American Airlines status

[sendoff]

In the business section of the World today, there is an article about the dire status of Delta, US Airways, and United.

Does anyone have any "insider information" as to the health of American Airlines? Could we be seeing more job cuts/salary reductions/other cust? Or is AA in better shape than the three mentioned above?

[Townsend]

Well it took 7 years to respond but here what is reported on Channel 6's site:

American Airlines Bankruptcy Fears Rock Wall Street

NEW YORK  -- The stock of American Airlines parent company AMR Corporation tumbled Monday, at one point falling nearly 40 percent, on renewed concerns that the carrier could be headed for bankruptcy protection.

Shares lost 84 cents, or 28 percent, to trade around $2.12 in early afternoon trade after plummeting to their lowest point in 8 years. The stock has not closed below $2 since 2003.

A major airline trade group, The International Air Transport Association, said Monday that the industry may be headed for a downturn. American Airlines is considered to be in the most vulnerable financial position of major U.S. carriers.

Morningstar analyst Basili Alukos said Monday he believes AMR implemented "its last-ditch effort to return to profitability" when it spun-off its regional carrier and said it would place a record order to buy 460 planes to quickly address its aging fleet.

American Airlines is the only major airline that has not filed for bankruptcy protection in the last decade, leaving it saddled with higher costs for everything from labor to financing. American is the only major airline that has lost money this year.

Fort Worth, Texas-based AMR. lost $286 million in the second quarter alone.

An AMR spokesman did not immediately respond to a request for a comment on the bankruptcy talk.

American Airlines is one of Tulsa's largest employers with more than 5,600 people on the payroll.

[Conan71]

American Airlines is the only major airline that has not filed for bankruptcy protection in the last decade,

Almost makes it sound as if bankruptcy is fashionable.  "Nyah nyah nyah nyah nyah nyah your airline hasn't filed for bankruptcy".

[Townsend]

Almost makes it sound as if bankruptcy is fashionable.  "Nyah nyah nyah nyah nyah nyah your airline hasn't filed for bankruptcy".

Yeah, this part sounds like the story author thinks they screwed up by not BK'ing.

leaving it saddled with higher costs for everything from labor to financing. American is the only major airline that has lost money this year.

[stageidea]

They still have some hope (not that I am going to run out and by a ton of shares).  Price of oil is going down, and they are supposedly spinning off American Eagle.  Plus, they are currently in negotiations with employees so there is a chance, American can hold out without having to go the way of bankruptcy. 

[Hoss]

They still have some hope (not that I am going to run out and by a ton of shares).  Price of oil is going down, and they are supposedly spinning off American Eagle.  Plus, they are currently in negotiations with employees so there is a chance, American can hold out without having to go the way of bankruptcy. 

That's just great, another 25 percent paycut on the horizon?  I know many AA employees (my best friend being one for 15 years now) and he's hoppin' mad.  Not just at AA upper management, but at the union...

[Ed W]

A couple of points.

Some Wall Street analysts are saying that AA can no longer blame the unions for the lack of profit.  All the unionized groups gave the company concessions in the previous 'negotiations' and those costs haven't changed significantly for nearly 9 years.  And I say 'negotiation' because AA basically held a gun to their heads.

The pilots have been negotiating a new contract for 5 years.  When the stock market took a nose dive this summer, many of them started planning to retire.  AA lost 110 in August and another 129 in September.  By leaving now, they lock in their pensions at the previous 90 day level, but if they waited to retire, they'd have to work years to make up the difference.  The pilots are frustrated and angry.

The flight attendants have been negotiating for years too.  The federal mediator refused to allow them to start a 30 day cooling off period, instead recommending that AA and the union continue negotiating without the mediator.  The flight attendants are frustrated and angry.

(An aside: navigating the Byzantine structure of the Railway Labor Act is almost an exercise in Kabuki theater.  Nothing happens quickly, and the steps are laid out to prevent any wildcat strikes or lockouts, hopefully maintaining a dependable transportation system.  Yet it seems obvious that this condones management stalling and drawing out negotiations for interminable periods if only as a means to contain costs.)

