Vision 2025...Part 2?

[Conan71]

So I am seeing on the news this morning, that around 3,000 are receiving layoff notices. I'm not sure exactly how V2 is on the ballot, but is this pretty much the nail in the coffin for that one?

That would tend to indicate one of two things:

Either AA has been carrying far too much payroll all these years (doubtful) or they aren't really planning on ramping up next gen 737 and 777/787 maintenance at this base.

I'm starting to wonder if they are looking for a suitor to buy out a trimmed down AA without as many obligations.

Ed, what say you?

[Hoss]

So I am seeing on the news this morning, that around 3,000 are receiving layoff notices. I'm not sure exactly how V2 is on the ballot, but is this pretty much the nail in the coffin for that one?

They also state that the number will likely be much lower if many take retirement packages.  My best friend works for AA and has for about 12 years.  Not sure how this will affect him.  Feel for those however who are receiving layoff notices.  No thanks to AA management.

[nathanm]

So I am seeing on the news this morning, that around 3,000 are receiving layoff notices. I'm not sure exactly how V2 is on the ballot, but is this pretty much the nail in the coffin for that one?

They aren't laying off 3,000 people. They have to send notices out to everyone who might get laid off, which basically means everybody low enough on the seniority list that they might get bumped out when someone higher on the list has their position eliminated. I think they're still targeting about 900ish, and as noted previously that number will vary depending on how many people leave voluntarily.

AA was never planning on doing 777/787 maintenance here. Supposedly the hangars aren't big enough, so now that they're closing Alliance they'll be having the widebody maintenance done in Hong Kong like Delta and COdbaUA are. I don't much appreciate that, but there aren't any US-based international airlines doing widebody maintenance in the US any more. I'd love to figure out how to get AA to move most or all of their maintenance here, but I don't see that as very likely. For obvious reasons, they can't send the short haul planes very far away for maintenance, so it makes more sense to keep that in house.

[Hoss]

They aren't laying off 3,000 people. They have to send notices out to everyone who might get laid off, which basically means everybody low enough on the seniority list that they might get bumped out when someone higher on the list has their position eliminated. I think they're still targeting about 900ish, and as noted previously that number will vary depending on how many people leave voluntarily.

AA was never planning on doing 777/787 maintenance here. Supposedly the hangars aren't big enough, so now that they're closing Alliance they'll be having the widebody maintenance done in Hong Kong like Delta and COdbaUA are. I don't much appreciate that, but there aren't any US-based international airlines doing widebody maintenance in the US any more. I'd love to figure out how to get AA to move most or all of their maintenance here, but I don't see that as very likely. For obvious reasons, they can't send the short haul planes very far away for maintenance, so it makes more sense to keep that in house.

It's not the hangers that aren't big enough; it's the engine testing cells.  I live close enough to the airport that I know when they are testing them, especially in the winter when the prevalent wind is out of the north (I live about two miles south).

[nathanm]

Well, it sounds like we could make an offer then. (not that there's one chance in a thousand they'd accept)

[Oil Capital]

They aren't laying off 3,000 people. They have to send notices out to everyone who might get laid off, which basically means everybody low enough on the seniority list that they might get bumped out when someone higher on the list has their position eliminated. I think they're still targeting about 900ish, and as noted previously that number will vary depending on how many people leave voluntarily.

That more or less fits with what the news articles are saying (they expect fewer than 40% of those receiving notices to actually lose their jobs).  So, at the end of the process AA expects to have 900 fewer jobs in Tulsa than they currently have or are you saying they expect to have to lay off 900? Either way, Ouch!   Have some Tulsa employees already taken voluntary separations?

From the city's perspective, it really matters little whether jobs are eliminated by early retirement or by layoffs.  Each results in 1 less job in the Tulsa economy.

[DTowner]

I wonder how the layoff notices will play out with the V2 vote (I'm sympathetic to those those getting the notices, but there's nothing much I can do about it)?  Does this help the supporters' argument that it is critical that something be done now, right now, be damned the costs or the concerns over funding method, equipment buys, etc.?  Or, does it help those who say we've thrown money at AA in V2025 the exact same way and there are less people working for AA in Tulsa now than there were then?  Economic uncertainty can make people desperate and more willing to spend public moneys to "save" jobs.  Problem is, this is not a new effort with this employer and an argument can be made that it does not seem to have worked and there is no guaranty that new expenditures will save a single job.

A better crafted proposition would have placed some protections/conditions so that some of the expenditures (especially equipment purchases) would be done only if AA made certain committments re jobs, etc.  While not a perfect comparison, this was done with the Boeing portion of V2025.  Too bad there was no public input before finalizing the propositions for a vote so that such ideas might have developed....

[erfalf]

Are all of the quality of life projects tied in with AA or is it separate, like the original Vision ballot was?

[DTowner]

Are all of the quality of life projects tied in with AA or is it separate, like the original Vision ballot was?

As I understand it, Prop 1 is all airport facilities projects/closing fund and Prop 2 is all quality of life projects (known or unknown).

