would strike around the world, fuel would spike to record levels, the U.S. economy would suffer the worst or second-worst recession since the Great Depression, 4 out of AA's 5 legacy competitors would use bankruptcy 1-2 times each, and the federal government would reverse a decade of public policy and allow 4 of those 5 legacy competitors to merge into 2 megacarriers, do you suppose they might have approached the 2003 concessions differently? Do you suppose they would have approach their long-term plans for capital investment, fleet renewal, network and capacity planning, etc. differently? Of course they would have. But they were working with what they had in front of them at the time.

I do not have the slightest idea and neither do you. Had anybody known what was coming, I'm sure we all would have acted differently, including airlines. We can speculate until we're blue in the fact but by your metric, would it not be disingenuous to sit and armchair QB things at this point?

Quoting commavia (Reply 162):
It can be said - fairly, I think - that AMR management was too slow to react and adapt once they did clearly see the direction things were heading, but I think it is also fair to state that AMR management was, in some very key ways, incapable of fully reacted and adapting to the evolution of the competitive landscape because of the strictures placed on the company by the union contracts (particularly with the pilots).


Earlier you mention that we now have decades to look back and comment on the ramifications of decisions made, yet you suggest here that the APA is at fault for not giving enough when AMR came to them asking for concessions. First, the APA or any pilot union for that matter is in place to act as a liaison and often a buffer between employees and the company. While it is their responsibility to be concerned with ensuring the success of the company, they are primarily responsible to their members and strive to protect and gain as much as they can for said group. Negotiating concessions from employees is the job of the executive management team. Excusing management decisions for not knowing what would happen then stating only a few sentences later that the APA should have known that more concessions would be needed is hypocritical. The APA had no more knowledge of everything that would happen or how it would affect the company, than AMR executives did so why should they be faulted and management excused?

DL, UA, NW and US all had to face bankruptcy. They all had to deal with unions and contracts, each one presenting unique challenges and situations, and despite concessions each still went through bankruptcy and emerged on the other side only to consolidate down the road. AA was able to negotiate a concessionary contract with the APA, a contract which AA pilots flew under longer than their peers had to fly under theirs. AA isn't unique in having to work with unions prior to, or during Chapter 11.

Quoting commavia (Reply 162):
An article is one thing. This is not an article. This is a blog post, and a one-side, disingenuous and biased one at that.

It was written by a former unionized AA flight attendant - clearly not an objective, dispassionate source, and likely not one fully qualified to be passing judgement on corporate financial decisions, either (although if the author was in fact present for AMR board meetings, and internal financial modeling and reviews of these decisions, and had access to the data behind these decisions, then I do stand corrected).

If Gerard Arpey wrote a blog post about the non-competitiveness of AA's union contracts and the intransigence of its union leadership, that, too, would be labeled in some quarters - including from me - as just as biased as this blog post you've linked to.

A fair point about article vs. blog, however, evidence on here would be the letter a former AA CEO wrote, and the numerous responses from people here celebrating how he "stuck it to labor" and how the letter was "in-arguable" yet it was clearly as biased as any other personal opinion being voiced.

[Edited 2012-10-10 17:30:43]

[Edited 2012-10-10 17:33:00]

[Edited 2012-10-10 17:35:49]

[Edited 2012-10-10 17:38:13]
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pu
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RE: AMR Bankruptcy Court Thread Part 3

Thu Oct 11, 2012 12:31 am

Quoting commavia (Reply 164):
Given the information available to them at the time, some of these decisions likely were entirely economically rational, and some likely were not. But none of us is fully qualified to make that judgemen

No.
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A bad decision is bad because of its results. And ONLY its results.
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A bad decision does not become a good decision, an "ok" decision or merely a subpar decision because the bad decision seemed rational at the time.
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You are confusing EXPLANATION with JUSTIFICATION. There is a big difference and management's mistakes are not justified merely because they thought they were right at the time and made for rational reasons.

Management is correctly judged only by results, ;not by what they were thinking at the time. AA's result speaks for itself, regardless of what reasoning they used to get into this mess.

Pu
 
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RE: AMR Bankruptcy Court Thread Part 3

Thu Oct 11, 2012 12:43 am

Quoting futureualpilot (Reply 165):
Yet the years of training, the financial, legal and much more importantly, safety responsibilities of pilots mean they should be paid less, despite already working under a concessionary contract?

That's not what I said. My comments in this thread were in regard to the article - not what I or anyone else believes is a fair wage for AA's pilots.

Quoting futureualpilot (Reply 165):
In one of your paragraphs you mention strictures on AMR with regard to pilots, but it is a two way street. The market forces acting on pilots are skewed by the Railway Labor Act, and the nature of pilot contract negotiations and the NMB.

True, but those "market forces" and the RLA acting on AA's relationship with its pilots were also equally acting on the relationships between AA's competitors and their respective pilot unions, and yet those airlines were able to use bankruptcy to extract from their pilots so substantial flexibility and economic value that AA's 2003 concessions did not match.

Quoting futureualpilot (Reply 165):
I'm sure AA execs thought they were making smart decisions at the time, and fully intended to keep the company on track but that does not change the fact that those decisions did not work out.

