Robert Crandall's response to an AA pilot.

[Citjok]

http://aviationblog.dallasnews.com/...t-about-the-american-airlines-situation.html/

 

[T-1GUY]

http://aviationblog.dallasnews.com/...t-about-the-american-airlines-situation.html/

If American is to succeed in the years ahead, it must pay wages and benefits, and operate using work rules, which produce labor costs equivalent to or – while American gets itself back on track – lower than those of its major competitors. In the long run, no successful service company can offer compensation and working conditions that are materially different than those of its competitors


So is he saying that as long as AA pays Southwest, Fedex, and UPS like wages that the company will do just fine???

 

[pilotyip]

If American is to succeed in the years ahead, it must pay wages and benefits, and operate using work rules, which produce labor costs equivalent to or – while American gets itself back on track – lower than those of its major competitors. In the long run, no successful service company can offer compensation and working conditions that are materially different than those of its competitors


So is he saying that as long as AA pays Southwest, Fedex, and UPS like wages that the company will do just fine???

No this is what he said

The company’s labor costs have been higher than those of its competitors since the major airline bankruptcies early in the last decade. Each of the Company’s major competitors used bankruptcy to achieve lower labor costs than those provided for in the so called consensual agreements – and used their bankruptcy experience to lower many other costs as well. The Company sought – rightly or wrongly – to rectify the cost problem without declaring bankruptcy itself, but was unable to persuade the unions to accept the changes needed to lower labor costs. Moreover, because it did not take bankruptcy action, it suffered other cost disadvantages relative to its competitors. As a consequence, the Company lost money for many years and is now smaller and less well positioned financially than its major competitors.

Then he went on to say

You go on to observe that “the pilots of American are highly skilled, trained professionals directly responsible for the safe operation of over two thousand flights daily. Their contributions merit a plan which includes them as part of a solution to what ails American”. I find nothing in that statement with which I disagree, nor with which Tom Horton or other senior executives would disagree. But I’m not clear about why you think the pilots do not have a major part of the plan going forward. The pilots, as you well know, recently voted down the Company’s LBFO. 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?

BTW Remember that FedEx and UPS are trucking companies that happen to fly airplanes

 

[Lear70]

Sure, you can use "industry average" rates... So long as CEO's and senior management are paid similarly to other airlines, which include the same "peer group" airlines that the pilots are being compared to, including bankrupt airlines, smaller airlines such as Allegiant and Virgin America, etc., and using total compensation, including stock options, etc.

I have always found it disingenuous for senior management with compensation in the multi-millions of dollars which runs through several BILLION dollars of capital and runs a company that is operating on a bankruptcy-era contract into bankruptcy again themselves, to then ask labor for further reductions when they are not willing to reduce their compensation similarly.

When a CEO gets to walk away from a "successful" bankruptcy reorganization with millions in shares of new stock and labor walks away with pay cuts, it seems clear something is wrong with the system.

 

[Flopgut]

Sure, you can use "industry average" rates... So long as CEO's and senior management are paid similarly to other airlines, which include the same "peer group" airlines that the pilots are being compared to, including bankrupt airlines, smaller airlines such as Allegiant and Virgin America, etc., and using total compensation, including stock options, etc.

I have always found it disingenuous for senior management with compensation in the multi-millions of dollars which runs through several BILLION dollars of capital and runs a company that is operating on a bankruptcy-era contract into bankruptcy again themselves, to then ask labor for further reductions when they are not willing to reduce their compensation similarly.

When a CEO gets to walk away from a "successful" bankruptcy reorganization with millions in shares of new stock and labor walks away with pay cuts, it seems clear something is wrong with the system.

Bingo...

 

[fr8doggie]

FedEx is an airline that has expanded into trucking.

 

[cheapgreek]

Sure, you can use "industry average" rates... So long as CEO's and senior management are paid similarly to other airlines, which include the same "peer group" airlines that the pilots are being compared to, including bankrupt airlines, smaller airlines such as Allegiant and Virgin America, etc., and using total compensation, including stock options, etc.

