American and Eagle (AMR)

[highflying]

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.

 

[Draginass]

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).

 

[pilot141]

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.

 

[rjcap]

pilot141,

....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 ?

Thanks

 

[pilot141]

"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).

 

[highflying]

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??

 

[Draginass]

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.

 

[ALCOHOLIC]

I am a feb. 2000 hire on furlough at AA.

 

[atpcliff]

Hi!

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.

Cliff
GRB

 

[falcon20]

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

 

[pilot141]

Market capitalization has nothing to do with how much or how little cash a company has on hand. It has everything to do with how much investors believe the company is worth.

Market cap is simply the price of the stock multiplied by the number of outstanding shares. The price of the stock takes into account many factors, one of which is actual assets. However, the stock price is affected by many other variables, including expected future profits (or lack of same), earnings forecasts, expected growth, and also some plain gut feelings.

This explains why AMR has tons of cash on hand but still has a depressed stock price: the losses are expected to continue for months, and this is reflected in the stock price.

I could also ask you to explain how some dot-com companies that had never shown a profit and were burning through millions of dollars a month could have market caps of several billion dollars, but I'm too nice to do that!

 

[MachPi]

I am a feb. 2000 hire on furlough at AA.

I was hired by AA in Aug 2000 and have about 600 working FOs below me. How can you be on furlough with that DOH? Are you a TWA feb 2000 DOH pilot?

 

[WyoHerkdriver]

He must be a former TWA guy like myself. I have a DOH at TWA of Sep of 99, but find myself furloughed because of my April 01 DOH thanks to the wonderful seniority list integration.

 

[bayoubandit]

I'm a furloughed June '01 AA DOH. It wasn't much fun losing 2300 numbers in a day. I know how you guys feel.

 

[HA25]

1. Market Cap, (I speak as a Finance MBA) is totally unrelated to balance sheet. It is an indication of the markets view of the earnings potential of the stock.

2. Like it or not, the majors are in this order with regard to financial strength:
SWA,DAL,AMR,NWA,ATA,CAL,UAL,AAA ----- Who is losing money and who is
making it now is meaningless in the short term, this is self evident it the fact
SWA's stock is being hammered as hard as AMR, etc...


3. Frontier & Jet Blue are not majors

4. AMR has close to 3 billion in cash and convertable assets, and 6 billion in unencumbered aircraft, more than any other airline (including SWA).

AMR is here to stay.....hang tight, they will hire again.....with 13000+ pilots on one seniority list, retirements alone will take care of that!

 

[rican]

majors

UPS, FDX, & ABX are majors too.

 

[ALCOHOLIC]

I'm a furloughed June '01 AA DOH. It wasn't much fun losing 2300 numbers in a day. I know how you guys feel.

I know it hurts, but think of this. You did loose 2300 spots. That is almost down to 2100. See you just gained 200. TWA brought somewhere around about 140 planes afrer AA gotr rid of the 9's,717(stupid) and the 767 200's. That is barely enough pilots to do the flying with AA's work rules. Remember instructors and management are in the 2100 left. Next year over a hundered more will be gone. If AA does not shrink anymore, you are in a better position than you would be if AA did not buy TWA. Remember you were hired because of expected growth. I do not think there will be much growth for awhile. I am furloughed also so I know how you feel, but look at the big picture. The big picture being furloughed blows.

 

[pilot141]

ALCOHOLIC,

I don't mean to be a jerk, but shouldn't BAYOUBANDIT expect to benefit from AA buying TWA? I mean, if I'm hired by a company that buys another company, shouldn't that benefit me as an employee?

Did BAYOUBANDIT have an application on file with TWA? Did he want to work there?

Being furloughed sucks, but telling BAYOUBANDIT that he should be glad that almost 2,300 TWA guys took up spots in front of him on the AA list without his consent is just rude.

The problem AA had after 9/11 was excess capacity, as did every other major. Unfortunately, AA now had to deal with both AA and TWA capacity. Using two seniority lists, AA furloughed what they could.

Now that the seniority lists are combined, every TWA pilot must be recalled before someone in BAYOUBANDIT's class is recalled. I think that the seniority integration was very favorable to TWA guys, in that every one of them is senior to an AA guy hired in April 2001.

As for airplanes and routes, welcome to AMR. We bought two west-coast airlines (Air Cal and Reno Air) and still do not fly any SEA-LAX routes. Expect to see STL dwindle down and in five years disappear as a pilot base.

Expect to see numerous fights with the "new" feeders in STL, as AMR tries to use them to avoid scope and ASM clauses.

Bottom line: in 2007, expect STL as an Eagle RJ hub, and nothing else. The TWA and AA pilots will be fighting over the same amount of mainline jobs that we have now.

 

[ALCOHOLIC]

EXCUSE ME

Pilot 141,

Do you not think out friend and many other Reall AA pilots would be fourlouged if not for the former TWA. I think I can find 209 pilots glad that single carrier was announced. They would still be on the street if it were not for TWA. They were not needed but after single carrier was ruled they had to come back because they were senior to the twa pilots and it was cheaper to bring them back to the AA side rather than furlough more TWA guys and have the 209 go through a full TWA school. By the way, TWA has left 103 MD80's many of them new. The 757's will be here until at least 2005. The 767's are being replaced next year with new ones. I am sorry our friend is furloughed. I did not have an app in with AA.

 

[Flying Jade]

I think that the seniority integration was very favorable to TWA guys, in that every one of them is senior to an AA guy hired in April 2001.

Now, come on....considering that every TW guy senior to that April 2001 AA guy WAS INDEED hired PRIOR to April 2001 (some as early as 1986 who lost 15 years)...that's not called Favorable, that's called FAIR (and those guys who lost the 15 years would call it something else, I'm sure)!!


FJ