American Airlines status

[JCnOwasso]

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

Very true, but to be fair, I don't think the 737 was a viable replacement to the MD-80 until the introduction of the NG which was around 97-98.  And fuel costs have probably increased over 300% since then.  and to be even more fair, up until 911, it probably wasn't a reasonable business move, it was about that point that the airline industry crashed as well as the fuel price increase.  Add to that Katrina, which put the final dagger in the era of "cheap" gas.

American did try to do some creative things with their repair unit by bidding on contracts to repair other airlines aircraft. 

[heironymouspasparagus]

Very true, but to be fair, I don't think the 737 was a viable replacement to the MD-80 until the introduction of the NG which was around 97-98.  And fuel costs have probably increased over 300% since then.  and to be even more fair, up until 911, it probably wasn't a reasonable business move, it was about that point that the airline industry crashed as well as the fuel price increase.  Add to that Katrina, which put the final dagger in the era of "cheap" gas.

American did try to do some creative things with their repair unit by bidding on contracts to repair other airlines aircraft. 

All the airlines have used the fuel prices as an excuse for 30 years (or more).

Don't know about 737 vs MD-80, but the fuel has always been better.  I suspect that the savings on parts stocking, training of mechanics and flight crew would be greatly simplified with one platform.  (There absolutely MUST be big savings there.) 

And do a lease program.  There are lease programs in electronic industrial equipment where you can lease for a term, then buy at end of lease (like a car lease) that I suspect are used in airlines, too.  I have been told that is always a viable financial approach versus direct buy for large ticket items like an airplane.  'Course, it may not be so... 

But they still have had crap for management since at least Crandall (sp?).

[JCnOwasso]

All the airlines have used the fuel prices as an excuse for 30 years (or more).

Don't know about 737 vs MD-80, but the fuel has always been better.  I suspect that the savings on parts stocking, training of mechanics and flight crew would be greatly simplified with one platform.  (There absolutely MUST be big savings there.)  

And do a lease program.  There are lease programs in electronic industrial equipment where you can lease for a term, then buy at end of lease (like a car lease) that I suspect are used in airlines, too.  I have been told that is always a viable financial approach versus direct buy for large ticket items like an airplane.  'Course, it may not be so...  

But they still have had crap for management since at least Crandall (sp?).

I can't really disagree with you.  A one platform approach is the best as the commonality in parts will provide for tremendous reduction, not only in spare parts, but their is a huge reduction in buying in bulk.  If all NG's use the same "widget", you can merely spare out enough widgets to meet your MTBF requirements for the entire fleet, rather than to meet the MTBF for 10 planes here, 7 there, 35 over there.  You would be amazed to find that on some items, you may only need 3 spares, whether for 20 or 200 planes in the fleet.  Whereas if you 10 different groups of 20 and they each required 3 spares per group, you would be required to buy 30, if they are not interchangable with eachother that is.

And leasing for aircraft is the way to go.  the UK leases C-17's from Boeing (or last that I heard they did)

[Red Arrow]

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.  

I'm sure AA gets a better price but the range of jet fuel at Tulsa International for the little guys is $4.52 to $6.03 depending on which FBO you go to.

http://www.airnav.com/fuel/local.html

type KTUL in the spot for the airport.  It wouldn't link to the specific page. (KTUL is the 4 letter code for Tulsa International Airport)

[heironymouspasparagus]

I can't really disagree with you.  A one platform approach is the best as the commonality in parts will provide for tremendous reduction, not only in spare parts, but their is a huge reduction in buying in bulk.  If all NG's use the same "widget", you can merely spare out enough widgets to meet your MTBF requirements for the entire fleet, rather than to meet the MTBF for 10 planes here, 7 there, 35 over there.  You would be amazed to find that on some items, you may only need 3 spares, whether for 20 or 200 planes in the fleet.  Whereas if you 10 different groups of 20 and they each required 3 spares per group, you would be required to buy 30, if they are not interchangable with eachother that is.

