American Airlines status

[Hoss]

There's no secret unions drive up the cost of doing business for a corporation.  Both from a wage and administrative stand-point. 

However, taking a good look at cross-town rival Southwest Airlines, they are heavily unionized as well and continue to turn a profit while offering lower fares.  I seriously doubt their only advantage is a "one type" aircraft policy which keeps maintenance costs lower.  They still operate, I believe, around 550 aircraft compared to AA's 600 or so.  I truly believe Southwest's rapid gate turns have a lot to do with this, as well as (far as I know) not brokering out ticket sales.  You can't buy a SW ticket anywhere but their own web site so they aren't paying travel agent or travel site commissions on ticket sales.

Here's an article from 2008 outlining seven reasons they are successful when others are cutting fleets, cutting service, & flights, as well as filing bankruptcy.

http://www.wired.com/cars/futuretransport/news/2008/07/portfolio_0708

I honestly don't know why every other airline hasn't taken a closer look at Southwest's financial success and tried to model what SW is doing.  One of the things airlines could probably do is eliminate first class on domestic flights anyhow.  It's typically little more than an upgrade option for frequent fliers and I don't believe it adds significantly to the bottom line.  SW has made it for years on customer loyalty without first class and without costly perks programs.

Rapid gate turn....I talk to a controller at TUL (tower/ground controler) who tells me that a LOT of the SWA pilots ask for the crosswind runway (8/26) out there.  It's almost never in use unless the wind is so strong from the east or west AND the visibility is within minimums because that runway has no precision guidance (ILS/GS etc).

Reason they do this?  Especially in the winter, it takes the average jet about 5 minutes to taxi back to the terminal if they've landed on 18L/36R because once they've shut it down, they're typically about 1.5 miles past the terminal.  Landing on 8/26..especially on 8, allows them to rollout and turn right on to the ramp pad.

[Conan71]

Oh, it's an immutable fact: you have to make the same lease payment and payroll whether you do 6 operations a day or 8 along similar routes, and you have x-amount of fuel burn per hour while the APU idles. 

[Teatownclown]

I fail to see how the airline industry has been hosed by right to work when it's virtually impossible to find an airline job which is not unionized.  If you think the industry isn't already a model of socialism, consider all the federal dollars which pay for air traffic control, airports, the FAA, professional gropers, etc.  The only thing missing is direct ownership of the airlines by the government.  Also consider how strongly organized labor fits into the picture.

Unions are made up of mostly good hard working people. I know this seems obvious but it escapes you what goes into the concept of Unions. They are the whipping boys and they are a necessary evil for the working man against oppressive corporate bosses. It's always "labor costs" and never "bad business decisions."

Amtrak should buy American.

btw, SW Air got in at a good time....their timing was good, their game plan was good, and their execution was smart. American Airlines has been living off several municipalities which have provided welfare for their stockholders. But it's run it's course. I imagine the lawyers will clean them up, hammer labor, cut pensions, write off debts, and spin it off to British Airways.

[Conan71]

Unions are made up of mostly good hard working people. I know this seems obvious but it escapes you what goes into the concept of Unions. They are the whipping boys and they are a necessary evil for the working man against oppressive corporate bosses. It's always "labor costs" and never "bad business decisions."

Amtrak should buy American.

btw, SW Air got in at a good time....their timing was good, their game plan was good, and their execution was smart. American Airlines has been living off several municipalities which have provided welfare for their stockholders. But it's run it's course. I imagine the lawyers will clean them up, hammer labor, cut pensions, write off debts, and spin it off to British Airways.

You just contradicted yourself.  You say unions fight against oppressive corporate bosses, yet they can't do much other than stand around and watch as their members benefits, pensions, and wages get cut when it comes to the nut cutting.  TWU members made concession after concession to "save" American for how long in Tulsa?  Then what happens?  Job loss and further concessions.  If I were a TWU member I'd be pissed as hell not just at AA management but union leaders who capitulated to every whim and demand of AA and the company still went broke.

[nathanm]

Does it matter the manner in which it happened?  The bottom line is, they got fed a pile and will have to deal with it since no one stepped in to "un-legislate" this.

