AAerSTL

Couldn't have said it better myself.

AAerSTL

I don't think the writing being on the wall for CLE has much to do with the outcome in the labor agreement. The union leadership [supposedly] works to provide the greatest good to the greatest number and obviously they can't please everyone. Several non-hub stations have more mainline UAL flying as it is today.

weirdlyndon

That I knew, but EWR764's post mentioned JFK in the list.

EWR764

I am not sure of the precise nature of the JFK ground handling situation, but the fact that it is specifically identified as a station being brought in-house leads me to believe that some 'core' functions are being handled by outsourced staff... perhaps the UX ramp ops?

I hope someone more informed than I can chime in with the answer.

DWFI

Well for starters they can go to water-only drink service in Y for flights under 1500 miles

AAerSTL

The IAM District 141 website has two AGCs (Associate General Chairs) listed for JFK, so I imagine it is UAX ramp, bagroom, curbside check-in.

http://www.iam141.org/about/name.html

fastair

Most likely they cover LGA and EWR as well.

wto605

You sound like you might know where to find this data (publicly, I'm not asking for proprietary of course). Is there a way to see total number of flights/passengers/seats or something in this vein grouped by operating carrier or at least UA vs UX? I've always been curious to know the numbers behind this ever since half of the C concourse seemed like it was UX (in addition to D).

spin88

Lark, I have repeatedly said that UAL had a revenue problem, and have raised, and I think now conclusively showed the ongoing loss of HVFers due to all of Jeff's changes (since the "its operations" argument you and others have made does not hold water at this point.

But, I have never denied there were major CASM issues, but I think that this had much to do with poor decisions (SHARES) requiring extra workers, many of which are covered by this contract, and the extra costs of cross fleeting (which for the FAs is not covered by this agreement). Having two or three agents, rather than one, handel a flight is expensive.

To bring it home for you.... I ran the change in UAL's and DL's numbers from 3Q 2011 to 3Q 2013. Recall in looking at these numbers that the markets were promised $1.2B/yr in "synergies" ($800M in extra revenue from capturing more of their own elite traffic and $400M in cost savings). So how is it working out?

Delta 3Q 2011-2013

Revenue up 6.8% (from 9.81B to 10.49B)
Operating income up 81.3% (from $860M to $1.56B)

Yield up 7.2% (from 15.72 c/mi to 16.85 c/mi)
PRASM up 6.9% (from 13.54 c/mi to 14.48 c/mi)
CASM down ( 1.3%) (from 14.16 c/mi to 13.97 c/mi)

UAL 3Q 2011-13 (UAL used sUA numbers in its 2011 3Q 10Q for yield/PRASM, sCO's yield was slight higher while sUA's PRASM slightly higher, so it should balance out)

Revenue was up .6% (from 10.17B to 10.23B)
Operating income was down 45% (from $935M to $510M)

yield was down ( .3%) (from 16 c/mi to 15.96 c/mi)
PRASM was down (.3%) (from 13.75 c/mi to 13.71 c/mi)
CASM was up 5.4% (from 14.18 c/mi to $14.94 c/mi)

So, had UAL had Delta's yield growth, it would have had another $736M in revenue this quarter. ( 6.9% + .3% = 7.2% x 10.23B )

Had UAL had Delta's CASM control (for example not adding extra staffing for SHARES) it would have saved $651M in expenses this quarter. ( 6.7% x 9.72B in operating expenses)

keep in mind these are the figures for only three months, not a full year. But its where Jeff has taken this airline in two years. This is cumulative poor performance which is simply staggering at this point. That UAL still managed to turn a profit, given how far it underperformed other airlines, simply shows that Jeff had an amazing set of assets to work with, and very loyal and valuable customers on both sides of the merger, yet has done worse than nothing with them.


Thanks, very interesting. However, I just can't see the type of efficiencies in having one IAM work group as I can for pilots and FAs. Again, happy for the raises and new contact, but its impossible for me to believe that the extra pay (19% to 56% over next three years) will be matched by extra "efficiency".

What you are seeing at ORD is not surprising, Jeff practically promised staff cuts and less staffing to try to keep down CASM on the 3Q 2013 call. But, I seriously doubt that the extra productivity (which is different that efficient use of staff via work rules) will make up for less staff, and I expect wait times to substantially go up.


If you have an example of work rule changes making up for 19 to 56% raises over three years, happy to see it. Call me highly skeptical that this will LOWER CASM ex-fuel.

But, if I am right, then it simply shows that (as Horton and Anderson, and evidently Parker given his statements of late, have realized) to be more profitable in this business, given unionized work forces and higher pay, you have to have INCREASING REVENUES, something that UAL has done nothing to really address at this point.

fly18725

You need an example that mirrors UAL's situation in order to understand the issue? I would suggest looking at the relationship between Southwest, Alaska or Delta's (or Continental pre-merger) employee costs and CASM to show that there need not be a direct correlation. Paying for productivity is more effective at lowering total costs than having less productive, lower paid employees.

For what its worth, this thread is not about revenue.

LarkSFO

But, I think it was you (among others) who stated that one of the routes to better CASM control / reduction is through unified labor groups / labor contracts.

You assume (and maybe you are right) that even with this agreement UA is not on a path to better managing / controlling their CASM.

Other assume (and maybe they are right) that agreements like this are a step in the journey towards a more efficient operation which will lead to improving CASM.

UA is still behind where DL was at this point in the integration process.

"When" UA achieves the types of numbers DL is producing today, you'll wish you had invested in UAL at $32 / share!

We'll see, won't we?

spin88

This level of generality is simply not helpful. I certainly understand that new tools (e.g. a functional reservation system, or giving everyone I-pads) can help productivity, but I am entirely unaware of any contract every achieving that level of productive increases from work rules.

Well I bought DAL in December 2012, very happy with that investment. I would not buy UAL at $32, nor at $28, nor at $26 (Bakers's target for price). If may go up from these numbers (due to changes in oil price or macro factors) but I believe it will continue to trail DAL until there is a major change in management, and then it has time to heal itself from the Jeff era.

I might buy AA when it comes out of BKR, but that is not a workable play at this point.

But hey, mark the day, we will see who is right.

and FYI, I have never believed that UAL would get cost control via unified labor agreements. I did think (and do think) that having them will improve the operational performance of the airline (OT will go up), particularly integrated FAs and pilots, but that is a different issue.

I see the extra costs of buying a single labor agreement as being necessary for UAL and ultimately good for passengers, but I think this agreement (as did the pilot agreement) will push up CASM, unless (as UAL may be doing, see Fastair's post) UAL cuts staffing dramatically to make up for these higher wages, in which case service levels will fall yet further.

cheltzel

I don't know for sure if this has the data you are looking for, but there are a lot of down-loadable databases (in Excel csv format) maintained by the DOT.

http://www.transtats.bts.gov/DataIndex.asp

fly18725

How does Southwest achieve a lower CASM than any of the network carriers while paying almost all of its employees more than employees of comparable seniority at the network carriers? Here's a clue: it's not Southwest's tools, since they have the most antiquated reservation system in the industry.

DENviaLAX

Well with insurance going up $300 a month and most employees seeing significantly less than that in their raise, I'm sure it's benefiting them just fine...because it sure isn't benefiting the employees.