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View Full Version : A concise article on AA


Tsuda
02-06-2012, 10:54 AM
Is American the Worst-Managed Airline in America? | Business | TIME.com (http://business.time.com/2012/02/06/is-american-the-worst-managed-airline-in-america/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+time/business+(TIME:+Top+Business+Stories))


BIG COMPANIES
Is American the Worst-Managed Airline in America?
By BILL SAPORITO | @bilsap | February 6, 2012 |


Members of the Transport Workers Union (TWU) were scheduled to vote on a new contract with American Airlines, or AA, this December that would have lowered the airlineís cost and outsourced hundreds of jobs that werenít directly related to aircraft maintenance. They never got the chance because American instead filed for bankruptcy. On Wednesday AA announced it planned to outsource just about all of them ó 4,600 mechanics jobs are going, along with 4,200 ground-service positions, 2,300 flight attendants and 400 pilots. About 15% of Americanís work force is getting a one-way ticket to Termination, Texas ó thank you for dying with us today.


Of the cuts, the latter two figures make the most sense: American isnít likely to be needing as many flight crews by the time its bankruptcy is settled because passengers are going to be bailing. Flying is horrible to begin with, and flying an airline run by a group of really angry people isnít likely going to enhance the service level.

American was the last of the majors to file for bankruptcy ó some have gone through the Chapter 11 bath twice ó but itís a standout for another reason. Over the long term, it has arguably been the worst-managed major airline ó perhaps the worst-managed service company ó thatís still in business. Over the past decade American has lost some $11 billion, which is about 15% of the industryís total losses over the history of the entire industry. Thatís quite an accomplishment.

AA is an airline that always seems to be mad at someone: employees, competitors, passengers, governments, OPEC. The company has been at war with its unions for years. Granted, the TWU is a rough crew, and the pilots are no picnic either. But both groups already negotiated givebacks and the TWU was on the verge of coughing up some more. Blaming the unions, which is basically what management is doing, misses the point. As a very smart CEO of a unionized company said to me years ago: ďIf you arenít getting along with your union workforce, donít call it a labor problem because itís not. Itís a management problem.Ē And American has managed its workforce badly for years.

American has historically tried to do everything but compete. It has been trying for years to carve up the London/New York City market with British Airlines, despite the furious protest of Sir Richard Branson at Virgin Atlantic. Indeed, American also tried hard to prevent Virgin America, in which Branson had an interest, from even getting off the ground. American instead should be trying to copy Virgin America, which has one of the best service products in the air and can charge premium prices because of it. Instead, American has been losing altitude in critical markets such as New York City and Chicago, and canít grow revenues. You canít pin the lack of revenue growth on mechanics or ground crews. As airline analyst Vicki Bryan of Gimme Credit told the New York Times:*ďThey are still playing football with a leather helmet against Delta and United.Ē Killer quote, that.

Instead, American screwed everybody, including the DallasĖFort Worth area, which lured American there in 1979 and where American is planning to close its maintenance base. American intends to outsource most of that work now, and itís even possible that the work on the engines of American Airlines wonít be done in America, though a maintenance facility in Tulsa, Okla., will be expanded. AA also failed to make most of the payments due on its pension plans ó meaning it is trying to dump future obligations onto taxpayers. Shareholders, of course, get wiped out.

If top managements abruptly decides that it has 13,000 too many employees, shouldnít the first cuts be to top management, where all the bad decisions were made? Thatís probably why other companies are sniffing around American. Theyíre probably thinking that anyone could run the company better than its current management. Speaking of which, even US Airways is reportedly giving American a sniff. If US Airways thinks youíre under managed, youíve pretty much proved you couldnít run a rental car shuttle, never mind an airline.



