If American Airlines Is Going to Screw Anyone, It Should Screw 'Em All

Categories: Schutze

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American Airlines wants to ditch all of its labor contracts. I wonder a couple things about that. But first: I do get what bankruptcy is.

It's pushing back the creditors. I get that. Maybe everybody signed deals that were too generous, back in the fat days. Now somebody doesn't want to renegotiate, because he's paranoid somebody else will get full pay. I get that, too. Bankruptcy is the time-out corner for business.

But isn't it the whole point to make sure everybody gets treated the same? That's all I wonder about here.

Where are the stories telling me that American Airlines wants to bust all of its purchase agreements with the airplane makers, including what they owe on planes already delivered? What about professional services, like law firms and outside engineers? We're going to see those deals ripped, too, right? By the same amounts, right?

The union leaders at American have been saying that management wants to tear the wage structure down to what they describe as less than industry standard. And maybe that's how it's gotta be.

But if that's how it's gotta be, I sure hope the company intends to pay below industry standard for lawyers, contract engineers, interior decorators, business travel and ... let's see, who else is on the tit ... oh, yeah, American Airlines executives.

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What bothers me is a certain cultural assumption that it's OK to go after the unions with a meat-ax before you even give the vendors and the top dogs a haircut. And I hasten to say, if that is a cultural assumption that's sort of ambient out there, I still can't assign it to American necessarily. Yet.

Maybe they won't turn out to feel that way. Maybe next time we see the top brass on television, they'll all be wearing barber smocks and have shears in their hands, hungry to go after the people who sold them their airplanes.

I just don't see it so far. It's all about kicking the unions in the ass. First. So I ask again. Why is that OK?

Please don't tell me that giving everybody else a haircut would hamper the company's ability to come out of bankruptcy and perform well, but screwing long-term loyal employees will not. Those employees made that company great, every bit as much as management did. It was a two-way street and a joint deal from the beginning.

Shafting the employees will have every bit as devastating an effect on the company's ability to perform in the future as shafting vendors and lawyers. That's why people try to avoid bankruptcy. It hurts, all the way around. But putting the torch to your agreements with your own people hurts you every bit as much as burning up the bills you get from your suppliers.

Look, mine is a modest request. Please, American: Tell us who else you intend to screw. If it's an across-the-board haircut and everybody winds up with the same bald buzz, then I guess it's your business, and good luck.

But if it's just a case of chopping the unions off at the knees because you think that's somehow more acceptable than chopping off other obligations, then that's another matter entirely.

That's a political statement -- one that people will need to keep in mind every time they make travel arrangements.

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Guest
Guest

Schutze - Do some research next time: AA has been rejecting and renegotiating all kinds of leases - for aircraft, services, everything.

Also, AA's management ranks 7th in terms of pay of major airlines, and they ARE going through cuts right now, but the labor groups are the highest paid in the industry (per hour) with the most flexible rules.  Furthermore, all the exec bonuses that people complain about are worthless (tied to stock) and were agreed to by the unions. 

Don Abbott
Don Abbott

Isn't karma the greatest thing since frequent flier miles. Thanks American for the Wright Amendment. You made crony capitalism cool in the 1970's!

Visigoth55
Visigoth55

Jim - A little study of bankruptcy law will reveal that yes, every labor group is treated equally - a company cannot disproportionately punish one labor group. For example, management will take concessions in benefits as well as a headcount reduction of more than 10%. AA is renegotiating virtually every one of its contracts from airplanes to cocktail napkins.

The reason the unions get the press is 1) they are unions and 2) AA unionized wages / productivity are not competitive with its competition. However, they will not take any larger haircut than the rest of the company.

It is a tragedy for everyone; however, the good news is that AA workers have had and will continue to have amazing benefits and wages (how many workers do you know that pay nothing for health care like AA flight attendants) but it will never be as good as the benchmark, which largely was inflated artificially by regulation.

Fireplane
Fireplane

I am a AA flight attendant and I pay for my health care. Where did you get your info??

Hldr
Hldr

Absolutely correct. Too bad more reporters don't have the balls to tell the truth like this.

Valentino
Valentino

What do you think will happen to the stock/ stockholders when AMR emerges form bankruptcy?

Paul
Paul

 AMR stock has already been delisted on the NYSE.  It was done without even a whimper.

