UpNAWAy wrote:

That last part is very inacurate. Reliability is at all time highs in the US (as well as elsewhere I'd imagine).

Really??? You should introduce yourself to a UA 747 or 767 to see the result of Chinese neglect. Some of live in a world where you don't have to imagine. The numbers are plain as day. Even UA has admitted this fact. Aircraft that they overhaul themselves have higher reliability scores than aircraft that are sent to outside vendors. That's a fact and in no way inaccurate.

B737900ER wrote:

anshabhi wrote:

A little fact: People who shout "Make America Great Again" themselves don't want to take any pain for America!

Again, you'll have to explain this, because it makes no sense.

What on earth does this have to do with this topic?

I think it's interesting that airlines will fly aircraft halfway around the world to be maintained. Is the cost savings really that much?

Well KLM is doing its heavy checks in China and Malaysia i think to lower costs so this appears to be a trend to lower (maintenance and labor) costs. It doesn't come as a surprise to me. Who knows other airlines will be doing the same thing in the coming years.


A388

So what impact do we think this is going to have in TUL? I've noticed TUL has been getting more 772 work lately.

This hanger is to do line maintenance work, as the planes sit for an extended time between flights.

It will be staffed with foreign based AA mechanics, no outsourcing, not job loss.

Just like AA has maintenance in LHR, FRA and other foreign cities.

Correct me, if I'm wrong. Isn't some of the heavy maintenance on the 777 fleet now being done in Hong Kong by a contractor? If you can move that work from China to Brazil, and the work is done in-house rather than by a 3rd party, that should improve the ability of HQ to oversee the timing and quality of work.

lavalampluva wrote:

I think it's interesting that airlines will fly aircraft halfway around the world to be maintained. Is the cost savings really that much?

You're just kidding, right?

deltal1011man wrote:

reducing costly and unneeded regulation from agencies like the EPA

Care to give an example ? Should maintenance facilities be allowed to dump toxic waste in rivers ?

lavalampluva wrote:

I think it's interesting that airlines will fly aircraft halfway around the world to be maintained. Is the cost savings really that much?

Yes, I worked MD88 overhaul at DL when they decided to outsource our check to AeroMexico. We were told we would have to work for free to bring our check costs in line with what AM was offering to do them for. We could not win this work back. Years later they still are doing those checks in Mexico.

Boof02671 wrote:

This hanger is to do line maintenance work, as the planes sit for an extended time between flights.

It will be staffed with foreign based AA mechanics, no outsourcing, not job loss.

Just like AA has maintenance in LHR, FRA and other foreign cities.

I doubt American is building a $100 million hangar just to do line work. Most line work can be done on the open ramp. That includes 'A' checks. Anything more involved than that usually is done indoors, and takes more than a RAD/RON. I bet AA has had a line station at GRU for years without a hangar. I know DL has. Most international cities served by multiple ETOPS flights have line stations.

Yes, I also think this maintenance base is much more than what Boof02671 says. 100 million dollars is much more money than necessary for having a simple base for line maintenance work.


A388

AA is going to the Phase Check maintenance, where planes get overnight in depth checks most have a C1 through C12 check, the majority are overnight.These checks need a hangar as he work is suppose to be done inside.

It is not being equipped with back shops, if you were going to do more than line checks, you need support back shops.

The facility will be doing line phase checks, MEL work, and staffed with AA mechanics from Brasil.

“The Brazil hangar is literally to build a structure around work that is already being done down there,” Seymour said in response to union concerns. “It is line maintenance work only. It’s not heavy maintenance.”

Seymour added that American does not plan to fly aircraft to Brazil simply for maintenance work. Rather, aircraft that are already scheduled on routes to Brazil typically spend 10 to 12 hours on the ground between flights when routine maintenance is performed.

Read more here: http://www.star-telegram.com/news/busin ... rylink=cpy

The protectionist comments in this thread are just pathetic. 1200 777s flying around the world and only about 170 flown by US carriers. If every country goes into "Make it great again" idiocy, Boeing stops existing as we know it.

