American Airlines may cut up to 15,000 jobs

Finding 2300 F/As to take an early out? Not gonna happen. Maybe a few hundred, but not 2300.

The most junior F/A on the AA seniority list has a hire date of April 2001. Yes, that's 2001. For as sucky as it was, what happened to me, I could not imagine being on the BOTTOM OF THE LIST, for 11 years... no movement, no improvement in lines/bidding... I may have be axed, but at least the axe took me swiftly and quickly. I wasn't left to rot at the bottom of the list for 11 years. :confused:
 
BobDDuck said:
Yep. Sending aircraft overseas for MX when nobody on the line speaks or reads English and all the MX manuals are written in English is a GREAT idea.
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It's bad enough when a plane comes back from ones of the places in the Florida swamps. If there's a work item that is optional, there's a good chance it wasn't done during the downtime or it's completion led to something else being broken.

This summer when UniCAL was talking about talking about a fleet reduction I figured the number of employees-per-plane for UA/CO, AA, DL, CO, and US (ca 2011 Q2):

United 100
Continental 152
American 106
Delta 109
Airways 91

So American wasn't really exceptional back then. They must be planning on getting rid of some capacity faster than can be replaced.
 
AA did good to keep their MX in house. One of the only ones left to do this. But when your competition outsources this, its tough to remain competitive. I'm surprised AFW has been kept. It can't be cheap to ferry a 777 from DFW to AFW, when its easy to just put one under tow. Then again they are widening 114 quite a bit. :)
 
its official AA looking to cut 13K from its work force
Negotiations with union upcoming in a few weeks.
 
Is overseas maintenance a regular practice for the rest of the Legacies? At KATL I always see foreign carriers flying their planes IN to have maintenance done by Delta TechOps
 
Letter sent to employees today

Dear Colleagues:
Today we outlined a bold plan to address the urgent need to restructure our company. This requires decisive action, difficult changes, and an unwavering commitment to our future success. As Tom discussed in his message earlier today, we are seeking $1.25 billion in permanent annual cost reductions from all employee groups.
Nothing about this process is easy, but the alternatives are harder still. The fact is that we're losing money every day. And every employee will feel the effects of this effort to address our challenges, from the leadership level to the frontline.
A successful restructuring requires that we reduce employee costs by significantly more than what was discussed in Section 6 negotiations. Our goal then was to reach agreements that would create greater financial flexibility as we worked to compete more effectively and avoid Chapter 11. Unfortunately, we ran out of time.
In restructuring, the bar to success is now higher. After losing $10 billion over the last 10 years, and financing those losses with debt, we must now prove to our creditors and the court that we can implement significant cost reductions, remove barriers to flexibility, increase revenue and ultimately be a consistently profitable company. If we don't demonstrate the necessary plan for success, we risk failure or the possibility that others may try to step in and convince the court their way is better.
This afternoon we met with each of the unions and shared proposed changes to our current agreements to achieve the necessary cost reductions. Every workgroup – including management – must reduce its total costs by 20 percent in order to achieve this goal.
Across all workgroups, we are proposing to maintain base pay rates to the greatest extent possible. In some cases, that will mean the savings will come from increased productivity. In others, it will rely on outsourcing. And in all cases, the changes will be focused on creating a successful business.
One of the most difficult outcomes of this process is our need to reduce the size of our workforce to better align with our streamlined and more efficient operations. The business plan and our proposals outline a total reduction of approximately 13,000 employees across our company. Our proposals are consistent with the approach of other airlines and are fundamentally necessary for our long-term success. These include:
  • Outsourcing a portion of our aircraft maintenance work and seek the closure of AFW
  • Outsourcing some airport fleet service clerk work
  • Removing major structural barriers to operational flexibility, including restrictions on code sharing and regional flying
  • Introducing work rule changes to increase productivity
We also are putting in place changes to certain benefit programs for all employees that are necessary to reach our savings target and move us in line with other airlines and large companies. Among these, we will:
  • Seek court approval to terminate our defined benefit pension plans. If terminated, the plans would be replaced with a 401(k) plan with a company match.
  • Seek to discontinue company-subsidized retiree medical coverage for current employees, but will offer access to these plans if employees choose to pay for them.
  • Move to implement common active medical plans and contribution structures across all employee groups.
We'll meet with representatives from the APA, APFA and TWU to negotiate the necessary changes through a formal process controlled by the court. We hope to reach consensual agreements with the unions in the next few weeks. Only if we can't reach agreement would we ask the court to authorize our proposed changes that we believe are fair, equitable and necessary to a successful restructuring.
Specific changes affecting independent employees – Agents, Representatives, Planners, Management and Support Staff – will be influenced by employee feedback offered in conjunction with restructuring forums held throughout the system in recent weeks. That process is ongoing and we expect to complete those plans in the coming weeks. Additionally, to achieve the 20 percent reduction in management costs, we will launch a redesign of our management and support staff structure that will result, in part, in a 15 percent reduction of management positions. Our goal is to create a leaner leadership culture of accountability and high performance.
As part of this process, we also intend to provide all employee groups annual pay increases and a new, first-dollar profit sharing plan that matches the most generous plans in the industry – provisions we propose as part of a reaching consensual agreements with the unions. Just as our competitors that went through restructuring are now earning consistent profits, we believe there is a real opportunity for American's employees to benefit when we emerge a stronger, more competitive company.
As part of our commitment to providing employees current information and facts on the restructuring process, we've created a new website, www.RestructuringAMR.com. Information will also be available on the Restructuring Resource Center on Jetnet. I hope you'll visit these sites often as we move forward.
Today's announcements are difficult news for our company and our people. But we must face this challenge head on and look to the future. We have done everything we can up to this point to cut costs and raise revenues with minimal impact on employees. And, as difficult as our proposals are for everyone, we believe that our plan is the best approach to making the changes necessary to a successful restructuring while saving as many good jobs as possible and acting in the long-term best interest of employees and all other stakeholders.
Sincerely,
Jeff Brundage
 
Going after the pension as I figured they would, and 88 seat "commuters" up to 114,500mtow. up to 255 aircraft or 50% of mainline whichever is greater.

Another interesting comment in the apa term source page. "All commuter aircraft will now operate as owned"
The proposed pay band for AA starts at +88 seat aircraft. Appears a single list(heard that rumor a few times)is not in the future plans

Guess we have 3-4 weeks to wait to hear what will happen at eagle.
 
mooneyguy said:
Going after the pension as I figured they would, and 88 seat "commuters" up to 114,500mtow. up to 255 aircraft or 50% of mainline whichever is greater.

Another interesting comment in the apa term source page. "All commuter aircraft will now operate as owned"
The proposed pay band for AA starts at +88 seat aircraft. Appears a single list(heard that rumor a few times)is not in the future plans

Guess we have 3-4 weeks to wait to hear what will happen at eagle.
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I saw that too, so I looked and the 190AR has a MTOW of you guess it 114,000. I also think RAH has a few 190AR's they would love to pull off the F9 flying. :fury:
 
Roger Roger said:
RE: mx outsourcing. It's scary. It will probably take a major maintenance error related crash for the FAA to crack down on it though.
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I don't like to "like" posts like this, but it's the sad truth. How is the FAA supposed to over sea a maint. base that outside the FAA's reach?
 
As airline bankruptcies go, this one from AA appears to be the most screwed up of any of them. First they filed bankruptcy about 7 years too late. Second they have no DIP financing going into Chapter 11 which decreases their chance of coming out of bankruptcy. One would have to believe that American has very experienced bankruptcy attorneys, but I can't figure out where these guys are going here.

Now the bean counters have taken a pen and decided they need to have 20% less employees one way or another. (less employees or less pay) Of course that would be all well and good if they had 20% too many employees already. But that is not the case. Their numbers just do not make sense here. We don't know all of the employee numbers, but we do have some that give us some insight into what is going on.

If American is going to get rid of 400 pilots then American would need to get rid of 800 flight attendants for that number to work. Why you ask? Because there are about 2 times as many flight attendants at American as there are pilots. So the 2300 figure American proposes can not possibly be correct. Either they have the pilots wrong or the flight attendants wrong. (or both wrong)

American has 12.83 pilots per aircraft and 24 .13 flight attendants per aircraft. That's about the industry average. If 400 pilots are going then that means 31 aircraft would be removed from the fleet. If 2300 flight attendants are going that would mean that 95 aircraft would be removed from the fleet. American has not announced that it is removing 95 aircraft from the fleet.

Fuel cost continues to be the problem for AA and other airlines. American spent 29% of it's gross revenue on fuel in 2010. This is not a sustainable number. They need to attack that fuel price and also find ways to reduce fuel usage. The average age of the fleet is 15 years and that is also contributing to the high fuel cost. Older planes burn more fuel than never planes.

