Soaring into the Black

Friend Nate sends in these stories: 1 of 2

There have been some significant layoffs this year in many fields: Hewlett-Packard, Eastman Kodak, and Kimberly-Clark have announced huge layoffs of tens of thousands, and others are following suit. In the airline business, things are not so rosy, either. Delta wants to file bankrupcy protections, Northwest is posting huge losses, etc, etc.

So how is it that These Guys, the American Airlines crew, once as embattled as any of the Majors, flew back from the red into the black?

Two American Airlines mechanics didn't like having to toss out $200 drill bits once they got dull. So they rigged up some old machine parts - a vacuum-cleaner belt and a motor from a science project - and built "Thumping Ralph." It's essentially a drill-bit sharpener that allows them to get more use out of each bit. The savings, according to the company: as much as $300,000 a year.

And it was a group of pilots who realized that they could taxi just as safely with one engine as with two. That was instituted as policy has helped cut American's fuel consumption even as prices have continued to rise to record levels.

From the maintenance floor to the cockpit, American Airlines is daily scouring operations to increase efficiency and find even the smallest cost savings. It's paid off: Last week, the company announced its first profit in almost five years.

While the other so-called legacy carriers are also slashing labor costs and increasing efficiency in an effort to compete with successful low-cost airlines, American has been the most aggressive in emulating the positive employee relations of low-cost rivals. Indeed, when American's management intensified its cost-saving efforts, it didn't turn to high-priced outside consultants. Rather, it asked its employees, since they do their jobs day in and out and know them probably better than anyone else.

It strengthened its relationship with employees and employee unions, and worked with the expertise of those that know the planes best: those that work with the planes. While other airlines are relying on subsidies, handouts, loans, market forecasters, and number-slashing accountants, American Airlines turns to the Americans it hires to help work out its problems.

Incredible story.