American, Delta and United should have done something like this at GRU a long while ago. The biggest problem I see is getting this project through Brazil's completely corrupt society and coming out at the other end legally with a complete project.

incitatus wrote:

American, Delta and United should have done something like this at GRU a long while ago.

I too, was a bit shocked that this was not yet a reality. Considering AA's presence at GRU (and to Brazil, in general...) it did seem odd, however the comments offered above (by Seymour) appropriate the need, with;

Boof02671 wrote:

AA is going to the Phase Check maintenance, where planes get overnight in depth checks most have a C1 through C12 check, the majority are overnight.These checks need a hangar as he work is suppose to be done inside.It is not being equipped with back shops, if you were going to do more than line checks, you need support back shops.The facility will be doing line phase checks, MEL work, and staffed with AA mechanics from Brasil.

essentially sealing the logic of it for me.

I wonder, though - if the JV/ATI with LATAM would have provided another and/or a better opportunity, cost-wise;

Dalmd88 wrote:

LAXintl wrote:

For reference AA along with UA already have in-house maintenance staff at GRU. (Not sure about DL)

Yes DL has a line station in GRU. I bet the AA hangar will be for longer visits than an overnight sit. There would not really be a need for a multi bay hangar support just line mtc. Sounds similar to DL's AeroMexico shared hangar in Mexico. That one is used for heavy checks for both airlines.

I mean, AA has not invested in LATAM, however - could the JV have included a deal similar to DL's at MEX with AM?

incitatus wrote:

The biggest problem I see is getting this project through Brazil's completely corrupt society and coming out at the other end legally with a complete project.

...at that cost.

The costs here are high, but the rewards must be higher - I assume.

incitatus strikes again. The reason why such a project did not make sense in the past is because Infraero was not really offering the land for it to become a reality. Now, that the airport is privately run, it has become possible.

And the TWU has filed a grievance on the work being done there.

I'm always amazed that major airlines will allow a $200 or $300M airplane to sit for 10, 12, or more hours just for a return flight. There used to be a saying in the industry, "How much money does a plane make sitting on the ground?" I guess the bean counters in a cubicle back at the home office have figured out a way to make that happen.

727200 wrote:

I'm always amazed that major airlines will allow a $200 or $300M airplane to sit for 10, 12, or more hours just for a return flight. There used to be a saying in the industry, "How much money does a plane make sitting on the ground?" I guess the bean counters in a cubicle back at the home office have figured out a way to make that happen.

. . . And yet it happens the world over with all manner of carriers. Perhaps the airlines know something you don't?

B737900ER wrote:

UpNAWAy wrote:

That last part is very inacurate. Reliability is at all time highs in the US (as well as elsewhere I'd imagine).

Really??? You should introduce yourself to a UA 747 or 767 to see the result of Chinese neglect. Some of live in a world where you don't have to imagine. The numbers are plain as day. Even UA has admitted this fact. Aircraft that they overhaul themselves have higher reliability scores than aircraft that are sent to outside vendors. That's a fact and in no way inaccurate.

Seriously, if you have those huge problems with all those vendors, you manage them crap. From very first hand experience I can attest a totally different story. But yeah, they just overpaint cracks and stuff, thats why continuously planes fall out of the sky...

Cubsrule wrote:

727200 wrote:

I'm always amazed that major airlines will allow a $200 or $300M airplane to sit for 10, 12, or more hours just for a return flight. There used to be a saying in the industry, "How much money does a plane make sitting on the ground?" I guess the bean counters in a cubicle back at the home office have figured out a way to make that happen.

. . . And yet it happens the world over with all manner of carriers. Perhaps the airlines know something you don't?

Nah, don't take the beloved "beancounters are the devil and stupid", "outsourcing is taking our jobs and is stupid" and "everybody else is so stupid...and some more stupid" arguments from people...

anshabhi wrote:

The high time has come when US should work towards reducing costs. Protectionism will earn duck.

