What is it with OneWorld and strikes? First BA, now AA?
American Airlines flight attendants authorized their union leaders today to call a strike against the second-largest U.S. carrier if they are freed from further negotiations.
About 97 percent of those voting cast ballots to support a walkout, Association of Professional Flight Attendants President Laura Glading told members in a recorded message. Discussions are proceeding today between Fort Worth, Texas-based American and the group, which represents 16,550 of its active attendants.
I think they’re bluffing and I also don’t have too much sympathy for the FAs, especially after reading this:
“American has the highest labor costs of the legacy carriers,” Jim Corridore, a Standard & Poor’s equity analyst in New York, said in an interview. “I don’t see circumstances under which the company can provide a pay raise. There has to be some sort of productivity offset to any kind of pay increase.”
Ironically, that’s what happens to an airline that manages to be careful enough to avoid bankruptcy.
American has an annual labor “cost disadvantage” of $600 million, which is the difference between its labor expenses and what those costs would be under the contracts of competitors, Chief Executive Officer Gerard Armey told shareholders at the company’s annual meeting today in New York.
Other airlines, including United and Delta, lowered their labor costs during bankruptcy reorganizations.
American is trying to balance the interests of employees with its need to be competitive on a cost basis, Armey said.
Arpey, not Armey. But he’s right and I wish him success.
It’s true that AA has not gone through bankruptcy, and so they still retain their worst contracts. However, AA also has two other major disadvantages with respect to its peers:
Ancient, fuel-ineffiient planes. The MD-80s are a huge cost drag on tha airline.
Lowest leverage of their global alliance. The inability to partner AA and BA across the atlantic for miles is a negative. They may not have ATI, but they could still allow reciprocal FF benefits. They don’t, their marketing alliance is broken and it costs them customers and money.
Finally, while it has much less to do with cost structure benefits / advantages, now AA has the least valuable domestic upgrade program of its peer group.
@AS: Excellent points. The Mad Dogs and BA/AA relationship are consternating.
The Mad Dogs should be fairly cheap as aircraft though by now. In any event, I currently like them above everyone’s 737s.