AE/Envoy Pilots Reject AIP

[will fix for food]

I think your correct though. The Pilots passing their contract at Repub will more than likely be used against the AE pilots. ..

I'm not sure I understand your point. Do you think AAG will point to this if it passes and say, " See, Republics pilots are smart enough to pass this contract"

 

[700UW]

The old AA wouldnt turn a profit if they didnt have AE, if that was the case, they would have shut AE down in Chapter 11 which would cost them way less than it is going to do now.

 

[will fix for food]

The old AA wouldnt turn a profit if they didnt have AE, if that was the case, they would have shut AE down in Chapter 11 which would cost them way less than it is going to do now.

I remember going to an American Airlines function back when Carty was in charge where he gave a videotaped state of the airline message. He said that the difference between profit and loss even in the good times was the amount of passengers Eagle fed to American. He put the numbers in terms of number of md80s filled a day. I wish I remember the number, it was astounding.

I think I was the only Eagle employee there and the only one listening. It was one of those free food and drink management only parties they used to have.

 

[1AA]

The old AA wouldnt turn a profit if they didnt have AE, if that was the case, they would have shut AE down in Chapter 11 which would cost them way less than it is going to do now.

Eagle does not turn a profit. AA subsidizes eagle. This is why AA can not sell eagle on its own. It has been tried before but no one wants a losing entity.

 

[Thomas Paine]

Looks like Republic's pilot negotiators came to their senses.

http://aviationblog.dallasnews.com/2014/02/republic-airways-reaches-tentative-deal-with-pilots-union-for-its-three-airlines.html/

Anyone want to place bets on how long it takes AAL comes out with a statement tentatively assigning jets (pending ratification) with Republic?...

How many Pilots look at Republic as a career? Most look at it as a stepping stone, not realizing they are undercutting their futures by giving away their labor to get the hours needed for the majors.   They didnt come to their senses, they whimped out.

 

[700UW]

Eagle does not turn a profit. AA subsidizes eagle. This is why AA can not sell eagle on its own. It has been tried before but no one wants a losing entity.

Did I say sell? No
 
I said shut down, just like what Delta did to Comair and and the same is getting ready to happen to ExpressJet.

 

[will fix for food]

Eagle does not turn a profit. AA subsidizes eagle. This is why AA can not sell eagle on its own. It has been tried before but no one wants a losing entity.

Are you sure of that? I know I have seen BTS stats that showed Eagles RASM exceeded its CASM. I also doubt that reflects the revenue that American earned on its segments that that passenger connected to.

When Eagle was being shopped around there were some interested buyers. The strings American attached to the sale killed the deals though.

I just checked. The BTS website says Eagle had an operating profit of 13 million for the Q3 13, which is the most recent stats they show. Interestingly enough, Eagles operating profit was only 2.1 million less than Americans in Q3 12.

 

[Thomas Paine]

Eagle showed a profit because AA bought every seat on the plane, thus guaranteeing a profit for Eagle, the losses were borne by AA.

Didnt AA just order a bunch of new planes for Eagle? Well they just left BK, what will they do with those planes without pilots? I'm sure Eoleson will say that they can send those planes to other Regionals who would gladly pick them up but if thats the case then why wouldnt those regionals have ordered them? Probably because they are too costly, and thats probably why they wouldnt want AAGs planes.

I think the Eagle pilots, despite Eolesons comments have AAG in a bind. If they dont get a deal they will have all these planes with nobody to fly them, planes they will still have to pay for, they really cant threaten BK because they just came out of BK, they can claim they will dissolve Eagle and send the work to other Regionals but can they handle it? If it was so easy then why havent they already done so? They have been claiming they want to get rid of Eagle for a long time now, they probably cant at the moment. Sure over time maybe AAG could eat the payments , in other words subsidize those regionals with the aircraft AA bought and get them to fly what Eagle now flies but once again the issue will come up, "Who will be flying them?" Unlike mechanics where they can use poverty wages to get two mechanics worth of labor for the price of one by having them work all sorts of Overtime, pilot hours are limited. Other carriers have already announced cutbacks in service due to Pilot shortages, and that wont be fixed overnight. If anything kills Eagle it will be the fact that without enough pilots to go around they cant afford to waste having the few pilots they have flying 50 people when they need them to fly 200.

 

[will fix for food]

Eagle showed a profit because AA bought every seat on the plane, thus guaranteeing a profit for Eagle, the losses were borne by AA. 0.

I'm not quite sure that's the way it works.

If that's true no regional should ever show an operating loss. According to the BTS they have. Eagle included.

The rest of your post I agree with. This could very well be the end of the regional segment of the industry. If it's not killed outright I think there will be a huge contraction.

 

[Thomas Paine]

I'm not quite sure that's the way it works.

If that's true no regional should ever show an operating loss. According to the BTS they have. Eagle included.

How many Regionals have a deal where every seat is sold? Any business can show a loss when they want to, even when they are profitable, showing a profit can be a challenge.

 

[will fix for food]

How many Regionals have a deal where every seat is sold? Any business can show a loss when they want to, even when they are profitable, showing a profit can be a challenge.

As the divestiture attempt was being setup we were told they were switching to the industry standard FFD deal so that Eagles true value could be assessed. As far as I know that is still in effect.

