American Airlines doing all it can to cut costs as fuel prices rise

[MERV]

FORT WORTH, Texas - As the price of jet fuel soars, American Airlines is finding new ways to save fuel and money.
http://www.9news.com/money/187783/344/American-Airlines-doing-all-it-can-to-cut-costs-as-fuel-prices-rise?odyssey=mod|newswell|text|FRONTPAGE|p

http://http://www.9news.com/video/default.aspx?bctid=830193484001

 

[TIME FOR CHANGE]

They have been saving money for three years dragging out labor contracts

This year alone, American expects its efforts to conserve fuel will save the airline more than $370 million.

 

[Hopeful]

They have been saving money for three years dragging out labor contracts

This year alone, American expects its efforts to conserve fuel will save the airline more than $370 million.

I guess they don't figure that in their financial statements. 8 years of concessions and they are still not satisfied.

 

[FWAAA]

AMR spent $850 million more for fuel in 2010 than it did in 2009.

If fuel prices stay where they are right now, AMR will spend $1.75 billion more for fuel in 2011 than it did in 2010.

Last year (2010), AMR spent $4.0 billion more for fuel than it did in 2002.

If it wasn't for expensive fuel, AMR would be swimming in money. "Restore and more" would be no problem.

 

[DallasConehead]

Even in lay person in the fine art of running a business knows that he should raise his prices to cover the costs of running the business. But I guess our fine group of MBA's at AA are much smarter then the average lay person.

 

[WorldTraveler]

alot of fare increases would never have been possible if fuel were still at lower levels...

AA~s position relative to the industry would like be unchanged... look back at their situation a couple years ago and then identify what has changed and you will find that AA is not much different relative to the industry... that is a more rational, reasonable approach to the situation.

AA didn't settle its labor cost problems then for the same reason it doesn't now - it can't get them down on at least a cost neutral basis which is even a major disadvantage given that other competitors will continue to undercut AA by a wide margin even if AA mgmt is right about UA's labor costs coming up perhaps close to AA's as a result of their merger.

 

[Hopeful]

AMR spent $850 million more for fuel in 2010 than it did in 2009.

If fuel prices stay where they are right now, AMR will spend $1.75 billion more for fuel in 2011 than it did in 2010.

Last year (2010), AMR spent $4.0 billion more for fuel than it did in 2002.

If it wasn't for expensive fuel, AMR would be swimming in money. "Restore and more" would be no problem.

I don't think anyone is disputing the rising cost of fuel. Anyone who drives a car and/or heats their home with oil will agree.
I do however dispute the company's claim of rising labor costs. We have all, (except the executive class), been working under the concessions have only recieved pennies the first few years of this concessionary contract in return. They have hired NOONE until just recently. In maintenance alone, the total Title 1 seniority list was upwards of 12000 eight years ago. It now stands at near 9300. I can't speak for the other work groups.
if the company is envious of other carriers cost structure, then file bankruptcy already and stop whining.
I guarantee you I will still be on payroll doing my best to "help" AA the best i can.
They can force feed me a crap contract, but they cannot force me to "work."
I will go by the book do my best to "help" their on time performance.

 

[FWAAA]

Even in lay person in the fine art of running a business knows that he should raise his prices to cover the costs of running the business. But I guess our fine group of MBA's at AA are much smarter then the average lay person.

Well, AA's been leading the way on fare increases, not just in 2011 but ever since airlines were allowed to price their own tickets instead of obeying the CAB on prices.

Even laypersons know that the more expensive something gets, the less of it gets consumed. And the converse is also often true - the cheaper something gets, the more of it gets purchased.

Problem is, vacationers and other leisure travelers simply don't have to fly. They will fly at the right price but if prices increase too much, they don't. Vacation airfare isn't the same as the gasoline bill or the mortgage payment or groceries or utilities or property taxes - you know, the things you HAVE to buy every day, week, month. When the average layperson is wondering how to house, feed, clothe and educate the kids in the face of higher and higher prices, those tickets to MCO fall farther down the list of priorities.

Just a note about internal consistency of your position: Most of the employees who post here are in agreement that AA management is greedy and out to take every dollar from the employees, right? Is there any reason at all to suspect that management hasn't been treating customers the same way all these years? I've seen airfares go up and I've seen them go down, but lately, prices have been higher and higher. Fortunately, I can afford them even at their higher prices and I don't post here or elsewhere about how terribly evil AA is for squeezing every dollar it can from customers. But look at other online sites and there are many complaints by cheapskates about how high airfares have risen. If AA management is so greedy and willing to screw employees, you can be sure that management is willing to do the same to customers.

The USA-based airlines grew very rapidly post-1978 and grew very large because of cheap airfare. Airfare based on fuel that was less than a dollar for most years until the past decade. In 1998 and 1999, AMR's average fuel price was $0.55/gal. Demand for air travel exploded because prices could be so low, since fuel was practically free. Fuel ain't anywhere near free anymore. AMR's fuel bill in 2008 was more than AMR's total fuel bill for 1998 thru 2001. That's right: In one year, 2008, AMR spent as much on fuel as in those four years when fuel was really affordable.