No argument. Mistakes are mistakes whether they were well-intentioned or not.

Quoting futureualpilot (Reply 165):
Several of the decisions listed were options available to competitors, yet they did not make those same decisions. They weren't all perfect either, but that does not change the end result.

True, but on the flip side some of the things the blog's author listed as "mistakes" were not, actually, mistakes, but actually were very smart decisions. And, totally ignored in his blog are the numerous extremely smart and ultimately-successful decisions made by AMR management during the same timeframe he highlights. Thus why I called it one-sided, biased and disingenuous.

Quoting futureualpilot (Reply 165):
AA pilots gave quite a bit and have been working under those concessions far longer than their counterparts.

AA pilots did give quite a bit in 2003, but in some strategically critical ways what they gave proved to not be enough.

And while it is true that AA pilots have been working under a lower-paying contract for longer than some of their peers, it is equally true that the other legacy airlines were able to return economic value back to their pilots to a certain extent because their pilots were willing to give it up in others. Perhaps the clearest example: Delta's pilots are now among the highest-paid pilots in the U.S., but Delta also has - even with its new TA - among the most flexible RJ scope provisions in the industry.

Quoting futureualpilot (Reply 165):
Talking strictures when regarding pilot groups will garner little sympathy

That may well be, and I respect that, but it doesn't change the fact that the "strictures" placed on AA by its pilots' defined benefit pensions, scope provisions and codesharing restrictions, among other things, were absolutely an impediment to AA's ability to respond to the evolve marketplace. AA's legacy peers - both before and after their mergers - did not have to contend, to one degree or another, with some or all of those.

Quoting futureualpilot (Reply 165):
yet you suggest here that the APA is at fault for not giving enough when AMR came to them asking for concessions.

I never said or suggested any such thing.

AA management was responsible for the "ask," and as I said, had AA management known in 2003 what they knew in 2008 or 2012, I suspect their "ask" would have been different. I never placed any "fault" with APA for not voluntarily giving AA more than what management asked for in 2003. That would be ridiculous.

Quoting futureualpilot (Reply 165):
First, the APA is there to protect their members (hard to believe given some of their actions), moreso than ensure the long term viability of the company.

True, although I think it would be wise to recognize that ultimately the best "protection" for their members is for their members' employer to be viable for the long-term.

Quoting futureualpilot (Reply 165):
Excusing management decisions for not knowing what would happen and stating that the APA should have known better is hypocritical to a degree.

Again - never said that. I'm not excusing management decisions for not knowing what would happen - just placing them in context. And I never stated that APA "should have known better."

Quoting futureualpilot (Reply 165):
The APA had no knowledge of everything that would happen or how it would affect the company, so why should they be faulted here?

It was not APA's "fault" to have not known was the future held, or for not giving more in 2003. Not at all. Nonetheless, I think APA absolutely could have done things better in, say, 2008 or 2009, not 2003. By the second half of the last decade, it was abundantly clear that AA was no longer competitive with its peers - merged or not merged - and I think it was also (or at least should have been) abundantly clear that there were certain aspects of AA's pilot contract that were no longer competitive. At that point, rather than suggesting Arpey was a murderer, putting up billboards on a busy DFW freeway suggesting AA's planes were unsafe, or continually repeating "restore and more," APA should have recognized reality and addressed it pragmatically. (And maybe they did behind the scenes, but it doesn't seem so to me.)

But of course - at that point, was it only APA's responsibility? Absolutely not. AA was sitting across that same table. AA management tried in 2007-2009 to persuade the pilots that their 2003 contract was, in several key ways, not competitive, and it seems to me that the APA simply wasn't having any of it. On the flip side, I have no doubt that in 2007-2009 AMR management was trying to extract from the pilots more than what was truly "necessary" to be competitive. Both sides - then as now - sat at opposite ends of the table at their polar positions and compromise never came. That's my perception. I was not in the room. If that perception is wrong, then I retract it.

Nonetheless, either, way, again - from my perspective, there's plenty of blame to go around.
 
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RE: AMR Bankruptcy Court Thread Part 3

Thu Oct 11, 2012 12:45 am

Quoting pu (Reply 166):
A bad decision is bad because of its results. And ONLY its results.

No. I am not confusing anything.

For the very last time - the statement I am making is that in my opinion some of the things the blog author lists as "mistakes" were successes, meaning with positive results. I believe getting rid of the TWA 757s was not a mistake - it was a smart decision then and now, and had a positive result on the company's finances.
 
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RE: AMR Bankruptcy Court Thread Part 3

Thu Oct 11, 2012 1:45 am

Quoting commavia (Reply 168):
No. I am not confusing anything.

For the very last time - the statement I am making is that in my opinion some of the things the blog author lists as "mistakes" were successes, meaning with positive results. I believe getting rid of the TWA 757s was not a mistake - it was a smart decision then and now, and had a positive result on the company's finances.

For the very last time? We'll see...

What began as a blanket apology for management mistakes at AA:

Quoting commavia (Reply 162):
If AMR management had known in 2003...

....do you suppose they might have approached the 2003 concessions differently?

