How will this affect Tulsa?

[AquaMan]

AP is reporting AA is filing bankruptcy protection-
http://finance.yahoo.com/news/american-airlines-parent-seeks-ch-130619018.html

Ed?

[Breadburner]

It will be better in the long run.....No short term problems either.....

[heironymouspasparagus]

Yep.  Going bankrupt is always better.  For the CEO and top officers.  They will be writing themselves some nice big bonus checks for the truly inspired way they took the company through the rocky shoals of reorganization and emerged on the other side a better, leaner, slimmed down company ready to do battle with the forces of evil!  (Other airlines.)

Let's not forget - the phrase "so it never happens again" must be worked into the dialogue somewhere.

[we vs us]

AP is reporting AA is filing bankruptcy protection-
http://finance.yahoo.com/news/american-airlines-parent-seeks-ch-130619018.html

Ed?

This whole thing makes me sad, honestly.  According to most reports, the money problems stem from an outdated fleet that uses too much fuel and "extravagant" labor contracts.  AMR has already made a huge fleet order, so that end of things will be addressed in time.  Chapter 11 will allow them to restructure their labor deals (read: cut pay and bennies) to make things more affordable.  Reportedly, the AMR unions have already negotiated pay cuts of over $1B to help the company stay afloat, but will now be asked to give more.  (This also follows Chapter 11 declarations by most of the other big airlines -- United, Continental, etc -- who used the opportunity to hollow out their labor agreements, too).

I understand the give and take, that employees are asked to make these sacrifices in tough times, but it makes me sad because it's part of a much larger picture in our country, where labor -- regular working folks -- are the ones who reap the whirlwind when the company fails. 

[we vs us]

And I don't think anyone knows to what extent it will affect Tulsa.  Since the AMR workforce here is mostly unionized, it's a good bet that they'll bear the brunt of whatever wage/workforce reductions that have to happen.

[heironymouspasparagus]

This whole thing makes me sad, honestly.  According to most reports, the money problems stem from an outdated fleet that uses too much fuel and "extravagant" labor contracts.  AMR has already made a huge fleet order, so that end of things will be addressed in time.  Chapter 11 will allow them to restructure their labor deals (read: cut pay and bennies) to make things more affordable.  Reportedly, the AMR unions have already negotiated pay cuts of over $1B to help the company stay afloat, but will now be asked to give more.  (This also follows Chapter 11 declarations by most of the other big airlines -- United, Continental, etc -- who used the opportunity to hollow out their labor agreements, too).

I understand the give and take, that employees are asked to make these sacrifices in tough times, but it makes me sad because it's part of a much larger picture in our country, where labor -- regular working folks -- are the ones who reap the whirlwind when the company fails. 

At least we can rest easy in the knowledge that the top officers at least won't be hurt, and will in fact get large, reduced tax bonuses! 

[Conan71]

Is it a matter of mis-management or do airlines simply worry too much about emphasizing market share over value to the passenger which forces them to make stupid fare cuts in the face of rising fuel prices?

Sure, many people are price-driven, but there are also plenty of people who will look for the best value when shopping which doesn't always equate to a lower fare.  Airlines have increasingly reduced on-board extras and even tacked on plenty of new charges, like fees for checked baggage in order to flaunt lower fares.  I'd like to see one of the airlines break from price pressure to create a better value for the passenger, like more on-time arrivals, no extra fees, and bringing back in-cabin amenities like snacks, full size blankets, free use of headphones (At least United is doing that now), etc.

I read somewhere in the last year or two that the history of the airline business in the U.S. has been a net loss over the last 100 years.  Not sure if the stat is true or not, but essentially there have been enough years of loss to offset profitable years that the end result has been break-even to a loss.

I doubt the Tulsa workforce faces job cuts, and considering concessions already made by the unions, I suspect there won't be any new major wage cuts, but like most all industries, I think they are going to want employees to start funding more of their own retirement.  Pensions are going the way of the doe-doe bird because they are simply too costly to provide anymore with a workforce which is living much longer past retirement age.

[heironymouspasparagus]

Is it a matter of mis-management or do airlines simply worry too much about emphasizing market share over value to the passenger which forces them to make stupid fare cuts in the face of rising fuel prices?

Sure, many people are price-driven, but there are also plenty of people who will look for the best value when shopping which doesn't always equate to a lower fare.  Airlines have increasingly reduced on-board extras and even tacked on plenty of new charges, like fees for checked baggage in order to flaunt lower fares.  I'd like to see one of the airlines break from price pressure to create a better value for the passenger, like more on-time arrivals, no extra fees, and bringing back in-cabin amenities like snacks, full size blankets, free use of headphones (At least United is doing that now), etc.

I read somewhere in the last year or two that the history of the airline business in the U.S. has been a net loss over the last 100 years.  Not sure if the stat is true or not, but essentially there have been enough years of loss to offset profitable years that the end result has been break-even to a loss.

I doubt the Tulsa workforce faces job cuts, and considering concessions already made by the unions, I suspect there won't be any new major wage cuts, but like most all industries, I think they are going to want employees to start funding more of their own retirement.  Pensions are going the way of the doe-doe bird because they are simply too costly to provide anymore with a workforce which is living much longer past retirement age.

For my travel needs, Southwest has achieved the best value/price point.  Not because they are always the cheapest (most of the time yes, but not always), nor do they have on board services - I don't care about that stuff.  Baggage fees are a huge irritation to me - even beyond the real expense of the thing.  Don't care about headphones, pillows, blankets or meals or snacks - if I get cold, I put on my jacket.  But I never get cold.  Of all the trips I have taken over the last 30+ years, I am seldom surprised when we leave/arrive on time or close to on time (less than 20 minutes difference).  All the other airlines are a very big surprise to me when we leave/arrive on time or close to on time.