Valentino
Valentino

but after it comes out of bankruptcy, will aamrq resume as amr?

Modfigueroa
Modfigueroa

The only way I can agree to a salary cut it would be that my mortgage, my car payments, my utilities bills, groceries bills, gas bills etc. are cut in half.

Jimmorrison316
Jimmorrison316

Horton has NO intention on cutting his "talented" management team's pay, nor will they actually cut head counts. All we will see is smoke and mirrors. This team is not smart enough to be pulling us through BK that's why they hired 12 companies to make all the decisions for them. They should ALL be fired!! Oh yeah, and the BOD too!!!

NotaSacrificalLamb
NotaSacrificalLamb

My philosophy is..American Eagle  part of AMR has already one of the lower end paid airline employees scales,,cost of living rises...can it be that the poor guy always needs to be the sacrificial lamb?...not very fair. One dedicates years of service to be put out in the cold like an orphan child..meanwhile the company has been playing with assets , moving them here and there too appear in desperate need ...to appear  in need bankrupt...its all a sham to run away from obligations..is this the American way?

cp
cp

Oh shut up. What a worthless post. 

AA employee
AA employee

I'm glad you said that! I wish more people saw it that way!

Flyaastew
Flyaastew

@Real World... Maybe not in the Constitution, the if memory serves me, The Declaration of Independence does make reference to "Life, Liberty and the Pursuit of Happiness" and AA has done the level best to suck the life and morale out of this job; if you see a smile from a crewmember on your flight, be thankful, because we are pumping each other up for our own benefit and for that of our passengers; Yes, most of us are glad to be employed in today's economy.... but we do not deserved to be raped & pillaged by greedy employers after everything we have given over these past 9 yrs, after mgmt. has lied and taken bonuses, and hidden multi million dollar London townhomes, NYC luxury apts., and God knows how many other pieces of Prime Real Estate in our Asset Portfolio that should have been disclosed in 2003 when we bent over and forked over our paychecks and sick time and vacation time; lastly to DSkinner7... you are most obviously NOT an airline employee, because you must be smoking something... and thus are not subject to the random drug/alcohol screenings that we all go through.... why do I say this? you must be high if you think AMR negotiators know anything about Good Faith Negotiating.... they take a stance and STICK to it and do NOT MOVE FROM IT~  the pilots have been in negotiations for FOUR YEARs... and the other unions for 2-3 yrs... these post Bankruptcy negs. have been SuperMediated under the watchful eye of the National Mediation Board and AA has said NO, NO, NO!!! to everything that all 3 unions have asked... The pilot's union has asked AA to Cost out each section to try to swap out and trade on some items, same with the flight attendants, and have been met with NO, NO, NO!   so take your CRAZY elsewhere, we're NOT BUYING IT HERE!   ...

ScottsMerkin
ScottsMerkin

you might want to save the rape and pillage argument for those whe truly have that happen to them,  I know you cant be comparing a small 3rd world african countrys plight with that of an airline pilot can you?

James Miller
James Miller

As long as you're willing to fly on planes engineered by cut rate fools.  Serving drinks isn't quite the same thing, even if you do have to know CPR and how to pull the handle on an emergency slide.

Douglas Scott
Douglas Scott

 and are you will to step aboard a plane that had it's maintenance done  at Juan de Carlos Auto and Aircraft Repair and Taco shop in some third world country? Because that's what they plan on doing! Maintenance that used to be done in America, by English capable  certified mechanics.

Soontobeunemployed
Soontobeunemployed

A couple of thoughts.  1.  There's petition to outsource the board of directors instead of maintenance.  Great idea!  2.  AMERICAN Eagle Airlines flies planes built by Brazil, Canada, and France.  A name change seems in order.  3.  How many of us will undergo layoffs and pay cuts to pay for the continued naming rights for American Airlines sports arena in Dallas?

ScottsMerkin
ScottsMerkin

2.  dumb argument, US airways flies Airbus, should they change their name, and did you forget that American just had an order for whole lot of Airbus as well?

Aviationh
Aviationh

I just wonder how those people that make up management live with themselves, as well as the lawyers that represent them. How are people that have always done the job they were asked to do, restructure their lives; is there a South Manhattan District for hard working people?