And an injunction against anyone daring to make a judgment about AA management in hindsight:

Quoting commavia (Reply 164):
The point I'm making is that I do not know ...But none of us is fully qualified to make that judgement

...and blaming the pilots for "incapable" management:

Quoting commavia (Reply 162):
incapable of fully reacted and adapting to the evolution of the competitive landscape because of the strictures placed on the company by the union contracts (particularly with the pilots).

...has now morphed into a simple complaint that the TWA 757s were not a mistake and that AA management did do some good things along the way:

Quoting commavia (Reply 164):
What I'm saying is that some of his list of "mistakes" were simply not mistakes.

This IS NOT what was said earlier around post 162...the argument has now changed... earlier it was strongly implied and argued that management was justified for making bad decisions, that "none of us" can be so disrespectul as to "make that judgment" that their mistakes were in fact mistakes, AND, that pilots placed restrictions on management rendering them incapable of managing.
.
.
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WN has been in business for 40+ years now. Delta is (I think) older than AA or any of its predecessors, or at least about the same age. WN has marvelous labour relations in a highly unionised workforce, while Delta is much less unionised but also has reasonable labour relations.
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It's not like AA got stuck with pissed off pilots who were hatched in anger and then somehow all ended up at AA...while everyone else go the management-loving workforce. AA management is mainly responsible not only for the current state of AA but also for its labour relations. They signed all labour contracts.

Management decides what routes to fly and planes to buy. They also determine the timbre of labour relations, which is why some airlines have it good and AA has it so bad.

AA is where it is because of management. Labour only worked the contract management signed and ran the business as management directed.

Pu

[Edited 2012-10-10 19:23:59]

[Edited 2012-10-10 19:26:42]
 
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RE: AMR Bankruptcy Court Thread Part 3

Thu Oct 11, 2012 3:09 am

Quoting pu (Reply 161):
If labour equally shares the blame for the past failures and current turmoil at AA, then labour likewise shares the credit for past success, correct?

I think that.

Look at Delta and what they did after Chapter 11. Labor and management came together, they were energized, and they were on the same page. The result of what they were able to accomplish is amazing. Delta came out of Chapter 11 bold and ready to conquer and sure enough, now they are the envy of the airline industry.

The reason Delta is where they are is because management and labor came together and accomplished something great. They went from almost shutting down in 2005/06 to being at the top of the industry. That is something that could not have been done without labor and management coming together. They both deserve credit for that and both groups probably would agree with me.
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RE: AMR Bankruptcy Court Thread Part 3

Thu Oct 11, 2012 3:28 am

Quoting pu (Reply 169):
Management decides what routes to fly and planes to buy.

Not true for several reasons:

(1) Without a payrate in the APA contract, management has not been able to unilaterally commit to purchasing 787's. The deal with Boeing for the 787 is contingent on a TA with the pilots.

(2) Scope clauses have severely limited AA's ability to add regional jets with 70+ seats. If AA wanted to buy the E170 under its old pilot contract and assign those planes to a regional operator, it would have been in breach of that contract.

It is true that the legacy carriers should never have bargained away their ability to outsource ASM's to regional operators. But all of them fell into the trap in order to buy labor peace. All of them, not just AA!

(3) At AA, there was a formula in the pilot's contract by which the ASM's AA was allowed to codeshare with other airlines were determined. Because the formula did not make a distinction between a profitable and unprofitable route, unprofitable routes were still counted in AA's ASM total even though those routes might only last a few months. This had one major effect on route expansion: It made AA management cautious about trying new routes because not only was there the risk of the route being unprofitable, but there was also the risk that the ASM's from a route that had to be discontinued would count against the ASM's AA was allowed to codeshare.

Quoting pu (Reply 169):
AA is where it is because of management. Labour only worked the contract management signed and ran the business as management directed.

You should read Bob Crandall's letter to the pilot who sought out his advice. Long thread about it here. Look it up.

When it came to assigning blame, this is how Crandall put it: "Things began to change in the very late 80’s and early 90’s, and have not been the same since. I retired in 1998 because new initiatives of any type – routes, aircraft, systems, or service approaches – were typically held hostage to individual contractual modifications desired by one group or another and because of increasingly vitriolic personal attacks by one or another of the unions on the property."

If you doubt the veracity of Bob Crandall's words, google information about AA's proposal for China service from DFW. That would be the proposal that the pilot's union failed to endorse and even went so far as to challenge with their own filing in the DOT case. LOL.

Or, search Flyertalk for information on the how the FA's filed a grievance against management because of the turndown service in International F. The union thought that it represented a breach of their contract. SMH.

So, NO,... AA is not where it is just because of management. There is a lot more blame to go around. I haven't even scratched the polished aluminum.
 
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RE: AMR Bankruptcy Court Thread Part 3

Thu Oct 11, 2012 3:43 am

Quoting LAXdude1023 (Reply 170):
because management and labor came together

Everything you say is reasonable and I agree. As far as it goes.
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But what is the difference between AA and your Delta example?
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Its management that is different. I argue the pilots, for the point of this thread, are essentially the same between all the airlines. If we could retroactively give every DL pilot a career at AA, and instead of working at AA have all of today's AA pilots working at Delta, it would still be the AA pilots that are angry, (that is the pilots now working under Horton) and the Delta pilots would still be content.
.
It is management that sets the tone AND specifics for labour relations, hence anyone blaming labour for any part of AA's prolems should in fact be blaming management....your Delta example poves it is ONLY MANAGEMENT that determines whether a labour group contributes to success - or instead feels alienated so much that thet actively pursue having AA's leadership sacked.
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If Delta and Southwest were in such a labour disaster as AA, it would be undeniable that labour shares a big share of blame for AA's troubles, but their labour success PROVES it is only good versus bad management that decides an airline's fate.

