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American and Eagle (AMR)

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Well-known member
Jul 2, 2002
Could someone explain to me what the problem with American and Eagle are? Everyone on the board seems to think that they are not doing good and wont get back to the top like they use to be. I know the pilots need a new contract and stuff but why does everyone seem to think that American and Eagle begining to go down? I dont know inside details and am just curious about this so any info would be cool.
First of all, the whole industry is in the crapper. AA and AE are no exception. Relatively speaking, AMR is in better position than most of the other major carriers. Southwest is squeaking out a profit, but in tough times, the low-cost carriers usually do. Like it or not, this is a very cyclical industry with very high capital costs. When your customer base goes away (business travellers) your costs still don't change but your revenues do.

As far as "issues" at AMR . . . . well:

1. the AA pilots' contract came up for renewal last August and those talks are ongoing without much progress as is usual. The longer the companies can slow-roll the contract, the longer they have lower costs.

2. AA has not asked for employee concessions.

3. Force Majuere provisions have been cancelled.

4. AMR is being forced to comply with AE ASM restrictions that they themselves agreed to in the last contract. These ASM restrictions were triggered by having AA pilots on furlough and ratio of AE and AA flying. They don't like it and want unilateral relief from the AA pilots.

5. In a cynical attempt to skirt the ASM cap, AMR is transferring 14 RJs to outsourcing company TSA for them to operate under a "reverse" code-share in STL. This is also a clear violation of the AE ALPA scope contract. In the last contract, AE pilots gave up considerable compensation in return for a combining of a hodge-podge of front companies operating as AE into a single entity and a scope clause that forbid exactly the kind of thing that AMR and TSA is trying to scam. This will, in all certainty, NOT hold up in court.

6. The AA pilots' union (APA) has proposed the absorption of AE into AA to operate as a single company and single seniority list. AMR has flatly rejected this proposal. Not surprising since they have something like 10 more years on a sweetheart contract. AE pilots generally have reacted favorably to the APA general proposal.

Bottom line is that the same fight over scope is going on all over the industry. All the major airlines would like to break their unions, and they see NOW as the time to get the wedges in. At the very least, the major airlines' managements are seriously trying to change their compensation structure to be like their commuter afflilates. Transferring flying to outsourcing companies with cheap labor gives them flexibility and freedom from those pesky labor contracts that force them to deal fairly with their employees.

Many corporate executives in the industry would like to see the entire industry "internationalized" with ownership and cabotage restrictions lifted. This could result in very cheap labor brought in from South America, Europe, Eastern Europe, and elsewhere to replace higher paid American airline workers (pilots and flight attendants especially).
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To augment what DraginAss said:

1. When you "Hear" that AMR/Eagle is going down, not recovering, in dire straits, etc, consider where the info is coming from. We are in Section 6 negotiations with AMR right now; the more miserable they look financially (including with public perception gained by press releases) the more they can delay our new contract, or, eventually, claim that they "can't afford" an increase in pilot pay. The company is losing money, but has $2.5 billion in cash, high load factors and pilots working for 30% less than UAL and DAL. AMR will still be a leader when the dust settles.
2. Who would have ever thought that Eagle guys would go to battle with AMR over a scope clause! The scope clause has been likened to a camel's nose under the tent, and now (unfortunately) the Eagle guys, while looking out the front tent flap at AA mainline, have suddenly noticed a very smelly nose poking into the tent. The battle now becomes what it always has been: our jobs or someone else's for less pay.
3. I'd like to see what the apparantly short-lived RJDC has to say about this action. The issue was never about airplanes: it has always been about jobs. Given enough time and enough outlets, the company will continue to define your job down until eventually you don't recognize it.
4. Having Eagle (ALPA) and AA (APA) at each other's throats is management's dream. As long as we are fighting each other, we can't effectively fight AMR. This is one of the reasons why management tries to time contracts so that only one labor group will be in negotiations at a time. Imagine if pilots, F/As and mechanics all were in contract negotiations at the same time.....

They would work together and feel a sense of unity.....the company's goal is to have every union fight every other union. Witness UAL's concession talks....
Sorry...off the subject now....bottom line is AMR has strong financials and is looking for excuses to cut costs in any way...posting a huge quarterly loss helps do that.

....bottom line is AMR has strong financials and is looking for excuses to cut costs in any way...posting a huge quarterly loss helps do that.

I read about the approximately 500 million quarterly loss but what other information do you have that supports your claim of strong financials ?

"Strong financials" referred to AMR among the industry....

Look on any industry website, or financial info website.

AMR and DAL are the strongest among the Big 3, with strong cash positions and good credit. SWA is obviously making money, but other carriers vary. CAL has had a good recovery, but is still losing money. NWA is still losing money and plans to cut capacity, as evidenced by the future furloughs. UAL and AAA are a mess, as is evidenced by their application for federal loan guarantees. Everyone must understand that these are NOT loans, but simply the Feds co-signing on a loan taken out by, for example, UAL. This gives the creditor confidence that he will get paid back, and UAL gets a lower interest rate. It's like your responsible uncle co-signing a car loan for you: you don't get the rate that your uncle would, but it's a heck of a lot better than you could do on your own!

I think any major airline that can avoid the gov't backed loans in this environment can be called "strong".

Just my opinion, of course!
(AMR also has $1.5 billion in cash on hand, as well as hundreds of unencumbered aircraft).
So then why wont American or Eagle be hiring for a long time and why does everyone say that the upgrade takes a long time? Is this just a thing the airline man. is doing to get a contract that is better for the company or what? Why does everyone say American and Eagle is so horrible to work for right now??
There's not really anybody that great to work for right now. The key word is "work." AA has only about 4% of it's pilot seniority list on furlough right now (Apr 2000 hires). Contract that with over 20% of the US Airways list (back to '89 hires, I believe). DAL, UAL, and NWA are somewhere inbetween at about 10% and probably furloughing more in the future. AA has no plans to furlough any more pilots.

NWA is NOT cutting back!

NWA now has the same number of aircraft flying that they did pre-9.11. They are receiving the delivery of new aircraft next year. They plan on recalling pilots in the spring of next year. They are doing the best of the majors, outside of SWA and ATA, who are both making money every quarter.

AA is doing terribly, along with the rest.

if they (AMR) have 2.5 billion in cash as you say than why does there market capitilization equal less than 2 billion

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