Robert Crandall's response to an AA pilot.

[doh]

Yip, it's a leadership issue. "You do it, I'm not participating" shows no leadership. It show an owner/slave mentality. That's what it really comes down to.

 

[Sluggo_63]

Don't want to sidetrack the thread, but...

and a very successful trucking company at that, if you send it overnight to anyplace within 500 miles, it is charged air shipment rates and goes on a truck.

That's not FedEx, that was UPS. FedEx sells time. Their products are First Overnight, Standard Overnight, Two-Day, etc. They say nothing about how the package will get there. You tell them when you want it there, and they tell you what it will cost. Then FedEx figures out the best way to get it there. It was our brothers at Brown who got in a little trouble by calling their product "Next Day Air" and sending it by truck.

There - fixed it for you Yip. When the purple and green truck shows up its not FDX.

Yes it is... the drivers are independent owners/operators who contract their routes from FedEx.

 

[Bringupthebird]

If airlines wouldn't have bought into the whole Internet distribution model (Expedia, Travelocity, etc.) and restricted access to their fares, they would have the pricing power to create decent margins and profits from which to pay employees what had been the accepted going rate.

Instead we have articles about airlines raking in billions on bag fees and a history lesson by Crandall. Internet distribution is what forced airlines to cut fares and make it up in below-the-line fees for which they are criticized. In fact air fares are 20% less in inflation-adjusted dollars than they were 10 years ago, largely due to reductions in wages.

So you can blame greedy airline execs all you want, but give blame where it's due - the inability of airline execs to adequately price their product. They gave away all their pricing ability (and more importantly the crucial connection between prices and the cost of production) when they let Expedia sell their tickets.

Now, here's where Southwest got it right!

 

[BoilerUP]

Its often been said that 'pilots' are not 'managers', and should not be compensated the same as airline managers; I can't really disagree with the premise, even though I don't fully agree with the conclusion.

I'm about as "free market conservative" as they come...but:

When an airline pilot mismanages his or her airplane, resulting in an incident or accident, there often is discipline or termination.

When an airline manager mismanages his or her company, leading it to bankruptcy, there often is a "retention bonus" given so the same manager that failed in their responsibilities will remain with the company through reorganization.

If job performance is an important metric by which to measure employee effectiveness, and by any b-school standard, it is, it doesn't make a hell of a lot of sense to retain managers who FAILED AT THEIR JOBS, leading to bankruptcy in the first place.

So many management apologists want to blame unions for 'bleeding the company dry', without acknowledging two very important facts:

1. Unions strike almost never these days thanks to the RLA, meaning contracts don't expire/terminate but rather become "amendable" ensuring continued availability of labor, and
2. Management is always a signee to the CBAs their unions ratify...meaning they agree to a given contract just as much as labor does.

There's a sh!t-ton of "managers" in the industry these days...but precious few LEADERS.

 

[Abernathy]

There's a sh!t-ton of "managers" in the industry these days...but precious few LEADERS.

Less than a few. Pride of ownership isn't a concept that has been known in the industry since the Juan Trippe and Howard Hughes days... with the exception of Southwest.

 

[redflyer65]

Really? Unions did it?

American's union contracts were forged under the threat of a bankruptcy filing by American in 2003.

The unions agreed to contracts calling for $1.62 billion a year in wage and benefit CONCESSIONS to keep the company from canceling wage, benefit and pension agreements in bankruptcy court. The contracts became amendable in May 2008.

AA 767 Pay

CA top $169
FO top $122

DL 767 Pay

CA top $197
FO top $134

AA 737 Pay

CA top $166
FO top $113

AirTran 737 Pay

CA top $171
FO top $107


But yeah, it's those over-paid pilots who created 12 years of sustained yearly losses of hundreds of millions per year...

They're paid under their industry peers, yet Management wants MORE pay and productivity cuts. I'd say the business model that management has created over the least decade plus is flawed... but what do I know.

Bingo.

The management should be on the hook for a complete 'mis-management' of the airline.

The pilots wages, as Lear pointed out above are not that high and in the end are a very, very small slice of the revenue pie. Horton et al have made horrible decisions to get to were they are, yet they will reap millions while the works will have to live with a repressive 'new' contract for the rest of their careers.

 

[PBRstreetgang]

OK OK OK, it is all management's fault they are greedy and incapable of doing anything, but did not Bob say the pilots had a chance to step into a management role and have say in the running of the company, where they could provide the guidance to make AAL the perfect airline?

That proposal, if approved, would have awarded the pilots a generous piece of equity, would have allowed the pilot group a substantial voice in the governance of the new company and did not – so far as I know – impose conditions materially different from those in effect at other major airlines. Thus, I was and remain mystified as to why the pilots – having turned down an agreement materially better than the company’s original proposals, are now angry that alternative proposals are being implemented. Wasn’t that always the clear alternative to approval?