Read more: Is American the Worst-Managed Airline in America? | Business | TIME.com (http://business.time.com/2012/02/06/is-american-the-worst-managed-airline-in-america/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+time/business+(TIME:+Top+Business+Stories)#ixzz1ldJcOO6 6)


eaglefly
02-06-2012, 12:32 PM
Is American the Worst-Managed Airline in America? | Business | TIME.com (http://business.time.com/2012/02/06/is-american-the-worst-managed-airline-in-america/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+time/business+(TIME:+Top+Business+Stories))


BIG COMPANIES
Is American the Worst-Managed Airline in America?
By BILL SAPORITO | @bilsap | February 6, 2012 |


Members of the Transport Workers Union (TWU) were scheduled to vote on a new contract with American Airlines, or AA, this December that would have lowered the airlineís cost and outsourced hundreds of jobs that werenít directly related to aircraft maintenance. They never got the chance because American instead filed for bankruptcy. On Wednesday AA announced it planned to outsource just about all of them ó 4,600 mechanics jobs are going, along with 4,200 ground-service positions, 2,300 flight attendants and 400 pilots. About 15% of Americanís work force is getting a one-way ticket to Termination, Texas ó thank you for dying with us today.


Of the cuts, the latter two figures make the most sense: American isnít likely to be needing as many flight crews by the time its bankruptcy is settled because passengers are going to be bailing. Flying is horrible to begin with, and flying an airline run by a group of really angry people isnít likely going to enhance the service level.

American was the last of the majors to file for bankruptcy ó some have gone through the Chapter 11 bath twice ó but itís a standout for another reason. Over the long term, it has arguably been the worst-managed major airline ó perhaps the worst-managed service company ó thatís still in business. Over the past decade American has lost some $11 billion, which is about 15% of the industryís total losses over the history of the entire industry. Thatís quite an accomplishment.

AA is an airline that always seems to be mad at someone: employees, competitors, passengers, governments, OPEC. The company has been at war with its unions for years. Granted, the TWU is a rough crew, and the pilots are no picnic either. But both groups already negotiated givebacks and the TWU was on the verge of coughing up some more. Blaming the unions, which is basically what management is doing, misses the point. As a very smart CEO of a unionized company said to me years ago: ďIf you arenít getting along with your union workforce, donít call it a labor problem because itís not. Itís a management problem.Ē And American has managed its workforce badly for years.

American has historically tried to do everything but compete. It has been trying for years to carve up the London/New York City market with British Airlines, despite the furious protest of Sir Richard Branson at Virgin Atlantic. Indeed, American also tried hard to prevent Virgin America, in which Branson had an interest, from even getting off the ground. American instead should be trying to copy Virgin America, which has one of the best service products in the air and can charge premium prices because of it. Instead, American has been losing altitude in critical markets such as New York City and Chicago, and canít grow revenues. You canít pin the lack of revenue growth on mechanics or ground crews. As airline analyst Vicki Bryan of Gimme Credit told the New York Times:*ďThey are still playing football with a leather helmet against Delta and United.Ē Killer quote, that.

Instead, American screwed everybody, including the DallasĖFort Worth area, which lured American there in 1979 and where American is planning to close its maintenance base. American intends to outsource most of that work now, and itís even possible that the work on the engines of American Airlines wonít be done in America, though a maintenance facility in Tulsa, Okla., will be expanded. AA also failed to make most of the payments due on its pension plans ó meaning it is trying to dump future obligations onto taxpayers. Shareholders, of course, get wiped out.

If top managements abruptly decides that it has 13,000 too many employees, shouldnít the first cuts be to top management, where all the bad decisions were made? Thatís probably why other companies are sniffing around American. Theyíre probably thinking that anyone could run the company better than its current management. Speaking of which, even US Airways is reportedly giving American a sniff. If US Airways thinks youíre under managed, youíve pretty much proved you couldnít run a rental car shuttle, never mind an airline.



Read more: Is American the Worst-Managed Airline in America? | Business | TIME.com (http://business.time.com/2012/02/06/is-american-the-worst-managed-airline-in-america/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+time/business+(TIME:+Top+Business+Stories)#ixzz1ldJcOO6 6)

Horton is on the precipice of "rebuilding" American Airlines with rotted wood and bad concrete. If you always do what you've always done, you'll always get what you've always gotten.

I've lowered my odds of AA coming out of this intact and under the new "plan" down 40/60 against.