Pu

[Edited 2012-10-10 21:08:43]

[Edited 2012-10-10 21:09:36]
 
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RE: AMR Bankruptcy Court Thread Part 3

Thu Oct 11, 2012 3:46 am

Quoting SJUSXM (Reply 157):
With the "me too" clause in the other contracts (APFA, TWU), if the pilots are given anything beyond the LBFO2 (17% cost savings vs. the 20% in the imposed contract), that must be amended in the APFA and TWU contracts, even further reducing the cost savings. Would the UCC-the real people in charge of allocating addition givebacks-be ok with that?

My understanding is that there will be a work around that problem. It is a problem AA management got themselves into and they will have to find a way around it. One thing, is it appears no value was applied to the scope givebacks, so there is quite a bit of money there. It will be interesting to see how this plays out. While equal treatment may be "fair" in this politically correct world we live in, it is not reality. The pilots have a different skill set and therefore cannot easily be replaced and AA will have to find a way to deal with that.
 
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RE: AMR Bankruptcy Court Thread Part 3

Thu Oct 11, 2012 4:03 am

Quoting LDVAviation (Reply 171):
(1) Without a payrate in the APA contract, management...

(Scope clauses have severely limited AA's ability ... breach of that contract.

(3) At AA, there was a formula in the pilot's contract ..codeshare
Did management sign the contract without a 787 payrate, a contract with a scope clause that proved unprofitable - and a contract that allegedly put AA at a disadvantage where codeshares are concerned?
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In industries which aren't myopically dominated by the absurd idea that a decision is valid if their bankrupt competitors also made the same decision, management is ENTIRELY held reponsible for signing a supply contact that they now say is untenable.
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If AA signed an airport lease that was too high, paid too much for planes that were later shown inefficient or signed a futures contract on jet fuel that was well above later market rates IT IS ENTIRELY MANAGEMENT's responsibility. The same is true with labour. Labour prices went down and AA had a higher contract in place - not labour at blame here; management alone decides how much it pays for needed resources.

Pu
 
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RE: AMR Bankruptcy Court Thread Part 3

Thu Oct 11, 2012 4:12 am

Quoting LDVAviation (Reply 171):
(2) Scope clauses have severely limited AA's ability to add regional jets with 70+ seats. If AA wanted to buy the E170 under its old pilot contract and assign those planes to a regional operator, it would have been in breach of that contract.

I believe APA agreed to pay rates to have mainline pilots fly 70 seaters, so the option was there, but I cannot recall why things never went forward with this. Perhaps someone out there knows?

[Edited 2012-10-10 21:13:23]
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RE: AMR Bankruptcy Court Thread Part 3

Thu Oct 11, 2012 2:21 pm

Quoting pu (Reply 172):
Its management that is different. I argue the pilots, for the point of this thread, are essentially the same between all the airlines. If we could retroactively give every DL pilot a career at AA, and instead of working at AA have all of today's AA pilots working at Delta, it would still be the AA pilots that are angry, (that is the pilots now working under Horton) and the Delta pilots would still be content.

My point was that its not just the management thats different, but labor is very different as well. The American unions are a lot more militant than is Delta and Delta's labor knew they were not going to gain anything in BK but wanted to work with management anyway. AA's have not been that way at all.

The reason I pointed it out was not to say it was simply management is different, but also labor is different. Its a two way street and blaming one side is simply not right in this situation.
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gegarrenton
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RE: AMR Bankruptcy Court Thread Part 3

Thu Oct 11, 2012 2:55 pm

Quoting LAXdude1023 (Reply 170):
Delta came out of Chapter 11 bold and ready to conquer and sure enough, now they are the envy of the airline industry.

I wouldn't quite go that far.
 
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RE: AMR Bankruptcy Court Thread Part 3

Thu Oct 11, 2012 4:29 pm

Quoting futureualpilot (Reply 160):
My comment was in regard to a CEO of a bankrupt company making more than half a million dollars and setting themselves up to get much more.

I understand where you're coming from, but half a million isn't too disgusting compared to many others.
Unfortunately, it is no longer about making a good living. People now have to make a killing. And, it's not just airlines. I work for a non-profit hospital. We just laid off all of our patient care techs on the night shift. Nurses now have more work with the same pay. Patients have to wait longer for everything and they're not happy. But, the CEO was paid $6 million last year. I just don't understand what anybody does for that kind of money. Can't he live on $3 million? Or $1 million? I think the average worker is just tired of being told to do more with less while our leaders continue to get more and more. Some people will say "they work so hard" and they "deserve it". I respectfully disagree. Nobody "deserves" to make that kind of money while their organization is losing money, downsizing, and people are losing their jobs.
From the world's largest airline-to the world's largest airline. Delta2ual
 
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RE: AMR Bankruptcy Court Thread Part 3

Thu Oct 11, 2012 5:20 pm

Quoting LAXdude1023 (Reply 176):
but labor is very different as well. The American unions are a lot more militant than is Delta

Agreed, but why are you stopping at the conclusion that the unions are "more militant" - which is undoubtedly a proximate cause of AA's difficulties?

