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Accounting in Action Transcript of interview with Sean Ayars, Operations Manager, American Airlines. Recorded January 2021

Rasmussen: Welcome to another episode of Accounting in Action. My name is Stephanie Rasmussen, and I am an associate professor of accounting at the University of Texas at Arlington. Today I am joined by Sean Ayars, a former student of mine at UTA who now works as an operations manager at American Airlines. Welcome Sean.

Ayars: Hi Stephanie, how are you? Thanks for having me.

Rasmussen: I'm great, it's so good to see you. So, we will get into kind of what you are doing now in in just a minute or so for my students, but I'd like you to start by telling me a little bit about your educational background and your work history prior to coming to American Airlines.

Ayars: So, I took a bit of a nontraditional path. I worked for many years after leaving high school in hotel operations and managing those businesses. Then I went back to school to UTA in my mid-20s, and I studied accounting and finance and got a BBA. After that, I went into an internship at Southwest Airlines, where I worked in internal control, financial budgeting and then from there I left that internship for full time employment at PWC. I did that for a short time before joining American Airlines, where I am now the operations manager in our ramp operations in Los Angeles.

Rasmussen: OK, so when we hear the phrase operations manager, that doesn't really sound like a traditional job title for someone with an accounting degree. So, tell us a little bit about what day-to-day work is like for you and why that career interested you.

Ayars: Sure, so that is a great question and I get that all of the time folks that you went to UT Arlington for accounting and now you're in operations, how do those two marry together! I thought that to myself when I first started, but it is very much integrated in that. I work for 750 employees and I oversee their scheduling and work assignments, an operation that runs 24 hours a day. For me, that is understanding our labor budgets, how do we efficiently schedule our team members. So that way we are getting the most efficiency out of them while spending as few labor dollars as possible. So, from an accounting perspective, we are constantly looking at the managerial accounting aspects of 750 employees on schedules. What does it mean to have vacation liability at the beginning of the year, where you have to accrue for vacation, sick time, all of that stuff that we are heavily involved with in the ramp operations here in LAX.

Rasmussen: OK, so we talk about budgeting in my class and it is being more of once-a-year thing companies do and it might take several months to prepare this big annual budget that they're going to use to help lead their operations. But what you are talking about sounds like budgeting that is occurring for smaller periods of time. Can you talk about like how long of a time period are you looking at when you schedule these employees and you're focused on managing these costs?

Ayars: Sure, so just like you said, we do an annual budget, and we look at for example, what is all of 2021 going to look like? But then we also have a month-to-month budget that we go on. So, at 12 months prior to today things were very different. We are now in a COVID environment where we are operating at 25% of the capacity that we were at the time last year. So, in terms of budget and forecast, the amount of spend that we have available in the top line revenue coming in are very different than we anticipated. This time last year in my role I look at, let us say today is the 11th of January i will look at what is coming up in February. What is our flight schedule 3 like. So, in Los Angeles all have about 52 flights every day in February. I work on the ramp where we have the baggage handlers. We also shipped mail, the US postal service is our number one customer, so we consider all of the freight bags in the mail that need to be loaded onto an aircraft. And then how do we staff around that model while being conscious of a budget? So, February may look one way and then in March it may look totally different when spring break comes around. We might see an increase in flights, may be 60/70 flight a day. So, then it is up to meet again, take our labor workforce and say how do we staffed efficiently while still saving money and being conscious of those costs?

Rasmussen: And this annual budget you talked about, like 12 months ago things were looking a lot different than they are today. Does American Airlines update those annual budgets as major things like COVID changed or did they just operate here with our static budget we created and we're just going to keep working off of that?

Ayars: So you know the budget that we put out there goes to shareholders and we share that information across our organization internally so that it stays the same. But then what we go on is a forecast. And so, we looked at the budget, but then the forecast in kind of takes the reins as our overarching budget, a kind of like our guidebook from month to month. When I talk about budget and it changes from month to month. When I am working in house, we are talking all things forecast. What is our forecast for February going to be and how has it changed from what we planned and the initial annual budget.

Rasmussen: OK, another thing we focus on a lot in this class is after we have our budget calculating variances of our actual performance to our budget or even to a flexible budget that we've adjusted based on actual production or productivity. Are you involved in looking at those types of variances and how do you use that information to make decisions?

Ayars: Yeah, I mean absolutely, and I this is a very relevant question to the environment we're in today. For example, the County of Los Angeles has recently come out with a new health order that requires us to give employees 10 days off of work if they have come into contact with somebody positive with COVID-19. So, when I look at variances at the end of the month, I have to explain, OK, Sean was out for 10 days. This was nonproductive work paid time that's going to be much higher. This employee who did not do anything for 10 days, I have to explain that thousands of dollars we pay that person to be at home, and it's an understandable expense by organization. It is just being able to explain them where I step in to say 75 Employees were out for 10 days and that is why we have had to incur. It is greater variance as opposed to the forecast we thought we would have.

Rasmussen: Great! So, let me flip now to ask you a couple of questions about when you were a student, so you were in accounting major, right? I assume that means you liked accounting, you liked being in your accounting classes, but even though you were in accounting major, what areas of accounting were most interesting to you as a student because you took classes in several different aspects of Accounting?"

Ayars: Yeah, I mean, it really now that I'm out working everything that I learned all really comes together for me, there are pieces of everything that I learned in accounting. Whether it be financial or managerial all come together. When I have to explain variances to budget or forecast, I am very much in a managerial accounting world but in every day looking at how do I schedule people, what days off they are going to have, what hours of the day should they work, then I am in managerial accounting mode. So, my favorite thing when I was in your class, I love the managerial accounting getting all the way down to the details of This variable cost is $0.13 or This fixed cost is still going to be $1000 a month. We have those real costs here every day 5 and we look at stuff like that. In my current role I look at variable costs, how can I save money with employees giving them time off and things like that. But managerial accounting was my favorite. First understand the business and the decisions they have to make with production and product costs. So that was my favorite managerial for sure.

Rasmussen: What advice would you have for students who are at UTA today? Obviously COVID is changed a lot, but even outside of COVID, just as someone who's preparing to enter the workforce in a few years and starting to think about what career they might want! what advice would you have for them?

Ayars: Yeah, you know when your student and youre in it, sometimes you don't see that big picture of everything that you're learning, but the things I took away from college were just to be on top of your deadlines. Make sure that you are where you're supposed to be, you check your emails in college and it's not quite as serious as checking them in the workforce. But when you get out and you start working, you realize how important it was when your professor told you that, you needed to stay on top of checking your assignments and getting that stuff done. Also, the lessons that you are learning out of the textbook are important, but the lessons you learn in class, help to show up how to pay attention and be respectful and work together as team. If I had to do it all over again, I would pay closer attention to everything I was doing. I would really study more because it is so much when you are in college, you are learning so much and there is so much to take out of that you want to make the best of your time there.

Rasmussen: OK great, well thank you Sean. I really appreciate your time today.

Ayars: Yeah, absolutely. It was great chatting with you. Thank you so muc