And leasing for aircraft is the way to go.  the UK leases C-17's from Boeing (or last that I heard they did)

Not surprised at all...that is the kind of thing I have dealt with for several dozen years in the different industries I have been in - from very low volume equipment in the dozens per year to low volume of several thousands per year to medium volume products of hundreds of thousands per year (current endeavor).  There are ways AA could have been profitable for all these years instead of losing their butt and blaming everything except the root cause - bad management.  They could still pull it out, but am afraid they won't.

A lot like GM and Chrysler compared to Honda, Toyota, Hyundai, Subaru, etc.

[Conan71]

Not surprised at all...that is the kind of thing I have dealt with for several dozen years in the different industries I have been in - from very low volume equipment in the dozens per year to low volume of several thousands per year to medium volume products of hundreds of thousands per year (current endeavor).  There are ways AA could have been profitable for all these years instead of losing their butt and blaming everything except the root cause - bad management.  They could still pull it out, but am afraid they won't.

A lot like GM and Chrysler compared to Honda, Toyota, Hyundai, Subaru, etc.

Interesting comparison.  What do GM, Shysler, and AA have that those other car companies you mentioned don't?

The airline industry is a strange beast.  They operate on thin margins to try and retain market share, because empty seats cost them money. 

[heironymouspasparagus]

Interesting comparison.  What do GM, Shysler, and AA have that those other car companies you mentioned don't?

The airline industry is a strange beast.  They operate on thin margins to try and retain market share, because empty seats cost them money. 

Talking about management.  Poor versus at least competent, if not good.


Thin margins seem to be the rule in my current industry - I agonize every day about adding 10 cents to cost of a board or assembly.  VASTLY different from oil and gas where spent a lot of previous time. 

Lot higher volumes, so 10 cents adds up to hundreds of thousands if not millions per year (depending on component and usage per unit).  Had one part last year that went from 18.3 cents each up to 23 cents.  Ended up costing about $300,000 more per year total.  Some of that for the part cost on several million per year usage, some for an increase in assembly/handling cost (unjustified, but charged).  Accompanied by much screaming, wailing, pulling of hair, and gnashing of teeth, but in the end, what can you do??

[Conan71]

Talking about management.  Poor versus at least competent, if not good.


Thin margins seem to be the rule in my current industry - I agonize every day about adding 10 cents to cost of a board or assembly.  VASTLY different from oil and gas where spent a lot of previous time. 

Lot higher volumes, so 10 cents adds up to hundreds of thousands if not millions per year (depending on component and usage per unit).  Had one part last year that went from 18.3 cents each up to 23 cents.  Ended up costing about $300,000 more per year total.  Some of that for the part cost on several million per year usage, some for an increase in assembly/handling cost (unjustified, but charged).  Accompanied by much screaming, wailing, pulling of hair, and gnashing of teeth, but in the end, what can you do??

Brings up an important point:  We demand cheap goods at our own peril when it comes to shipping jobs overseas.  

[heironymouspasparagus]

Brings up an important point:  We demand cheap goods at our own peril when it comes to shipping jobs overseas.  

I always look for Made in USA.  And never worry about the extra cost.  Elaboration; in my frame of reference - money levels, the difference will never be big enough to worry about.  If I were buying a machine tool that cost 2 million here and 1 million for Japanese, well that is a different thing - would be looking at it very closely.  But I seldom here about those kind of differences...usually few percent differences rather than 100 %.

Too often, cannot find Made in USA.

[Conan71]

I always look for Made in USA.  And never worry about the extra cost.  Elaboration; in my frame of reference - money levels, the difference will never be big enough to worry about.  If I were buying a machine tool that cost 2 million here and 1 million for Japanese, well that is a different thing - would be looking at it very closely.  But I seldom here about those kind of differences...usually few percent differences rather than 100 %.

Too often, cannot find Made in USA.

The reason you can't find made in the USA is because a lot of consumer products you could buy for, say, $300 20 to 30 years ago are still $300 sometimes even less. Those products were built in the U.S. back then.  Of course the reason the price is the same or less now is due to the reduced labor costs of manufacturing items in Mexico or overseas.

[heironymouspasparagus]

The reason you can't find made in the USA is because a lot of consumer products you could buy for, say, $300 20 to 30 years ago are still $300 sometimes even less. Those products were built in the U.S. back then.  Of course the reason the price is the same or less now is due to the reduced labor costs of manufacturing items in Mexico or overseas.

