AA Pilots: Bankruptcy is YOUR Fault
By Robert Mark on November 30th, 2011
From Paris —
There’s no small amount of irony that AMR, parent of American Airlines and American Eagle, filed for Chapter 11 bankruptcy protection – a move certain to save the carrier millions over the next few years – only a day before 2,000,000 million British public sector workers walked off the job to protest pension cuts in the UK.
Gerald Arpey stepping down as American’s CEO is just a tad late though since the airline lost billions in six of the eight years he ran the place. The union’s hated him so it was no surprise management told everyone that the straw that pushed the carrier over the edge was the inability of AA’s 11,000+ pilots to agree on productivity cuts in the upcoming contract.
You bad pilots.
The greedy Allied Pilots Association’s Master Executive Council, in fact, reportedly refused to even present management’s last offer to the rank and file. Clearly, just as in Britain, fault clearly rests with labor. Here we are in the worst recession/depression in a century and these damned pilots still want stuff. The nerve of these pilots trying to outmaneuver management.
Now American’s filed bankruptcy because those greedy employees went out and blew their huge bonuses again with no thought for tomorrow. Oh wait a minute … that’s right … it was just management who picked up those bonuses wasn’t it. Oh whatever.
Obviously those stupid pilots don’t realize the corner they’ve put management in. Those poor fat cats are down to their last $4.1 B in cash too. That doesn’t leave much for anyone else for god’s sake.
C’mon you American pilots. Times really are tough. Can’t you just take one more for the team … just once more? Management’s got your back this time … really.
“Oh Paaaleazzzze!” But a common philosophy that labor and management are natural enemies is also ridiculous. That antagonism was born from too many layers of airline management losing touch with the pilots, flight attendants, mechanics and ground personnel who actually perform the work.
American employees – like the rank and file at most of the other airlines in the US – have spent most of the last decade giving back to their airline when times are hard, only to be stalled by management waiting for a payback when times improved. In fact, quite a few other airlines became successful, can you say Delta/Northwest and United, because employees pretty much always rolled over when times were tough.
I’d never sit here and arrogantly tell another labor group what to do, like the pilots at AA for instance. As the pilot of a failed airline, I know how bad things can become. No one wants to see another Eastern Airlines fiasco.
But from where I sit, American doesn’t have employees over a barrel. It’s the other way around. I just hope employees realize it. Just like the debt crisis that’s sweeping here through Europe, everyone is going to need to be responsible for their actions …in this case labor AND management. But if Boeing can make a deal with the IAM, there’s hope for everyone, isn’t there?
Not surprisingly, pundits around the world have already taken great creative pains to poke at AA management. The nerve of these people too. Here’s a look at AA’s bankruptcy from Taiwan.
Rob Mark, Publisher & AA Advantage member
PS to Tom Horton – might want to rethink that scope clause thing you were hoping the pilots were going to go along with.
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December 1st, 2011 at 10:16 am
I’m confused. Is it greedy pilots or greedy management? Who is the 1% and who is the 99%?
December 2nd, 2011 at 3:09 am
Just wanted to point out, the last bit.ly link (“Heres a look at AAs bankruptcy from Taiwan”), points to gmail.
December 2nd, 2011 at 10:35 pm
About 2 years ago there was a nice TV documentary on a day in the life of AA where amongst other things Arpey AND the rank and file were interviewed.
Salary wise, Arpey was making waaaaaaay less than his CEO peers at other airlines and one really got the impression that labor and management were really working together although clearly in some cases they just had to agree to disagree.
I was so hoping that their strategy was going to work for them. Guess it didn’t
Douglas
December 2nd, 2011 at 10:39 pm
Arpey reportedly actually resigned from American to protest the bankruptcy filing itself. And you’re right Douglas, his pay was much less than that of his counterparts which proves again this is not all just about money.
Too often in Labor Management issues though, there is just too much finger pointing and too little plain old respect … on either side.
December 3rd, 2011 at 8:51 pm
There are wider issues here – mainly a serious decline of an industry that is firmly racing to the bottom.