Yes your right we should reduce our salaries. Mechanics are making salaries at numbers close to what mechanics made 25 years ago. But then how will I pay my school/property tax that just went over 10 thousand a year. They raised it because we had to take 300 border children a few years ago. And they cost money for services.

Maybe ORD will no get 788 service to GRU to compete with UA.

Nicoeddf wrote:

Seriously, if you have those huge problems with all those vendors, you manage them crap.

I'm assuming you mean to say that the airline oversees the vendor?
If that's what you're trying to say then yes, they do. And they are pulling out. The proof is in the numbers. You don't have to accept them but it is reality.

So many issues in this thread alone with English comprehension and sentence structure. You wonder how the off the street AMECO tech is able to read the SRM or AMM since it's only written in English.

Wow, quite a large number of uninformed A-netters here.

Some background.

South American-American businessmen prefer overnight flights between North and South America. Day flights tend to be geared towards leisure travel. With this consumer preference, many American carriers have lots of wide body aircraft sitting on the ground. They use this time to deep clean them. Seatbacks are sent out to be cleaned. Cushions removed and cleaned. Toilets deep cleaned. Even exterior cleaning.

Time is money with today's airline business, if they are going to have a multi million dollar plane sitting around all day. Emphasis on day, not third shift. They might as well equip that station to do more.

Brazil has a long history with aviation and produces many of the planes you fly on. Sao Paulo is far from a third world backwater. The city contains top quality talent, and AA has a long history of operating 3-6 wide bodies a day to GRU. AA does a similar job in Buenos Aires EZE, but they don't do heavy maintenance there, just light stuff/cleaning.

No, no one is flying a plane to GRU simply for work. AA is simply using the natural slack in its schedule, Brazils economic downturn and their long reliance on Latin traffic to make a smart business move.

Adam

B737900ER wrote:

Nicoeddf wrote:

Seriously, if you have those huge problems with all those vendors, you manage them crap.

I'm assuming you mean to say that the airline oversees the vendor?
If that's what you're trying to say then yes, they do. And they are pulling out. The proof is in the numbers. You don't have to accept them but it is reality.

So many issues in this thread alone with English comprehension and sentence structure. You wonder how the off the street AMECO tech is able to read the SRM or AMM since it's only written in English.

Stop your arrogance, I recommend. Thats always the first step! You know exactly what I am saying and your reference to comprehension and sentence structure is a bit laughable as this is a multinational forum. It is not for everybody the first language and might not be perfect (who is), but hardly ever had I problems with comprehension here...

To the topic: Nobody is pulling out. AA building a maintenance hangar @GRU is actually more of a sign of not pulling out (of oversea maintenance). The reality is, overseas heavy maintenance is as strong as it never was and again, I talk from from first hand experience working with this shit everyday, not from hearsay.

The only point I give you is that I agree, that the off the street mechanic in e.g. China is hardly able to read the manuals or job cards, but that is to be managed by the vendor. I am not throwing in names as you do, but we are able to overcome this problem professionally. And we receive the aircraft in a well maintained state. If you don't, reconsider your "managing the vendor skills".
Are those vendors flawless? God, no! Is your home base maintenance flawless? Certainly not. And looking at it globally rather than "those foreigners steal our jobs", than it is the perfect symbiosis to give maintenance work requiring thousands of hours of manual work to lower cost countries while keeping the high tech know how in the country.
Thats exactly whats happening.

Have a good day!

727200 wrote:

I'm always amazed that major airlines will allow a $200 or $300M airplane to sit for 10, 12, or more hours just for a return flight. There used to be a saying in the industry, "How much money does a plane make sitting on the ground?" I guess the bean counters in a cubicle back at the home office have figured out a way to make that happen.

They have to sit. It is a result of the length of flight and timing of departures and arrivals. If they did a quick turn back to the US the arrivals would be at a terrible hour with no connection possibilities. Like wise if they timed the southbound flight to get good connections for the northbound they would lose US connections for the southbound flight. Planes sit all the time. The US east coast airports a full of aircraft all night. There are a bunch that sit on the west coast most of the day. They don't all get maintenance during those sits. Many are at endline stations waiting for a early departure.

