AA in trouble?

[rotornut]

BBC News - American Airlines shares plummet on bankruptcy fears (http://www.bbc.co.uk/news/business-15160412)

[Intruder]

Lots of pilots retiring on the news, too! They don't want to lose their pensions in bankruptcy like all the other used-to-be "majors"... :(

[Levraimatt]

And they've just signed a giant order... :ugh:

[CitationUltra]

In 1990, AA became the world's largest airline with more than USD $1b in cash reserves. They're stock price was $88 per share. Today they have very nearly the highest costs in the industry, are third-largest, despite their huge fleet and bloated payroll; stock price:$2 and change, and is probably over-valued at that.

What we have here is a grotesquely obsolete business model.

[SFI145]

Does anyone really understand airline economics?

[GALAD]

Dear SFi145

Do I understand economics? No, but a good way to make a small fortune in aviation is to start with a large one!
:)

[SFI145]

What I don't understand is that the current market capitalization of AMR (AA's parent) is $663 million dollars. This is about the price of 2.5 B777s. Yet among its 619 aircraft AA has 47 B777s - doesn't make any sense to me. So presumably most of the fleet is actually leased from other companies.

[kick the tires]

As Stelios from EasyJet once said.

Stelios has made a large fortune from starting with a small one!

[TowerDog]

What we have here is a grotesquely obsolete business model.

AA should really hire you as a consultant...:sad:

[jeff748]

Say what you want, but unions are killing the industry.

[bigjames]

according to company figures via bloomberg, AMR's net fixed assets (cast - depretiation of all their assets, mostly aircraft) was $15.1bn as at 30 June 2011. long term debt was 10bn and other long term liabilities was another 10bn. there was also 1.8bn of short term debt.
what do you think the stock should be worth now?

[cyrilroy21]

In 1990, AA became the world's largest airline with more than USD $1b in cash reserves

I read somewhere that their present cash reserves amount to around $4.5 billion USD which is one of the reasons they have managed to avoid bankruptcy for so long .

The media keeps quoting that the reasons for its continuous losses is due to its high labor wages .
However if you look at the pilot payscales ( not sure about flight attendants and mechanics ) as quoted on APC they dont seem to differ much from that of other legacies ( for eg : Delta )

Question
How many think that AMR's reason for continuous losses is due to its High Labor wages ?
Or is it due to something else like say old airplanes ( they have too many Maddogs flying around )

[yokebearer]

In general airline losses are due to one thing- they sell their tickets too cheaply!!!!

This is the only business that sells a lot of their product - mostly economy seats - below cost. And try and recover the loss on business class and freight.

Sure - its due to stiff competition - but other industries also face competitors and I dont see them selling their product below cost.:ugh:

[bigjames]

as at 30 June cash was 318 mil and short term investments was 4.8bn BUT on the other side of ledger there is 9.7bn of short term liabilities which includes the 1.8bn of short term debt.

just putting the facts out there...

[PantLoad]

If you remember the movie "Home Alone"....the characters played by Joe Pesci and Daniel Stern....the idiot burglers....well, that is typical airline management.

We can argue all day and all night about unions this and unions that....but, with management like the burglers in "Home Alone"...
well, what the hell do you expect!!!!!

[Huck]

Say what you want, but unions are killing the industry.

Except they're not.

Wages are about 40% of what they were 20 years ago at AA, adjusted for inflation.

Executives get the credit when companies are successful. They get the blame when they're not.



American Airlines flight attendants protest bosses' executive bonuses at JFK airport
BY LORE CROGHAN
DAILY NEWS STAFF WRITER
Wednesday, April 20, 2011
American Airlines flight attendants picketed at JFK Airport Wednesday to protest fat bonuses for their bosses in the face of big losses for their carrier.

About 30 workers and retirees waved signs saying "Bonuses for Failure?" and chanted "Down with corporate greed" on the sidewalk across the roadway from American Airlines' terminal.

Drivers of some passing cars honked to show solidarity with the flight attendants, many dressed in their navy-blue work uniforms.

"The top people have a lot of nerve taking their bonuses," said demonstrator Connie Patrick, 62, of Newtown, Conn., who has worked as a flight attendant for the airline for 43 years. "They're a bunch of Bernie Madoffs."

The top five execs have reaped $100 million in bonuses since 2005, while the carrier lost more than $4.2 billion. In 2003, the flight attendants agreed to cuts in pay and benefits worth $340 million annually, which they say kept American out of bankruptcy.

"We were promised when American got back on its feet that we would share in the profitability," said another protestor, Marilyn Catania, 60, of Rockville Centre, L.I. "But only the top people get the money.

"I had hoped to retire by now, but I'm going to have to work a few more years," said Catania, who's been an American flight attendant for 40 years.

The carrier's flight attendants earn $30,000 to $40,000 per year, which puts them in the middle of the pack on pay among the major airlines, said flight attendant Raymond Lewis, 40, of Stroudsburg, Pa., who's a rep for their union, the Association of Professional Flight Attendants.

"A regular work schedule is 75 to 80 hours a month, but most people I know in New York can't live on that," said flight attendant Jan Gadd, 44, of the lower East Side. "Most work at least 100 hours; I know people who work 140 hours to make ends meet."

The union issued a mock "14-count indictment" of their bosses charging "managerial incompetence" and "moral bankruptcy."

Protests were also held at LaGuardia Airport and nine other airports nationwide where the carrier has a presence.

It employs nearly 18,000 flight attendants. Their union has been in labor contract negotiations for three years.

