AA Plans

[HA25]

well said rapidD, I agree with that statement 100%, and sorry guys for my crappy spelling, I tend to spell bad as it is, then add to it the heat of a debate and I turn into an spelling slob.

 

[publisher]

ggod points

Good points but there will always be another SWA and another Alaska.

The fact is that left to their own devices would revert to pre deregulation type pricing and polcies.

The SWA's of the world always come along to keep them honest in both fairs and employee compensation.

What has not be recognized here is that a systemic change is going on and that it began almost 6 years ago. The percentage of people on an aircraft at discount has risen steadily for many years. Eventually it was going to catch up with the industry. Business travel diminishes and that's the ball game. We will see how long this lasts.

 

[HA25]

Carty and AMR acknowledge that pricing structure change is inevitable, and AMR seems to be proactive in this area, as in the past during hard times, which will help them. But there is one fact that cannot be escaped ......an airline has NEVER made it by shrinking ....growth is a key driver in rising earnings. Don’t think that AMR is gonna defer all aircraft orders for ever. Wait the the 17th of July and listen to the conference call, I’m sure some interesting news will come out.

 

[Jakeair]

SWA does not want market share !

As a SWA Pilot (about one year), I can tell you that SWA does not want to complete with other airlines. SWA does not care about market share like other airlines, it's all about profits.

Take a look at the cost of moving one SWA seat, one mile.
About 7.54 cents (2001)

(UAL about 9.2, U about 8.9 and on and on.)

Now look at the Yield per RPM.
About 8.51 cents (2001)

After Sept. 11 the yields are down. However, so are the costs.

In 2001 the Average Passenger fare is $83.46.

27.3 % of SWA aircraft are leased, the rest are owned.

Long-term Debt 1.3 billion.
Cash 2.27 billion.

As you can see the company is run like a business, not to buy other business (car rental comp. or Hotels). When it makes money, it pays off its liabilites.

I think the interim contract offer will pass. In 2006 with the super Mediation language in the offer, I think the pay will come up that last 15-20 % in 2006 (if you count the stock opts).

SWA will always be a low cost, lower paying(?), grow at 9-10% per year, secure, well run airline. Who's management knows how to stay the course.


Jakeair


PS. You can cross the Pacific in a 737-700 (with the APU runing !!)

 

[HA25]

The key is that SWA is not really in competition with AMR, they are a niche company who does better in tough times. I still maintain that when the pilots and others get paid closer to AMR wages, as they eventually will, that cost of moving a seat will rise, as will the fare.

 

[Draginass]

What DAL, UAL, NWA, and AA managements want to do is gut scope and dumbdown pilot jobs to commuter scale compensation. When they get done with that, they want to open up cabotage and internationalize their companies. That way they can get rid of those overpaid commuter scale guys now flying wide-bodies and get even cheaper labor from South America and eastern Europe.

 

[ex nav]

more AA pilot furloughs?

Ex-TWA pilots could be caught in layoff

By Christopher Carey
Of The Post-Dispatch
Bloomberg News Contributed Information To This Report.


American Airlines could have to furlough more than 100 former TWA Airlines LLC pilots to comply with a seniority-integration agreement it signed before the carriers combined operations.


Fleet reductions since the terror attacks Sept. 11 have left American with an "excess" of ex-TWA captains at its St. Louis hub, said Stephen Tankel, a spokesman at American's headquarters in Fort Worth, Texas.


Under the formula for combining the seniority lists, the number of former TWA captains at the St. Louis hub was capped at a fixed percentage of the number of American captains at the carrier's Chicago and Dallas/Fort Worth hubs.


The strictest interpretation of the agreement between the airline and the Allied Pilots Association would require the airline to park about a dozen jets operating from Lambert Field and to displace at least 103 captains. Such a move could lead to an equivalent number of layoffs at the lower end of the seniority list.


Negotiators for American met Tuesday with negotiators for the Allied Pilots Association -- the union representing all 12,400 pilots in the merged airline -- to discuss alternatives to furloughs.


About 310 former TWA pilots have been idled.


American has outlined three options, Tankel said.


The airline's preferred option would be to amend the maximum number of ex-TWA captains in St. Louis to "more closely reflect the realities of the current environment."


It also would be willing to create a satellite base for the excess pilots at LaGuardia Airport in New York, relocating their flying until retirements, attrition and aircraft conversion eliminate the surplus.


American said its least favored option would be grounding jets and laying off pilots.


The union also offered some options, said Todd Wissing, an American first officer who serves on the union's communications committee. "The things that we've proposed would not result in any displacements," he said.


