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

[Capt.Underpants]

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.

You can operate a gas guzzling fleet if you own the airplanes versus a competitor making payments on a new fleet. But if you've traded your old dogs for a high interest credit line you are hosed. Even more so when fuel prices climb.

 

[justin15e]

You can operate a gas guzzling fleet if you own the airplanes versus a competitor making payments on a new fleet. But if you've traded your old dogs for a high interest credit line you are hosed. Even more so when fuel prices climb.

AA may or may not "own" those planes, however with an old fleet, they have higher gas bills, more maintenance costs, more down time, higher cost for replacement parts.

Didn't AA have to ground its whole MD-80 fleet about a year ago because some FAA maintenance issue?

I'd be more than willing to bet those old MD-80s are costing them much more than those with newer fleets, otherwise, why did CAL park all the -300s, and UA park all its 737 fleet? Why has AA recently placed an order for over 500 new aircraft if those old aircraft are worth it? DL has been parking stuff too, just at a much slower rate.

 

[densoo]

why did CAL park all the -300s, and UA park all its 737 fleet?

It's easier to make capital improvements when you have the employees pay for it.

 

[crxpilot]

looks like a buying opportunity to me!

 

[General Lee]

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?

I remember some execs getting bonuses for "emerging from a successful BK." Of course the big winners are BK lawyers. One thing they are open to in a BK is a hostile takeover. USAir tried to go after Delta in BK, but the other creditors didn't like it. You just never know.


Bye Bye---General Lee

 

[The Prussian]

Well...I'm convinced it's AArmageddon...because GL actually made a serious post...:cartman:

 

[justin15e]

I remember some execs getting bonuses for "emerging from a successful BK." Of course the big winners are BK lawyers. One thing they are open to in a BK is a hostile takeover. USAir tried to go after Delta in BK, but the other creditors didn't like it. You just never know.


Bye Bye---General Lee

You can almost guarantee USAir will make a bid at AA if bankruptcy happens. Once the bad debt is gone, USAir will buy them and take the American name.

Anyone else attempting to buy it would be difficult due to overlap, unless they sell the pieces.

 

[Poahi]

Anyone want to guess who made this statement (without consulting Google)?

If a capitalist had been present at Kitty Hawk back in the early 1900s, he should have shot Orville Wright. He would have saved his progeny money. But seriously, the airline business has been extraordinary. It has eaten up capital over the past century like almost no other business because people seem to keep coming back to it and putting fresh money in.

You've got huge fixed costs, you've got strong labor unions, and you've got commodity pricing. That is not a great recipe for success. I have an 800 number now that I call if I get the urge to buy an airline stock. I call at 2 in the morning and I say: 'My name is xxx, and I'm an aeroholic.' And then they talk me down.

 

[tzskipper]

Anyone want to guess who made this statement (without consulting Google)?

That rich guy from Omaha?

 

[Poahi]

That rich guy from Omaha?

Do you mean the guy who disputes his taxes or the one who thinks he should pay more of them?