Douglas Scott
Douglas Scott

 simply put ; most of them are psychopaths. persons without  empathy or remorse.they make it easy on themselves  with such things as calling employees  "cost units" thereby DE-humanizing the workforce.the rest of them ar just greedy scum ( applies to the lawyers and "consultants")

Non-ya
Non-ya

Being a 21year employee at AA....I too get there has to be sacrifices, and back in 2003 WE ALL VOLUNTARILY GAVE concessions.   8 plus years later, we still have to file bankruptcy???  MANAGEMENT took their YEARLY bonuses every April, in the millions.  And you are right, there are no plans or proposals for management cuts, that has been published.  You are also right about the "MENTALITY" of AA corporate, it is antiquated to say the least.  They want to pay millions in bonuses to the consulting firms, REGARDLESS, if we are successful.....

I personally don't see how they couldn't make it work the last several years with the millions employees gave to help out, nor do I believe they can make it work with more of employee concessions. 

But what do I know....I'm just a dumb Flight Attendent

AABagApe
AABagApe

 The interesting read from AA (Jeff Brundage) in letters to employees and the NMB is where he cries, "AMR lost more than $10 billion over the past 10 years..." Well, by my simple math, it would have been more like $30-40 billion if employees hadn't offered wage and benefits concessions over the past 9 years. But wait, there's more... I personally pay about three times more for my medical benefits than I did five years ago, thanks to shell game increases, and an infinite quantity more than I did 20 years ago when I received full medical benefits AND cash back by selecting an HMO option. When medical benefits started that upward hike, the HMO benefit was cancelled completely. You figure out why.

ScottsMerkin
ScottsMerkin

guess what, we all pay more for our benefits now than we did 5 years ago.   Nearly every large corporation, whether they have unions or not have been passing on higher insurance premiums to the employee. 

Cujo
Cujo

I'd really like to know where all the money went. DFW has had some of the highest fares in the nation for the last 20 years due to AA's stranglehold on longer flights. Perhaps now that the (illegal) Wright amendment is fading away, AA wants to keep the money flowing at the same rate? This would make a fascinating story, I'm surprised the DO hasn't done something on it. The whole sordid history from the Wright Amendment on to now would be something I'd love to read, just not from a source like the Dallas Mangled Nooz.

Get your ass in gear, Schutze. The full story, with financials, dammit!

As an aside, AA is a much nicer airline in many respects when you're not flying to/from DFW. I don't know why, but that's what I've seen from my experiences. Anyone else want to weigh in?

Max from the Sandspit
Max from the Sandspit

Interesting article in this months Texas Monthly on SWA by Sam Gwynne. Years ago United tried to take on SWA head on in the west with United Shuttle. Got their clocks cleaned cuz the unions said no way jose. Good read.

Cliffhanger
Cliffhanger

You know, I can remember when bankruptcy was actually considered somewhat embarrassing, and executives who led companies into such straights were fired in great numbers, not given new contracts and bonuses.

Douglas Scott
Douglas Scott

 exactly. breaking a lawfully binding contract was called breach of contract. bankruptcy was when all other means had failed and you were literally BROKE. now.. $29BILLION in Assets and $4Billion ready to spend CASH on hand, and the only reason for  filing would be to break unions because the lazyass executives don't WANT to negotiate in good faith, rather they want to DICTATE to increase their own wealth.disgusting where our country has gone.

Paul
Paul

 After the 1st Braniff bankruptcy, airlines realized that you do not have to be cashless in order to file for reorganization.  The Braniff bankruptcy showed that the most important aspect of an airline is as an ongoing concern.

The BK courts recognized this and allow airlines to file for bankruptcy while they are still an ongoing concern and that the termination of the business as an ongoing concern is high likely if a reorganization does not take place.

One of the big factors in AA bankruptcy is the defined benefit pension plan underfunding which I believe is about $50 billion.  I may be wrong on this number, so if any one has a good number for the unfunded defined benefit pension liability, please let us know.

I believe that AA is the last of the legacy carriers to reorganize in BK court.

I often wonder how much of this is due to the termination of the Wright Amendment restrictions in a few years.

Rex
Rex

What new contracts and bonuses are executives getting?

Anon
Anon

the CEO is leaving to take a lucrative job in finance, but in many cases, management does get "retention" packages.