Mink
02-06-2012, 01:06 PM
Good article; pretty much sums it up. Truth hurts.


JamesNoBrakes
02-06-2012, 03:49 PM
If you always do what you've always done, you'll always get what you've always gotten.
I just want to say, that is a great quote!

squawkoff
02-06-2012, 04:03 PM
If you always do what you've always done, you'll always get what you've always gotten.

Isn't that a roundabout definitions of insanity?

More Bacon
02-06-2012, 04:20 PM
definition of insanity?

Along with "I'm an airline pilot."

Tomahawk58
02-06-2012, 05:24 PM
The arm chair chorus never ends. I would suggest you all go start your own airline. Clearly you have everybody else's figured out!

GQpilot
02-06-2012, 06:40 PM
The arm chair chorus never ends. I would suggest you all go start your own airline. Clearly you have everybody else's figured out!

Oh, cmon', the guys an idiot. His reorganization plan is a joke. Grow 20%, brilliant. We may be armchair CEOs, but ask any airline CEO, Delta, US Airways, Alaska, they're going to say the same thing.

JamesNoBrakes
02-06-2012, 06:46 PM
The arm chair chorus never ends. I would suggest you all go start your own airline. Clearly you have everybody else's figured out!
It's the best way to make management jobs.

eaglefly
02-06-2012, 06:47 PM
Oh, cmon', the guys an idiot. His reorganization plan is a joke. Grow 20%, brilliant. We may be armchair CEOs, but ask any airline CEO, Delta, US Airways, Alaska, they're going to say the same thing.

Perhaps there's something else in the water in DFW ? :rolleyes:

GQpilot
02-06-2012, 07:13 PM
Perhaps there's something else in the water in DFW ? :rolleyes:

The comment on Doug drinking funny water was about the only intelligent thing he said. Of course it showed a complete lack of class though. No class and dumb, what a great combination for a CEO.

Grumble
02-07-2012, 04:54 AM
The arm chair chorus never ends. I would suggest you all go start your own airline. Clearly you have everybody else's figured out!

Do you need a snorkel to breath?

Mink
02-07-2012, 07:34 AM
The arm chair chorus never ends. I would suggest you all go start your own airline. Clearly you have everybody else's figured out!

Unbelievable...

eaglefly
02-07-2012, 08:08 AM
Unbelievable...

Not really............actually, entirely predictable.

Tomahawk58
02-07-2012, 09:04 AM
Not really............actually, entirely predictable.

What's been entirely predictable is the constant chorus of "we're not gonna take it anymore" and other platitudes on the dismal state of the industry that permeate this forum.

Well, quit with the incessant whining and get in the game! Offer up practical and actionable solutions that would return not only AA but most other Airlines to a sustained model of profitability.

Advising folks to seek other career fields or seek their fortunes elsewhere globally, does nothing to advance the future careers of airline pilots. Hope isnt a strategy either!

Complaining without viable solutions is a lot like peeing in your pants, you get a warm comfortable sensation for about thiry seconds!


Take me up on it, start your own airline and report back a decade on the success. I'll still be here at AA waiting.......!

eaglefly
02-07-2012, 09:25 AM
What's been entirely predictable is the constant chorus of "we're not gonna take it anymore" and other platitudes on the dismal state of the industry that permeate this forum.

Well, quit with the incessant whining and get in the game! Offer up practical and actionable solutions that would return not only AA but most other Airlines to a sustained model of profitability.

Advising folks to seek other career fields or seek their fortunes elsewhere globally, does nothing to advance the future careers of airline pilots. Hope isnt a strategy either!

Complaining without viable solutions is a lot like peeing in your pants, you get a warm comfortable sensation for about thiry seconds!


Take me up on it, start your own airline and report back a decade on the success. I'll still be here at AA waiting.......!

Yes, it can be frustrating for management types here on this forum, but here's a few stray ideas;

- Price your product above its costs.
- DEMONSTRATE the concept of value in your employees, instead of perpetually trying to screw them and line your pockets at their expense.