Ask a UAL guy how that ESOP deal worked out...

 

[tomgoodman]

Crandall invariably blames others, but he laid many of the eggs which are now hatching at AMR. Here's an article from 20 years ago:

http://www.businessweek.com/stories/1992-07-05/the-airline-mess

 

[pilotyip]

Ask a UAL guy how that ESOP deal worked out...

didn't the UAAL pilots sell their stock to take a profit and gave up control?

 

[waveflyer]

Yip, did you see how far that contract proposal was from any other competitor-
When is mgmt responsible for their actions in your world?

 

[PBRstreetgang]

didn't the UAAL pilots sell their stock to take a profit and gave up control?

180 degrees off, do your own research gramps.

 

[waveflyer]

Bring up the bird has good points on the Internet-

Myself and others have also been on here preaching the necessity of flattening out the earning curve in our profession. End-loaded compensation is not only dumb bc of the time value of money- but also bc of the competitive pressure that having a topped out senior work force puts a company in if they make it that far once created or between bankruptcies-
Crandall points out that the Bscales were all about dealing with junior upstarts
And he's recommending a restart again bc of this same factor.
A flattened pay scale industry wide would prevent the seniority induced disadvantage

 

[PBRstreetgang]

If you want an explanation to this question watch the first video, of start at about :18 minute, about 3 minutes you will have the answer and keys to the treasure chest....

Right from Crandalls mouth:

http://vimeo.com/6705165

This should be required viewing for every line pilot in the world.

 

[Lear70]

Like I said, I simply want management to share in the success and, conversely, the failure of the airline in the same way they expect US to.

I don't know ANY capitalistic system that's successful, LONG-TERM, whereby mismanagement is rewarded by INCREASING salaries and bonuses. That kind of system usually implodes upon itself, but our bankruptcy system continues to support it. That's not true capitalism in its strictest sense, it's a perversion of it that can't last long-term.

Then again, these managers aren't thinking long-term. They're thinking make money off the stock, take their gains, and go to some other private sector that pays even more. Crandall is one of the few examples of a long-term executive in the same company, and I'd be curious what he'd have to say, off the record, about the lack of profitability of American over the last 15 years when they've had, arguably, some of the lowest labor costs due to their 2003 restructuring.

 

[Lear70]

Yip, did you see how far that contract proposal was from any other competitor-
When is mgmt responsible for their actions in your world?

According to YIP?

Never. At least, I've never heard him admit to anything even resembling acknowledgment that, at a Legacy carrier, management deserves the brunt of the blame of their lack of success.

Many other Legacy carriers have managed to be successful with even higher labor costs (not just pilots, but labor across the board) than American, at least SOME years out of the last 15. AA has consistently LOST money, almost EVERY year, and sometimes 3-4 TIMES as much money as their competitors, but with LOWER labor costs.

Again, you can't blame labor for their problems when labor costs are ALREADY below their peers in most cases... But YIP won't acknowledge that.

 

[Ops check good]

AMR paid my $10 activation fee to come on here an stir the pot. HAHAHA.

 

[B727FA]

There's a sh!t-ton of "managers" in the industry these days...but precious few LEADERS.

Management is doing things right, leadership is doing the right things. P.F. Druker

 

[ualdriver]

didn't the uaal pilots sell their stock to take a profit and gave up control?

absolutely not.

 

[pilotyip]

Yip, did you see how far that contract proposal was from any other competitor-
When is mgmt responsible for their actions in your world?

Hi wavy long time no trade barbs. So your point is? Management makes an offer, pilots accept or reject. Then management makes a decision to continue operation or fold. Sounds pretty simple. I go back to something posted before, if pilots have all the answers to run the perfect airline, how come no one has set forth to make that move? Could it be that plan could not attract any captial to become a start up?

BTW: Management is always responsible fro their actions, the same as unions.

180 degrees off, do your own research gramps.

then how did they loose control? don't have to do any research, you sound like a good source of knowledge

According to YIP? Never. At least, I've never heard him admit to anything even resembling acknowledgment that, at a Legacy carrier, management deserves the brunt of the blame of their lack of success.

So mangment is at fault at DAL/NWA, USAirways, CAL/UAL for saving 10,000's of pilot jobs by taking their companies into BK to save them? Was that not a success story?

BTW: I agree that there is much to be desired in management leadership, but they are doing their job as directed by the Board of Directors. Now if pilots really wanted to fix this buy the controlling stock and take over the company like Lorenzo did back in the 70's and 80's

 

[Mamma]

Yip, I don't think pilots advocate running an airline. Since they are invested for a career in their airline, they demand accountability and to be treated fairly. Too many times they have seen management abuse the employees, line their pockets then bail....Tilton comes to mind. Your airline is a stepping stone or final stop to those at the end of their careers so it can't really be compared.