American Airlines Is Too Profitable for Its Own Good

[Jacobin777]

But US' profit margin on Transatlantic and Latin America is the highest in the industy of the legacy carriers.

And US just posted record profits, DL is the 2nd largest airline and US is the 5th, compare apples to apples, not oranges.

Atlantic
AA - 16.00 - 14.96 - 14.70 - 6.9%
DL - 14.02 - 12.39 - 13.79 - 11.2%
UA - 15.94 - 14.61 - 15.98 - 9.1%
US - 15.41 - 13.83 - 13.56 - 11.4%

Latin
AA - 17.55 - 15.57 - 16.61 - 12.6%
DL - 14.04 - 14.64 - 14.30 - (-4.1%)
UA - 16.45 - 15.39 - 16.07 - 6.8%
US - 19.21 - 16.84 - 15.08 - 14.1%

If US had "industry average" payscale for the pilots they probably at best would have a "break-even" quarter.

wouldn't matter much... you can't debate the facts that I bring up shot or no shot.

Go ahead... maybe the pain of the truth won't hurt as much even if you're wrong one way or another

It's a simple standard.. if what I say is wrong, debate it with facts.

You avoid my factual comments at times. 🙂

 

[FWAAA]

But US' profit margin on Transatlantic and Latin America is the highest in the industy of the legacy carriers.

And US just posted record profits, DL is the 2nd largest airline and US is the 5th, compare apples to apples, not oranges.

Atlantic
AA - 16.00 - 14.96 - 14.70 - 6.9%
DL - 14.02 - 12.39 - 13.79 - 11.2%
UA - 15.94 - 14.61 - 15.98 - 9.1%
US - 15.41 - 13.83 - 13.56 - 11.4%

Latin
AA - 17.55 - 15.57 - 16.61 - 12.6%
DL - 14.04 - 14.64 - 14.30 - (-4.1%)
UA - 16.45 - 15.39 - 16.07 - 6.8%
US - 19.21 - 16.84 - 15.08 - 14.1%

Is this the same old chart that you reproduced here a few times several months ago or is this an updated chart with more current numbers? It's helpful for the readers (especially those who don't hang out at airliners.net) if you include some explanation or a legend along with the charts. You omitted the column headings so that we aren't even certain what each of the columns' numbers represent.

 

[700UW]

Updated on the thread at US it has the titles for the columns

 

[Jacobin777]

Updated on the thread at US it has the titles for the columns

..and it still doesn't address my comment of:

"If US had "industry average" payscale for the pilots they probably at best would have a "break-even" quarter."

 

[robbedagain]

Jacobin is that even w the bag fees they charge if the industry wages were applied

 

[jimntx]

..and it still doesn't address my comment of:

"If US had "industry average" payscale for the pilots they probably at best would have a "break-even" quarter."

I have seen some numbers that suggest that if LCC were paying industry standard wages, the profits would be losses, not even break even. I too, have asked the question "where is the money coming from to fund these promises that DP has made to the AA unions." In fact, I have asked the question at least 3 times on various threads here. Not one response from anyone on either side of the aisle.

I'm beginning to think that maybe no one has an answer to my question. But, we shall skip blissfully down the road to the future knowing that because we are going to get a raise (supposedly) when the merger goes through (if it does), we are all fully in favor of the merger.

 

[WorldTraveler]

Jacobin is that even w the bag fees they charge if the industry wages were applied

yes, revenue includes bag fees and other ancillary revenues.

 

[WorldTraveler]

I have seen some numbers that suggest that if LCC were paying industry standard wages, the profits would be losses, not even break even.

can we see them?

 

[jimntx]

I don't remember where I saw them, and I didn't much care at the time or now; so, I don't keep a file of links to every article I ever read. But, from another post here on AirlineForums by a pilot, LCC's 737 captains make the same or about the same as American Eagle rj captains. ($125/hr? Does that sound right?) As I understand it, DP has promised pay restoration to all the represented groups at AA (as in raises to cancel out latest cuts). I can not imagine that any LCC pilot/flight attendant/mechanic worth his/her salt would stand by and let AA counterparts receive pay rates that they did not get.

An LCC pilot sent me this link that supposedly has all the major airline pay rates for pilots. http://www.willflyforfood.com/ If the numbers there are accurate, it shouldn't be that hard to do the math with a financial statement and substituting the AA pilot rates for the LCC pilot rates.

 

[dash8roa]

I have seen some numbers that suggest that if LCC were paying industry standard wages, the profits would be losses, not even break even. I too, have asked the question "where is the money coming from to fund these promises that DP has made to the AA unions." In fact, I have asked the question at least 3 times on various threads here. Not one response from anyone on either side of the aisle.

I'm beginning to think that maybe no one has an answer to my question. But, we shall skip blissfully down the road to the future knowing that because we are going to get a raise (supposedly) when the merger goes through (if it does), we are all fully in favor of the merger.