Douglas Scott
Douglas Scott

 You'll see! I figure a 30-40% raise, maximum profit sharing, double the amount of stock they had BEFORE BK, and no performance requirements (is if they had any) for annual bonuses.

Hulbert55
Hulbert55

you nailed it... good job.. i am an AA flight attendant.

Douglas Scott
Douglas Scott

one word comment: Hallelujah! this is the first time I've seen the TRUTH in print since the mid-sixties. Thank you for the refreshing  difference! Just follow the corporate math : they say each work group must shave 20%. There are 12,000 managers, yet only 1400 are going to get the axe.(11%). Maybe it's because they cost TWICE as much, that only half as many will have to go. But then, what about the  " our labor costs are to high" complaint.  Never a strAAight AAnswer.

Douglas Scott
Douglas Scott

 as a p.s. ; notice that  AMR said 20% of management and STAFF.  so.. of those 1400 alleged to be furloughed, you can expect the majority will be the STAFF. so a bunch of managers will have to make due without a secretary. business as usual at AMR  :over-managed ,poorly managed.

Non-ya
Non-ya

Yes, when employees gave concessions in 2003, for one work group it was 37% in pay and benefits, so tack on another 20%.

Takumarumomochi
Takumarumomochi

Look forward to Doug Parker and his team taking over and sending Dallas management andtheir years of sloppy decisions to the unemployment line. AA has gone down hillsince Crandall left. Let the strong survive. Let the successful management teamrun the airline.

Douglas Scott
Douglas Scott

 got that right except that the top dawgs will get paid handsomely  (CEO get 5 times his annual comp. ) to move on to other jobs.

Paul
Paul

Jim, why are you surprised at this?

Anyone who has watched an airline go through bankruptcy reorganization since deregulation should know by now that the following is what happens:

1) Stockholder equity is wiped out.  AA's stock has already been delisted on the NYSE.2) Any bonds issued by the company are now worthless (See unsecured creditors.)3) Secured creditors get paid first and are paid a portion of what is owed to them. 4) Unsecured creditors get paid last and are often only paid a few cents on the dollar.  The smart suppliers to AA probably had them on a cash basis already.5) Any defined benefit pension plans will be stopped.  The question is what happens to the unfunded liabilities as of the date of the filing.  Three things can happen, 1) they get funded; 2) they get partially funded; or, 3) the whole thing gets chucked over to the PBGC.6) Existing labor agreements will be tossed out.  New ones will be written.  The question is what the new ones will look like.7) The new company will offer a defined contribution pension plan and not a defined benefit pension plan.8) The lawyers do get paid.9) For airlines the aircraft are generally leased, not owned, so really it is a question of whether or not the new company will be able to make the payments.10) When the DIP offers its plan to the BK Judge, the creditors usually have signed off on it.

Don't forget that in the history of AA, its management never met an operating cash flow problem that couldn't (edit) be solved by a worker concession.

Dskinner7
Dskinner7

AA has been trying to work with the unions and negotiate fairly.  The union officials refuse to budge knowing that they will end up losing everything yet they continue to turn away from what AA has offered.  I would not want them representing me!!!

Non-ya
Non-ya

You must be drinking the AA corporate KOOL-AID.

After voluntarirly giving 37% in pay and benefits in 2003 to HELP AA, with no increase since, I personally am not staying for a penny less. 

Me and my co-workers  risk our  lives everytime we go to work and get on an airplane, we are responsible for the lives and safety of all passengers. 

Tell me, you want to be on an airplane with $10 an hour employees????

You should educate yourself before you make such an ignorant, misguided comment.

Flyfastfl
Flyfastfl

Where the hell did you come up with AA is trying to negotiate fairly? First of all are you AA management? They have never tried to negotiate fairly with the unions.

The wages Paid are back to 1980's, flight attendants have lost close to 36 % in 2003 when offering to prevent bankruptcy meanwhile AA keeps taking bonuses, spending money to help other airlines in bankrupcy, refurbishing planes, ect.

AA management Wants about 30 % again by the time everything else is added up. They would never give back what's been given. The work conditions are extremely bad, management needs to go. So before you post something that's untrue, ask directly at the source, and educate yourself!!! AA now hiring new management willing to make AA the best in the industry. What AA needs is management willing to walk in the employees shoes and feel their pain. The union members have sacrificed enough.

