American Airlines is thriving despite bankruptcy

[Flying low]

I wouldn't recommend reading the public comment section of the media - that will just add to your blood pressure and general stress level. As has been posted here many times, you can't fix (or teach) stupid. The world is full of ignorant people who have no interest in learning the actual numbers or the truth; they only want to rant and rave their preconceived notions.

True, but that is still how the general public views us and Unions in general. Ever listen to talk radio when they get on the subject of WI. governor Walker? He did a "great" thing by going after unions.

 

[AA89]

Hmmm. Maybe you should check, because when it comes to labor, Parker is the Ringmaster of a three ring side show circus. Don't believe me. Go to the US pilot forum with labor issues that have been there since 2005.

AA management has been leading their own 3 ring Circus since 2003 starting with Carty and his embarrassing exit followed by a clueless board of directors and a directionless management team. I'm not close enough to the daily goings on at USAir to know the pulse but I think the fact that the 3 unions at AA are entertaining the thought of Doug Parker as a boss says enough for me. I realize some of the belief in Parker is for leverage and some from anger but who can say which management team is worse. Can we swap for a year and see?

 

[WorldTraveler]

As I mentioned above to Buck, AA's labor costs per ASM are the highest in the industry. That does not mean that AA's employees have the highest hourly pay or that AA's employees are all overpaid. All it means is that every other airline pays less per ASM for its labor than does AA. The estimates range from several hundred million compared to UAL and DAL to over $2 billion compared to US. If AA had the same labor costs (per ASM) as jetBlue, AA's labor expenses would be about $4 billion less each year.

and to add, it comes down to efficiency..it is why WN is able to pay their employees much more per person that other airlines but still have absolute labor costs per ASM that are lower than the network carriers. It is also why AA and UA have had a historic efficiency deficit relative to CO, DL, and NW.... UA fixed much of its efficiency issues in BK which is why AA sticks out even more because of its relative inefficiency - and thus higher costs - relative to its network peers.

Another part is related to WN's network which is more efficient in gaining the most amount of revenue per seat mile compared to hub and spoke networks as well as the way WN operates (normally minimum of 10 mainline flights per station) but part is related to the efficiency of the labor contracts and the (historic) willingness of WN employees to put alot of effort into the operation knowing they will benefit financially.
Obviously a big part of the disconnect for the network carriers related to labor costs is that they were unable to provide pay benefits to employees for their hard work. it is very hard to believe that you will someday share in the wealth if you have nearly unilaterally endured the cuts....

In the past five months, AA management (now that Horton is in charge) has increased unit revenue faster than has UA or US. For the first quarter, DL's revenue was increasing very fast also. But during the last couple of months, Delta's unit revenue percentage gains have begun to slow down below the rates at AA.

AA needs both: lower labor costs AND higher revenues. So far in 2012, the higher revenues have been a reality. In a few days, AA will probably have the lower labor costs to complete the restructuring.

To be fair, AA has surpassed DL's RASM growth only in one month, May, IIRC. AA is increasing its revenues at an above average rate for the industry, which right now includes better than UA. Given that UA has had some nasty integration issues which are not resolved, there is undoubtedly a part of AA's RASM growth that is attributable to revenue shifting from UA.
Still, AA has at its core a network that fundamentally has the ability to deliver solid revenue and it is clear they are trying to ensure that remains.
The competitive situation in the industry is still very intense, esp. between AA, DL, and UA - with US trying hard to benefit where it can. Historically AA has succeeded with revenue when UA has faltered - and UA's integration problems could be the best thing to happen to AA's restructuring.
It still says that there is probably not a need for 3 mega network carriers plus US... and further consolidation in the industry will focus on gaining a long-term advantage by two of the three of the megacarriers over the third - which makes it likely that US will not remain as a long-term 4th network carrier.

 

[AA89]

The facts don't match this paragraph. Horton and Parker both began their careers at AA. After a few years, Parker left AA to go to NW before landing at HP. Horton, on the other hand, stayed at AA for many years before his brief stint at AT&T. After the merger of AT&T, AA recruited Horton to return, where he's been for several years. I'm not saying anyone has to like Horton, but he knows more about running an airline than does Doug Parker.


I'm certainly not smart enough either, but Parker's expertise has been in convincing his pilots to work for less than jetBlue pays its A320 and E190 pilots. Parker inherited USAir with pilot and FA payrates that were substantially below AA's 2003 concession payrates.