I am also surprised by the willingness of the rank and file to take as gospel what DP is promising. No talk of how many jobs will be lost, what huge payment I heard about is due next year for US and where all the saving synergies will come from. It will be mostly of the backs of labor when the layoff slips are handed out.
I am amazed on how the willingness to believe a fast talker still finds adherents who want so bad to believe the glowing comments on more money, job security and growth. Kind of like Bernie Madoff, promise big rewards and you will find many who without rational research and thinking jump on the bandwagon and just wait for the money to pour in.
Airlines are one of the most cyclical businesses there are, ultra sensitive to oil prices, the economies here and around the globe, just the threat of terrorism can cause huge dips in ridership.
I hope for all involved that if this deal goes through, it will have success, I know many personally that depend on this plan to work and I wish them the best.

 

[jimntx]

Dash, DP has the support of the AA unions for the same reason that the same idiot Congressmen get re-elected time and time again. Both he and the Congressmen are adept at telling people what they want to hear, not what they need to hear. Whether or not what they are told is the truth is immaterial. (It's also why WT's posts irritate so many people on this forum. He backs up what he says with facts--not emotions.)

 

[mistified]

I have seen some numbers that suggest that if LCC were paying industry standard wages, the profits would be losses, not even break even. I too, have asked the question "where is the money coming from to fund these promises that DP has made to the AA unions." In fact, I have asked the question at least 3 times on various threads here. Not one response from anyone on either side of the aisle.

I'm beginning to think that maybe no one has an answer to my question. But, we shall skip blissfully down the road to the future knowing that because we are going to get a raise (supposedly) when the merger goes through (if it does), we are all fully in favor of the merger.

Synergy: is t he interaction of multiple elements in a system to produce an effect different from or greater than the sum of their individual effects . Only time will tell if it works out that way. Worldtravler is "cock sure" that it won't. Standby for a very lengthy response from him. It will be a repeat from what we heard from him over and over and over and over and over again. WT your point is understood. Really it is. Lets see in the future how it pans out. If your going to continue to drive your point home then please say something NEW. We don't need to hear the same thing again.

 

[FWAAA]

Laura Glading's ignorant whining continues:

Labor support for the merger has been unprecedented and may conceivably have an impact on a Democratic administration that has generally had labor support.

"What is so frustrating here is that DOJ doesn't seem to consider the attitude of [background=transparent]employees[/background], flight attendants in particular," said Laura Glading, president of the Association of Professional Flight Attendants and perhaps the most visible labor supporter of the merger.

"Shouldn't we be figured into the equation?" Glading asked in an interview. "Nobody considers the employees who made the sacrifices, did everything right, willing to change the company -- and now getting kicked in the teeth by a Democratic administration."

http://www.thestreet...oo&cm_ven=YAHOO

The "Democratic administration" she criticizes has finally abandoned the hands-off antitrust enforcement policies of the evil bastard Republicans who don't care about consumers and she's crying and whining about it. Her rant translates to "Please, Mr President, let my capitalist overlords merge so that they can exert more market power and charge consumers more, inflicting the very harm the antitrust laws were passed to prevent."

 

[WorldTraveler]

Dash, DP has the support of the AA unions for the same reason that the same idiot Congressmen get re-elected time and time again. Both he and the Congressmen are adept at telling people what they want to hear, not what they need to hear. Whether or not what they are told is the truth is immaterial. (It's also why WT's posts irritate so many people on this forum. He backs up what he says with facts--not emotions.)

thank you, sir.

I am also surprised by the willingness of the rank and file to take as gospel what DP is promising. No talk of how many jobs will be lost, what huge payment I heard about is due next year for US and where all the saving synergies will come from. It will be mostly of the backs of labor when the layoff slips are handed out.
I am amazed on how the willingness to believe a fast talker still finds adherents who want so bad to believe the glowing comments on more money, job security and growth. Kind of like Bernie Madoff, promise big rewards and you will find many who without rational research and thinking jump on the bandwagon and just wait for the money to pour in.
Airlines are one of the most cyclical businesses there are, ultra sensitive to oil prices, the economies here and around the globe, just the threat of terrorism can cause huge dips in ridership.
I hope for all involved that if this deal goes through, it will have success, I know many personally that depend on this plan to work and I wish them the best.

All of the network carriers have reported as have WN and AS.

Since AS is still small in the scope of aviation in the US, they can be excluded on the national basis that the DOJ will use.

Two numbers tell volumes about where the industry is and where it will go.

Consolidated passenger yield: (the amount of revenue per mile that an airline collects from paying passengers, expressed in cents, here including mainline and regional operations)

DL- 16.85
US - 16.75
AA - 16.36
UA - 15.96
WN - 15.94

And the second number - mainline CASM ex-specials, fuel, profit sharing (the base cost to fly a mainline seat for one mile, also in cents).