How AA negotiates is by methods of intimidation. They try to destroy contractsto get what they wanted years ago. They don't care about passengers or their employees. When employees are sick, their are often intimidated about it. What they are forcing down their throats is absolutely disgusting! All their lies should be exposed to the flying public.

Ilovesunvalley
Ilovesunvalley

Dskinner7 must be an executive at AA. There is no other explanation for such drivel.

Bonnie
Bonnie

You need to get a clue here... There is no negotiation process here.  AA says take it or leave it.  Arrogance beyond what is normal.  I think you need to cut from the top.  The Unionized work groups have taken plenty of cuts since 2003.  Yet they can take bonuses for their so called upper management.  Get a clue.  A company who can post losses year after year and still take bonuses is not management.  They are really criminals wearing a suit who sits behind a desk and pushes a pencil..  They are clueless and so are you.

Cjm3
Cjm3

AA isn't trying to negotiate - its their way or the highway and that's why they keep taking more and more from the employees and the execs never give up anything!! This is getting to be norm in the USA - accept less pay and send the other work to other countries!!

Douglas Scott
Douglas Scott

Hahaha .. fAAir and  in good fAAith are not part of the AMR dictionary.  it's always been my wAAy or the highway. if they bargained in good faith  negotiations wouldn't take upwards of 4 years. if the unions "accepted" what aa has to offer , top Flight attendant pay would be $17/hr. top pilot pay would be $90.00/ hr , and of course the CEOs think they are equal to the top CEO's so their pay would be  above $23Million. Yes all's fAAir in the AMR world.

PMAJ
PMAJ

Dskinner, clearly you are either a member of AA's management or just completely ignorant of everything on the planet. AA has been working AGAINST their unions for the past decade. They have not participated fairly with any of their unions. As a matter of fact, they opened the negotiations with their flight attendants, FOUR YEARS AGO, telling them that they were only offering a "zero sum" contract. Do you know what that means? It means they are offering NOTHING.

Adtobias
Adtobias

Dskinner that is not true. AA is not working with union. Where do you get you information?

James the P3
James the P3

The employees are making out better than any other creditor.  They are being paid 100 cents on the dollar for work they have done up to today.  Even their pension benefits are going to be kept intact.  They aren't going to accrue more going forward, but what they have accrued is not going to be reduced.

Every other creditor is taking a haircut.  If you're a law firm that has done work for American and didn't get paid before their filing, you're a general unsecured creditor and you're going to get pennies.  If you supply American with fuel, or sodas, or paper, or any of the thousands of other things that airlines consume in their standard operations and didn't get paid before bankruptcy, you're going to get pennies.  

That's the way it should be.  Employees should be at the head of the line.  They should be paid in full for work they've already done.

But that's not what we're talking about here.  We're talking about work they're going to do tomorrow.  And the next day.  And three years from now.  If employees don't like the terms of employment going forward, they can seek other opportunities elsewhere.  They can end their employment at any time with no notice.  And if they do so today, they will have been paid every cent to which they are entitled under the existing contracts.

That's better than any other creditor.

OhMiss
OhMiss

Isn't it easy to advise others ( when you are not in their shoes ) that if they don't like their terms of employment, they can just quit and seek employment elsewhere. As is usually the case with a sophomoric statement such as this, seeking other employment, especially in an economic climate such as the one we have been suffering this past decade is an unavailable option.

James the P3
James the P3

So you don't want to quit and seek employment elsewhere because obtaining alternative employment is an "unavailable option" in this "economic climate."  Meanwhile, if any American employee were to quit, American would have no problem finding a replacement--they've got filing cabinets full of resumes of people willing to take that job.  It's pretty easy to see why management believes they have disproportionate bargaining power.

But you're right--the situation at American is toxic and it reflects in the customer service provided on every flight.  Ever since Bob Crandall, management and labor have been at each other's throats.  Both have a ludicrous sense of self-entitlement that is unjustified by the facts.  Neither American's management nor its unionized employees are nearly as good or important as they think they are.

I have to take a trip on American to LIM in two weeks and MXP in two months, and I'm absolutely dreading both trips.