I have always found it disingenuous for senior management with compensation in the multi-millions of dollars which runs through several BILLION dollars of capital and runs a company that is operating on a bankruptcy-era contract into bankruptcy again themselves, to then ask labor for further reductions when they are not willing to reduce their compensation similarly.

When a CEO gets to walk away from a "successful" bankruptcy reorganization with millions in shares of new stock and labor walks away with pay cuts, it seems clear something is wrong with the system.

This is found in most companies and will not change in the near future, so talking about some practice that is unchangeable is a waste of time and effort. Dave Seigal at airways walked away with 4.5 million for a job NOT well done. This is capitalism, like it or not, its standard practice in big business today and lower employees always get the bad end of the deal.
What the rank and file need to remember is that keeping a job is better than looking for a job. The airline industry will never be what it was back 20,30 years ago, those days are gone for good. Fuel costs, threat of terrorism, weak economy are part of the new normal.
Upper management will always fare better because they write their own contracts and that's just the way it is and no amount of ranting and raving will change it.

 

[Flopgut]

If it's to the point where Crandall has to be pulled out from under a rock to offer a comment? Then AMR mgt is more than likely a very worried group.

 

[Lear70]

This is found in most companies and will not change in the near future, so talking about some practice that is unchangeable is a waste of time and effort. Dave Seigal at airways walked away with 4.5 million for a job NOT well done. This is capitalism, like it or not, its standard practice in big business today and lower employees always get the bad end of the deal.

What the rank and file need to remember is that keeping a job is better than looking for a job. The airline industry will never be what it was back 20,30 years ago, those days are gone for good. Fuel costs, threat of terrorism, weak economy are part of the new normal.

Upper management will always fare better because they write their own contracts and that's just the way it is and no amount of ranting and raving will change it.

Paragraph breaks are helpful.

The above is EXACTLY why this career is in the toilet and will not recover.

Too many people are unwilling to fight the hard fight, a ton of newly-minted Commercial pilots are always ready to take their place, and you people think it's somehow acceptable because "it's capitalism". You people deserve the contracts you get.

Failure to hold your management accountable to "walk the walk" before they "talk the talk" is simply ALLOWING the kind of raping you are referring to. If they TAKE it in bankruptcy, it's one thing. But willingly giving concessions, especially when you're already operating on a bankruptcy-era CBA, without similar commitments from management, in writing, and including their ENTIRE compensation package is weak.

What's that line from Airplane about Airline Management and the FAA?

 

[GogglesPisano]

You guys (except for Yip) have got it all wrong. The first thing they teach you at B-school is that executive compensation is not part of "labor costs."

You see, they (the "job creators," bootstrappers, and "rugged individualists") are a different breed from common labor and need to be compensated on a completely different scale. They are a breed where performance does not factor into compensation, where substandard talent necessitates what would otherwise be seen as obscene "retention" bonuses, and pensions must be insured outside of any government safety net (PBGC -- how quaint.) Golden parachutes and guaranteed bonuses during bankruptcy are a foregone conclusion.

Crandall and Arpey are perfect examples of this mindset. The sooner you (the rabble) start watching CNBC and absorb your daily dose of "The Journal" the sooner you'll come around to the reality of modern America. Shining a light on the story is "class warfare," and, in any event, the battle is already over.

 

[redflyer65]

Put very plainly.....

Anyone that enters bankruptcy (management-wise) shouldn't get anything on the other side....ZERO, ZILCH.

Here's a clue.....they are the ones that mis-managed the company into bankruptcy in the first place. The bankruptcy laws need to be changed to show this failure.

 

[Lear70]

Put very plainly.....

Anyone that enters bankruptcy (management-wise) shouldn't get anything on the other side....ZERO, ZILCH.

Here's a clue.....they are the ones that mis-managed the company into bankruptcy in the first place. The bankruptcy laws need to be changed to show this failure.

Well said.