The union bought a half-page ad in Wednesday's USA Today that trumpeted, "Wall Street greed is alive and well at American Airlines," and debuted a TV commercial that takes aim at American's CEO, Gerard Arpey.

After the protests, a company spokeswoman defended the bonuses and offered a hopeful word about labor negotiations.
"Performance-based compensation plans are considered good corporate governance," Missy Cousino said in a statement.

"We remain committed to working with all the unions to reach agreements addressing the needs of both parties that are in the long-term best interests of the company and all of its employees," she added.

[PantLoad]

but, isn't American the only remaining major airline in the U.S. that still offers a defined-benefit pension plan?

If this is correct, could it be possible that management is playing with the numbers to get rid of the pension liability? Others did this.....

[westhawk]

The senior execs got their 100M in bonus payout so no trouble. Isn't that how their job performance/success is measured?

[ZFT]

Quote:
Say what you want, but unions are killing the industry.
Except they're not.

Wages are about 40% of what they were 20 years ago at AA, adjusted for inflation.

Executives get the credit when companies are successful. They get the blame when they're not.



Quote:
American Airlines flight attendants protest bosses' executive bonuses at JFK airport
BY LORE CROGHAN
DAILY NEWS STAFF WRITER
Wednesday, April 20, 2011
American Airlines flight attendants picketed at JFK Airport Wednesday to protest fat bonuses for their bosses in the face of big losses for their carrier.

About 30 workers and retirees waved signs saying "Bonuses for Failure?" and chanted "Down with corporate greed" on the sidewalk across the roadway from American Airlines' terminal.

Drivers of some passing cars honked to show solidarity with the flight attendants, many dressed in their navy-blue work uniforms.

"The top people have a lot of nerve taking their bonuses," said demonstrator Connie Patrick, 62, of Newtown, Conn., who has worked as a flight attendant for the airline for 43 years. "They're a bunch of Bernie Madoffs."

The top five execs have reaped $100 million in bonuses since 2005, while the carrier lost more than $4.2 billion. In 2003, the flight attendants agreed to cuts in pay and benefits worth $340 million annually, which they say kept American out of bankruptcy.

"We were promised when American got back on its feet that we would share in the profitability," said another protestor, Marilyn Catania, 60, of Rockville Centre, L.I. "But only the top people get the money.

"I had hoped to retire by now, but I'm going to have to work a few more years," said Catania, who's been an American flight attendant for 40 years.

The carrier's flight attendants earn $30,000 to $40,000 per year, which puts them in the middle of the pack on pay among the major airlines, said flight attendant Raymond Lewis, 40, of Stroudsburg, Pa., who's a rep for their union, the Association of Professional Flight Attendants.

"A regular work schedule is 75 to 80 hours a month, but most people I know in New York can't live on that," said flight attendant Jan Gadd, 44, of the lower East Side. "Most work at least 100 hours; I know people who work 140 hours to make ends meet."

The union issued a mock "14-count indictment" of their bosses charging "managerial incompetence" and "moral bankruptcy."

Protests were also held at LaGuardia Airport and nine other airports nationwide where the carrier has a presence.

It employs nearly 18,000 flight attendants. Their union has been in labor contract negotiations for three years.

The union bought a half-page ad in Wednesday's USA Today that trumpeted, "Wall Street greed is alive and well at American Airlines," and debuted a TV commercial that takes aim at American's CEO, Gerard Arpey.

After the protests, a company spokeswoman defended the bonuses and offered a hopeful word about labor negotiations.
"Performance-based compensation plans are considered good corporate governance," Missy Cousino said in a statement.

"We remain committed to working with all the unions to reach agreements addressing the needs of both parties that are in the long-term best interests of the company and all of its employees," she added.

Last month I flew on a Continental domestic service at the back end of a B757-300. As it takes an age to deplane I ended up talking to the FA whilst waiting for those in front to move off. He said that whilst he only gets paid when the doors are shut, by working domestic and Central Americas only but scheduling back to back flights he makes all in over US$120K per year!! Now he could well have been embossing his salary but I got the impression that he wasn’t. This seems somewhat at odds with the AA salary claims and why would anyone work 43 years and end up on $30K-$40K or is the US industry really that bad?

[Chidken Sangwich]

What I don't understand is that the current market capitalization of AMR (AA's parent) is $663 million dollars. This is about the price of 2.5 B777s. Yet among its 619 aircraft AA has 47 B777s - doesn't make any sense to me. So presumably most of the fleet is actually leased from other companies.

There's no way that B777's are costing AA $265m each. $90m per aircraft (top) new.

[Spooky 2]

Seriouly doubt that 120K figure. I cannot recall, but are FA's limited to 1000 hours per year as the pilots are? even if you selling back vacation, etc. 120K is a stretch. :rolleyes:

[DozyWannabe]

Stelios has made a large fortune from starting with a small one!

As in Stelios, son of Loucas - one of the wealthiest shipping magnates in Greece? Give over - there was a lot more fortune to keep it afloat if there needed to be.

I wonder what ol' 411A would have made of this?

[pieceofcake]

This whole thing is a joke. The pilots bet the whole company on a pay rise.. its totally dumb - don't these people see whats happening in the real world? They should close the doors and start over.

[free at last]

When you get the knowledge and the pain that it takes to become an airline pilot. You can talk! Pilots are grossly underpaid so that you can fly for $100, a seat. :=

[pieceofcake]

my friend thats the most stupid thing anyone could say. It costs a lot of money to become a professional at many things - what about a doctor or a dentist or even some professional sports people. The over riding point is that you have to understand the market you are in and things get priced accordingly. These pilots are holding the entire company to randsom and putting at risk not just the executive but also the smaller people who perhaps clean the offices, man the phones or maintain the aircraft. All for what? You know what is great about USA is that you are free - and that means these poor pilots were free to not be pilots or free to work at another airline.