Just bought a water heater.  Said it was made in USA.  Label said Whirlpool, but made by American Water Heater company.

Just bought $1,000 of car parts that said they were USA.  MOOG.

Don't know for sure, but am hoping they did not lie.

Bought some GoodYear tires (4) that said made in Thailand, I think - not USA!  Didn't like it even a little bit, but was in a time crunch and couldn't wait three days for tirerack.com to get the right ones sent.  (Since no one in this state saw fit to stock them - Tulsa, OKC, Muskogee, Edmond, Norman, Moore.)


As far as lower cost to end user?  Didn't happen.  With Wranglers, Zebco, Thermos.  All that DID happen was that now it says Made in China - or some other Pacific rim country, the price held steady, and any savings did NOT accrue to the American Consumer.  Classic example is a one quart thermos vacuum bottle sold by Thermos at Wally World for about 20.  While the same vacuum bottle with their private brand is a little over 10.  Extra 10 for the name.  And yes, I did buy both to compare - one for me, one for SWMBO.  No noticeable difference in construction or operation.  Just a little cosmetic change.

[Red Arrow]

Don't know for sure, but am hoping they did not lie.

I can't speak to the stuff you bought but sometimes putting a Made in the USA label just requires some finishing touches. 

At one time, putting a Made in the USA label on a personal computer only required that the computer be shipped to the US in a non-operational condition.  For example, leaving out the video card was enough.  The US final assembly plant installed a video card from a different source and legally applied a Made in the USA sticker on the outside for all to see.

[DolfanBob]

Just a thought. How much do you think the Third World Countries despise American made products as we act and say that we do theirs ?
Or do you think they still clammer to pay high dollar for Levis or Nike products ?
And how bout their Air industry. Do they do it smaller, cheaper and faster ?

[heironymouspasparagus]

Just a thought. How much do you think the Third World Countries despise American made products as we act and say that we do theirs ?
Or do you think they still clammer to pay high dollar for Levis or Nike products ?
And how bout their Air industry. Do they do it smaller, cheaper and faster ?

China can't buy Buicks fast enough.  GM is huge there.  There are some imports that I definitely prefer to domestic - chocolate!  And tea.  And black pepper.  Saffron I can make here - don't need imported.

Levis and Nike are made in China (plus other places), so it should be cheap for the third world...  Not really, 'cause they gotta pay for the name, too.  Here is Levi's supplier list - interesting how they make that public.  Nice touch.
http://www.levistrauss.com/sites/default/files/librarydocument/2011/5/lsco-factory-list-may-2011.pdf

Air industry - Embraer is mostly made in Brazil, I think (??).  Good planes, just WAY too small for me to be interested in riding in.  Airbus?  Not when we got Boeing.  Boeing - well they are getting lost in the weeds of 'outsourcing' to cheap labor markets.

[AquaMan]

Products like water heaters, washers, power saws etc. are mature industries. There is very little difference in the technology of the product from 30 years ago. Really, up to 50 years ago. They should have costs, resource aquisition, management and demand cycles pretty well under control. Those type products generally do not increase in price quickly unless manipulated to do so. We manipulate the prices because we condensed a lot of industries in the last decade. IOW, we allowed them to buy their competitors and control pricing. Now many products that should have had level prices (mostly influenced by inflation, resource fluctuation, labor costs) have instead risen faster than any of those components. It is administrative pricing rather than supply and demand. Stockholders love it, corporates can't seem to operate without it, and the buyer is simply screwed.

Trendy, style, fashion components aside, foreign products operate under different systems though the outcome may be the same. They may love the Levi's brand, but I would imagine that our products, being outsourced to China and the Philippines are no better quality or better priced than the ones they outsource to China, Mexico and the Philippines.  Prices are now driven by the margins and profits demanded by corporations who slavishly shine on their stockholders, not as many of you insist, by the market place.

Now comes the name-calling. I'm not a socialist, liberal, anti-capitalist, occupier, t-partier, poor, envious, wealth hating %*@$!!  Just the way its going down right now. Well, I am kinda poor.