The point was that it's not that the pensions are somehow so expensive that it's driving the Post Office into bankruptcy, it's that they are being forced into bankruptcy by a stupid law that only applies to them.

The business climate in the US is so fundamentally foobared that we can't see the real con, instead blaming unions, pensions, and all the other "socialist" programs for driving all our companies into the ground when in reality it's largely at the hands of high finance and foreign dumping. (although the latter does not apply as much to airlines)

[heironymouspasparagus]

The point was that it's not that the pensions are somehow so expensive that it's driving the Post Office into bankruptcy, it's that they are being forced into bankruptcy by a stupid law that only applies to them.

The business climate in the US is so fundamentally foobared that we can't see the real con, instead blaming unions, pensions, and all the other "socialist" programs for driving all our companies into the ground when in reality it's largely at the hands of high finance and foreign dumping. (although the latter does not apply as much to airlines)

It all goes back to the "pension reform" that Reagan pushed and got passed.  Couple that with the bankruptcy law that passed under Bush, and ya got the situation where it is easier for a company to go bankrupt and rape the pension, and harder for an individual to get clear of debt.  Another Bush legacy action.

[Teatownclown]

You just contradicted yourself.  You say unions fight against oppressive corporate bosses, yet they can't do much other than stand around and watch as their members benefits, pensions, and wages get cut when it comes to the nut cutting bad executive planning.  TWU members made concession after concession to "save" American for how long in Tulsa?  Then what happens?  Job loss and further concessions.  If I were a TWU member I'd be pissed as hell not just at AA management but union leaders who capitulated to every whim and demand of AA and the company still went broke.

Perhaps, the Union should have placed themselves in the right priority position for bankruptcy. Wouldn't it be something if the workers owned the company coming out of bankruptcy...

[Red Arrow]

Perhaps, the Union should have placed themselves in the right priority position for bankruptcy. Wouldn't it be something if the workers owned the company coming out of bankruptcy...

If it were to happen, it would be even more interesting to see what would happen with wages and benefits.

I believe there have been some companies where the workers/union did buy a bankrupt company but I cannot remember any examples at the moment. 

[Conan71]

It all goes back to the "pension reform" that Reagan pushed and got passed.  Couple that with the bankruptcy law that passed under Bush, and ya got the situation where it is easier for a company to go bankrupt and rape the pension, and harder for an individual to get clear of debt.  Another Bush legacy action.

The Bush era BK reform did not make it any easier for companies to file bankruptcy.  It made it more difficult for individuals to discharge unsecured  revolving debt (i.e. credix cards) in an obvious nod to the banks to help stem losses, yet the banks still went tits up.

[Conan71]

The point was that it's not that the pensions are somehow so expensive that it's driving the Post Office into bankruptcy, it's that they are being forced into bankruptcy by a stupid law that only applies to them.

The business climate in the US is so fundamentally foobared that we can't see the real con, instead blaming unions, pensions, and all the other "socialist" programs for driving all our companies into the ground when in reality it's largely at the hands of high finance and foreign dumping. (although the latter does not apply as much to airlines)

Far as I'm concerned, a deal is a deal and a contract is a contract.  If a company promised to pay someone a pension and other benefits in their retirement years they should have to keep that contract.  However, it seems that is one common lynch pin in many corporate bankruptcies.

Apparently no amount of sound financial logic is going to get you and some of your brethren to understand that a company simply cannot afford for 30 to 40% of their payroll costs to go to people who no longer work for the company.  You can't possibly pay that much for zero productivity and expect your company to survive over the long haul, especially when you have to compete with companies which don't have such a burden.  

Let me put this in a different light and see if it makes sense: If you started a new company tomorrow with a great idea that would hit really big, how enthused would your potential investors be if you came to them with a business plan that proposed to employ 600 people full time and proposed to pay an additional 400 people 2/3 the working person's salary plus full benefits at an advanced age where health care costs are higher, yet those people did not have to contribute a single hour of productivity a year to the on going operations of the company?  Would you invest in such a business plan if you were a potential investor?  

