American Airlines status

[dbacks fan]

Can you imagine being a pilot for an airline, and getting this message from a control tower?

Captain Bob Gilchrist, the pilot of what possibly was history's final Braniff flight, 902 from Buenos Aires to Miami, heard the message from the Miami tower over his radio: "Whether you know it or not, you have just been terminated. You have been flying for free."

http://www.time.com/time/magazine/article/0,9171,953515,00.html

[dbacks fan]

The other issue is if, god forbid, AA closed all of the other aviation related businesses in Tulsa would take a hit because the vast majority do business with AA. I worked briefly for Pryor Machine Tool and they do a lot of work for AA, as well as Nordam and others. They all do some kind of contract work for AA.

[Hoss]

Muse, there's a name I hadn't heard in awhile.  Went the way of Braniff.

I used to love to watch the planes literally take off over I-70 at the old Stapleton Airport.  Remember the runway overpasses?

I do.  I remember driving through them.  Looking at Google Maps it looks like they've just about completely cleared out the old airport and the overpasses appear to be gone.

[Ed W]

And what amount of people does American employ ?
How come they are Tulsa's little darling and this city almost shuts down everytime American has a problem.
Will we really become Michael Moore's Flint Michigan if they go away ?

When the steel mills closed down in Pittsburgh, job losses and other business closings rolled across the region like a tidal wave.  The mills closed and their payrolls went away.  All the related businesses that supplied the mills folded and their payrolls went away. Local supermarkets, clothing stores, and other retailers saw their business diminish and many of them folded too.  Local governments watched as their tax bases shrank as people moved away and businesses failed.  In the case of McKeesport, there wasn't enough money to repair the water treatment plant when it was infested with giardia.  National Guard troops had to truck potable water into city neighborhoods.  It was like being in the third world.

The point is that trouble with any large employer can spread like ripples on a pond, and bring that trouble to people who think they're well above it.   

[tulsa1603]

What I don't understand is.. just four weeks ago on my last flight on AA, I read the letter from the CEO in American Way talking about how they were ordering hundreds of new planes?  In fact, just the other day there was an article in the Chicago Sun:

http://www.suntimes.com/business/6608833-417/american-airlines-orders-460-new-planes-from-boeing-and-airbus.html

Would a company on the verge of bankruptcy do that?  I don't get the logic.

[Conan71]

What I don't understand is.. just four weeks ago on my last flight on AA, I read the letter from the CEO in American Way talking about how they were ordering hundreds of new planes?  In fact, just the other day there was an article in the Chicago Sun:

http://www.suntimes.com/business/6608833-417/american-airlines-orders-460-new-planes-from-boeing-and-airbus.html

Would a company on the verge of bankruptcy do that?  I don't get the logic.

Ordering new, more fuel efficient, planes to help lower operational costs.  

[tulsa1603]

Ordering new, more fuel efficient, planes to help lower operational costs.  

I get that, but if you're about to file bankruptcy, do you go out and buy a new car to save money?  Maybe I'm applying consumer logic that is not taking into account the complexities of corporate finance, but I don't understand how they would pay for it if they're going bankrupt.

[Red Arrow]

I get that, but if you're about to file bankruptcy, do you go out and buy a new car to save money?  Maybe I'm applying consumer logic that is not taking into account the complexities of corporate finance, but I don't understand how they would pay for it if they're going bankrupt.

Sometimes it works.  You have to think cash flow.  In the 80s, my brother had a car that needed several hundred $ worth of maintenance (tires and some other stuff I don't remember).  He didn't have the cash and couldn't afford payments for an additional loan.  The present car was close but not close enough to being paid off. He was able to buy a new car for about the same monthly payments he was already making by using his trade-in as a down payment.  Instead of having a free and clear old car in less than a year, he was making payments for another 5 years or so but the cash flow was about the same and he had a new car.  (New, not used but new to him.)

[Conan71]

I get that, but if you're about to file bankruptcy, do you go out and buy a new car to save money?  Maybe I'm applying consumer logic that is not taking into account the complexities of corporate finance, but I don't understand how they would pay for it if they're going bankrupt.

Along the lines of what Red is saying, IIRC, most airlines lease their planes.  It's not as if they were going to write Boeing or Airbus a $20 bln check.  It's a cash flow matter. If they replace older, less efficient aircraft which they are leasing with a like number of new aircraft and the lease payments on the fleet don't increase more than the fuel and maintenance savings, that's the logic behind it.