American's biggest expense is labor which is 31% of it's gross revenue. That is the highest number in the industry and it is not sustainable. The maximum number should be at or around 25% to keep them in business.

Breaking the labor numbers out a bit further for our interests.......

Flight attendants cost the airline 3.8% of it's gross revenue. It's not a major number and trying to shave money out of that 3.8% is just not going to be productive for AA. After all what is the most they can possibly save? The number of flight attendants at AA has already been cut from 21,356 in 2002 to 14,918 in 2010.

Pilots cost American 5.6% of it's gross revenue. Again, it's like the Flight Attendant number, even with a cut there isn't much of a savings. This is compounded by the fact that American has reduced it's pilot number from 12,297 in 2002 to 7934 in 2010. This indicates the "fat" has already been cut out and there really isn't much left to cut.

AA's yield per seat mile was $13.36 in 2010. That will probably not improve while the company is in bankruptcy for a number of reasons.

I do see a major problem that I have not seen discussed. Airlines have been on a growth spurt in 2009 and 2010. Over the last two years, air travel is growing at about 7% per year. American is not getting any of that growth. In fact American's passengers boarded decreased by 9.2% in 2009 vs. 2008. That is creating pricing pressure for them which means it is difficult for them to raise ticket prices.

That's what I've come up with by looking at the 2010 financials.

Joe
 
Great post Joe.

AA is short pilots right now. They are parking 60 planes and some are 757/767.
 
If they switched some of the widebody flying to narrowbodies (what they can at least) and some of the mad dog flying got shuffled to regionals, that could account for some of the FA losses. An 88 has, what, 3 FAs? Sending that to a regional would mean a 2:3 loss ratio for the pilots:FAs. If they offer early outs to the pilots, I'd wager they'd have to turn away some since more than 400 guys would likely take it. No way they're getting 2,000+ FAs to take an early out. Numbers still don't match up, though. Possible for a Pan Am style fragmentation? Maybe Delta, United and US Air wind up with a piece of the pie.....
 
The numbers don't match because people are not accounting for productivity. FA's are already being used up to FAR limitations (I think) but the pilots at AA are the most unproductive of any airline. This new proposal would greatly increase the productivity of the pilot group, thus the reason why the pilot furlough numbers are much small than the FA furlough numbers.
 
I was talking to somebody who is relatively in the know on the bankruptcy side and said that the PBGC has told AMR that if they dump their pensions they are going to put a lien on the 4+ billion AMR is keeping in the bank to prevent a hostile takeover.

That would be hilariously funny, although it would still mean that the work groups would get screwed.
 
This was taken from restructuringamr.com


Overview of Pilot Proposals


Targeted Annual, Permanent Cost Savings: $370 million per year (20% of pilots’ total costs)
Approximately 400 pilot furloughs
Lessen restrictions on codeshare and regional flying
Increase pilot schedule max time to align with other carriers
Improve scheduling through Preferential Bidding System
Eliminate various premium pay options; provide sequence protection
Reduce dependency on reserves
Implement case management for sick absences
Introduce pay banding
Replace Pilot A and B (retirement) Plans with a defined contribution plan with 13.5% company contribution

So overall sounds like pay and QOL are going down.
 
Would a company wide pay cut save this sinking ship? I know pensions are going to get raided, benifits slashed, etc. But I am just curious that if everyone at AMR took a pay cut, do you think it would save the jobs of many who might be furghlouged?

This is a real rough patch for AMR employees, for sure. But if everyone shares the brunt, will it save a lot of the jobs.

Don't taze me, I don't know a whole lot of whats going on here at AMR, just thinking out loud. I haven't had the time to read through all the letters that have been sent out by management.
 
mshunter said:
Would a company wide pay cut save this sinking ship? I know pensions are going to get raided, benifits slashed, etc. But I am just curious that if everyone at AMR took a pay cut, do you think it would save the jobs of many who might be furghlouged?

This is a real rough patch for AMR employees, for sure. But if everyone shares the brunt, will it save a lot of the jobs.

Don't taze me, I don't know a whole lot of whats going on here at AMR, just thinking out loud. I haven't had the time to read through all the letters that have been sent out by management.
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Personally, I would rather see the company fail or, better yet, be bought/merged by another legacy than to have this proposed contract applied to a legacy. This is class warfare and we have to stand up for our livelyhood.
 
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