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FBN’s Dennis Kneale on why mounting labor costs are a key factor leading to AMR’s bankruptcy filing.
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A who's at New York's LaGuardia Airport Dennis I would imagine people are nervous because they don't understand that that doesn't mean that the -- -- shutting down but what does it -- me.
We note on the flight board all the departures all their rivals for American Airlines their on time -- whether or not withstanding.
So -- aren't that worried plus let's remember something.
Since the year 2000 guys we have seen.
48.
Airlines -- Chapter Eleven filings under the bankruptcy code.
And so what is American Airlines problem its what it always boils down to you have all -- fuel costs.
But really its labor and pension -- let's just don't take a look at that the airline's financial crunch the got a chart on this.
Visit company has had four billion dollars in losses.
L eight to ten it's lost almost a billion more this year.
It's gotta -- by.
I've 120 million dollars into the pension -- this year and already done it it's gonna have to pay 560 million more next year all right so what is the real cost culprit.
Look at how -- their labor costs are -- AMR almost seven billion dollars a year that's 31%.
Of their cost it's only 2322%.
At delta and united.
Now in the -- labor costs are really what's hurting and even when they try to reform at the airline does a bad job pilots.
Right now they get paid only 2% more.
Then their peers in the industry their pension plan for -- it's 40% higher.
Then the industry average so they tried to reform -- for new pilots they said you're gonna get a 401K just like regular employees in the workforce out there the 401K after one year of working.
The company contributes 12% additional.
To -- annual salary into the retirement -- you the -- don't have to contribute anything at all so even when they try to cut.
They don't cut enough now.
One person who kind of pushes the -- the flight attendants case for that union -- look.
The flight attendants have -- -- had cut their pay a lot it's the pilots who keep on asking for way too much money.
But then another -- union member -- maintenance -- with American Airlines he comes up to me today and he -- you know what's really the problem it's not -- it's not pensions -- its management.
Management is a bad job -- run airline and then this guy said.
I fly on US air all the time and I gotta tell yet it's a better airline and this guy is an American Airlines employee.
So they got a lot of work lying ahead as they try to rebuild this thing -- -- A legacy costs that you just outlined her stunning especially the 12% into the 401K and then there isn't a matching situation.
That is very reminiscent of a lot of unions -- a lot of -- certainly groups of people who have had a pretty good for the past couple years it's really time to buckle up and changes in it than us.
It really is and here's the thing.
You know every bums -- -- -- parallel but every parasite knows enough not to be so damning did damage your favorite -- -- the host a while unions I should ask -- as much as they can you don't wanna after so much the to kill the company that's employing an.
Indeed and and we love our pilots that go through unbelievable training and safety same with the flight attendants so we thank them certainly they deserve.
For that airline to survive and certainly let's hope that it does Dennis thank.