Companies simply cannot afford to pay for a workforce which no longer produces anything for the company.  Bankruptcy after bankruptcy is bearing this out.  People blame incompetent management.  Did it ever dawn on them that part of the incompetence was promising pay and great benefits after retirement?

It's not a matter of people seeing that as a socialist mentality, Nathan, it's simple business logic.  Pensions were well-intentioned, but due to too many programs which allow for being fully vested in 20-30 years, it's left a huge burden on companies to pay those benefits to a workforce which can retire, in many cases in their mid '50's and siphon pension and benefits for another 30-35 years.

[ZYX]

Conan, do you know how close you were to posting at 12:34:56? Ahhhhhh, so close.

[Conan71]

Conan, do you know how close you were to posting at 12:34:56? Ahhhhhh, so close.

Just a little less wind and I would have done it...

[DolfanBob]

BAM ! Give that man a See-Gar. Exactly what I have been thinking but my Jethro Bodine ciphering couldnt quite put it into words. Kudos Conan + 1

[heironymouspasparagus]

Far as I'm concerned, a deal is a deal and a contract is a contract.  If a company promised to pay someone a pension and other benefits in their retirement years they should have to keep that contract.  However, it seems that is one common lynch pin in many corporate bankruptcies.

Apparently no amount of sound financial logic is going to get you and some of your brethren to understand that a company simply cannot afford for 30 to 40% of their payroll costs to go to people who no longer work for the company.  You can't possibly pay that much for zero productivity and expect your company to survive over the long haul, especially when you have to compete with companies which don't have such a burden.  

Let me put this in a different light and see if it makes sense: If you started a new company tomorrow with a great idea that would hit really big, how enthused would your potential investors be if you came to them with a business plan that proposed to employ 600 people full time and proposed to pay an additional 400 people 2/3 the working person's salary plus full benefits at an advanced age where health care costs are higher, yet those people did not have to contribute a single hour of productivity a year to the on going operations of the company?  Would you invest in such a business plan if you were a potential investor?  

Companies simply cannot afford to pay for a workforce which no longer produces anything for the company.  Bankruptcy after bankruptcy is bearing this out.  People blame incompetent management.  Did it ever dawn on them that part of the incompetence was promising pay and great benefits after retirement?

It's not a matter of people seeing that as a socialist mentality, Nathan, it's simple business logic.  Pensions were well-intentioned, but due to too many programs which allow for being fully vested in 20-30 years, it's left a huge burden on companies to pay those benefits to a workforce which can retire, in many cases in their mid '50's and siphon pension and benefits for another 30-35 years.

It was the pension "reform" during the Reagan years that enabled the companies to raid the pensions, drain them of cash, use company stock as the "payment" to the pension plan.  

Previously, they were funded and required to maintain an arms length relationship - this is NOT a company payroll event, it is a separate item, more like an annuity or 401K.  And over a long period of time, it worked well until the companies were allowed unfettered access to the money in the plan.  

It is/was exactly the same as if your company could now reach into your 401k and "change" the terms, take money out and put in their stock, without you having a say in the matter - the company was allowed to take the money back from the pension plan.  I'm a little bit surprised that hasn't happened yet - it will.  How do you not remember/know this??  You are old enough to have been there!

That is when bankruptcy became an economic policy event.


There are a few companies out there that have maintained a decent, honorable approach to their pension plans.  Locally, TD Williamson is one of those.  Not sure the new hires have same pension as in past, but I know several who work there and the company is exceptional.

[Conan71]

Care to cite an article on that?  Only thing I can find related to pension reform and Reagan was a 1984 bill which made it easier for women to earn their own pension or participate in their spouse's plan.

EDIT: Only other thing related to pensions and Reagan was his administration demanding higher pension insurance premiums from companies who were raiding pension funds.  I think your disdain for Reagan borders on the neurotic at times.  Unless you can come up with some sort of fact based article, I'm going to assume your claim is completely bunk.

http://news.google.com/newspapers?nid=1917&dat=19870407&id=tBAhAAAAIBAJ&sjid=oHIFAAAAIBAJ&pg=969,1607901