Have a co-worker who feels exactly the same way about Delta - they provide him with exactly what he wants for travel (and I really dislike Delta), so there is obviously a wide range of needs from the traveling public.

Pension elimination was just another cash grab opportunity for CEO's.  A pension cost to a company was one of those "total compensation" items that is hidden and never shows up on the paycheck.  NOW, the pension expense is gone, and the 'extra expense' that was previously touted as part of your compensation never did show up on the paycheck either.  And in addition, the farce of the 401K plan is an ADDED expense, taking even more actual cash out of your paycheck.  So the net difference is huge - a huge expense to YOU.  And a huge windfall to the company!

But hey, that's the real benefit to electing Ronald Reagan - "pension reform" - as in, reform it out of existence.

But since everyone out there working today is eminently qualified as a financial planner, well the 401k is just the ticket....

[swake]

Is it a matter of mis-management or do airlines simply worry too much about emphasizing market share over value to the passenger which forces them to make stupid fare cuts in the face of rising fuel prices?

Sure, many people are price-driven, but there are also plenty of people who will look for the best value when shopping which doesn't always equate to a lower fare.  Airlines have increasingly reduced on-board extras and even tacked on plenty of new charges, like fees for checked baggage in order to flaunt lower fares.  I'd like to see one of the airlines break from price pressure to create a better value for the passenger, like more on-time arrivals, no extra fees, and bringing back in-cabin amenities like snacks, full size blankets, free use of headphones (At least United is doing that now), etc.

I read somewhere in the last year or two that the history of the airline business in the U.S. has been a net loss over the last 100 years.  Not sure if the stat is true or not, but essentially there have been enough years of loss to offset profitable years that the end result has been break-even to a loss.

I doubt the Tulsa workforce faces job cuts, and considering concessions already made by the unions, I suspect there won't be any new major wage cuts, but like most all industries, I think they are going to want employees to start funding more of their own retirement.  Pensions are going the way of the doe-doe bird because they are simply too costly to provide anymore with a workforce which is living much longer past retirement age.

On the CBS news last night they said that since 1950 US Airlines have lost a combined $54 billion. That would be on top of all the public money that goes into air travel. Makes rail look maybe not so bad.

But then yesterday on NPR they were taking about the high speed rail line between LA and the Bay Area costing $100 billion. How on earth could HSR cost that much?

[SXSW]

If American outsources a good chunk of their maintenance, where would they outsource it?  I've heard that American has by far the biggest in-house maintenance dept. which is killing them with high wages and pensions.  

Some say they could close the Tulsa base completely wiping out 7,000 jobs, and others say nothing will happen.  Who knows at this point but very scary for the city regardless. 

[heironymouspasparagus]

If American outsources a good chunk of their maintenance, where would they outsource it?  I've heard that American has by far the biggest in-house maintenance dept. which is killing them with high wages and pensions.  

Some say they could close the Tulsa base completely wiping out 7,000 jobs, and others say nothing will happen.  Who knows at this point but very scary for the city regardless. 

If I had a big plane of my own, I would certainly bring it here for service just due to what I know about some friends that work there.  They are exactly the kind of people I would want working on it for me.

Would be a huge shame to lose that here.  Any outsourcing elsewhere would be a step down.

But AMR has been run stupid for a long, long time....

[Breadburner]

If I had a big plane of my own, I would certainly bring it here for service just due to what I know about some friends that work there.  They are exactly the kind of people I would want working on it for me.

Would be a huge shame to lose that here.  Any outsourcing elsewhere would be a step down.

But AMR has been run stupid for a long, long time....

Puff puff pass....!

[Jeff P]

Isn't American the only legacy carrier that hasn't filed for Ch. 11 since 9/11?

That has to put them at a huge disadvantage, cost-wise.

This has been inevitable for a long time, IMO.

Some say they could close the Tulsa base completely wiping out 7,000 jobs, and others say nothing will happen.  Who knows at this point but very scary for the city regardless.

Well their planes will still need maintenance, will they not?  The airline isn't liquidating, it's going through the same financial restructuring that all other legacy carriers have gone through.

One possible option would be to spin-off their maintenance division as a separate company.  Kind of like what Boeing did with Spirit Aerosystems.

As long as AA has planes in the air, they're going to need the maintenance facilities in Tulsa.

[nathanm]

Isn't American the only legacy carrier that hasn't filed for Ch. 11 since 9/11?

It was the only one to not have ever filed for bankruptcy, not just since 9/11, although they were also the only one who didn't get bought or go BK since 9/11.
Pre-9/11, I believe Delta had also never gone bankrupt. I'm pretty sure all the others had been in BK at least once previously.

[heironymouspasparagus]

Isn't American the only legacy carrier that hasn't filed for Ch. 11 since 9/11?

That has to put them at a huge disadvantage, cost-wise.

This has been inevitable for a long time, IMO.

Well their planes will still need maintenance, will they not?  The airline isn't liquidating, it's going through the same financial restructuring that all other legacy carriers have gone through.

One possible option would be to spin-off their maintenance division as a separate company.  Kind of like what Boeing did with Spirit Aerosystems.

As long as AA has planes in the air, they're going to need the maintenance facilities in Tulsa.

How far back makes a legacy carrier?

1971 would seem to me to get the legacy designation.  Especially since so many of the others have morphed so much through bankruptcy.