Of course, the USAir employees got rid of the old USAIr management when Parker took over with the merger in 2005, and thus the US employees don't hate him - after all, he wasn't the boss that took them into Ch 11 twice in two years and imposed three rounds of concessions on them and terminated their pensions. So perhaps the hatred that AA employees have for Horton & Co will prevent AA employees from backing Horton and will push them into the arms of Parker, the true Pay Miser of the airline industry.

I don't know how you can say that the facts don't add up. Whorton left for ATT and Parker has been employed by one airline or another his whole career. Further, I believe Whorton will take a paycheck from wherever he can get it but I don't get that feeling from Parker and so far I am correct.

 

[eolesen]

I don't know how you can say that the facts don't add up. Whorton left for ATT and Parker has been employed by one airline or another his whole career. Further, I believe Whorton will take a paycheck from wherever he can get it but I don't get that feeling from Parker and so far I am correct.

Parker has 26 years of work experience, all of it with airlines. He spent 5 at AA, jumped to NW for 4 years, and now has 17 years at HP/US.

Horton has 27 years of work experience, split between 23 years with AMR, and ~3 years at AT&T.

I'd say it's a pretty even toss-up on their experience. Horton left for greener pastures once. Parker left for greener pastures twice.

The other thing you might want to look at with Parker vs. Horton....

In 2004, Parker went after a merger with ATA
In 2005, Parker went after US Airways.
In 2006, Parker went after Delta
In 2008, Parker went after United

Horton hasn't pursued any mergers.

 

[AA89]

Thanks for the info Eric but my original post was about which man had made a career at the airlines and which had not. I felt that Parker is a career airline guy and Whorton is not. FWAAA attempted to refute that but his "facts" didn't add up. I believe in my heart that Whorton could care less if he is running an airline or a department store chain. I believe the fact that he left for "greener pastures" once backs that up and I don't think he cares what AA looks like in 5 years either.

As for Parker's merger attempts...It seems to be the thing to do lately so kudos for trying.
As for Whorton's non merger pursuits.... Has he been in a postion to pursue airline mergers? Only in the past 6 months.

 

[signals]

As for Parker's merger attempts...It seems to be the thing to do lately so kudos for trying.
As for Whorton's non merger pursuits.... Has he been in a postion to pursue airline mergers? Only in the past 6 months.

Eric didn't mention that in 2010(?) he wanted to merge again with United, and got shafted by Continental.

Parker is a merger whore. The only things these rumors result in is US stocks rising, which is good seeing that he caught hell from shareholders a few years ago.

Isn't it funny that no sooner that AA announces BK, Parker throws his hat in the ring. Unlike the others, this time he is promising a rose garden to the disgruntled workers-if you're not, you will be with that merger. Horton hasn't been in position to persue a merger, this is the US kool ade that AA is drinking full force. He seems to want restructuring and stand alone. Maybe this isn't a bad thing or as bad it seems or AS BAD AS IT WILL GET WITH US!

Lets face it, AA looks at Parker as a labor savior, yet at US labor is at war. Not Parker's fault? Well as long as his airline makes a profit and continues to run efficiently, I don't think he cares.

Make sure you know what you are in for, because the pastures aren't always greener, and most are obviously not seeing what some outsiders see. Forget the pilot situation, talk to the f/as that believe the TWA f/as were stapled and seem to be preparing to revenge TWA, the way they are talking.

Perhaps I am talking out my butt, but hindsight is 20/20, and the regrets will eat you alive.

Just sayin'.

 

[AA89]

Parker: “Look, the only issue we’ve heard from bondholders is ‘You guys are giving too much to labor.’ Our answer is no. Here’s what I think about what we give to labor. We create an airline here that has the same scale and revenue generating capabilities as United and Delta, we should have our employees therefore compensated similar to United and Delta. American can’t do it standalone. We can’t do it standalone for our employees. But put them together, we can and we should. They’re still large concessions for the American employees, as you know.”

I find it interesting that Parker believes that labor can be compensated equal to their peers, if the merged airline can generate revenue equal to their peers.

Exactly Buck. As we all know, like him or not Parker has at least made a career in the airlines. Whorton on the other hand is only here as a hatchet guy for his next payday.
I'm not smart enough (and probably most on this post aren't either) to predict the best course for AA but I do see a better future for AA with a management team that understands ALL of the facets of of running a business as labor oriented as an airline.