 

[pilotyip]

[

Sure, you can use "industry average" rates... So long as CEO's and senior management are paid similarly to other airlines, which include the same "peer group" airlines that the pilots are being compared to, including bankrupt airlines, smaller airlines such as Allegiant and Virgin America, etc., and using total compensation, including stock options, etc.

I have always found it disingenuous for senior management with compensation in the multi-millions of dollars which runs through several BILLION dollars of capital and runs a company that is operating on a bankruptcy-era contract into bankruptcy again themselves, to then ask labor for further reductions when they are not willing to reduce their compensation similarly.

When a CEO gets to walk away from a "successful" bankruptcy reorganization with millions in shares of new stock and labor walks away with pay cuts, it seems clear something is wrong with the system.

Here we go again, yes their salaries are obnoxious, but in the big picture they are peanuts. I saw an article in ATW in 2001 that stated at DAL there were 17 members of top management made more than the top DAL Captain. The combined top 17 salaries equaled less than 1/6 of 1% of the combined pilot salaries. If management worked for free all pilots in the company would get a 1/10 of 1% raise. (for a $100K per year pilot that would be $3/wk increase in take home) Boy that raise would really make the pilot group happy.

FedEx is an airline that has expanded into trucking.

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.

 

[G4dude]

[

Here we go again, yes their salaries are obnoxious, but in the big picture they are peanuts. I saw an article in ATW in 2001 that stated at DAL there were 17 members of top management made more than the top DAL Captain. The combined top 17 salaries equaled less than 1/6 of 1% of the combined pilot salaries. If management worked for free all pilots in the company would get a 1/10 of 1% raise. (for a $100K per year pilot that would be $3/wk increase in take home) Boy that raise would really make the pilot group happy.


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.

Yip, you are my hero.

 

[G4dude]

Put very plainly.....

Anyone that enters bankruptcy (management-wise) shouldn't get anything on the other side....ZERO, ZILCH.

Here's a clue.....they are the ones that mis-managed the company into bankruptcy in the first place. The bankruptcy laws need to be changed to show this failure.

Priceless! Unions drive a company under, and the union members blame management for spending so much on labor.

 

[Lear70]

Priceless! Unions drive a company under, and the union members blame management for spending so much on labor.

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.

 

[LearLove]

and a very successful OUTSOURCED trucking company at that

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

 

[njcapt]

Crandall wants new B scales. How innovative.

I really give him a lot of props as being one of the last REAL airline leaders, even if I didn't like being an employee under his rule. Unfortunately, I think even the great Crandini can't make a silk purse out of the sow's ear the airline industry has become. Whether AMR management gives into pay cuts commensurate with the labor groups or not, if they are allowed to skate with their ********************ing immoral "retention bonuses" they will never respect the employees that truly generate revenue rather than bullsh1t.

 

[waveflyer]

Yip-
What losses do you think AA has incurred by natural lost morale over the management retention bonuses- you keep saying their pay is peanuts- it's the ripple effect that cost billions in inefficiency as each employee and each group operates with a 'me-first' mentality

Crandall barely mentions and ignores the effect the bonuses have had on the company- if you Yip, took almost 40% in payouts so that your company could avoid bk, then mgmt took that money for themselves, leaving the company in no better position- then entered bk a decade later and imposed ridiculous cuts on top of the one's you already took, you'd be good with that.

Bob mentions respecting the legal rights management has in the process in order to gain respect, and I am reminded of the ultimate corruption- when one has enough wealth and power to make theft LEGAL.

As for you, Cheap Greek- ford and Harrison paying your paycheck with those 20 posts- ?

Funny how so many new names are popping up on these forums w/ anti-union sentiments- fall for that and you're an idiot- prereq for union busting 101

I respect to no end AA pilots. You aren't in a work action- you are stuck with no good choices, in an abrogated contract where you must be careful- this is not a game or an excuse to gain leverage- I'd be covering my ass every which way from Sunday if I worked there too

 

[pilotyip]

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?

 

[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?