Real World
Real World

So remind me......exactly where in the Constitution - or any other laws - are you guaranteed a job that you like?

cp
cp

Nowhere! And I don't think these employees exactly care for their jobs now. And that's not the point. The point is at which CUSTOMER satisfaction meets SERVICE. It seems that the execs (and people like you) forget that these are people upon which whose smiling faces customer satisfaction depends. Consumers aren't simply buying a product when they purchase an airline ticket, they are purchasing an experience. And that seems to be something that executive management at AA has long forgotten. 

Jlbflies
Jlbflies

your not 100% right about this. they have and do plan to take moneys already earned by us. paying us less for our sick hours. taking away already earned vacation days then paying us less for our already earned vacation days.and yes if we don't like it we can quit. And sadly working for a company for many years (26 for me) a getting the shaft from them is the way of the future.  

q2alphadog
q2alphadog

The customer will get what they pay for whether the current employees decide to stay or not.  Ticket prices will be higher because all airlines will be on a more level playing field, but service?  Forget about it.  You'll be lucky if they're willing to save your life.  We are approaching rock bottom.  Enjoy your flight.

ohmiss
ohmiss

Having been a flight attendant  from back in the day when I was PROUD to work for American... I admit the flying experience on AA  and the level of service  now totally stinks...  AA has stripped us (the flight attendants) of all the tools necessary to provide a decent service.   I can get on my plane and smile and be as friendly to all of you as I can be... but you know what... I'm tired... I'm tired of apologizing on behalf of AA that we don't have a blanket when you are cold... or we run out of a meal choice (I fly international)... or the video screen is broken and you cant see a movie this 6 hr flight... or any other host of issues I run into on a daily basis.  I am frankly embAArased to go to work... as I have a MUCH higher standard for myself and for the level of service I should be performing.  (I come from the world of corporate aviation and those lovely private jets!) ... Sadly, I agree with you... We are approaching rock bottom...     Our job has become WAY more challenging and stressful since 9/11... and I took a 30% paycut in 2003... and now they want more from me.  I make less now than I made in 1997... and have not had a penny pay raise since '03... its 2012... and because i am part of a "Union" my head is the first on the chopping block again... yet the executives refuse to disclose any figures about cuts  to their pay or disclose any company financials....and have stopped negotiating... Yep... I will probably quit/ retire or whatever happens here when all this shakes out as frankly it is TOXIC for my personal happiness to keep subjecting myself to the enviornment at AA.   Besides no one wants to work where they are unappreciated... it is like being in a really BAD marriage) ...  And for what they will be paying me... I'm more than happy to go back to my corporate job.. fly part time and make more money)   What AA will truly lose in all this  ( ie The cost NOT figured in by the bean counters)... are the many flight attendants like myself who actually care about the job they do...and truly took pride to make the travel experience "World-Class"....While we are fighting for the integrity of our profession... and our financial future... (and frankly the future of YOUR travel experience as well)... our bosses want to turn our career into a revolving door of minimum wage type workers...  (if you don't believe me... they tried it at SkyBus... Flight attendants were paid min wage plus commissions off what  food and drink they sold on the flight...  If you brought your OWN coffee or food and beverage on board.... you were given nasty looks by them and even scolded at times!....(They are out of business now... but not because of labor costs...)... Is this what you want when you travel for business?...  Or to start your vacation???  Go on your honeymoon???.... Like most things in this wold... Eventually you get what you pay for folks... And as far as saving your life goes... don't count on me... I'm busy trying to  save my own.

cp
cp

Well, I don't know about getting what you pay for.... I am a consumer and a loyal Southwest flyer and my ticket prices are ALWAYS $200 less round-trip than at AA. 

Non-ya
Non-ya

I'm a 21 year AA Flight Attendent.....I couldn't of said it better.

I'm proud to be an AA Flight Attendent and what American stood for, but I am embarrassed by the current AA management.  I too have higher standards and back in the day, that's what we were hired for.

I, too am leaving when the final decisions are made.  Good Luck AA and Passengers!

Douglas Scott
Douglas Scott

 there will be 20% fewer flight attendants to work even more flights. what do you think is going to happen? you can stretch a human only so far.Of course the math the executives understand  shows it's absolutely possible.  just work those cost units (as employees are called)  26 (twentysix!) hours a day 360 days a year.

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