Carmine Romano tells Liz French about a continuous improvement process that has revolutionized airplane maintenance and overhaul.

The airline industry and its affiliated unions have always been at odds. Each side had its own opinion as to how the business should be run, but neither put down the gauntlet long enough to consider a true business partnership—until now. Three years ago, American Airlines partnered with the Transport Workers Union (TWU) to turn the airline’s high-cost maintenance and engineering division into a profit center.

September 11, the dot-com bomb, and rising fuel costs sent the airline industry down a long, slippery slope. To cut costs, many carriers began outsourcing their heavy-duty maintenance work to maintenance repair operators (MROs) springing up across the US and overseas. (These organizations offer carriers low-cost maintenance because they generally provide low wages and few to no benefits, employ a young workforce, and are not unionized.)

Despite rising differences, American Airlines realized it couldn’t survive without the help of its labor union. “The process has been difficult because we were not used to working synergistically. In the past, I’d make what I thought were intelligent business decisions, but I’d still get an angry phone call from the union,” said Carmine Romano, vice president of American Airlines’ Tulsa, Okla.-based maintenance and engineering base.

Carmine Romano

Putting differences aside
To set the stage for change, leadership from American Airlines and TWU retreated off-site for three days. With the help of Overland Resource Group, a Summit, Mo.-based consulting firm specializing in management/ union relationships, the two parties began working out their differences and forming a unified vision: to become a world-class MRO and a profit center for American Airlines.

The group then set a goal to generate $500 million in cost savings and third-party revenues by the end of 2006—an impossible feat using the airline industry’s traditional method of airplane maintenance and overhaul.

The first leg of the 23- to 24-day check is labor intensive, requiring 115 to 120 people for each MD-80 aircraft (American Airlines is the largest operator of MD-80s in the world with a fleet of 330). But half way through, after most of the major maintenance was complete, a large portion of the crew needed to be redeployed. “It was difficult to shed those labor hours, so we moved people to other areas to keep them productive, but it wasn’t enough,” said Romano.

TWU and American Airlines sent employees involved in the airplane overhaul and maintenance process—planners, engineers, supervisors, TWU mechanics, maintenance staff, inventory control specialists, etc.—off-site for four days to brainstorm ways to reduce turnaround time, develop a consistent work flow, and reduce unit costs. The result was the MD-80 pulse line.

Now, each MD-80 goes through four “positions.” The first position lasts four days and requires heavy manpower as the plane is opened up, offloaded, sanded, inspected, and cleaned. Once this crew has completed its job, it moves to the next airplane. “The manpower is designed around the work required during those four days. Everyone stays busy,” Romano said.

In position 2A, which takes six days and requires a smaller crew, the plane is jacked, the gear sets are changed, the horizontal stabilizer comes off, and general repairs are made. The plane then enters third position, where an even smaller crew spends three days finalizing repairs. Romano explained that each plane requires more or less people depending on the number of repairs, so a roaming crew is on hand to fill in when necessary.

In the last stage, the plane is given to the functional check flight crew, pilots who are trained to test airplanes out of heavy overhaul. They fly the empty plane for four to six hours, and when it is returned, it is polished up and sent back to the airline for revenue service.

To help the process along, the Tulsa maintenance base invested in a dock workflow management system (DWMS). The Web-based application schedules, assigns, and tracks work and resources while a plane is undergoing maintenance, helping the airline create excess capacity for third-party work, improve communication between departments, and reduce the length of time a plane is worked on.

Positive changes
With turnaround time cut in half, more than 300 employees who had previously been dedicated to MD-80 maintenance could focus their efforts on other work. The airline officially became an MRO and started taking on third-party business, including engine overhaul and component work for American Eagle, Synergy, Miami Air, and North American Airlines.

“We have an uphill battle as an MRO because our costs are so much higher—we are unionized, have an older workforce, pay our employees well, and offer them benefits. But with that, you gain knowledge and expertise you can’t find anywhere else. One employee recently celebrated his 60th year with the company. You just don’t hear about that anymore,” said Romano.

Throughout the continuous improvement process, communication was key. Every week, a TWU member and an American Airlines employee put together “crib notes,” a newsletter on the company’s progress toward meeting the $500 million goal. “Our employees were hungry for that,” said Romano. “They wanted to know how we were doing month to month.”

Constant communication and positive feedback motivated employees to take action. In the past, mechanics threw away used drill bits and cutting tools when they became too dull, costing the airline thousands of dollars. But two union mechanics designed a re-sharpening tool out of cast-off machine parts and a vacuum belt drive and motor from one of their daughter’s school science projects. The tool has saved American Airlines $300,000 annually. In addition, the airline had been paying $37.10 for jet engine air filters, but several mechanics found a company offering the same filter for $1.25.

The collaboration between TWU and American Airlines has created a business model unheard of in the airline industry. It also helped the
company surpass its $500 million goal. “I am proud to say that we achieved $501,533,000 in savings and third-party revenue production,” said Romano.

“Yes, union and management continue to struggle, but we have changed the way we do business. American Airlines is thinking more like a union, and the union is thinking more like a business. We have turned to our employees and said, ‘You know how to do your job better than anyone else. What are your suggestions?’ That is the best move we made because they have come up with innovative and ingenious solutions to big problems.”