Southwest has figured those two concepts out, wheras AMR refuses to and the repetitive results are obvious. :cool:

Tomahawk58
02-07-2012, 09:32 AM
Yes, it can be frustrating for management types here on this forum, but here's a few stray ideas;

- Price your product above its costs.
- DEMONSTRATE the concept of value in your employees, instead of perpetually trying to screw them and line your pockets at their expense.

Southwest has figured those two concepts out, wheras AMR refuses to and the repetitive results are obvious. :cool:

So how many of our fellow pilots here have put forth a retirement model sans DB plan in the past thirty years? If indeed AA had operated at SWA cost structure for the past thirty years, where do you suppose we'd be today?

block30
02-07-2012, 10:03 AM
The arm chair chorus never ends. I would suggest you all go start your own airline. Clearly you have everybody else's figured out!

It is so funny you bristling at insults being thrown at management. What is your occupation, again? Maybe we can get some pom poms ordered up to help with the cheerleading of AA management. :cool:

Mink
02-07-2012, 10:55 AM
I think the article in the original post says it all: AA is the most most poorly managed airline in the business. Yes, there's a lot of whining and venting here (I'm guilty of both), but having the company offer up a swift kick to the jimmies in the form of the 1113 sheet, and having others come along and essentially tell everyone, "just give 'em one more chance" or "C'mon! Get on board for the big win!" only rubs salt in the wound.

AA pilots deserve to be shown real corporate leadership - a new direction out of the swamp. So far, it's just more of the same.

Well, except for the new paint job.

squawkoff
02-07-2012, 12:01 PM
Along with "I'm an airline pilot."

Where do you get "I'm an airline pilot" out of that?

More Bacon
02-07-2012, 12:07 PM
Where do you get "I'm an airline pilot" out of that?

I was referring to another mark of insanity. :D

Tomahawk58
02-07-2012, 12:10 PM
It is so funny you bristling at insults being thrown at management. What is your occupation, again? Maybe we can get some pom poms ordered up to help with the cheerleading of AA management. :cool:

No bristling on my part, I've enjoyed a wonderful career over the past 23 years and have full expectation that the future will be just as bright.

Do you have a constructive input?

aa73
02-07-2012, 12:26 PM
Tomahawk.... please stop. Please. You're embarrassing our entire pilot group.

More Bacon
02-07-2012, 12:29 PM
have full expectation that the future will be just as bright.

speaking of "insanity..." :eek:

eaglefly
02-07-2012, 12:31 PM
So how many of our fellow pilots here have put forth a retirement model sans DB plan in the past thirty years? If indeed AA had operated at SWA cost structure for the past thirty years, where do you suppose we'd be today?

Unprofitable. Cost structure is only half the equation. Employee respect and a corporate culture that inspires as opposed to alienates would also be required. That's why it appears AA isn't going to make it. Only changing half the problem (and with a club), doesn't solve the other half, which is required.

Of course, you can continue to cling to "the beatings will continue until morale improves" philosophy, but that still leads to the same destination eventually.

Clearly, you don't get it, so why would anyone else there get it ?

....and the beat goes on. :(

eaglefly
02-07-2012, 12:33 PM
Tomahawk.... please stop. Please. You're embarrassing our entire pilot group.

Technically he may be, but in reality, he's part of the "us" side of "us and them" (as seen from the glass tower). We are the "them", AKA the clubee's.

block30
02-07-2012, 12:36 PM
No bristling on my part, I've enjoyed a wonderful career over the past 23 years and have full expectation that the future will be just as bright.

Do you have a constructive input?

Cut to...let's call it 2:40 to 2:52. Then just go back and watch the whole thing :D

YouTube - Broadcast Yourself. (http://m.youtube.com/#/watch?v=p5jpSvjo45E)

My work is done here. :p

Tomahawk58
02-08-2012, 02:57 AM
speaking of "insanity..." :eek:

So here's a proposal. Let's consider this thread a time capsule. Why don't we revisit AA's progress on February 8, 2022 and see who comes closest to their respective prediction.