What are the reasons AA's unions are "a lot more militant" except for management's previous behaviour?
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You actually hit at my point - pilots are for the purposes of labour relations the same across all airlines, the different character of labour relations (what you are terming militancy) is entirely the result of good versus bad management .

Pu
 
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RE: AMR Bankruptcy Court Thread Part 3

Thu Oct 11, 2012 5:31 pm

Quoting pu (Reply 179):
entirely the result of good versus bad management .

Yeah, that's a pretty false statement. Groups of people have a variety of external and internal factors that cause and result from their various personality traits.
 
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RE: AMR Bankruptcy Court Thread Part 3

Thu Oct 11, 2012 5:38 pm

Quoting gegarrenton (Reply 180):

You're implying that the unique personal aspects across the different labour groups at all the carriers are producing different labour relations...which I argue is nonsense among such huge workgroups,,,,Are you seriously suggesting that somehow AA hired a bunch of pinko workers-of-the-world-unite labour extremists across all their workgroups and somehow Southwest and Delta hired complacent management-loving employees?

The main explanation for the difference in labour relations across the different airlines is how they have been treated by management, there's nothing unique in the composition of the workgroup that isn't also the consequence of management actions.

Pu
 
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RE: AMR Bankruptcy Court Thread Part 3

Thu Oct 11, 2012 6:03 pm

Quoting pu (Reply 179):
.
You actually hit at my point - pilots are for the purposes of labour relations the same across all airlines, the different character of labour relations (what you are terming militancy) is entirely the result of good versus bad management .

You wont get any argument from me that AA's management has been uninspiring at best and really bad at worst. However, the APA has tried really hard to undermine the few good decisions that management has made (their bid for China, new aircraft orders pre-BK, etc.). I dont want to throw everyone under the bus, but as an AAdvantage Plat, I am not a fan of management or the APA.
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RE: AMR Bankruptcy Court Thread Part 3

Thu Oct 11, 2012 6:18 pm

Quoting LAXdude1023 (Reply 182):

Ok, I hear you and mostly agree with you.

One thing about the oft-repeated China route...isn't that small fry? AA's stunning lack of an Asian route system compared to UA and DL and its questionable reliance on codeshares are the big problem competitively speaking, one route isn't going to matter. BTW, even if US and AA merge, the Asian problem doesn't go away....is more east coast flying really going to help?

.

I think the pilots' behaviour is almost entirely the blowback from bad management, otherwise I see no explanation as to why WN and DL have happy pilots while AA's pilots are so pissed off.

Pu
 
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RE: AMR Bankruptcy Court Thread Part 3

Thu Oct 11, 2012 6:28 pm

Quoting pu (Reply 181):
Are you seriously suggesting that somehow AA hired a bunch of pinko workers-of-the-world-unite labour extremists across all their workgroups and somehow Southwest and Delta hired complacent management-loving employees?

Not at all, but I think you are making a big mistake in ignoring the personalities of the individual. All it takes is a few guys in labor and management who don't like each other, and it greatly magnifies the effect of management mistakes (or labor-leader power seeking). I've seen this over and over, here at a local level.

You made a pretty absolute statement that poor labor relations are entirely the fault of bad management, and I (and others) think that is a very incorrect statement. In fact, I think *any* attempt to pin poor labor relations entirely or almost entirely on just one side or the other is unrealistic. It's usually a shared effort.

One might as well ask "Are you seriously suggesting that AA has managed to land a series of stupid top management teams, all of whom hate the people who work for them, while WN and Delta got the nice guys?" That's not entirely realistic either.
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RE: AMR Bankruptcy Court Thread Part 3

Thu Oct 11, 2012 6:43 pm

Quoting pu (Reply 174):
Did management sign the contract without a 787 payrate, a contract with a scope clause that proved unprofitable - and a contract that allegedly put AA at a disadvantage where codeshares are concerned?
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In industries which aren't myopically dominated by the absurd idea that a decision is valid if their bankrupt competitors also made the same decision, management is ENTIRELY held reponsible for signing a supply contact that they now say is untenable.

When AA signed that contract, there was no 787. Should AA also have negotiated a 797 pay rate? You know for another plane that didn't exist at the time the contract was signed.

As to the rest, this is becoming even more absurd. First of all, up until 9/11 and the economic consequences of that event, the laws of pattern bargaining governed the industry. Every new contract was more or less parity plus 1% or something similar. It was the only way to buy labor peace at a time when airlines were actually making healthy profits. What you are saying is that this was bad management. Actually, it was the only way to manage because labor expected nothing less and management at the other airlines was powerless to hold the line. There was no way AA could have been the outlier, in anything from wages to scope clauses. If no one other than Bob Crandall bargained away the right to outsourcing, do you think much lesser minds like Stephen Wolf and James Goodwin were somehow going to hold the line? So good for you that you know how management should manage, but it ignores the specific realities of the airline business at the time contract negotiations at all airlines, including Southwest, were governed by the laws of pattern bargaining.

