Originally Posted by
grahampros
It may well. DL pilots now lead the industry in wages. The real key to the cost structure is not a few dollars and hour increase in pay, it's maintaining the productivity improvements, no pensions, health care, and scope. These items are what really drive costs more then anything. AA's workforce had the worst productivity in the industry and the highest benefit costs. It was not absolute pay rates that put them at such a cost disadvantage.
DL leads the industry in pilot wages, not in overall labor costs. Having just that one union (the pilots) helps a lot, as the DL FAs and other employee groups are not all that well paid and thus, somewhat low cost. About the bolded portion, you're right, but the improvements promised by Parker to the AA pilots return to them a fair portion of the cost-savings that were achieved in the Ch 11 case by increasing productivity and reductions in benefits. Horton claimed that the concessions cut AA's labor costs by 17% for all workgroups. And Parker's raises give back a bunch of that 17%. Therein lies the potential problem.
Parker had almost eight years of very low pilot and FA costs and failed to grow the airline despite those low costs. And now, just as those productivity cost savings are realized at AA, he's jacked up the AA labor expenses. Had to do that, of course, to get labor on board.
The changes to scope have nothing to do with costs - they will enable AA to achieve higher regional revenue.