The seniority-integration plan developed last fall envisioned that the merged airline would be operating about 880 aircraft today. Because of fleet adjustments, the figure stands at 823 aircraft.


Jeff Darnall, a former TWA captain who could be displaced, believes that neither American nor the Allied Pilots Association wants to see more pilots leave the work force.


Whatever imbalance exists between the number of ex-TWA and American captains should work itself out in the next year or so as TWA veterans reach the ends of their careers, Darnall said.


American plans more cuts


American Airlines, a unit of AMR Corp., will eliminate more jobs gradually as it cuts costs to compete with no-frills carriers, the company's chief executive, Donald Carty, told employees Tuesday. "Eliminating duplication, simplifying and otherwise streamlining the business . . . will no doubt mean that, over time, we'll need fewer people," Carty said in a recorded message.


"We don't anticipate wholesale changes to happen tomorrow."


AMR employed 123,732 people March 1.


The airline has no information beyond what was included in Carty's message, a spokesman said.



Reporter Christopher Carey:
E-mail: ccarey@post-dispatch.com
Phone: 314-340-8291

Published in Business on Wednesday, July 3, 2002.

 

[publisher]

Sell AE

Some anticipate the selling off of Eagle as one thing coming/ It would be no surprize.

It is hard to be all things to all people. As I have said before this does not have much to do with pilot pay as with a changing market.

It used to be that discount had a bad tone. Today both Southwest and Airtran are not looked on as discount carriers but in a positive light.

There is as much chance that major carrier pay will come down than these carriers up. In either case, you cannot directly compare. The big disparity in pay per hour that impacts costs are the larger aircraft of the majors.

 

[HA25]

Spinning of AE would be a God send!

 

[alek]

AE and TWA

I dont't think they will sell Eagle, they desperately need feed, and other commuters are tied with other majors.

I think we might see, if APA agrees, B-scale pay for new airline within AMR, using TWA airplanes/pilots, call some furlough people back, and start point to point operation like SWA. August 1 AA announced 2 daily roundtrips from Kansas City to New York. This might be the beginning of point to point or just try-out. Kansas City is Maintenance base but not the hub for AA, I wonder if other cities will follow.

I hope AMR learned lesson from SWA expansion. SWA didn't expand with 70% market share overnight. Jet Blue is doing same thing in their backyard in New York. I believe 2 days ago they announced 40 extra flights to Florida this fall. If Jet Blue can find passengers then AA should also expand. AA has crew domicile there, and also TWA use to have big domicile in JFK.

I like how everybody blames SWA for their expansion and their market share. That didn't happen overnight, and instead of fighting with unions over last 10 years about pay issues Managers of Big 4/5 should realize what's happening with their Airlines and their own market share.

Alek

 

[MD80DRVR]

B-Scale approved by the APA??? Get real. You'll never see a B-Scale approved at AA. They've been there and done that.

 

[pilot141]

Not only have we "been there, done that":
We approved the first B-scale, which dominoed to other airlines;
We were the last to get rid of B-scale: guys hired in 2000 still had to do a few months of B-scale after they got off probation. B-scale is a VERY ugly word at APA, and I never see it happening again.
To get back to the point of the OP, "AA Plans", I think Don Carty is accomplishing both of his objectives: positioning AA for a successful future, and lowering pilot's expectations during contract negotiations. There are many things going on here, but the most important are:
1. Passenger traffic has returned strongly. Sun July 7th AA set a record for RPMs (ever).
2. AA pilots are making up to 30% less than UAL and DAL pilots.
After parking airplanes, writing down the cost, and flying an 87% load factor on Jul 7th, AMR still claims to be losing money.
If a 30% pilot pay advantage combined with a record RPM day done with fewer airplanes cannot produce a profit, then the business model is flawed.
Now comes the kicker: what can be done? Do we scale back costs to meet the lower revenue? Or do we expand, and begin to charge small increases in fares? Don Carty says (during contract negotiations) that we have to shrink, and either lay off workers or accept XXX crappy deal. After we sign XXX crappy deal to prevent more threatened furloughs, watch for AA to expand like they should, but with the pilots holding the proverbial bag. Such is the job of the CEO, and such is the job of unions to prevent the bag from being too full.
While talking about this, why are AWA and AAA still in the game? Should we be forced into fare wares with companies that would be bankrupt except for federal loan guarantees? How about letting a couple of these companies go under and instantly getting rid of the excess capacity?
Just a thought as almost all companies struggle to make money. This is a capitalist market, right? Not a socialist one?