[LandArchPoke]

A better crafted proposition would have placed some protections/conditions so that some of the expenditures (especially equipment purchases) would be done only if AA made certain committments re jobs, etc.  While not a perfect comparison, this was done with the Boeing portion of V2025.  Too bad there was no public input before finalizing the propositions for a vote so that such ideas might have developed....

Ding Ding! We have a winner. Why in the H*** is this proposition not written like this!?

We are essentially customizing this base now with upgrades that are suited for AA... then when they move out we've just wasted $200 Million on that facility that we now have to reinvest even MORE money for it to be suitable for another company.

[nathanm]

We are essentially customizing this base now with upgrades that are suited for AA... then when they move out we've just wasted $200 Million on that facility that we now have to reinvest even MORE money for it to be suitable for another company.

That's not entirely accurate. About half is slated to be used to repair or replace the existing buildings, ramp area, and equipment and upgrade electrical service and wastewater service. The vast majority of that needs to be done regardless of who the tenant is. The other half is specific to AA and involves building/buying new things. Problem is, much of the old equipment/facilities (that we presently own) will become outdated as old aircraft are retired. Unless the website is lying, anyway.

[LandArchPoke]

That's not entirely accurate. About half is slated to be used to repair or replace the existing buildings, ramp area, and equipment and upgrade electrical service and wastewater service. The vast majority of that needs to be done regardless of who the tenant is. The other half is specific to AA and involves building/buying new things. Problem is, much of the old equipment/facilities (that we presently own) will become outdated as old aircraft are retired. Unless the website is lying, anyway.

Ok I'll buy the ramp upgrades, upgrades to electrical and waste water, and the building upgrades for the Bus and Spirit (I think those were the two). There's still about $140 Million give or take (not counting the equipment package which is another $130 Million) that is pointless to do until we know would will be occupying the building. Again the Existing buildings will be renovated specifically to AA is using them for at the moment. Even renovation to the buildings that AA currently occupies that wouldn't be modified for the larger aircraft is STUPID until we either know they are staying or until we have a new tenant lined up to take over the space. In major commercial real estate I have never seen anyone build out a space until the tenant has signed on the dotted line.

If AA leaves we can kiss the aviation maintenance industry in Tulsa goodbye unless we somehow manage to land one of the Middle East Airlines or someone like Lufthansa that has the kind of cash to invest in a maintenance business in the US so the equipment we invest it will essentially be worthless. We are going to have to get creative with the empty shells and we'll probably be filling them with multiple business not one big one like AA. If we exhaust our resources now we severely limit ourselves to redesign these to be adaptable to other different industries and companies. What happens if Intel or some company came to us after AA leaves and wants to modify the buildings... well we won't have the money to do it, and we are going to have a ton of useless aircraft equipment sitting in a junkyard somewhere. Someone else said it already on here, the aircraft maintenance business in the US is DEAD. $200 - 300 Million isn't going to change that when they would save that money in 2-3 years on salaries alone doing it in Asia and we'll be paying taxes on empty buildings that were renovated only for aircraft maintenance for the next 20 years.

What's really terrifying is there has been NO risk evaluation on the aircraft maintenance business done on behalf of the citizens. If you are investing, what's the number one thing you care about? What are the odds I will get my money back? 2) What would be the return I get on my investment? We'd probably have less risk putting the bond issue money into Chesapeake stock.

[rdj]

This one of the reasons many in the industrial sector of the commercial real estate business hate this proposal.  They understand how backwards the investment is.  It's one thing to pay for tenant improvements, it's another to do it without a solid lease signed, sealed and delivered.

[nathanm]

Someone else said it already on here, the aircraft maintenance business in the US is DEAD. $200 - 300 Million isn't going to change that when they would save that money in 2-3 years on salaries alone doing it in Asia and we'll be paying taxes on empty buildings that were renovated only for aircraft maintenance for the next 20 years.

Widebody maintenance in the US is dead. It's simply too cheap to fly the extra 500-1000 miles to HKG if you're already at one of the other big Asian gateways. However, if you have a 737 sitting in Texas it's an awfully long way to go, not to mention a huge pain in the butt with all the fuel stops. That's a lot of fuel you're burning with zero revenue passengers. What other narrowbody maintenance bases does AA have at this point?

That's not to say I don't get your point, or that I think everything in the package is likely necessary. I'd love some 787 maintenance here, but it's not happening, so why are we spending money on that? (for example) What other narrowbody maintenance bases is AA keeping open, by the way?

[Conan71]

Which TWA bases did AA keep in that buy-out?  Seems like there was one at MCI or STL.

I've looked and can't seem to get an answer as to where the other bases are, however, I'm curious if their ultimate goal is to start farming out their maintenance to MRO's and finally ditching their model of trying to turn maintenance from a cost center to a profit center by taking in outside work.

This paragraph in the Ft. Worth paper is what has my pessimism up

In its initial term sheet offer to mechanics in February, American indicated that it planned to close Alliance by the end of the year and outsource a significant portion of its maintenance work to third-party firms. The Texas Aero Engine Service Ltd. engine repair facility at Alliance, which is a joint venture between American and Rolls Royce, is expected to remain open and employs 600 workers.



Read more here: http://www.star-telegram.com/2012/09/10/4247526/american-to-close-alliance-maintenance.html#storylink=cpy