[28L]

Pieceof cake,

I don't understand your POV. You say (a) the pilots are holding the company to ransom (I assume that's by leaving in droves) yet you also say (b) that the wonderful thing about the US is that pilots can do just that.

If my pension pot was about to be decimated you can bet your bottom dollar that I'd be out like a flash too. How is that holding the company to ransom?

[pieceofcake]

@28L - I don't think this is too hard to understand?:-

“ Unions for the pilots, flight attendants and ground workers want to recoup at least part of the $1.6 billion in annual concessions made to avert bankruptcy in 2003, while American has said it has an $800 million-a-year labor-cost disadvantage to rivals..."

So these guys want to squeeze AMR dry leaving it uncompetitive. Or have I missed something?

[pieceofcake]

You know forget AMR the whole industry is in a hole, and why?

When you read this how is it ever good :-

By Steve Rothwell and Mathew Carr
Oct. 4 (Bloomberg) -- Airline profits forecast to total $28
billion in the three years through 2012 may be unsustainable as
over-capacity and looming regulatory costs weigh on margins, the
head of the IATA industry association said.
Airlines will generate net income equal to 0.8 percent of
revenue next year, a margin that may shrink further if economic
growth slows to less than 2.4 percent, Tony Tyler, chief
executive officer of the International Air Transport Association
since July 1, said in an interview in London.
“The natural condition of the airline industry is crisis,”
Tyler said. “Occasionally, we’ve had short periods where the
conditions are quite benign and everything goes quite well, and
the danger is to believe that’s normal -- and that’s wrong.”

[Mullinax]

are FA's limited to 1000 hours per year as the pilots are?

No, they are not.

[alouette3]

Time for reregulation.Oh sure Bubba and his overweight wife and kids will not be able to fly and alot of ERJ/CRJ pilots will be out of a job but that is the only way an airline can be restored.They need to charge what it actuslly costs to fly me or you to places we need to go.
It is always amusing to watch how the anti unionists will drop everything at the doorstep of the unions. Let us not forget United 232 & Eastern 401.What did they have in common? Half empty wide bodies flying on domestic routes.That certainly was not a union decision but a management one.
While the "shared sacrifice"mantra is good for the airline "shared prosperity" becomes "putting the squeeze on airlines"? Give me a break!

[PAXboy]

jeff748Say what you want, but unions are killing the industry.There are many, many factors at work that have already claimed many, many other companies (in Aviation and in regular commerce)


Contracts (for ALL staff) based on how the world was in 1970~1990
The emergence of LCCs to scythe away an enormous amount of domestic traffic and even feeder to long haul
Pax desire to pay nothing and the willingness of many companes to provide it
Regulatory changes undreamt of 25 years ago
An economic situation that no one thought to see (well, some did but not enough!) and a good five more years of recession yet to come
The ability of humans to think that, because something has been successful in the past - that the same process will be successsful in the future
The normal sclerosis that takes hold of any company that has been in operation for 85 years. There is a finite length of time for any corporation or organisation and the those that do not realise they are in the 'well mature' category are in trouble twice over. There are numerous carriers around the world who are in the same place as AA.
Their website boasts of 900 aircraft and 3,400 rotations a day (inc Eagle + Connections) Looking at the basics, they are now 'well mature'

Pan Am lasted 64 years
TWA lasted 75 years

AA have done very well but they, like millions of other companies, think that they can always 'fix it' and 'renew' and 'rebuild' and 'expand once again'. The answer is: No. It is impossible to say if they have five or 15 more years left in them but the only certainty is that they will not continue in this form for too much longer. Those that are taking their pensions and bailing now, have learnt the lesson from others.

It can eb said that it is not all the fault of mgmt, because what is happening to AA is just the usual life cycle of a successful company and you cannot expect humans to always learn from the past.

[pieceofcake]

You say don’t blame unions but that’s the collective force that is keeping costs where they are. Which is exactly what you Yrecognise when you say its time to start charging people what it actually costs to fly from A to B. There is clearly something wrong with an industry when the front page of London’s FT markets section says “AMR is the only big US national carrier not to have passed through Chapter 11 in the last decade”.

That’s a joke and typically at the core of the problem is wage costs associated with pilots – just look at Aer Lingus.

Frankly whilst being a pilot may mean an investment in ones self and it may be a skilled profession it isn’t immune from the same commercial realities as any other business.

[sb_sfo]

From wiki-On UA232, 111 died and 185 survived. I'd guess there weren't many open seats!

[stepwilk]

pilots...free to work at another airline.

Excellent understanding of how the seniority system works...

[sb_sfo]

Little bird told me they are giving up on the USPS domestic mail contract because it requires too many folks at corporate to administer the contract. That can't be good...

edit--I believe AA is the largest outfit among the majors doing the bulk of their maintenance in-house. The race to the bottom continueshttp://images.ibsrv.net/ibsrv/res/src:www.pprune.org/get/images/smilies/censored.gif

[pieceofcake]

What does this even mean? "Excellent understanding of how the seniority system works... "

[sb_sfo]

can you say "ironic"?

[yokebearer]

typically at the core of the problem is wage costs associated with pilots

Pilots are 5% % of the cost at the major carrier I work for. Fuel 38%. Other labour 20%.