TWU IAM workers picketing at DFW and TUL as things heat up regarding plans for GRU hangar and effects on US employees.


The Transport Workers Union said members representing aircraft maintenance, fleet service, facilities and ground support employees were to protest at Terminal D to "shed light on American Airlines' latest plan to outsource many more U.S.-based jobs."
The union told the Dallas Business Journal workers feared that U.S. jobs would be relocated to a new, $100 million maintenance facility in Brazil.

http://www.nbcdfw.com/news/business/DFW ... 38763.html
http://www.wfaa.com/money/american-airl ... /459654890
http://www.star-telegram.com/news/busin ... 24258.html

LAXintl wrote:

TWU IAM workers picketing at DFW and TUL as things heat up regarding plans for GRU hangar and effects on US employees.

The Transport Workers Union said members representing aircraft maintenance, fleet service, facilities and ground support employees were to protest at Terminal D to "shed light on American Airlines' latest plan to outsource many more U.S.-based jobs."
The union told the Dallas Business Journal workers feared that U.S. jobs would be relocated to a new, $100 million maintenance facility in Brazil.

AA has already said repeatedly that this GRU facility will not be used to "outsource many more U.S.-based jobs." Maybe it will be, and AA's lying, but if so, I've yet to see any actual evidence of it as presented by TWU/IAM. AA's response - that GRU is a natural place for line maintenance given lots of ground time, and that this will put a roof over the already-significant work being done there as a result of said ground times - seems quite plausible to me. Still looking forward to any compelling basis for the "alliance" fear mongering. While I get that this can be used as a populist rallying cry - whether true or not - I can't help but wonder if it's ultimately a distraction from contract negotiations.

I mean i am sure its about cost savings in labor salaries, but if you have multiple planes sitting on the ground all day everyday, it does make some sense. Hard to argue that they cant use that time as they see fit. Even just that half day of free time on larger projects over and over again turns into alot of time savings.

slcdeltarumd11 wrote:

I mean i am sure its about cost savings in labor salaries, but if you have multiple planes sitting on the ground all day everyday, it does make some sense. Hard to argue that they cant use that time as they see fit. Even just that half day of free time on larger projects over and over again turns into alot of time savings.

Agree with you. This is were unions step on there nose to spite there face. I'd think they would oppose it and use it to negotiate for some other things they want.

AA probably have 8 aircraft in MX here in Hong Kong. No Slave labour here.

Following up on the initial announcement from several months ago, Brazil’s government on Friday formally approved the agreement between AA and GRU's operator for AA to construct a hangar at the airport and use the land for up to 40 years. AA's plan entails a total investment of $100M, including $50M for the hangar itself and another $50M for parts/tools.

anshabhi wrote:

B737900ER wrote:

anshabhi wrote:

The high time has come when US should work towards reducing costs. Protectionism will earn duck.

I don't understand your statement. US airlines have been sending maintenance work, and a lot of it, overseas for about 15 years now. They reduced their direct cost. Reliability on the other hand has suffered as a result, but that cost is much more difficult to quantify.

I mean they go out of US because costs are very high. US should reduce them. It might start with wages.

The US is built on capitalism. The market determines wages for the most part. The only wages up for debate are in the public sector.

Now if you're saying that congress, firemen and teachers should have their wages reduced, that is another entire topic.

kiowa wrote:

anshabhi wrote:

B737900ER wrote:

I don't understand your statement. US airlines have been sending maintenance work, and a lot of it, overseas for about 15 years now. They reduced their direct cost. Reliability on the other hand has suffered as a result, but that cost is much more difficult to quantify.

I mean they go out of US because costs are very high. US should reduce them. It might start with wages.

The US is built on capitalism. The market determines wages for the most part. The only wages up for debate are in the public sector.

Now if you're saying that congress, firemen and teachers should have their wages reduced, that is another entire topic.