But I get it "reality" is no excuse. If you were Bob Crandall, you would have not only held the line (in the face of the increases at other airlines), but you would have unilaterally made changes to the contracts so that you could have done all the things he said he couldn't in his last days at AA. Of course, if you did that, you wouldn't be Bob Crandall at all; you would be Frank Lorenzo and the outcome would have been even more labor unrest than AA has now, a lockout, and liquidation. (See Eastern Airlines.)

C'mon. No CEO at AA could have unilaterally decided to lower wages when labor prices went down. Outside of bankruptcy, that was not going to happen. You fail to recognize just how powerless management is in controlling labor rates in a pattern bargaining environment or with an existing contract that by law never truly expires, even after the labor rates in that contract are no longer in line with what the rest of the industry is paying, as was the case for almost a decade at AA.
 
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RE: AMR Bankruptcy Court Thread Part 3

Thu Oct 11, 2012 6:49 pm

Quoting PITingres (Reply 184):
Are you seriously suggesting that AA has managed to land a series of stupid top management teams, all of whom hate the people who work for them, while WN and Delta got the nice guys?" That's not entirely realistic either.

You've hit precisely on our point of disagreement.

YES, WN and DL "got the nice guys" in management who highly value their employees. WN officially states employees are above both customers and stockholders in terms of importance.

AA got the management-by-spreadsheet guys whose employee relations are governed by their cost attrubutes and nothing else - the differing results between AA and DL/WN labour relations speak for themselves and are almost entirely because of differing management approaches ro labour.

Pu
 
ldvaviation
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RE: AMR Bankruptcy Court Thread Part 3

Thu Oct 11, 2012 7:03 pm

Quoting pu (Reply 186):
YES, WN and DL "got the nice guys" in management who highly value their employees. WN officially states employees are above both customers and stockholders in terms of importance.

AA got the management-by-spreadsheet guys whose employee relations are governed by their cost attrubutes and nothing else - the differing results between AA and DL/WN labour relations speak for themselves and are almost entirely because of differing management approaches ro labour.

The "nice" guys, huh?

Wasn't Richard Anderson at Northwest when the decision was made to lockout the mechanics in a contract dispute?

And, prior to bankruptcy, wasn't the Delta CEO a bean counter-type? What was his name? All I remember is that he left with quite a golden parachute, much to the dismay of Delta's employees.
 
gegarrenton
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RE: AMR Bankruptcy Court Thread Part 3

Thu Oct 11, 2012 7:16 pm

Quoting pu (Reply 186):
YES, WN and DL "got the nice guys" in management who highly value their employees. WN officially states employees are above both customers and stockholders in terms of importance.

LOL. This is one of the more interesting things I have heard lately.

Quoting LDVAviation (Reply 187):
The "nice" guys, huh?

Wasn't Richard Anderson at Northwest when the decision was made to lockout the mechanics in a contract dispute?

And, prior to bankruptcy, wasn't the Delta CEO a bean counter-type? What was his name? All I remember is that he left with quite a golden parachute, much to the dismay of Delta's employees.

Exactly. I think Leo Mullin is who you are looking for.
 
LAXdude1023
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RE: AMR Bankruptcy Court Thread Part 3

Thu Oct 11, 2012 7:24 pm

Quoting pu (Reply 186):

YES, WN and DL "got the nice guys" in management who highly value their employees. WN officially states employees are above both customers and stockholders in terms of importance

Perhaps at the end for DL, but Delta went through some guys that made Arpey and Horton look like Gandhi. Leo Mullin is an excellent example of that.
FOR THE LOVE OF GOD BRING BACK THE PAYWALL!!!!
 
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pu
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RE: AMR Bankruptcy Court Thread Part 3

Thu Oct 11, 2012 9:03 pm

Quoting LDVAviation (Reply 185):

When AA signed that contract, there was no 787

The dedication to defending ignorance and management's right to see no further than tomorrow is impressive.

In well run companies, unknown contingencies are accounted for as a matter of routine, example:...... Last page of contract titled, "future contingencies" ......
.

  • any plane with xxx seats and xxxx range acquired by the company at a later date [pays the pilots using this formula...
  • based on seats and range, ....or.....
  • paid using the same formula as UA/DL/NW/.../ etc."

  • .
    ...btw the 'Sonic Cruiser' or some type of new airplane from Boeing latger than a 75 and smaller than a 74 was ABSOLUTELY a known possibility at the time the AA pilot contract was signed.

    Quoting LDVAviation (Reply 185):

    no one other than Bob Crandall
    The Bob Crandall worship has a big role in both management failures post-Crandall and the mindeset of AA management apologists to this day. Give him credit for buying the Heathrow slots and other fine accomplishments. But give him the blame for setting the stage towards labour disaster that was made worse by Crandall disciples who continued his confrontational labour style when AA desperately needed employee help to recover from the market realties so apologetically offered in post 185.