In a world where prices generally are rising – airline ticket prices are declining. What’s the next step – free tickets? or better yet how about the workforce just pays to work!
If you draw the line it goes one way – down. AMR are in chapter 11 now and they’ll come out of it next year probably, and guess what – in another few years they’ll be moaning about their workforce and entering chapter 11 again, to tear up employment contracts and “re-structure”.
Aviation business models need to change, globally, and passengers need to pay more, workforces need to paid and treated properly and airline management needs to realise that it’s ok to make a profit.
I’ve written extensively about this subject on my blog http://www.flightgripe.com
Jim
December 4th, 2011 at 1:45 am
Ah if it was only so easy Jim.
No doubt passengers probably should pay more, but they won’t … at least not until they’re forced as the they apparently will be in PIT when Southwest pulls out. Last I heard, US Airways is planning on a 500-600% fare rise on the route to PHL once their competition departs.
Want to fly that route, pay up or drive.
Until that sort of thing happens though, prices won’t rise. But I think assuming the employees will share in any of that extra cash is a bit nave.
Perhaps a move to identify corporations that take advantage of their employees … sort of like how consumer groups have targeted the garment industry about sweat shops in Asia?
From my airline experience, employees will work … and they’ll work hard, even take cuts when needed.
Of course, even though times are tough, pilots face an uphill PR issue because they still make a pretty decent wage in total dollars compared to many other jobs.
But employees still want to share in the good times and as I said in the story and management always seems to go rather deaf when that sharing the cash thing comes around.
And BTW Jim, I hope you noticed we left the URL in to your blog. I’ll go take a look. Social media is about sharing good stories. One thing I would suggest — since you have no way for folks to comment — is to give your audience a reason to read, like tell them a bit about who you are.
December 4th, 2011 at 2:33 am
Sorry Robert (re the URL), thank you, very kind of you. I’m still relatively new to this. I’ll post a link to this story as well.
I think you’re right about forcing passengers to pay. It’s a difficult argument. On the one hand it’s great that people have access to such extensive travel opportunities, however on the other is how those low fares are being subsidised.
It’s a shame that people are to be expected to live on less and less.
Great discussion and thanks for the tips as well.
Jim.
December 5th, 2011 at 3:43 pm
Great post Rob. Some additional thoughts from an industry professional.
I am generally not a fan of appealing to emotion, or broad ideas of “fairness” when making an argument. But I’ve seen too many hardworking industry professionals ruined by poor management, so it’s necessary today…
Some lingering questions for airline management:
-How do you expect to ask your employees to give up significant concessions, not give them back, and reward your executives with bonuses? I know that’s how industry works. I know I chose to go to flight school, not business school. But that’s not RIGHT.
-What are you going to do when your employees have nothing left to give?
-How do you expect to improve the customer experience (really, the only thing you have left to compete with) when you do absolutely nothing to give back what your employees gave up so that you could ALL remain employed?
Running an airline is difficult. It’s no place for wealthy aviation enthusiasts to have a little “fun” for a few years, destroy a company and its culture, rake in some bonus money, and then leave for another industry.
Your customers might not know they’re helping facilitate a “race to the bottom,” you might not have much price control, you may even have to declare bankruptcy every now and then…
But give your employees a little respect. Thank them for their sacrifices. It goes a long way.
December 6th, 2011 at 11:13 am
Just playing devil’s advocate here…if pilots don’t like the pay, why are they still working there? There’s no mystery when it comes to how much a pilot makes at any given airline. There’s no mystery when it comes to how long the days are or how many days away from home. And when the airline asks for concessions, the pilot groups can easily say no, but they concede every time, and then cry about it. If you don’t want to cry, then don’t concede. I understand the want to fight for more pay. That’s every job. And just like every job out there, you either get it, or you think about finding a better paying job. Management is in the business of keeping the business alive. Pilots are a tool used by management to reach business goals. Just like employees in any company is a tool for the business to reach business goals. I know of no business where their goal is to make employees rich. I do know many businesses where their goal is to keep the shareholders happy. And when you’re sitting as top dog, you get top pay. When you’re the help, you get to split the tips in the tipping jar. ‘Tis the nature of the beast. And one can always seek life else where if it’s not acceptable. No one is putting a gun to anyone’s head on career choices. #justsaying
On a side note, does anyone know what the total compensation package Arpey was taking home every year? Most execs have pretty lavish compensation packages while their take home pay is minimal.