And if you believe in capitalism, then you should also believe in free trade and comparative advantages. If wage levels in the US make it so that Brazil (or wherever else) has a comparative advantage in aircraft maintenance, then aircraft maintenance should be done there.

Aesma wrote:

deltal1011man wrote:

reducing costly and unneeded regulation from agencies like the EPA

Care to give an example ? Should maintenance facilities be allowed to dump toxic waste in rivers ?

They do in Mexico. Go visit some maquiladoras. I think 1011's point was that there is not a level playing field between operations, and it is only partially a function of hourly wages. There is a lot more going on then that. Even within-the-US outsourcing is an issue. Why does stuff go to AAR? How is it that they can do it more-inexpensively? It's not just that their hourly wages are a tad lower.

Even Allegiant's in-house maintenance aren't the one who failed to install cotter pins in critical components. That was AAR. Apparently, more than once. And when the FAA found that they were systematically failing to do the level of checking work that was legally-required, they got a teensy little slap on the wrist. That told them everything they needed to know about how to keep operating. Yuck.

Here's an idea: since it doesn't seem to matter where the aircraft have to be flown to do MRO work on them, how about DL sets up a TechOps operation in the US that isn't at one of its hubs? It doesn't have to be in high-cost Detroit or Minneapolis. It could be in a less-union-oriented Southern state: Oklahoma, Arkansas, Mississippi, Alabama, or a hard-working Northwestern state: Idaho, North Dakota, South Dakota. Somewhere where there are no Ivory Towers around, government appreciates business, and a larger percentage of people believe in working for a living than they do in, say, New York. (Obviously, there are other states that fall into these categories; those are just examples.) That way, DL could get the quality of an in-house operation, but not have the excuse that its facilities at places like ATL are overburdened. One imagines that one could find a way to make the total cost of an overhaul (including the afterwork that is necessary from in-house mechanics) plus the benefit of increased reliability post-maintenance, come close enough to the price of an AAR or TechOps Mexico visit to make the operation viable.

Meanwhile, the current administration could, with very little rulemaking, quickly level the playing field regarding overseas operations. 1011 had a couple of good thoughts, like banning work at places that make a farce of FAA inspections.

b747400erf wrote:

anshabhi wrote:

The high time has come when US should work towards reducing costs. Protectionism will earn duck.

Fine then move your HQ out of America and change your name from American Airlines if you are not American.

Last time I checked Brazil was in America.

Best regards
Thomas

Since when is Brasil a low cost place to do business?

I have spent a lot of time there, and the labor regulations are really quite socialist.

Salaries must pay a 13th month each year....and English speaking/writing employees are not cheap.

Severance packages mandated by the government look like they exceed what the USA unions have negotiated for their laid off employees....you essentially cannot lay off employees in Brasil without paying them one month of salary for every year they have worked for you....

I would personally never locate a business there, unless I had to.

I think that the sitting plane is the critical point, and the cost difference with the US is minimal or maybe even negative.

You don't spend 100 million dollars on a facility just to do line maintenance on planes that are sitting around. Particularly when you're already doing it without the hundred-million-dollar facility. And you also don't spend a hundred million dollars on a facility unless there is going to be a return on invested capital, presumably due to appreciable cost savings. If the thing's going in for a multi-day or multi-week heavy check, it doesn't matter whether the first 12 hours are a period of time that it was scheduled to sit. So the explanation is total BS. As to the idea that Brazil's overall pay packages involve onerous labor regulations, as 1011 pointed out above, the issues go well beyond just hourly wage rates.

DLPMMM wrote:

Since when is Brasil a low cost place to do business?

I have spent a lot of time there, and the labor regulations are really quite socialist.

Salaries must pay a 13th month each year....and English speaking/writing employees are not cheap.

Severance packages mandated by the government look like they exceed what the USA unions have negotiated for their laid off employees....you essentially cannot lay off employees in Brasil without paying them one month of salary for every year they have worked for you....

I would personally never locate a business there, unless I had to.

I think that the sitting plane is the critical point, and the cost difference with the US is minimal or maybe even negative.