    Quoting LDVAviation (Reply 185):

    C'mon. No CEO at AA could have unilaterally decided to lower wages when labor prices went down. Outside of bankruptcy,

    Can you cite the section of the Bible, the Uniform Commercial Code or perhaps anything Bob Crandall said that says airline mgmt is only fairly judged if you exclude bankruptcy as an option? Who decided their course was to be outside of bankruptcy, labour or management?

    Pu
     
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    PITingres
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    RE: AMR Bankruptcy Court Thread Part 3

    Thu Oct 11, 2012 9:41 pm

    I'm afraid that this whole line of argument has reached the point where it probably belongs in non-aviation.

    Anyone who thinks that success or failure of labor negotiations is independent of the individual personalities involved, is living in a dream world, or maybe a theory world. I don't deny for a second that management can be the problem; I can name offhand at least a dozen managers whom I have known or worked for personally over the years who should never have been allowed to be managers. But you don't seem to extend the same right to be wrong to labor; I can also name you a dozen local presidents and labor "leaders" who were so focused on grabbing power, looking important, or putting the screws to someone they disliked, that they screwed things for their membership.

    If you want to continue this I suggest you open a thread in non-av before the mods wipe this whole discussion.
    Fly, you fools! Fly!
     
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    pu
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    RE: AMR Bankruptcy Court Thread Part 3

    Thu Oct 11, 2012 10:13 pm

    Quoting PITingres (Reply 191):

    I myself think the adults are fine discussing the causes of AA's bankruptcy as long it remains civil.

    The great things AA has done over the years: inventing AAdvantage, buying the MIA hub, keeping strong at LaGuardia, keeping the Wright Ammendment in place etc. are ALL the responsibility of great management decisions. Labour had nothing to do with these macro-level directions AA took.

    Likewise, the responsibility for all the not-so-great things AA has done don't get "shared" with labour just because of the natural human tendency to father success and orphan failure. MRTC, donating JFK to jetBlue, the TWA acquistion, the AirCal acquisition, the RenoAir acquisition, owning Eagle instead of selling, the failure to declare bx early on, etc...

    ...indicate AA mgmt has had morethan its fair share of failures. All labour did was negotiate a contract which MGMT signed.

    PU

    [Edited 2012-10-11 16:12:24]
     
    ldvaviation
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    RE: AMR Bankruptcy Court Thread Part 3

    Thu Oct 11, 2012 10:59 pm

    Quoting pu (Reply 190):
    Can you cite the section of the Bible, the Uniform Commercial Code or perhaps anything Bob Crandall said that says airline mgmt is only fairly judged if you exclude bankruptcy as an option? Who decided their course was to be outside of bankruptcy, labour or management?

    Can you be consistent?

    You were the one who argued that management at AA should have unilaterally made changes to labor rates when the price of labor went down across the industry.

    Once it was shown to you that in the airline industry that is not possible, you vacated that argument and now have nothing really more to say, except whatever this is.

    End of argument.
     
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    pu
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    RE: AMR Bankruptcy Court Thread Part 3

    Thu Oct 11, 2012 11:15 pm

    Quoting LDVAviation (Reply 193):
    You were the one who argued that management at AA should have unilaterally made changes to labor rates when the price of labor went down across the industry.

    Where exactly?

    My point is that mangement OWNS the decisions it makes, including the contractual provisions it agrees to. I don't believe I've gone very far of trying to say to AA management what they should have done instead.

    Besides its not labour rates that are such the issue, it is workrules. At least where the pilots are concerned. That doesn't quite fit into the schoolboy review of labour market mechanics provided at length above.

    Quoting LDVAviation (Reply 193):
    End of argument.

    Nice try. Such awesome authority is intimidating, on an internet forum no less.

    Pu

    [Edited 2012-10-11 16:18:48]
     
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    pu
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    RE: AMR Bankruptcy Court Thread Part 3

    Thu Oct 11, 2012 11:25 pm

    Quoting LDVAviation (Reply 187):
    The "nice" guys, huh?

    Wasn't Richard Anderson at Northwest when the decision was made to lockout the mechanics in a contract dispute?

    And, prior to bankruptcy, wasn't the Delta CEO a bean counter-type? What was his name? All I remember is that he left with quite a golden parachute, much to the dismay of Delta's employees.

    Thanks for proving my point so precisely, "professor".

    Prior to bankruptcy Delta had a CEO in the AA tradition of treating employees as cost centers., you say. Yet after he left, and while the pilot group remained the same labour relations improved dramatically under new management and a new approach....so management changed its approach and labour relations improved. Even with bankruptcy thrown in the mix.

    Hmmmmm.....hard to see how using a higher level of Bloom's Taxonomy (for those who are capable) and applying the lessons of Delta to AA means anything other than a different approach to labour produces a different result and that management is almost entirely in charge of setting the tone of labour relations, according to the Delta example.

    Pu

    [Edited 2012-10-11 16:49:46]

    [Edited 2012-10-11 16:51:13]
     
    JoeCanuck
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    RE: AMR Bankruptcy Court Thread Part 3

    Fri Oct 12, 2012 1:03 am

    Quoting pu (Reply 195):

    Hmmmmm.....hard to see how using a higher level of Bloom's Taxonomy (for those who are capable) and applying the lessons of Delta to AA means anything other than a different approach to labour produces a different result and that management is almost entirely in charge of setting the tone of labour relations, according to the Delta example.