The TWU is composed primarily of two groups: a large number of fleet service people and a much smaller number of mechanics and technicians. When the fleet service contract was sent for ratification last year, it was rejected overwhelmingly.  AA refused to negotiate further.  I don't know if that situation has changed.

Meanwhile, we're being told that AA wants concessions in any new contract.  They're losing money, but they still  managed to pay bonuses to top executives.  The logic is that if they didn't, those executives would leave.  Now, I ask you, if those are the people responsible for the company's lousy performance, shouldn't we let them go?

You learn two things working for AA.  First, always cover your butt.  That's why we're top heavy with management.  No one person is directly responsible for a poor decision.  Second, always assume that when a member of management is talking, he's lying.  That way there are fewer unpleasant surprises.

As for the bankruptcy talk, remember that second rule.  AA paid out bonuses.  It arranged for a huge new fleet of aircraft.  Pay attention to what they do, not what they say.  And remember that one of my bosses said there are two kinds of accountants - honest ones and really good ones.  AA has really good ones.

I'm not cynical.  I'm just very well trained.

[dbacks fan]

They also pointed out on CNBC that the industry is down across the board. Think that less people are traveling because of all the 'fees' they charge? If I were to travel now, and could fly SW I would in a heartbeat to save $120+ on a round trip in fees.

[AquaMan]

The economy is down. We still have a 911 hangover and people just aren't flying as much. Doesn't seem too hard to understand why the industry is hurting.

This is all starting to feel like "deja vu all over again"...(thanks Yogi B. for a classic).

[Conan71]

I've driven at least 20,000 miles so far this year on trips for which I could have flown except flying has become such a complete PITA, that I'd almost rather have a root canal without novocaine than to deal with all the security hassles, inconveniences, and extra fees.

[dbacks fan]

^^^ +1

[DTowner]

George Will used to quote a statistic that the entire aviation industry in this country has lost money since Orvill and Wilber took off at Kitty Hawk (total up all the profits and losses of every airline and it is a negataive number, by a wide margin).  That was prior to 9-11, so I doubt that number has turned around.  With its aging fleet and pilots, and antagonistic labor/management relations, AA is in a tough spot in a tough industry in a tough economy.

[Red Arrow]

George Will used to quote a statistic that the entire aviation industry in this country has lost money since Orvill and Wilber took off at Kitty Hawk (total up all the profits and losses of every airline and it is a negataive number, by a wide margin).  That was prior to 9-11, so I doubt that number has turned around.  With its aging fleet and pilots, and antagonistic labor/management relations, AA is in a tough spot in a tough industry in a tough economy.

It would seem to give credibility to the old saying that to make a small fortune in aviation, start with a large fortune.

[heironymouspasparagus]

And yet, Southwest just keeps on making money and being successful.

Ya gotta wonder why the others don't just use Southwest as their business model?  Well, that would be too much like right!

Have flown over a half dozen times this year, most on Southwest and 3 on Delta.  Business select on Southwest is the only way to go.  Delta is a joke.  A very bad joke.

Haven't had to fly AA for a few years, which suits me fine right now.  At one time they were the only ones I would choose (at one time had a few hundred thousand points and got some free flights!!  And a carry on bag, long since worn out.)  It is horrendous what the recent management has done to that airline.  As well as several of the others.

[Conan71]

And yet, Southwest just keeps on making money and being successful.

Ya gotta wonder why the others don't just use Southwest as their business model?  Well, that would be too much like right!

Have flown over a half dozen times this year, most on Southwest and 3 on Delta.  Business select on Southwest is the only way to go.  Delta is a joke.  A very bad joke.

Haven't had to fly AA for a few years, which suits me fine right now.  At one time they were the only ones I would choose (at one time had a few hundred thousand points and got some free flights!!  And a carry on bag, long since worn out.)  It is horrendous what the recent management has done to that airline.  As well as several of the others.

Although a great idea, unfortunately, short hop and a singular platform (i.e. 737 only) fleet don't fit the travel needs of all people.

One thing SWA has tapped into that others could follow is quick gate turns.  That plane is still costing you money sitting on the ground and when it's on the ground, it's not earning revenue.  I've been told SWA has some really keen fuel buyers, but I can't imagine other majors don't have some of their own.