With such abject negativism, I'm not sure how some of you are able to function on a daily basis. Clearly, the airline industry with all it's unpredictability isn't the place or the career field for a few of you. Do the industry a favor and leave thus providing opportunity for those willing and able to help move it forward!

JamesNoBrakes
02-08-2012, 04:55 AM
Do the industry a favor and leave thus providing opportunity for those willing and able to help move it forward!
The only thing that will make it move forward is less airlines, less planes, and less pilots.

Tomahawk58
02-08-2012, 05:12 AM
The only thing that will make it move forward is less airlines, less planes, and less pilots.

All the more reason to have folks on both sides excited about the prospect of constructive discourse and the exchange of positive ideas to make the industry more robust.

Why be in an a career field or job that you spend all your time complaining about. So many more folks are waiting for the opportunity to move forward!

Any takers or leavers?

Mink
02-08-2012, 07:13 AM
So in your mind, the 1113 sheet was which, "constructive discourse", or "the exchange of positive ideas"? Or both?

A320
02-08-2012, 07:39 AM
So how many of our fellow pilots here have put forth a retirement model sans DB plan in the past thirty years? If indeed AA had operated at SWA cost structure for the past thirty years, where do you suppose we'd be today?

I'm sure everyone would love to be compensated for flying planes at SWA rates for small narrow body jets.

Clear Right
02-08-2012, 07:42 AM
All the more reason to have folks on both sides excited about the prospect of constructive discourse and the exchange of positive ideas to make the industry more robust.

Why be in an a career field or job that you spend all your time complaining about. So many more folks are waiting for the opportunity to move forward!

Any takers or leavers?

My prediction on moving forward, AMR will emerge from this a stand alone. AMR will strengthen its partnership with BAE and JAL on the international front. If foreign investment rules change, big investment from IAG.

On the domestic side AMR will strengthen domestic codeshare with JetBlue and Alaska. If unable to do so due to scope, they will attempt a merger with one or both, however this would be very expensive as both carriers are very successful, and will be costly. There would be other hurdles from Anti-Trust over New York, regardless some type of JetBlue and Alaska Merger or Partnership, Interline, Codeshare will result.

This does not solve the product, revenue, or customer service issues AMR has. New airplanes are needed, new interiors, and new entertainment systems are a must. They will outsource all their heavy MNX (as does everybody else), they will freeze or eliminate pensions (as everybody else has). I think you will be pleasantly surprised with the final compensation package, it will probably be industry average, however they will seek productivity gains to allow for a competitive edge. They will use profit sharing and 401ks for retirement (as everybody else has).

The biggest challenge will be regaining the trust of employees, so AMR can compete customer service wise. This is a service industry, and AMR unfortunately needs to regain passenger loyalty. Personally I think AMR will be great, but the bottom line (no offense) is every time I get on an AMR flight the inflight service is poor, the seats are to close together and old, entertainment system is non-existent in coach or outdated, the product is poor compared to the rest. This will take some effort on Managements part to get the pride in AMR back for its employees to deliver an excellent customer service product.

How's that for optimism :) Good Luck AMR pilots, hope it works out in the long run.

Tomahawk58
02-08-2012, 07:48 AM
I'm sure everyone would love to be compensated for flying planes at SWA rates for small narrow body jets.

Did you miss the part about the past thirty years, not just the latest pay rate but the entire package.

tsquare
02-08-2012, 07:50 AM
Did you miss the part about the past thirty years, not just the latest pay rate but the entire package.

I'll take our retirement package over SWA's.

Tomahawk58
02-08-2012, 07:51 AM
So in your mind, the 1113 sheet was which, "constructive discourse", or "the exchange of positive ideas"? Or both?

Compared to DAL, UAL, US and others, it's both! Do you have a constructive counter to it that positions AA to be where those airlines are?

NERD
02-08-2012, 10:14 AM
Get back to your cubicle brundage.


Compared to DAL, UAL, US and others, it's both! Do you have a constructive counter to it that positions AA to be where those airlines are?

eaglefly
02-08-2012, 10:35 AM
get back to your cubicle brundage.

............