    So management is entirely to blame for any company's problems and employees are always blameless?

    If that is the case, then there is no case for employees getting more if/when the company succeeds, since they weren't part of any decision.

    And, if I understand you correctly, any failure of a company on any level is because of management mistakes so shouldn't any success, or profit, (regardless of how that profit is achieved), indicate that the management has been successful and employees had substantive to do with that success since they weren't party to any decisions.

    You can't logically have one without the other. Either the responsibility of BOTH success and failure is shared, neither is.
    What the...?
     
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    pu
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    RE: AMR Bankruptcy Court Thread Part 3

    Fri Oct 12, 2012 1:26 am

    Quoting JoeCanuck (Reply 196):
    So management is entirely to blame for any company's problems and employees are always blameless?

    For "any company's problems" and "always blameless" -- why jump to such such universal and blanket words/extremes from what I wrote? I have no comment on "any" companies problems and don't say employees are "always" blameless.

    BUT, for AA's problems, management is ALMOST entirely to blame for the problems, as I said. Management is especially to blame for their disastrous labour relations.



    Quoting JoeCanuck (Reply 196):
    If that is the case, then there is no case for employees getting more if/when the company succeeds, since they weren't part of any decision.

    Just because the employees don't make the macro-decisions DOES NOT mean they forever lack a role in the company's success. Employees work the plan formulated by management, and a bad plan forecloses ANY contribution from employees while A GOOD PLAN encourages it.

    (Likewise, just because the employees don't make macro-decisions DOES NOT mean they forever lack a role in a company's problems - it's just that in AA's case labour's role in the problems are small *compared to management.*)

    Quoting JoeCanuck (Reply 196):
    You can't logically have one without the other. Either the responsibility of BOTH success and failure is shared, neither is.

    No.
    This is a very common logical fallacy.

    A BAD BUSINESS PLAN IS IMPOSSIBLE to make succeed, A good business plan can be enhanced by positive employee contributions...e.g. WN pilots taxi faster.

    Example by way of illustration: you define a bunch of bad rules and hire a bunch of faulty teachers for your child. She fails to learn anything. Her fault or yours?

    ...However, you hire great teachers and foster a productive education environment and your child thrives. BOTH OF you share responsibility!

    Pu
     
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    par13del
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    RE: AMR Bankruptcy Court Thread Part 3

    Fri Oct 12, 2012 1:48 am

    Quoting PITingres (Reply 184):
    One might as well ask "Are you seriously suggesting that AA has managed to land a series of stupid top management teams, all of whom hate the people who work for them, while WN and Delta got the nice guys?" That's not entirely realistic either.

    AA has thousands of pilots flying hundreds of planes, exactly how many presidents / CEO's? The ability to effect change on a company wide basis is greater in management and insignificant at line staff, something like strategic and tactical.

    Quoting JoeCanuck (Reply 196):
    If that is the case, then there is no case for employees getting more if/when the company succeeds, since they weren't part of any decision.

    Business and working environment today is that workers are supposed to do what they are told and leave the thinking to management, a bonus is paid if the company is profitable.
    Management compensation is different which creates the contentious relations we sometimes see, workers know that they will receive no bonus as long as the company is in a loss state, management know that they will receive a bonus if they meet some metric, which can be on the road to profitabiity.
     
    JoeCanuck
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    RE: AMR Bankruptcy Court Thread Part 3

    Fri Oct 12, 2012 1:54 am

    Quoting pu (Reply 197):
    A BAD BUSINESS PLAN IS IMPOSSIBLE to make succeed, A good business plan can be enhanced by positive employee contributions...e.g. WN pilots taxi faster.

    Then the employee is responsible by accepting the contract and working under conditions they seemed to have found fatally flawed. They obviously thought that the conditions were good enough otherwise they wouldn't have signed.

    If conditions are unworkable, time to move on to employment with a company more to their liking.

    That signature is their admitted complicity in every plan of the company, (that they knew about), at the time of the contract and for its duration.

    If they didn't agree with management, they shouldn't have signed...and kept on signing contracts with a management they thought was destructive to labour relations and the future of the company as a whole.

    They kept agreeing with the plans so they kept shouldering responsibility. As of now, 8 of the 9 unions have struck deals with the AA management from hell...with only the APA holding out. Obviously, the majority of the employees think they can work with this management and are willing to sign contracts to that effect.

    An employee isn't just swept along willy nilly in the corporate structure...they have choices. They can choose to not work for them or to work for them. If they choose to work for them, they do it of their own free will and they accept all the conditions of that employment.

    Sure, if the management goes from fantastic to onerous within a contract, they may have room to gripe...if the new management attempts to change the already signed contract. BUT this has been going on for over a decade. Nobody working at AA can truthfully say they didn't know what the management was like when they signed their contract.

    Two sides sign a contract...both sides agree to the conditions and both sides know the character of the other side.

    If you hate a company, (which includes the management), don't sign the contract and don't work there. If enough people do that, the company may get the message.

    The pilots don't have to sign, (in fact, nobody HAS to sign). If they don't like the AA last best final offer, they have little choice but to work somewhere else.

    Once you accept employment, you also accept the management is worth working for.
    What the...?

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