My original post

 

[eolesen]

Thanks for the info Eric but my original post was about which man had made a career at the airlines and which had not. I felt that Parker is a career airline guy and Whorton is not. FWAAA attempted to refute that but his "facts" didn't add up. I believe in my heart that Whorton could care less if he is running an airline or a department store chain. I believe the fact that he left for "greener pastures" once backs that up and I don't think he cares what AA looks like in 5 years either.

As for Parker's merger attempts...It seems to be the thing to do lately so kudos for trying.
As for Whorton's non merger pursuits.... Has he been in a postion to pursue airline mergers? Only in the past 6 months.

First of all, Horton's been there for six years, and well placed to influence things.

Second, take a closer look at why Tom may have left in 2002. I know that some of this is probably a foreign concept to guys who live and die by the seniority system, but greener pastures is not always about the money. It's about increasing responsibility.

When you have an A-type personality like Horton or Parker, you'll see them engaging in a career path where there's a pattern of moving into positions of higher responsibility every 3-5 years. Horton clearly did that at AA between 1985 and 2002.

By 2002, Carty was CEO, and Baker and Gunn both retired, resulting in Arpey and Gunn got promoted into their respective chairs.

Essentially, Horton was the odd man out, and it was reasonable to expect that neither Dan or Gerard were going anywhere anytime soon,
given being in their 40's. That's when most executives get recruited to go elsewhere -- outsiders realize they're pigeonholed.

It's probably no different than Parker leaving AA for NW: he hit a ceiling where he knew he wasn't being challenged or wouldn't have been promoted beyond where he was anytime soon, so NW made him an offer which offered both a challenge and advancement. Likewise when HP recruited Parker away from NW.

When Carty resigned, Horton was already committed to the position at AT&T. When the opportunity came, he returned. He could have gone anywhere, and made a heck of a lot more money, but he returned to AA.

If that's not the definition of an airline guy, I'm not sure what is.

 

[john john]

This all sounds like the Good ol' boy network known as the boys' club system of cronyism

 

[FWAAA]

Thanks for the info Eric but my original post was about which man had made a career at the airlines and which had not. I felt that Parker is a career airline guy and Whorton is not. FWAAA attempted to refute that but his "facts" didn't add up. I believe in my heart that Whorton could care less if he is running an airline or a department store chain. I believe the fact that he left for "greener pastures" once backs that up and I don't think he cares what AA looks like in 5 years either.

If you think that spending three years outside AA out of a 27 year airline career with AA means that Tom Horton is not an "airline guy," then you're entitled to your opinion, as factually incorrect as it is.

 

[AA89]

FWAAA, Simply a comparison of their careers and my opinion of whorton's dedication to aviation in general and AA in particular . Relax.

Eric, being forced to join a union for employment and playing by the seniority rules doesn't make career advancement foreign to me. If pencil pushers can have an opinion on aircraft maintenance I can sure have one on management.

 

[Frank Szabo]

If you think that spending three years outside AA out of a 27 year airline career with AA means that Tom Horton is not an "airline guy," then you're entitled to your opinion, as factually incorrect as it is.

FW:

Methinks you missed 89's point.

Just because Horton spent all but three years working at an airline doesn't make him an "airline guy". He'd be just as at home drawing his charts and graphs for any other business and stomping its workers into the ground when the opportunity presented itself.

Horton is pure business - no room for creative thought, as is the case with many CPAs and other brands of finance people. These people install their drawers with a crowbar™ and have terminal tunnel vision. What "he" will accomplish will eventually be far outweighed by the overall damage he caused to the company, the people who dedicated a fair amount of time to it, and the ancillary businesses across the country that in their own ways helped AMR thrive at one time or another.

Airline people, like Uncle Bob was, are SOBs in their own right but understood when to back off in a battle to maintain civility and trust - Horton and the rest of this days' crop of MBAs do not understand that simple item because of their typical lack of skills with people.

Simply winning the battles over what one can control (one's people) does not equate to winning the war with economic pressures which are out of one's control - ever. Horton may well win the battle with AA's people - at the cost of the corporation.

He's not airline - he'd do fine in any position allowing him to be the bully and hire enough outside help to make it happen - or perhaps declare executive privilege.

 

[FWAAA]

FW:

Methinks you missed 89's point.