Agreed. The other factor is that as new widebodies replace paid-for 763s and 333s, AA needs higher utilization.

Not sure how much comparative advantage (that is, lower wages) plays a role in the case to set up maintenance in Brazil. Have no doubt: Doing business in Brazil is awfully difficult. Large companies are subject to illegal requests from government officials for bribes all the time - if you look at US laws, this exposes employees of US companies to a huge liability. Government bureaucracy is a dungeon maze to navigate. Employment laws are quirky and downright socialist. Ex-employees sue companies often. Benefits are sometimes a bigger expense than pay itself. Taxation is plenty and complex. Finding qualified employees is a difficult process. Firing one? Forget it! Getting equipment and goods through customs - something American will need to do often - is very slow and illogical. That is why many global brands like Ikea have never bothered with setting up shop in Brazil.

Having a decent maintenance shop in Sao Paulo has always made sense for US carriers, but I am impressed one actually decided to do it.

DLPMMM wrote:

..you essentially cannot lay off employees in Brasil without paying them one month of salary for every year they have worked for you....

... quite normal in the developed world. Living in Sao Paulo is about 40% cheaper than NY, hiring work can be expected to reflect that pretty much like for like.

Compared to US maintanance they will still safe some bucks IF the work is even done in the US at all at the moment.

Best regards
Thomas

wjcandee wrote:

You don't spend 100 million dollars on a facility just to do line maintenance on planes that are sitting around. Particularly when you're already doing it without the hundred-million-dollar facility. And you also don't spend a hundred million dollars on a facility unless there is going to be a return on invested capital, presumably due to appreciable cost savings. If the thing's going in for a multi-day or multi-week heavy check, it doesn't matter whether the first 12 hours are a period of time that it was scheduled to sit.

If an airline has 5-6 aircraft sitting at GRU for 14 hours a day, putting them through maintenance while they are there (instead of doing it in the USA) easily saves significant downtime somewhere else. Let's say it saves 8 hours of downtime for 6 aircraft somewhere else. That is 48 hours of flying that could be done - equivalent to 2 frames. So spending 100 million at GRU means saving the cost two aircraft. What is that? 300-400 million? The ROI seems trivial to show.

To capture significant and worthwhile cost savings, the majority of staff will be from low cost labour countries, with a mixture of senior management from the USA, Brazil and those same countries contributing the staff.

Comparable sites in Asia and ME, including the engineering facility and adjoining accommodation, usually operate along the lines of an entrepot tax free area, so quite possible neither US or Brazilian labour or tax laws will apply.

anshabhi wrote:

B737900ER wrote:

anshabhi wrote:

The high time has come when US should work towards reducing costs. Protectionism will earn duck.

I don't understand your statement. US airlines have been sending maintenance work, and a lot of it, overseas for about 15 years now. They reduced their direct cost. Reliability on the other hand has suffered as a result, but that cost is much more difficult to quantify.

I mean they go out of US because costs are very high. US should reduce them. It might start with wages.

It sounds like you don't understand basic economics. What do you think the hourly wage is for a aircraft maint shop worker in China or Brazil? Do you think a U.S. worker could survive on making $3 per hour? Airlines send their planes overseas for heavy maint because its cheap. Whether the quality is the same as a U.S. shop can be debated but the overseas quality in most shops is fairly good.

Protectionism is a failed policy. You can't reduce U.S. wages to match China's or Brazil's. Even if you did, the cost of living in the U.S.is far far higher so the worker couldn't survive.

SonomaFlyer wrote:

(...) What do you think the hourly wage is for a aircraft maint shop worker in China or Brazil? Do you think a U.S. worker could survive on making $3 per hour? Airlines send their planes overseas for heavy maint because its cheap. (...)

For $3 an hour in Sao Paulo one cannot even get a first-time nanny. I expect qualified mechanics at GRU make $20-$30 USD per hour - Brazil is not China. Again, Brazil is not a place for simple wage arbitrage. And Sao Paulo is not a cheap place to live. Public schools are not very good and tuition in a good private school is $8K-$20K per year.