So please tell me how you are going to save the airline by cutting pilot pay??

[Dream Land]

No word from Wino? :confused:

[pieceofcake]

@yokebearer - those %'s are meaningless in isolation without knowing the detail. After all other staff costing 25% would be a bargain if they generate 99% of revenues. The problem with pilots is that they are just a cost. A necessary one but its not like people choosing AMR on the quality of the flying. Answer this - when flying New York to LA what is the average pilot doing?

[Northbeach]

Answer this - when flying New York to LA what is the average pilot doing?


When flying New York to LA the average pilot is bearing the legal responsibility for their passengers safety at better than 8 miles a minute and some thirty plus thousand feet up in the atmosphere in a hostile and threat filled environment. They are monitoring numerous systems in a complex machine that has a finite amount of fuel that is rapidly disappearing.

Long before the fuel tanks run dry, there are no gas/service stations nor can one call 911 {emergency/aid phone number} and have the police, ambulance or fire department personally physically appear, our “average pilots” had better deal with any in-flight contingency and arrive safely regardless of what they encounter during their several thousand mile journey. This isn’t just another day in the office; Groundhog Day (Bill Murray movie) nor is the safe outcome of the flight guaranteed. Our “average pilot” must ensure the safe completion of the flight-and it isn’t going to happen without determined and intelligent effort. As I mark the transitory hours, continents (NY to LA) and vast oceans passing by I see a lot of determined and intelligent effort being exerted on my flight deck.

On our flight to LA our “average pilots” are tasked with protecting their passengers regardless of the changing weather (rapidly moving cold fronts, windshear, crosswinds on ice covered runways (NY not LA), clear air turbulence and embedded thunderstorms or super cells {Delta 191 @ DFW, AA in Little Rock}), security and traffic demands of an intricate national aviation system. Few people shoulder the responsibility for the safety of 75-500+ people every time they go to work; do you?

While our “average pilots” are so occupied, everything they say is being recorded by the cockpit voice recorder; the jet itself is monitoring, recording and relaying hundreds of parameters to the company that then audits for operational compliance. Their every transmission is also monitored and recorded by the regulatory authorities. The actual flight path is being watched closely and recorded. Our average pilot is conducting their flight in accordance with a vast amount of government and company regulations while being highly scrutinized. That is what is happening on my flight deck when I fly from New York to LA.

There is a little more to it than: LNAV, VNAV & USA Today. [Engage the autopilot and read the newspaper.]

Some people MAKE things happen.
Some people watch things happen.
Other people wonder what happened.

............. worth keeping in mind all the time while here on PPRuNe..........


As these are anonymous forums the origins of the contributions may be opposite to what may be apparent. In fact the press may use it, or the unscrupulous, or sciolists*, to elicit certain reactions.


*"sciolist"... Noun, archaic. "a person who pretends to be knowledgeable and well informed".

[dwshimoda]

Northbeach: Bravo!

Pieceofcake: you showed your colours with seniority.

[alouette3]

Northbeach,

Bravo ,indeed!:D
Piece of cake: I have yet to see a passenger make it from point A to point B because a ticket agent or a baggage handler or a mechanic carried him. Like it or not the revenue generators for any airline are sitting at the pointy end. And while they maybe "average" they are the reason the shiny tube like things get airborne, remain airborne and land, safely, thousands of times a day everyday .
I think you should retire honorably from this skirmish or----at least ---change your name to "piece of work".:E

[brakedwell]

Crumbs! :ugh:

[kimli]

Northbeach

One of the nicest posts I have read on Pprune for many years.

[pieceofcake]

So a great deal of value add then? All of which makes it a wonder why so many airlines going bust and why time and time again pilots are cited as one of / major cause of dispute.

The problem you have with the keeping everything going, saving everyone from impending doom is that subjectively if asked to put a value on that you all say its priceless but given we all know pilots are paid a salary tell me what should that be?

Then once you've put a value on it - lets say $100K - what happens when someone puts their hand up and says I'll do for $95K.. no £80K... no £50K...

Does a union get involved and protect its members? Does it create an artificial floor? Then what happens when the place goes bust?

Its all very well being a wise guy and saying "Oh the guy checking the bags what does he do to save an aircraft at 30000ft" but its also true that without that guy he's got nothing to fly and on the basis every major US airline has gone bust in the last decade - one thing that is for certain pilots are either over valuing their role or aren't representing themselves very well. Or do you have another reason?

[pieceofcake]

remember this from this year:- Members of the Irish Airline's Pilots' Association based in Dublin and Cork voted to begin the industrial action from June 7, Aer Lingus said in a statement.

or this at BA:-

BA Pilot Dispute Over OpenSkies Airline
The dispute centres on the fact that BA is planning to employ newly-hired pilots to staff its new subsidary airline OpenSkies, rather than use the existing pool of BA pilots, and that - according to Balpa - OpenSkies pilots would be offered "inferior terms" than mainline BA staff.

or this:- The dispute between Ryanair pilots and management over training on a new fleet of aircraft remains unresolved on Friday evening after a deadline for acceptance by pilots passed without agreement.

O 26 July Air France pilot strike is still on for next month, dates below.

Is there a common theme?

[xray one]

So if AA go into chapter 11 (with all the benefits this entails), what happens with any tie ups i.e. with BA.

Theoretically BA could send pax to AA with their alliance, AA could then offer cheaper prices as they don't need to honour creditors and operate under the normal restraints of commercial 'prudence'.

[Northbeach]

All of which makes it a wonder why so many airlines going bust and why time and time again pilots are cited as one of / major cause of dispute.



