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?