 

[publisher]

see

From Plane Business Banter

"Meanwhile, the boys down there in Ft. Worth with the silver airplanes said last week that they expect to announce further job cuts soon, as the airline admitted that changes in the marketplace are forcing American Airlines to restructure the way in which it operates.
While no details were forthcoming, I have a feeling we are going to hear some substantial news from the airline in the next two weeks. Perhaps in tandem with the airline's earnings announcement that is scheduled for next week. I would think one of the low-hanging fruit on the "possible" list would be a spin-off of the American Eagle operation, but much more than that is going to be necessary to get the airline back in the positive number column."

If only things were as simple as we thought.

Perhaps the fact that the costs at AA are less than United and Delta is why they are in better shape than those guys. Delta basically has expanded their regionals effectively reducing their crew costs while AA has stuck more to the letter of the law.

It also does no good to sit and point to one day load factor, especially when it was a giant holiday one. Come on, this is not airline anaylsis.

You spin it off to create value and cash, reduce liability, and you will still have the feed through contractural relationships/

 

[eaglefly]

It should be noted that Holly has a marginal history when it comes to accuracy.

 

[alek]

AA Advantage

I would have to agree with pilot 141.

AA saves about 600-700 Mil dollars compare to UAL, and DAL because they have old contract. You try to commute on AA and you will see about loads. Out of 10 flights, probably 9 are 90-95% full. Still AA complains about loses. I am sure yield is not there, but nobody has yield this days.

I think it is wrong to paint bleak picture of your airline so you can delay contract negotiations. That is old style. I bet they will delay it as much as they can, probably 2 years. I don't think the pay is the major problem, I think compare to ALPA, APA realized what threatens our pilot carriers are SJs or RJs.

"By changing their business" AMR should also change the way they deal with negotiations. Surprise everybody, sign contract early and move on with the business plan. I guess that is probably the dream world.

I can't wait to see how AA will respond to expansion of Low-Cost carriers.

Alek

 

[throttlejockey]

Here's my take on the AA/AE RJ situation:

In the late 80's and early 90's, Turbo-props were operated on a fee for departure basis. Majors were able to offer "joint-fares" from second and third tier cities which boosted traffic significantly from these cities since folks could fly from say Dubuque, IA to Orlando for the same price as ORD-MCO. Since then, RJ's have taken over much of this flying.

But the problem is that RJ's are much more expensive than turbo-props on a segment cost basis. Thus if loads and yields are not good, majors such as AA wind up subsidizing the losses incurred by operating the RJ. This is hitting carriers such as AA pretty hard right now since yields on feeder routes are not very good. The regional operators are guaranteed revenue, so most of the risk is taken by a major such as AA.

By having its own in-house regional operator, AA is basically stealing from Peter to pay Paul. (i.e. subsidizing Eagle at the expense of its own balance sheet).

It is my sense that AA would rather spin-off Eagle and at the same time let other RJ operators compete for the feed. Thus AA would get the benefit of the lowest bidder. In addition, being an innovator, I am sure that AA will be the first major to figure out a way to contract RJ flying on a "pro-rata" basis rather than "fee for departure" basis. This would mitigate AA's risk and place more of the risk of operating the RJ on the Regional Carrier.

As for AA pilots (APA) they should be frightened by the prospect of RJ's flying on a pro-rata basis. Since pro-rata flying requires the RJ to stand on its own, RJ's would be removed from flying to second and third tier cities (where they cannot make a profit on their own), and be placed on routes with higher loads and yields (i.e. cities being served by S80's and 73's.) The operating cost of an RJ is more consistent with these types of routes.

Thus AA pilots will loose jobs, and many cities will lose air service -all because of the RJ.

Let the flaming begin.

Regards,

throttlejockey

 

[VMC]

AA/AE

Eagle flying is busy with seats being filled.
I do not know where you state that Eagle is not generating revenue.

In regards to APA and ALPA not talking, we are trying to talk to APA. We need to unite and work together.

 

[publisher]

good points

Throttlejockey makes some good points.

The fact is that load factor is only part of the equation. A full aircraft flying for zero revenue has a load factor of 100%.

While the airlines were able to pare 18% of their flying, were they able to pare 18% of their total costs. No. If a gate is used for 5 flights a day rather than 10, the net effect is addional costs.

These are only a few examples but are symbolic of many.

Holly may have a track record of speculation but often she is right and we have already seen the trend. It makes sense. They will still have Executive at that point with turbo props.

The point that TJ makes about segment costs are dead on. The AE balance sheet looks better to the detriment of the major. If you were going to spin it off would it be quite so negative. No. You want that. Then you could renigotiate later after the spin off.

This may not happen but do not doubt the possiblity. Some of the Delta guys wouyld be right behind them..