 

[1AA]

AA needs to cut costs to offset the high price of fuel. They also need people to run the airline. AA has sent a management hiring team to NY to try to hire AMT's off the street. It seems that the local hiring people can not get the job done so they send people from HDQ's to assist. Nobody is biting at the opportunity. AA does not pay enough money to pay the bills. The transfer lists coming into the NY airports are pretty much DEAD. No internal movement and no one from the street. It's crunch time.

 

[FWAAA]

I don't think anyone is disputing the rising cost of fuel. Anyone who drives a car and/or heats their home with oil will agree.
I do however dispute the company's claim of rising labor costs. We have all, (except the executive class), been working under the concessions have only recieved pennies the first few years of this concessionary contract in return. They have hired NOONE until just recently. In maintenance alone, the total Title 1 seniority list was upwards of 12000 eight years ago. It now stands at near 9300. I can't speak for the other work groups.
if the company is envious of other carriers cost structure, then file bankruptcy already and stop whining.
I guarantee you I will still be on payroll doing my best to "help" AA the best i can.
They can force feed me a crap contract, but they cannot force me to "work."
I will go by the book do my best to "help" their on time performance.

That decline in headcount looks about right seeing how the mainline fleet decreased from 881 at 12/31/01 to just 620 on 12/31/10. I haven't calculated them with precision, but it looks like the pilots and FAs have seen similar decreases in their numbers.

Unfortunately for the employees, they represent the one cost area where costs can be slashed yet things continue to get done. Employees are vocal about their paycuts but they continue to show up and work. Perhaps not at the peak of their ability, but things get done. The other bills have to be paid or things come to a halt. No fuel and you can't fly. Stop paying for the airplanes and they'll get repo'd. But employee wages? They can be cut.

As to Chapter 11: I now predict that it will happen sometime in 2011 or 2012.

 

[AANOTOK]

As to Chapter 11: I now predict that it will happen sometime in 2011 or 2012.

Agreed!

 

[AV1]

I don't think anyone is disputing the rising cost of fuel. Anyone who drives a car and/or heats their home with oil will agree.
I do however dispute the company's claim of rising labor costs. We have all, (except the executive class), been working under the concessions have only recieved pennies the first few years of this concessionary contract in return. They have hired NOONE until just recently. In maintenance alone, the total Title 1 seniority list was upwards of 12000 eight years ago. It now stands at near 9300. I can't speak for the other work groups.
if the company is envious of other carriers cost structure, then file bankruptcy already and stop whining.
I guarantee you I will still be on payroll doing my best to "help" AA the best i can.
They can force feed me a crap contract, but they cannot force me to "work."
I will go by the book do my best to "help" their on time performance.

This is what makes standing together with other employee groups absolutely impossible, looking out for myself only.

 

[MCI transplant]

AMR spent $850 million more for fuel in 2010 than it did in 2009.

If fuel prices stay where they are right now, AMR will spend $1.75 billion more for fuel in 2011 than it did in 2010.

Last year (2010), AMR spent $4.0 billion more for fuel than it did in 2002.

If it wasn't for expensive fuel, AMR would be swimming in money. "Restore and more" would be no problem.

<_< ------- So what you're implying is "Labor" has to pay the price of high priced fuel in the form of the continuance of Concessions!!!--------This is a typical "Management" response!! 😉

 

[eolesen]

<_< ------- So what you're implying is "Labor" has to pay the price of high priced fuel in the form of the continuance of Concessions!!!--------This is a typical "Management" response!! 😉

I'd say it's a fairly honest response, MCI...

Lots of people in the late 90's and early 2000's decided to buy way more house than they could afford, and lots of others decided to "leverage home equity" to buy expensive toys.

Do you want AA to engage in the same type of risky behavior? Or do you think they should be living within their means?...

And please, don't even bother with the executive bonus red herring, or the executive compensation tangent. Senior management working for free would equate to probably less than those AIP payments everyone considers an insult...

 

[odie01]

That decline in headcount looks about right seeing how the mainline fleet decreased from 881 at 12/31/01 to just 620 on 12/31/10. I haven't calculated them with precision, but it looks like the pilots and FAs have seen similar decreases in their numbers.

Unfortunately for the employees, they represent the one cost area where costs can be slashed yet things continue to get done. Employees are vocal about their paycuts but they continue to show up and work. Perhaps not at the peak of their ability, but things get done. The other bills have to be paid or things come to a halt. No fuel and you can't fly. Stop paying for the airplanes and they'll get repo'd. But employee wages? They can be cut.

As to Chapter 11: I now predict that it will happen sometime in 2011 or 2012.

FWAAA,
Can you please explain to us how fuel hedging works for airlines during these tough times?
Also, airlines are raising fairs and adding fee's to offset fuel costs, and with the mergers, less competition makes this easier to do. The way I look at it, aa is making a killing right now.