Both of these sets of statistics are for the 3rd quarter of 2013; all of the network carriers have reported this data in the past week.

WN - 7.80
DL- 7.96
US - 8.08
AA - 8.48
UA - 8.75

The largest carriers don't necessarily get the best revenue nor do they have the best costs.

As I predicted, AA is in a better position than UA but worse off than the rest of the network carriers with respect to costs. AA has a 6% cost disadvantage to DL and a 9% cost disadvantage to WN.

UA has a 10% cost disadvantage to DL, the lowest cost network producer as well as a 12% cost disadvantage to WN.

US has a 2% cost disadvantage to Dl and a 3% cost disadvantage to WN.

The future of the industry is already well-shaped by these cost realities that will determine who can successfully "win" relative to other airlines.


Note also that DL's fuel price was about 13 cents per gallon less than UA, 9 cents less than WN, 6 cents per gallon less than AA, and 4 cents per gallon less than US.

Understanding what has really driven profitability is a whole lot different than the sheer size argument that far too many are using.

 

[Jacobin777]

Jacobin is that even w the bag fees they charge if the industry wages were applied

I have no clue but Parker & Co. are on record possibly lowering standards for pax and/or not really improving them.

I have seen some numbers that suggest that if LCC were paying industry standard wages, the profits would be losses, not even break even. I too, have asked the question "where is the money coming from to fund these promises that DP has made to the AA unions." In fact, I have asked the question at least 3 times on various threads here. Not one response from anyone on either side of the aisle.

I'm beginning to think that maybe no one has an answer to my question. But, we shall skip blissfully down the road to the future knowing that because we are going to get a raise (supposedly) when the merger goes through (if it does), we are all fully in favor of the merger.

I just don't see how this merger will be profitable if all the "lollipops" Parker has promised will be given . Maybe some member (such as FWAAA) who knows much more than me about this would be able to opine on the subject matter.

I also found an interesting comment by Parker:

"Adding some reality to US Airways’ favourable 3Q2013 results, company CEO Doug Parker noted that the airline’s credit rating recently notched up to a B, which is five upgrades shy of investment grade. “We know the merger is good for competition. But also, I want to make sure everybody understands what we’re really talking about here is merging a single B credit with a bankrupt credit,” Mr Parker concluded."

http://centreforavia...american-135085

Lets see, US Airways filed for bk twice in two years, had "bankrupt credit" a couple times and now has the galls to yap this tripe? B-credit rating isn't something to get all excited about anyway.

People who believe him are in deep trouble IMHO.

I don't remember where I saw them, and I didn't much care at the time or now; so, I don't keep a file of links to every article I ever read. But, from another post here on AirlineForums by a pilot, LCC's 737 captains make the same or about the same as American Eagle rj captains. ($125/hr? Does that sound right?) As I understand it, DP has promised pay restoration to all the represented groups at AA (as in raises to cancel out latest cuts). I can not imagine that any LCC pilot/flight attendant/mechanic worth his/her salt would stand by and let AA counterparts receive pay rates that they did not get.

An LCC pilot sent me this link that supposedly has all the major airline pay rates for pilots. http://www.willflyfo...orfood.com/ If the numbers there are accurate, it shouldn't be that hard to do the math with a financial statement and substituting the AA pilot rates for the LCC pilot rates.

The website http://www.airlinepilotcentral.com gives some interesting numbers as well. If true, then in some situations (such as the B762 and B738 versus A320), US pilots make 20%-25% less than their corresponding AA pilot. If US pilots were going to get a pay bump then the combined carriers costs just on US Pilot salary alone will take a huge jump. Add other costs,etc. and I don't see how the "syngergies" will be able not only mitigate the increased costs but actually imrprove profits/margins. I just don't see it!

I am also surprised by the willingness of the rank and file to take as gospel what DP is promising. No talk of how many jobs will be lost, what huge payment I heard about is due next year for US and where all the saving synergies will come from. It will be mostly of the backs of labor when the layoff slips are handed out.
I am amazed on how the willingness to believe a fast talker still finds adherents who want so bad to believe the glowing comments on more money, job security and growth. Kind of like Bernie Madoff, promise big rewards and you will find many who without rational research and thinking jump on the bandwagon and just wait for the money to pour in.
Airlines are one of the most cyclical businesses there are, ultra sensitive to oil prices, the economies here and around the globe, just the threat of terrorism can cause huge dips in ridership.

Because for some its all about "we hate current AA management so much we'll sell our souls to the devil just to get rid of them". What many do not realize is the "grass might not be greener on the other side".

I hope for all involved that if this deal goes through, it will have success, I know many personally that depend on this plan to work and I wish them the best.

I wish them well also but I'm definintely not as sanguine as many are. In fact, I'm downright "bearish" on the merger. As an avid AA flyer, I basically accepted the merger for all intents and purposes but I wasn't too keen on it. Hopefully it will get blocked.