Often pilots are our own worst enemy in the way we interact with co-workers and the public.

Pilots will get paid what we negotiate and can enforce, not what we think we should be paid or would like to be paid. You are right the world does not work that way. Nor does the public owe us anything.

The Colgan Air Dash 8 crash in Buffalo New York highlighted the pay issue for the crew. The First Officer was living with her parents and commuting to New York to fly; sleeping at the crew room because she could not afford to live in New York on her wages.

I made $22,000 my first year (family of 5-BEFORE taxes-not take home) at the major airline I am flying for. After nearly 16 years with my current employer I made between $150,000-200,000 last year (> 900 hours of actual flight time, > 110 nights in a hotel room and many more hours than 900 "on duty), so what; those are not extravagant wages in exchange for what I do between New York and Los Angeles!

I hope you make as much or more-does not bother me in the least, not a shread of envy! The more money you make the more likely you will fly with me and I can keep doing the job I enjoy (most of the time).

Whittling down the pilots wages may be emotionally satisfying and an effective tactic in a labor (labour) dispute. But in case after case it does not lead to solving the woes of the industry. Ask the legions of out of work pilots (and every other work group) or those retired having had their retirements looted who spent their working lives and gave up, or had taken away, their pay & benefits for airlines that won that battle but failed to stay in operation.

Thank you for your time!

[pieceofcake]

So why do you think every US carrier ex-amr filed chapter11 in last decade? Why pilots being headlined as a major factor in amr woes today?
Regards your point on pay - your point is valid, $200k doesn't seem put of whack for the responsibility (but it's probably more than 90% of the population and more than many surgeons) but I don't think that needs either a cap nor protecting. The Market decides surely?? I guess what is difficult to understand is why time and again it's another airline issue with staff at the centre. If it's that bad why do it?

With respect sir, envy isnt a factor in my post. Im a pilot and punter that just gets sick and tired of the same headline - oh and I guess so is the guy who owns the equity (the people who along with those holding AMR debt finance the show) - maybe AMR stock is in the pension scheme of lots of regular and not so regular people?

[grounded27]

Hell, they just made a record breaking aircraft purchase. They have done a relitively great job of keeping jobs and work in house over the last decade. Seems they are less concerned about the street and more about their long term sucess as a unified company. Sure they took a kick in the shorts with other airlines consolidating to become larger than they are but will their ideals be sucessfull in the long run?

[ready eddy]

'I have yet to see a passenger make it from point A to point B because a ticket agent or a baggage handler or a mechanic carried him. Like it or not the revenue generators for any airline are sitting at the pointy end. And while they maybe "average" they are the reason the shiny tube like things get airborne, remain airborne and land, safely, thousands of times a day everyday .'

I Beg to disagree with this point, pilots are not the 'sole' revenue generators for an airline as the above post alludes to. If mechanics/engineers do not provide safe serviceable aircraft for pilots to fly, then there is no revenue generated. If cleaners don't clean the aircraft, pax will not fly with the airline -no revenue generated. If baggage handlers do not load bags, again pax will not fly with said airline - no revenue generated. I could go on and on with examples here, but the point I am trying to make is that pilots are the final piece of the puzzle that enables pax to fly from A to B, but all the pieces are required to complete the puzzle. An airline cannot exist/operate/generate revenue unless all of the individual departments do their job!

[poorjohn]

Out of curiousity what do senior captains earn at Southwest? That gang seems genuinely happy with their situation, and the company is profitable. Are they doing it by having beaten up the employees "until morale improves" or by having management that actually earns their pay. Or just lucky?

[stepwilk]

Out of curiousity what do senior captains earn at Southwest? That gang seems genuinely happy with their situation, and the company is profitable.

Funny thing, I just flew SWA as a passenger for the first time in my life, as did my wife on a separate day and flight(s). EWR-DEN-SFO and return. We were both stunned. This is an airline that does so many things right that none of the other lines have figured out yet, and they seemingly have fun doing it. Best airline I've ever flown, even though we had to lay over in DEN it was worth it.

Henceforth, I will fly SWA every chance I get.

As I understand it, far from having ever sought bankruptcy protection, they have been profitable every year they've been in existence, and I believe they've only had one single unprofitable quarter. I also understand their flight-deck and cabin crews are well-paid, at least by industry standards.

[grounded27]

I also understand their flight-deck and cabin crews are well-paid
So are the maintenance staff. Their pay is in the top 3 only competative with america's 2 most profitable (little more ression proof) airlines that run freight. Their business model is great, hope they can keep it up!

Back on AA, they still seem to have a good long term outlook, just made a large investment to compete domestically with more efficient aircraft, screw the stock price. If in trouble on the short, I believe they will do well in the long term as they mothball domestic aircraft that burn more fuel than the fleet they want.

[Northbeach]

Google is your friend & the world is at your fingertips.

Out of curiousity what do senior captains earn at Southwest?

Airline Pilot Pay Rates (http://www.aviationinterviews.com/pilot/airlinepayrates.html)

[flyallnite]

Southwest is the most completely unionized airline in the world. There isn't a workgroup on the property without union representation. Their pilots are among the most highly compensated in the world. According to a brochure distributed by their pilots, an AVERAGE 737 captain earns $260,000 per year in pay alone, with no overtime included in that figure. A generous retirement plan, paid vacation, and health benefits that are the envy of the industry.

For those who seek to find what ails AA, the truth is found not in the usual, tired old anti-union and anti-pilot platitudes.

