757Driver's correct, Management's position during negotiations for the pilot contract stated cost neutral. Based on their statement below, copied from the AS website watercooler, they got cost neutral
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Fuzzy math?
Q. Second quarter results indicate that we have 900 fewer employees (9.1% drop) over last year, yet we have 5.2% increase in wages. Why is there such a large increase in wages paid given the large number of fewer employees and no management raises?
A. It helps to break this down a bit since the total includes both wages and benefits. Both are important to look at since benefits costs are 48% of wages. In other words, for every dollar in wages, benefits cost the company another 48 cents.
Here is the breakout:
Wages - down $7 million or 2.6%
Benefits - up $26 million or 26%
Wages: Understanding the change in wages requires you to go one level deeper.
-Pilot wages are actually down slightly- fewer pilots offset by the increase in rate in the new contract.
-Flight attendant wages are up in total - again few flight attendants but the ones that are flying are, on average, more senior and earn more. There is also a mix issue where we now have more 800s, which require four flight attendants, but the MD-80s (which we were flying last year at this time) only required three.
-Management wages are down - fewer management people offset by a full six months of the rate increase that occurred in the spring of 2008
-Wages for mechanics, and IAM folks are all down mainly driven by fewer people offset by some contractual increases
Benefits:
Almost all of the increase ($24 million) is because of the increase in pension expense. Because of the dismal returns in the market in 2008, the value of the pension assets declined significantly. Accounting rules require that we set aside (expense) more going forward to make up that loss. -- Brandon Pedersen, VP finance & controller (August 3, 2009)