You may be right, but here's what 89 said:

Exactly Buck. As we all know, like him or not Parker has at least made a career in the airlines. Whorton on the other hand is only here as a hatchet guy for his next payday.
I'm not smart enough (and probably most on this post aren't either) to predict the best course for AA but I do see a better future for AA with a management team that understands ALL of the facets of of running a business as labor oriented as an airline.

And by comparing Parker and Horton and claiming that Parker "made a career in the airlines" but that Horton did not, he's objectively mistaken. They're both airline guys cut from the same cloth - their apprenticeship under the ultimate airline (numbers) guy, Crandall.

Just because Horton spent all but three years working at an airline doesn't make him an "airline guy". He'd be just as at home drawing his charts and graphs for any other business and stomping its workers into the ground when the opportunity presented itself.

As Parker began his career at AA, just like Horton, as a numbers guy, then Horton is as much an "airline guy" as Parker.

Horton is pure business - no room for creative thought, as is the case with many CPAs and other brands of finance people. These people install their drawers with a crowbar™ and have terminal tunnel vision. What "he" will accomplish will eventually be far outweighed by the overall damage he caused to the company, the people who dedicated a fair amount of time to it, and the ancillary businesses across the country that in their own ways helped AMR thrive at one time or another.

Airline people, like Uncle Bob was, are SOBs in their own right but understand when to back off in a battle to maintain civility and trust - Horton and the rest of this days' crop of MBAs do not understand that simple item because of their typical lack of skills with people.

Funny that you mention Crandall. I watched the Charlie Rose interview with Crandall, along with that annoying "I want to be relevant" Peter Greenberg (what an idiot) and Crandall admitted early on in that interview that he was a numbers guy, just like his crop of proteges at AA in the '80s and '90s (including Horton, Arpey and Parker). Crandall said that the airline business was a numbers business.

I understand the hatred for Horton and I understood the hatred for Arpey and Carty. I understand the idolizing of Crandall - it's been a long time since he demanded and got concessions (in the form of the B scale), so hatred for him has worn off.

My point is that Parker is no more "airline guy" than Tom Horton and that will be apparent once the merger happens and everyone's infatuation with Parker fades away. At that point, it will be apparent that he's Carty/Arpey/Horton with a different last name but the same inside. Exactly the same. Except with more drunk driving arrests throughout his career than the others combined.

 

[Frank Szabo]

You may be right, but here's what 89 said:


And by comparing Parker and Horton and claiming that Parker "made a career in the airlines" but that Horton did not, he's objectively mistaken. They're both airline guys cut from the same cloth - their apprenticeship under the ultimate airline (numbers) guy, Crandall.


As Parker began his career at AA, just like Horton, as a numbers guy, then Horton is as much an "airline guy" as Parker.


Funny that you mention Crandall. I watched the Charlie Rose interview with Crandall, along with that annoying "I want to be relevant" Peter Greenberg (what an idiot) and Crandall admitted early on in that interview that he was a numbers guy, just like his crop of proteges at AA in the '80s and '90s (including Horton, Arpey and Parker). Crandall said that the airline business was a numbers business.

I understand the hatred for Horton and I understood the hatred for Arpey and Carty. I understand the idolizing of Crandall - it's been a long time since he demanded and got concessions (in the form of the B scale), so hatred for him has worn off.

My point is that Parker is no more "airline guy" than Tom Horton and that will be apparent once the merger happens and everyone's infatuation with Parker fades away. At that point, it will be apparent that he's Carty/Arpey/Horton with a different last name but the same inside. Exactly the same. Except with more drunk driving arrests throughout his career than the others combined.

My main intent was to point out the lack of people skills - knowing when to attack from a different position, if need be, simply to maintain a certain amount of trust with those being dealt with.

Crandall was, plain and simple, an SOB, BUT - he was our personal SOB and we knew that regardless of what came down, he had our backs to a degree this present crop of corporate dorks couldn't possibly understand nor ever will.

I was proud to cuss RLC as was everyone else I worked with - this group is much different - they care about nothing but their bonuses. It's really not, to me, an issue of the "Good ol' days" as you might think but a issue of the difference in personalities and what it takes to, as it's said, "get the troops to follow their leader to hell if that's where they're needed".

The soup sandwiches making up the finance department haven't a personality nor two atoms of individualism to rub together - at least that's what I've seen during my lifetime.

That's NOT the type one wants to run their business.