AA has major financial problems. Employee pay is not currently one of them. Underfunded pensions, huge debt obligations, exorbitant lease agreements and a corporate tax structure that amounts to extortion to name a few. For those who understand, there is no need to say anything more. For those who don't, I suggest a more in depth examination of the current state of airline economics.

[Popgun]

There is no doubt that legacy carriers the world over have to adapt to survive. Time will tell which of those are able, and which ones go the way of the dinosaurs.

Excellent post North beach. One of the most articulate I've read in a long while.

[cyrilroy21]

So why do you think every US carrier ex-amr filed chapter11 in last decade? Why pilots being headlined as a major factor in amr woes today

I guess what is difficult to understand is why time and again it's another airline issue with staff at the centre

The staff and unions are always used as a scapegoat to put the blame on

Do you really expect airline management to come forward and take the blame on themselves .
" I am sorry guys we screwed up " - Airline Management
You will see that statement the day pigs fly :rolleyes:

SWA is the perfect example of how management and unions get along together and which returns profits for the company .
SWA does not blame its employees . Infact it thanks them everyday
So does Fedex

Typical airline management always use labor costs as an excuse for their own inability to manage . They then negotiate lower wage costs while at the same time give themselves bonuses and golden parachutes

Donald J. Carty comes to mind.........

[Bobbsy]

Answer this - when flying New York to LA what is the average pilot doing?

I'm only a member of the SLF brigade but I know darn well you can ask the same question about ANY job.

For example, how about "What is the average airline CEO doing all day?".

The answer is most likely "sitting in an office drinking coffee, reading emails and telling underlings to do reports". A very small proportion of his time is spent actually making critical business decisions.

However, the big difference is that when the CEO gets it wrong, he can file for bankruptcy, blame his failures on the unions and probably walk away with his contractual "golden parachute". When a pilot gets it wrong, there's a potential for the people he has taken responsibility for dying. Even if it doesn't go that far, you only need read this forum to see that one bad decision out of millions of good ones can abruptly end a pilot's career--with no such golden parachute.

In any case, arguing that other staff members generate revenue but pilots are just a cost is simply wrong. As SLF, when I buy an airline ticket it's to get me from point A to point B. As such, the pilots, the rest of the operational staff, the airplane itself and the fuel are far more involved in generating the revenue from my ticket than anybody at head office. The reality is that the whole company is involved in generating revenue...and arguing that pilots are a pure cost is simply foolish.

....my take as SLF anyhow.

[pieceofcake]

Its not argued that way is it? It goes without saying that the pilot adds value but what is very clear is that industry wide the business operates on wafer thin margins and has employees who time and time again come out to protest about pay and conditions.

It seems that as a group they feel that their pay is only going to go one way, up, regardless of the prevailing economic conditions.

Even if you take a selfish view and suggest pilots only out to maximise their pay – which is a fair argument. How the heck can someone earning $100K, $200k, $250K throw their toys out and stand behind a union that threatens strike action and in the process materially damages the company they work for?

Its insulting to suggest that those claiming pilots are not behind some of the trouble with airlines as I could dig out 100’s of example. This from just last week in Europe:- Sept. 30 (Bloomberg) -- Five unions representing pilots and crew at International Consolidated Airlines Group SA’s Iberia may call a strike if the airline creates a lower-cost unit for short- and medium-haul flights, Cinco Dias reported, citing the unions.

Then reflect on the fact that whilst doing such noble and skilled work this is the current pay scale in the RAF:-

Pilot Officer
£24,130
Flying Officer
£29,000 – £32,060
Flight Lieutenant
£37,170 – £44,205
Squadron Leader
£48,824 – £56,075

[niceday2700classic]

Someone else hit the nail on the head - the tickets are too cheap and the cost base is too high.

The customer end of the business involves filling planes with passengers paying $50 - 500 each for their ticket.

When you have a cost base like Ryanair or EasyJet, then you just about make money. With a cost base like AA, you lose money hand over fist.

You're spending more than you're taking. It's not complex.

[pieceofcake]

So if costs are higher than revenues - you think the costs are too high?

[single chime]

poc, I don't think air marshall (whatever his name) is asking his staff to take pay cuts while taking a multi-million $ bonus...even though every major purchases under his watch went sour. Airline employees are just fed-up of supporting the bonus of their failed leadership.

[TowerDog]

Pilot cost at SWA is 9%, AA is 6%..

AA pilots took a big cut in pay and benefits to "save" the company from bankruptcy in 2003 to the tune of over 1 billion dollars.

Then managment started doling out bonuses to themselves, hundreds of millions of dollars, no holding back there.

The pilots are pissed off and want their money back, rightfully so.

[Mullinax]

You know what is great about USA is that you are free - and that means these poor pilots were free to not be pilots or free to work at another airline.

Mr. Cake, you obviously are not an airline pilot and that's ok. Not everyone can be. But it appears you like trying to interact with them on the Professional Pilots Rumour Network. Good for you.

You are absolutely correct that pilots in the USA (and I would think the UK) are free not to be pilots. Most of us in the profession have a love for flying and that's why we enter the profession in the first place. Hopefully you are employed in a profession you love. Many people that aren't pilots love flying as well but didn't have the ability to fly or couldn't pass the physical standards required.