January 9th, 2012 at 11:34 pm
I think we have a bit of an ocular issue here. Things are very out of focus.
Let us try to bring some focus back, and drop kick the economic theories so we can deal with the real world.
Why did the pilots feel that they needed a union all those years ago? And then the mechanics, and flight attendants?
When a plane crashes (including simply bending a wingtip), whose license is on the line? Is it the operating certificate for the airline, or that of the Captain of that flight? Or is it the guy with the Inspector’s certificate?
When scheduling flights, who is supposed to determine how much fuel to put on board and who does the arm-twisting? So who decides where a pilot has to divert.
Who makes the decisions on fuel purchases? Who negotiates the aircraft leases? Who decided where to invest the monies until needed to pay expenses? Who figures out how to cut the costs of aircraft maintenance and on what basis?
Who is it that sets the policies of the airline? Is it the Pilots? Flight Attendants? Counter Agents? Mechanics?
Why is it that major airlines don’t hire 23 year old pilots with 500 hours TT and 100 Multi? After all, its what the market will bear, right?
As you answered some of these questions (or pondered them), you have to remember that the unseen partner, who doesn’t own one share of stock, is the FAA. And then there are the insurance and leasing companies who are your vendors that make you do things via contracts.
Now throw in the rest of the US Gov’t and you are in for some ugliness. If you have to deal with the IRS, DOT and TSA for anything, then I need say nothing more.
In reality, the top management of an airline is atually middle management, not “top management.” And it doesn’t matter how much money your competitors make at your level.
There’s an old saying, when the tide rises, all ships float. What your competitors do in preparation for the future…
Somewhere back there, airline management forgot that they are holding themselves out to the flying public and providing a service. Airline management needs to make JOB ONE making their customers happy.
I once had a talk, about the mid-80s or so, with a guy who was watching corporate raiders taking over companies, slashing their labor costs, and then selling those companies (that were now loaded with debt). These corporate raider’s battle cry was, the stock holders come first. As Dr. Phil might say, Just how did that work out for us?
But what that old guy told me made sense to me. And so I tried it while I was running a company or three: Happy employees make good workers. Good workers make happy customers. Happy customers make for free marketing and sales. This makes for more money to pay management and dividends to the stock holders, which generally makes them happy.
Taking economic theories about business operations and putting them into effect leads to the bottom employees feeling like replaceable equipment.
Case in point: A Sr. VP made a speach to a group of people, and he said that you are some of the most expensive people in the company. Mind you, those people were responsible for the products that brought in 60+% of the revenues for the company. Bright boy got a bonus for figuring out how to offshore…
Machines do not have emotions or feelings, people do. Machines will work until the power goes off, they run out of lubrication, or whatever. People get fed up and walk. And what you are left with are those who are willing to work for you.
Pilots are professionals who have spent a lot of time getting those Type Ratings and that ATR (now ATP). Management got an MBA. We pay Captains very well, because we like having 300 people arrive at a place, alive when you are getting clear ice on the ILS and you have to fly that ILS to the ground (0-0 approach).
If it works for other companies, why won’t it work for the airlines? Kill the fees and stop treating your customers like cattle. Stop blaming TSA for your policies. Treat the customers like you want to be treated.
There is a show with a title something like the under cover CEO. If the airlines’ C level officers had to fly incognito, once per quarter, and in coach, and have to deal with TSA, I’ll bet you a donut that they would start making changes to how their customers are treated.
And maybe, after a few years the employees would fire the unions.