I know what you mean about showing a profit/ loss. That is one of the reasons it surprised me they were talking divestiture. They used to shuttle money between American and Eagle all the time. It was the running joke about how much American was charging Eagle for a bag of ice that day. Was it one cent or thirty dollars? Who's ledger needed propping up?

We had a VP doing a road show when the divestiture was going on and he admitted it. He used it as a reason why we would do better being divested. He used the example that he had just requested a new computer system upgrade and had to get it approved through American. American said "Sure, you can do that, but we have to install it for you." He said they charged Eagle five times what an outside contractor would have done it for.

 

[WorldTraveler]

Eagle showed a profit because AA bought every seat on the plane, thus guaranteeing a profit for Eagle, the losses were borne by AA.

Didnt AA just order a bunch of new planes for Eagle? Well they just left BK, what will they do with those planes without pilots? I'm sure Eoleson will say that they can send those planes to other Regionals who would gladly pick them up but if thats the case then why wouldnt those regionals have ordered them? Probably because they are too costly, and thats probably why they wouldnt want AAGs planes.

I think the Eagle pilots, despite Eolesons comments have AAG in a bind. If they dont get a deal they will have all these planes with nobody to fly them, planes they will still have to pay for, they really cant threaten BK because they just came out of BK, they can claim they will dissolve Eagle and send the work to other Regionals but can they handle it? If it was so easy then why havent they already done so? They have been claiming they want to get rid of Eagle for a long time now, they probably cant at the moment. Sure over time maybe AAG could eat the payments , in other words subsidize those regionals with the aircraft AA bought and get them to fly what Eagle now flies but once again the issue will come up, "Who will be flying them?" Unlike mechanics where they can use poverty wages to get two mechanics worth of labor for the price of one by having them work all sorts of Overtime, pilot hours are limited. Other carriers have already announced cutbacks in service due to Pilot shortages, and that wont be fixed overnight. If anything kills Eagle it will be the fact that without enough pilots to go around they cant afford to waste having the few pilots they have flying 50 people when they need them to fly 200.

accounting for subsidiaries is always messy and it is absolutely certain it has been between AA and AE, in part because AA has gone back and forth about deciding whether they want to keep it or not.

There is a post on another site that has planned retirements of 50 seat aircraft under contract between some of the largest US regional operators and the network carriers. UA has alot more 50 seaters coming off contract in the next couple years than I though but they also have way more than any other legacy carrier so they are still exposed. DL and UA have both tied awards for flying their new large RJs to the reductions in their 50 seat flying... IOW they have already planned on an overall reduction in RJ flying with small RJs being replaced by a smaller number of large RJ flights.

Given that AA is still shopping around the majority of its large RJ flying, they are very likely well behind DL and UA in securing their regional jet feed thru a supply of contracts that will ensure that regional operators have the pilots and the incentive (via longer term large RJ contracts that have profit potential).

The implications for AA's network are significant if they start losing regional carrier feed at a much faster pace than has been planned and that capacity cannot necessary be replaced by larger mainline aircraft without also reducing the duplication in AA/US's network.

 

[eolesen]

The key phrase is the end of your last sentence. AA and US do have duplication in their networks, and will have to eliminate it regardless of the situation at the regional.

There are now markets which separately only worked with CPA flying, but now likely can support larger jets. The question becomes a matter of how many, and which markets still fall into the gap of what won't support a trio of a319's vs four or five 70 seaters. I won't do that type of analysis for free...

 

[WorldTraveler]

I don't expect anyone to do if for free but it doesn't change the dynamics of hubs change dramatically if 5 RJs per day to a hub are replaced by 3 319s, in your example.

And when you consider that there is duplication on SOME but not all flows between hubs like PHX and DFW, then it becomes a real challenge to see what is given up vs. what is gained. But there are many people who have tried to justify new AA's current size without recognizing that Parker has no choice but to rationalize new AA's network and that will result in fewer flights and fewer jobs. that is how mergers deliver the financial benefits they promise. AA will have to make decisions about cutting some hubs in order to improve its financial performance and it will lose a presence in some markets.



Since some here like to point to DL's pulldown of DFW AS A HUB, I have always acknowledged that they lost a certain amount of flow traffic that they still have not been able to replace.

Yes, the chances are very high that AA/US will have to rationalize their network just as UA is just now getting around to doing and likely will do more of.

Those who want to throw stones at what DL has done at MEM and CVG are the ones who will have to be explaining why AA and UA's actions are any different - and they are not.

DL has just had a head start, including in adapting to a world with fewer hubs and fewer small RJs.

I have never said that DL had a corner on any of its strategies - just that it has had a headstart not just in time but also in execution of its strategies.

The pilot shortage will force the subject, esp. for those who haven't made as much progress as the market says there are pilots available to operate.

 

[nycbusdriver]

I'm not quite sure that's the way it works.

If that's true no regional should ever show an operating loss. According to the BTS they have. Eagle included.

The rest of your post I agree with. This could very well be the end of the regional segment of the industry. If it's not killed outright I think there will be a huge contraction.

 
It "sort of" does work that way if it's a "pay for departure" arrangement.
 
The express carrier gets "X" amount of money (and only that) from mainline for every departure, and that amount guarantees a profit for the express carrier.  The mainline carrier then gets to sell the tickets and keeps all the revenue from those tickets.  If the plane flies out full, mainline wins.  If it goes empty, obviously a big loss.
 
So the profitability risk is solely with the mainline carrier who has to get the fannies in the seats.