Pilots really aren't "free" to work at any airline they choose. Airlines select the pilots they want and can furlough them at will. After 9/11 numerous pilots found themselves out of a job. Airline hiring is greatly a matter of timing and that's beyond the control of most would be pilots. Other factors in getting hired are letters of recommendation, background checks, company physicals, company testing (mental and/or psychological), licenses, a first class medical certificate, type ratings, requisite hours and experience in turbine powered aircraft, pilot in command time, passing the interview, a simulator check, and a probationary period. It's really not as easy as you try to insinuate. But, not being an airline pilot, you wouldn't really know. Once established in a company as an airline pilot, one must maintain his/her medical qualifications, pass periodic written tests, company line checks, FAA line checks (in the USA), and at least yearly simulator checks. If a pilot opts to attempt changing companies, the process starts over again. Due to the seniority system, pilots are generally "married" to their companies. If you don't already know, seniority determines upgrade, equipment type, pay, vacations, days worked, days off, basing, and being on reserve. Though the seniority system has it's draw backs, show me a fairer system.

Answer this - when flying New York to LA what is the average pilot doing?

Northbeach, thank you for an eloquent answer to Mr. Cake's question. All airline pilots hope that each and every flight is "average" and that all we have to be is "average" airline pilots. I doubt if anyone that was on Sullenberger's aircraft into the Hudson thought he was paid too much.

[niceday2700classic]

So if costs are higher than revenues - you think the costs are too high?

I didn't say that. I said the numbers didn't stack up. To make the business profitable, either the takings need to go up or the costs need to go down. The solution is generally a combination of the two.

What I do know is that air travel has never been (in real terms, accounting for inflation) cheaper or so affordable to such a large proportion of the world's population. This suggests that if the business is to remain profitable then costs should be falling in a similarly dramatic fashion. They aren't, and this is why many airlines find themselves in a pickle.

Ticket prices probably need to rise. But the industry is so competitive that no-one dares break ranks to do it for fear of losing market share. So they just keep chipping away at the cost base (and there is a fair bit to do - by comparison to other industries airlines are run horribly inefficiently) but it won't be enough. You could end up with the leanest structure possible, but with the price of oil and current ticket prices - it won't be enough. Not in the long term.

[pieceofcake]

@mullinax -
What kind of answer is that?

All you do is give a list of the basic requirements in order to do the job – and I already said it’s fair to be compensated for.

But there isn’t an industry more blighted by its disruptive work force. In the end if the skill set was in such demand then the market would re-adjust and you’d not be needing to fight for the pay – you’d get it anyway. That’s how free markets work, a principle at the heart of the USA?

Why talk about wanting to be an airline pilot or otherwise? Whats that got to do with anything? I fly for fun now having been a pilot previously.

I didn’t want to fly airlines because that type of flying doesn’t interest me.

All that aside it doesn’t stop me from having a view. And nothing you’ve said seems to counter the issues at many of todays airlines. Worse than that the attitude stinks. Its very selfish and frankly ridiculous for anyone – pilot or otherwise – who gets paid $250K per year however earned to potentially bankrupt a business in protest. The easy answer is to leave.

As for the Hudson. I know many people who have done much more in an aircraft and sacrificed much more for much less – as I suspect many others here have.

[brakedwell]

What a load of utter crap :ugh::ugh:

[pieceofcake]

think you might find SAR pilots disagree

[CargoOne]

Pilot salaries in airlines like AA are by far not the only spenditures on flight crew. Without going into details if AA and Ryanair pilots will be paid the same, it will still cost AA 50%+ more.

Another thing is that most of the pilots never had any other job (non-flying) which pays $200k+ a year which is not their fault for sure but it restricts their ability to judge about fairness of their remuneration. Most of the pilots can't imagine what a loads of cr@p people making $200k+ on the ground in most industries are taking on a daily baisis. 110 nights in hotel is not too much comparing to that, really.

[HZ123]

Right ! Blame the pilots !


Tube drivers £50,000 - mind the underground is 'broke' too .

[Yankee Whisky]

If you go to Utube and select "Unemployed Airline Pilot" you'll
get an idea of what most of us are thinking!

Unionism is good in reasonable measure, but when execs are receiving
unreasonable bonusses and parachutes, obviously something has to give !
Not to mention that they are causing unions to try to grab more from a bag that's getting empty ! Old fashioned management has flown the coup and
is replaced by a greedy bunch of "memememe first" types. Pitty !:ugh:

[Microburst2002]

POC

If the salaries of pilots of airlines such as southwest and AA, Delta, etc are reasonably similar (after all the job they do is exactly the same) and the profits are absolutely different (some have great pforits, others great losses) then who what does that mean? who is to blame?

Management, of course! Pilots just do their job, fly from A to B. Southwest does not succeed because their pilots are better.


Workers claim better conditions
Employers complain about labour costs

That's life. You will hear that for ever, no matter how much pilots agree to lower their salaries.

Why does that bother you so much? The fact that in the news you always see those arguments over and over doesn't mean they are true.

You know... not all the things you read on the press or hear on the TV are true. Even if they repeat them a lot.

[Mullinax]

What kind of answer is that?

Mr. Cake, I was responding to your statement about the "freedom" you claim pilots have of working where they choose. As it has been established, you are not an airline pilot but are no doubt an armchair pilot with thousands of hours. I can't help but smile when you state that you simply didn't want to be an airline pilot. The pilots you characterize as a "disruptive" are the ones that ultimately actually move the metal and have the responsibility for the many lives they are entrusted with. You, of course, will never have an idea of the gravity of that responsibility. Airline pilots do not run companies but fly airplanes. It is interesting that you do not discuss corporate greed or the poor management of those who do run airlines into the ground. It is the only industry that rewards management failure.

