Seniority Numbers and shareholder value
 

Question:

Assuming that AAG management truly seeks to maximize returns for shareholders, wouldn’t providing WO regional pilots with AA seniority numbers have been the best way to do that? Granted, APA would’ve needed to be involved in that process...and that may have cost a pretty penny.

However, it feels like handing out millions in new-hire bonuses, likely having to match EDV and Republic payscales at some point (making the regional model less lucrative), funding massive budgets for recruiting efforts...all could have been prevented by providing numbers.

My assumption, which could be completely wrong, is that pilots would be lining up for their AA seniority number without all of the bonuses and the major recruiting efforts. Pilots at WOs wouldn’t be as upset when AA suddenly increases the size of classes, which currently devalues the metered flow model.

So, you spend a ton less cash thereby boosting shareholder value, you improve morale at the WOs thereby increasing stakeholder value. Seems like a win-win. Also, you can maintain the regional model far more effectively than other majors since you have pilots flocking to get the seniority number while they are still desperately competing in the arms race that is the current increasing regional compensation race.

The biggest downside I can see is this being a turn off for some AA street hires (mostly military pilots) since WO pilots would be leapfrogging them in seniority for several years. However, the advantage they have over the regional pilots is that, by getting hired directly into AA, they earn the higher wages and have the better work rules from the get-go. Is that too much of a risk to balance out he shareholder and stakeholder benefits??

Anyways, just thinking about this while reading an article about airlines trying to maximize profits and shareholder value. It just seems like a ton of money is being wasted when providing that “simple” piece of career security would balance the equation.

APA has already said no seniority numbers for pilots not on AA property.

I get that, but you can overcome any obstacle for the right price. There is no such thing as an immovable object when dealing with labor negotiation. The question is...would APA’s price to make the change outweigh the massive costs that will be incurred over the next decade plus as retirements accelerate and things get more dire for AAG and it’s regional feed.

I’m assuming that AAG looked at this option and determined that the costs outweighed the benefit. A creative solution might have been to give AA pilots stock options as an incentive to play ball. As the massive savings were realized, AA pilots would benefit due to the rising value of the stock.

It would be a disruptive change to the airline labor game, one that I assume Wall Street would view favorably.

Besides, since when has a union saying no ever stopped an aggressive management from working creatively to get what it wants?

I totally agree!

Whiskey,

Like you said, OTS hires would no longer go to AA if they had to give up seniority for 10 plus years. That seems like a big problem.

Whiskey,

Like you said, OTS hires would no longer go to AA if they had to give up seniority for 10 plus years. That seems like a big problem. APA would want to protect AA pilots over non-AA pilots(Envoy) no?

Just bring it all in and put up a fence. I don’t even know why there’s still 3 seperate certificates we all get paid the same.

Well, United, Delta, SWA only have so much capacity per month/year. I think it is a fair assumption to think that OTS pilots will still be willing to work for AA if they call. And, if those pilots lateral, that would prevent a certain portion of OTS hires from ever building much seniority on the pay scale (positive for bottom line). Downside would be incurring additional training costs due to some extra churn at the bottom.

I agree that APA will (and should) look out for their own. However, it is also in their best interest to maximize company profit/value so they can carve out a lager pile of cash for the pilot group. If the size of the pie increases, then it follows that the union will be able to make the case for a larger slice.

So, what’s more important...helping the airline become more profitable thereby giving themselves a chance to negotiate for even better pay and work rules, or fiercely protecting seniority numbers from groups of pilots who will get them anyway at some point?

I agree, and you’re only protecting those seniority numbers for OTS hires who potentially aren’t already doing their part for the overall AA machine like the WO pilots are.