Well, this sends a nice message to the American worker...

JayMysterio

macrumors 6502a
Original poster
Apr 24, 2010
667
12,080
Rock Ridge, California
http://www.vox.com/new-money/2017/4/29/15471634/american-airlines-raise

"American Airlines agreed this week to do something nice for its employees and arguably foresighted for its business by giving flight attendants and pilots a preemptive raise, in order to close a gap that had opened up between their compensation and the compensation paid by rival airlines Delta and United.

Wall Street freaked out, sending American shares plummeting. After all, this is capitalism and the capital owners are supposed to reap the rewards of business success.

“This is frustrating. Labor is being paid first again,” wrote Citi analyst Kevin Crissey in a widely circulated note. “Shareholders get leftovers.”

Indeed, major financial players were so outraged by American’s decision to pay higher wages that they punished airline stocks across the board. American itself took it hardest on the chin, of course, but the consensus among stock analysts was that higher pay at American could signal higher pay at other airlines too, with negative consequences for the overall industry.

But taking a broader view, this blinkered Wall Street perspective on labor compensation is, arguably, exactly what’s gone wrong with the American economy. Any given company obviously benefits when it’s able to get away with paying its workforce less. But one company’s workers are another company’s customers. A world in which labor never gets paid is ultimately one in which nobody has much of anything but leftovers.

Wall Street analysts hate the idea of paying workers
JP Morgan’s Jamie Baker was even more scathing than Crissey.

"We are troubled by AAL's wealth transfer of nearly $1 billion to its labor groups,” he wrote, suggesting that the move was not just contestable as a matter of business strategy, but somehow obviously illegitimate."

o_Oo_Oo_O

http://www.salon.com/2017/04/28/labor-is-being-paid-first-again-american-airlines-investors-complain-after-company-gives-pilots-and-flight-attendants-raises/

http://www.latimes.com/business/hiltzik/la-fi-hiltzik-american-airlines-20170428-story.html
 

s2mikey

macrumors 68020
Sep 23, 2013
2,462
2,521
Upstate, NY
Honestly - I HATE Wall Street and obnoxious shareholders. They're never happy and dont pay nearly enough in taxes. Employees and customers should come FIRST, then the shareholders. if they dont like it then dont invest. Duh?
 

VulchR

macrumors 68020
Jun 8, 2009
2,329
10,254
Scotland
Wall Street can go **** itself. Have of them should be in jail. You'd of thought recent events of crew/customer interactions would have highlighted the need to manage airline staff so that they are treated and as as valued professionals.

The idea that a company is run solely to enrich stockholders will be the downfall of capitalism. It was a stupid idea when it was first introduced and it is a stupid idea now. Indeed, people refer to the fiduciary requirement to maximise returns for stockholders, but no law exists that requires this. It's just an urban myth that's ruining us. Now, if shareholders could not sell they shares once they invest, and become personally liable for any debt the company incurs, then they might have a case. The fact is, though, that they can sell their shares quite easily and minimise their losses. Thus, their actual investment is low because they can always opt out of being a shareholder of a given company.

All shareholders are taking a risk when they invest. If the investment does not have a good return, then boo-hoo. Don't bet if you cannot afford to lose.
 

BeeGood

macrumors 68000
Sep 15, 2013
1,801
4,841
Lot 23E. Somewhere in Georgia.
Shareholders act like they are employees who don't have to do any work. WTH.
Actually, in this case, many of the shareholders are employees (just not necessarily American Airline employees).

73.8% of AAL is owned by institutional investors, most of whom are mutual funds that make of 401k's and pension funds. So the line between ownership and labor isn't always black and white.
 

TonyC28

macrumors 68000
Aug 15, 2009
1,563
3,953
USA
Seems like a knee-jerk and stupid reaction from Wall Street. It does seem like a targeted response and like a punishment. Strange story.
 

Huntn

macrumors demi-god
May 5, 2008
17,062
16,579
The Misty Mountains
http://www.vox.com/new-money/2017/4/29/15471634/american-airlines-raise

"American Airlines agreed this week to do something nice for its employees and arguably foresighted for its business by giving flight attendants and pilots a preemptive raise, in order to close a gap that had opened up between their compensation and the compensation paid by rival airlines Delta and United.

Wall Street freaked out, sending American shares plummeting. After all, this is capitalism and the capital owners are supposed to reap the rewards of business success.

“This is frustrating. Labor is being paid first again,” wrote Citi analyst Kevin Crissey in a widely circulated note. “Shareholders get leftovers.”

Indeed, major financial players were so outraged by American’s decision to pay higher wages that they punished airline stocks across the board. American itself took it hardest on the chin, of course, but the consensus among stock analysts was that higher pay at American could signal higher pay at other airlines too, with negative consequences for the overall industry.

But taking a broader view, this blinkered Wall Street perspective on labor compensation is, arguably, exactly what’s gone wrong with the American economy. Any given company obviously benefits when it’s able to get away with paying its workforce less. But one company’s workers are another company’s customers. A world in which labor never gets paid is ultimately one in which nobody has much of anything but leftovers.

Wall Street analysts hate the idea of paying workers
JP Morgan’s Jamie Baker was even more scathing than Crissey.

"We are troubled by AAL's wealth transfer of nearly $1 billion to its labor groups,” he wrote, suggesting that the move was not just contestable as a matter of business strategy, but somehow obviously illegitimate."

o_Oo_Oo_O

http://www.salon.com/2017/04/28/labor-is-being-paid-first-again-american-airlines-investors-complain-after-company-gives-pilots-and-flight-attendants-raises/

http://www.latimes.com/business/hiltzik/la-fi-hiltzik-american-airlines-20170428-story.html
“This is frustrating. Labor is being paid first again,” wrote Citi analyst Kevin Crissey in a widely circulated note. “Shareholders get leftovers

******* bankers.

My money! My money! No real clue about how how a service industry relies on good service to compete. :mad: