AMR bankruptcy Likely.....so says the Associated Press

[Cpt Oveur]

Arpey, and possibly other execs get zero retirement themselves if AMR declares bankruptcy under his watch. He can get a golden parachute prior to that though...

How much of the debt are they responsible for from TWA alone?

 

[waveflyer]

Ridiculously transparent

All 3 major labor groups up for contract and now this??

Transparent and dumb-

spread the word

 

[Sacha]

Is it dumb? They didn't declare bankruptcy when everyone else did. They appeared to be taking the high road but now wish they had not. They have a very senior workforce that they know will be gone in the next 5 to 10 years. The economy is in bad shape so in their eyes the timing is either now or never. Wipe the slate clean, hope for new pay and work rules before the new blood shows up and be positioned for an economic recovery.
I'm willing to bet that's how management sees it.

 

[kf4amu]

Sacha made a good point. American is screwed because of bankruptcy laws allowing their competitors to renege on their contracts for lower rates. Because American was the only ones that did not, their competitors became "low cost carriers" and undercut them.

In reality, their business model worked, and worked fine in a normal business environment, but when the competition is able to reduce their costs through bankruptcy whenever they feel like it...bankruptcy becomes the only viable way to continue operating.

In a better world, the crappy airlines that go bankrupt multiple times would simply cease to exist, allowing the entire industry to enjoy higher profits, providing greater job security and higher wages. In this case, the bankrupt airlines have succeeded in destroying a perfectly viable airline that chose not to seek bankruptcy protection. The complete opposite of a free market.

Sad.

 

[waveflyer]

High road?
Someone forgot about Management retention bonuses that just so happened to equal the massive concessions pilots made.

 

[jonjuan]

BK or otherwise - getting costs down is only one side of the equation.

what about the product especially the international product they are putting out. Revenues will continue to deteriorate as customers switch to carriers with better service. That fact seems to be conveniently lost.

No kidding. I was in ord the other day and behind each gate was a big screen tha said "The newest jet fleet in the industry.". Moving closer the tiny fine print said "coming soon with the largest aircraft order in history.". Lol...

 

[Data]

When they start putting 'aircraft parts inventory' up for collateral for loans, then you can be sure BK will happen...

I thought the same thing when United did that a year or two back, look where they are!

 

[Sacha]

High road?
Someone forgot about Management retention bonuses that just so happened to equal the massive concessions pilots made.

High road in their eyes? Or yours or mine? Two completely different things...

Would those bonuses have been of the same breadth and scale if they had gone into Bankruptcy? I think not....

 

[spacecadet1]

Also look for the next required pension contribution. The union there is trying to hint about the A fund being in trouble (double foot stomp, but many guys just don't want to know). BK is coming quickly at AA. Hopefully they'll get new management out of it, and maybe some new hot FA's.

 

[justin15e]

The poor performance here has nothing to do with labor costs. AA has been competing with these low labor costs for a long long time now.

There were actually making good money back in 2007, and that is with the labor difference they still posses.

What has changed since then?

1) DL/NWA Merged
2) CAL/UA Merged
3) SWA/AT Merged
4) Everyone else dumped their fuel guzzlers- AA did not
5) AA Management has failed to adapt.

Labor is only one variable in the piece of the pie. When you read their rhetoric, you'd think that AA is paying 3 times the labor cost of its competitors. If you look at the facts at the MIT airline data project website, you'll see that the AA cost for its pilot is at best 10% higher than other legacies and "even steven" when compared with SWA. You don't get the productivity out of AA guys like you could, but AA could get that if they gave APA a contract.

Look at the #1 cost of all the airlines, GAS.

If you look at 1 figure, gas of AAs SNB fleet, the data shows that AAs fleet burns an average of 37% more gas per hour than CAL, which has the most efficient SNB fleet (961 gal vs 697 gal per block hr).

If you compare this with Delta, they are only 6% less efficient.

Get rid of the gas guzzling airplanes.

Labor isn't the issue, management of AA is.