May you continue to fly your armchair in the safety of your living room and continue to critique those who actually fly airliners in the real world. Hopefully the biggest hazard you will face will continue to be your own pipe smoke.

Best wishes.

[Wirbelsturm]

I was a SAR pilot, 4500 hours of it, in all weathers, any time of day, often finding and picking up idiots who should have known better. Twice taken to court for 'damages' when I wouldn't pick up surf boards and often asked by the 'victim' if they could be dropped off at the car park next to their car if I wouldn't mind.

I risked my life and my crew for a fairly rubbish wage using a licence that cost far more to obtain than a fixed wing licence.

Now I fly for an airline.

What's different? The skill set required for my previous 'life' was completely different to that which I require now. Do I feel that my current colleagues are in any way less competent than those I flew with before? Absoloutely not.

As for the Hudson. I know many people who have done much more in an aircraft and sacrificed much more for much less – as I suspect many others here have.

I completely fail to comprehend what you are trying to prove with this point? What the crew (I include the FO in this as he was also an ex-mil pilot who contributed alot to the incident) achieved was exemplerary. A massive bird strike just after take off followed by a double engine failure and a water landing in a big jet with large high bypass engines. Truely excellent. Sacrificed more for less? Not really.

Look at airline pilots pay, ask most people, and ask what pilots earned in the 1950's? Probably get an answer of £100,000 per annum.

Ask again for the 1960's, 1970's, 1980's, 1990's and the 2000's and you will probably get the same answer £100,000. Pilots wages have not moved with inflation for decades.

Many will say, 'ah but the aircraft are all automatic now!', true, there are many automated and crossed over systems to 'assist' in your task. However the downside of this is that the complexity involved when those systems start to fail is immense. Many times the safest option is to disengage ALL systems and revert the beast to a stick and rudder aeroplane. This sort of day, with 350 people behind you, is when pilots earn their pay.

I'm sure you pay insurance on your motor vehicle? I'm sure that you've moaned about it but had to pay it as it is a legal requirement? I'm also sure that you never, ever want to have to 'use' your insurance because of the consequences it has in cost, injury and legalities. But you feel safer knowing you have it there in the background. Piloting is, in many ways, the same. If you don't know what I mean try flying with some of the smaller 'local' outfits in Africa. It can be an eye opener to anyone who has only flown in the US or Europe.

Is it fair for the pilots to want to reclaim losses when gross mismanagement has led the entire workforce up the garden path? Probably. At least they should attempt to protect themselves from the losses and end up paying their pensions into the hands of the liquidators.

[Yankee Whisky]

Unemployed Airline Pilot | Xtranormal (http://www.xtranormal.com/watch/12366113/unemployed-airline-pilot)

[Tourist]

Piece Of Cake

"Pilot Officer
£24,130
Flying Officer
£29,000 – £32,060
Flight Lieutenant
£37,170 – £44,205
Squadron Leader
£48,824 – £56,075"

Whilst yes I think we are underpaid and in all aspects superior to civvy pilots, :E , I think you need to do a lot more research if you think that pay scale is correct for military pilots.
Look at the term "flying pay" and "FRI" on search.

[PA38 Captain]

I have heard rumours from a confirmed source that AA are going to be selling off 50% of there fleet over the next 3 years to repay massive debts. Views?

[Lonewolf_50]

Do you really expect airline management to come forward and take the blame on themselves .
" I am sorry guys we screwed up " - Airline Management
You will see that statement the day pigs fly
Which isn't that uncommon, as airline management fly now and again ... :}

@Bobbsy the perceptive SLF: well said!

For the jakes cake posting in this thread ...

Then reflect on the fact that whilst doing such noble and skilled work this is the current pay scale in the RAF:-
Pilot Officer £24,130
Flying Officer £29,000 – £32,060
Flight Lieutenant £37,170 – £44,205
Squadron Leader £48,824 – £56,075

Don't fly as often
Don't operate in a for profit environment.
Why not just compare dog food and automobile tires, while you are at it? Makes as much sense.


Pilot cost at SWA is 9%, AA is 6%..
AA pilots took a big cut in pay and benefits to "save" the company from bankruptcy in 2003 to the tune of over 1 billion dollars.
Then managment started doling out bonuses to themselves, hundreds of millions of dollars, no holding back there.
The pilots are pissed off and want their money back, rightfully so.

Yep. True in most big industries: the suits set up mutual admiration societies on the backs of those who get the actual work done.

A comment on the bail out safety provisions for suits.

The Golden Parachute schemes reflect crafty work contract writing in most cases. Terms and Endearment, if you will.

Get good at that, it's a skill. If you master it, you'll see your compensation increase. (See also how smart contractors structure contracts, and sub contracts, when taking on large projects).

[Aero Mad]

BBC News - American Airlines file for Chapter 11 protection (http://www.bbc.co.uk/news/business-15935206)

[EISNN]

AA Files for Chapter 11.

This is no surprise and was to be expected. AMR will slash staff wages again like they did 10 years ago, rid themselves of old aircraft and then all will back on track and management will pat themselves on the back about such a great job they did to save the company and will fill their pockets with enormous bonuses.

:ugh::ugh::ugh::ugh::ugh::mad::mad::mad::mad::mad:

Best of luck to the staff in AMR.

[Aero Mad]

Why can every other airline do that without filing Chapter 11? Always amazes me that fleet renewal for AA requires a bankruptcy declaration.

[Hamburg 2K8]

I don't know much about this but how will it affect the Airbus and Boeing deals on the A320neo and 737?

[Spitfire boy]

Move European HQ to USA and list on the US stock market. Will they be tempted?