[Townsend]

Along the lines of what Red is saying, IIRC, most airlines lease their planes.  It's not as if they were going to write Boeing or Airbus a $20 bln check.  It's a cash flow matter. If they replace older, less efficient aircraft which they are leasing with a like number of new aircraft and the lease payments on the fleet don't increase more than the fuel and maintenance savings, that's the logic behind it.

Perhaps writing down depreciation on the new purchases over the years they have them is working out for them as well.

An old saying is:  "the best time to buy a car is before you declare bankruptcy."

[heironymouspasparagus]

Muse, there's a name I hadn't heard in awhile.  Went the way of Braniff.

I used to love to watch the planes literally take off over I-70 at the old Stapleton Airport.  Remember the runway overpasses?

Got bought by Southwest Airlines.  Lamar Muse was President of Southwest for a while - helped build it up big time, then got canned - Rolland (other Southwest founder) didn't like him.  Started his own airline.  Kelleher bought them a few years later.  They were going bankrupt.

Runway Overpasses??  Is that a rap group?
Yeah, I remember them at Stapleton.  Drove through there a few weeks ago (out and back) and they are all gone now.  Has been so long since I was there, I didn't recognize much.  Couldn't even tell where Stapleton is/was - don't even know if it is still operating.  Ahhh....Wiki says it it industrial area now.  I drove right by it and saw all the industrial development, just didn't realize what I was seeing.

[Conan71]

Got bought by Southwest Airlines.  Lamar Muse was President of Southwest for a while - helped build it up big time, then got canned - Rolland (other Southwest founder) didn't like him.  Started his own airline.  Kelleher bought them a few years later.  They were going bankrupt.

Runway Overpasses??  Is that a rap group?
Yeah, I remember them at Stapleton.  Drove through there a few weeks ago (out and back) and they are all gone now.  Has been so long since I was there, I didn't recognize much.  Couldn't even tell where Stapleton is/was - don't even know if it is still operating.  Ahhh....Wiki says it it industrial area now.  I drove right by it and saw all the industrial development, just didn't realize what I was seeing.

Kelleher and King co-founded SWA.  At least according to SWA's own website.

[JCnOwasso]

American has a lot of the old MD-80 style of aircraft (over 200).  They are hugely inefficient, burning around 200 more gallons per hour than a 737 NG.  When you have 200 planes flying X hours per day burning 200 more gallons and carrying up to 80 passengers less than the 737, you are wasting a huge amount of money.  While I know each plane is not used ever day, let's look at this.  200 planes buring 200 gallons more an hour and they are in flight for 10 hours a day and fuel is @ $3.00 per gallon.  That is 1.2Million in wasted money PER DAY, not even including the loss in tickets for the additional passengers that could be.  So going for 365 days a year at 1.2million is around $438,000,000 in wasted fuel alone.  And for giggles, lets say that you can sell 50 more seats per flight on those 200 aircraft for 5 flights a day at $125 per flight for 365 days... additional revenue of $2,281,250,000 per year.  So your brand new fleet of 737's could be paid for in approx 7-8 years, by savings and additional revenue.  Not to mention you decrease the large dollar maintenance on these aircraft. 

Of course, this is all just throwing numbers around and would probably be in, as my physics teacher used to say, "a frictionless environment".   

[heironymouspasparagus]

Kelleher and King co-founded SWA.  At least according to SWA's own website.

My word (as opposed to letter) dyslexia kicked in - and spelling was wrong, too.  Rollin King.

[heironymouspasparagus]

American has a lot of the old MD-80 style of aircraft (over 200).  They are hugely inefficient, burning around 200 more gallons per hour than a 737 NG.  When you have 200 planes flying X hours per day burning 200 more gallons and carrying up to 80 passengers less than the 737, you are wasting a huge amount of money.  While I know each plane is not used ever day, let's look at this.  200 planes buring 200 gallons more an hour and they are in flight for 10 hours a day and fuel is @ $3.00 per gallon.  That is 1.2Million in wasted money PER DAY, not even including the loss in tickets for the additional passengers that could be.  So going for 365 days a year at 1.2million is around $438,000,000 in wasted fuel alone.  And for giggles, lets say that you can sell 50 more seats per flight on those 200 aircraft for 5 flights a day at $125 per flight for 365 days... additional revenue of $2,281,250,000 per year.  So your brand new fleet of 737's could be paid for in approx 7-8 years, by savings and additional revenue.  Not to mention you decrease the large dollar maintenance on these aircraft. 

Of course, this is all just throwing numbers around and would probably be in, as my physics teacher used to say, "a frictionless environment".   

And AA has had 30+ years to learn their lesson.  And yet, here they are....