American Airlines June traffic down 8.1&%

[eolesen]

Yup.

And while you're believing the "aircraft are full so there's no falloff" drivel, you can also ignore the impact on "full flights" that comes from the weekly $30/60/90 fare NetSaver emails I get every Tuesday for the next weekend's travel.

And you can also ignore all the double/triple mile deals which are nothing more than glorified begging to try and coerce corporates to go have a meeting somewhere...

 

[Bob Owens]

Well over the last thirty years in this industry I've seen a few recessions, will further downsizing come? Maybe, but one thing thats definite is that concessions wont mitigate layoffs, never did, never will. If high wages were bad for airlines then SWA would have been gone a long time ago. Once you cut wages you kill morale and if theres any way that employees can have any part of killing an airline its when management focuses on managing the many miserable instead of releasing the operation to the motivated few.

For some reason some of those who post here think that talk of bankruptcy and liquidation frighten us, well the fact is they've played that card one too many times. Looking at this latest proposal on the table pretty much tells me there's no future at AA anyway, what are they going to threaten us with? All they are promising us is financial ruin.

Threats will not motivate us because we are at the point where we dont have much to lose anymore. The worst that can happen is we are forced out of our comfort zone. Maybe thats what AA thinks they need, force out those with reasonaable expectations and try and get new workers with no expectation that the sacrifices they make will be balanced with good wages and benifits, I guess they didnt learn anything from the 95% rejection rate of recalls.

I'm not saying that the economy is fine, but all the doom and gloom sky is falling nonsense that the management types post here is meant to do one thing-lower the expectations of workers so they will give the company more for less.Things arent great for the airline, but the sky isnt falling either, all the financial hardships you hear about hasnt stopped the airlines from ordering scores of brand new airplanes and taking on other huge capital expenditures. Dont listen to what they say, watch what they do. We face stiffer economic challenges than the company does, there arent any new cars in my driveway,we've seen a 40% decline in real revenue, but we cant throw our kids to the curb to lower our expenses, the company on the other hand has seen their revenue increase by around the same percentage as ours decreased, yet they got rid of over 30% of their workforce, so they've recieved a double bonus, lower wages and less people being paid. So yea, things are not the best for AA, but they arent really all that bad either, our economic prospects are not looking as good as the companies.

We should take what we can because no matter how much we give it doesnt make us any more secure, in fact it does the opposite.

 

[FWAAA]

Analysts expect AMR to report a net loss of about $365 million (excluding special items) on Wednesday, or about $4 million a day for the second quarter:

http://finance.yahoo.com/news/Earnings-Pre...ml?x=0&.v=1

 

[eolesen]

The planes are full, so how is that possible?....

Sad, yet not too surprising. No doubt, some will write it off as Swine Flu, turtle mating season, whatever.

Fact remains that costs are exceeding revenues. Doesn't matter how full the planes are.

 

[Bob Owens]

Fact remains that costs are exceeding revenues. Doesn't matter how full the planes are.

Well then maybe its not the right time to be buying new airplanes, upgradfing the interiors of others and adding wingletts on others.

AA is expected to have brought in nearly $5 billion last quarter but they are expected to post a loss of $384 million, it wasnt spent on labor.

 

[The Goose]

Well then maybe its not the right time to be buying new airplanes, upgrading the interiors of others and adding winglets on others.

... snip

There you go again, Bob - this common sense stuff has got to stop as it's rather confusing to some.

 

[FWAAA]

Well then maybe its not the right time to be buying new airplanes, upgradfing the interiors of others and adding wingletts on others.

Why not? New 738s will burn substantially less fuel than the MD-80s. Would you rather AA waste money on jet fuel?

Upgrading interiors is necessary to continue to attract more revenue. You know, the revenue you want to take home as paychecks.

Winglets? Again, they save fuel, are installed by AA mechanics (one would think you'd be in favor of that) and their cost is negligible. I'd bet that more cash "disappeared" from domestic beverage revenue every year prior to the cashless system than the winglets cost.

Goose is right; it is confusing. At least it's confusing for Bob Owens. Capital expenditures like new 738s, new interiors and winglets didn't factor into the net loss for the second quarter. They will save AA billions of dollars in fuel over their useful life, so their purchase makes sense.

IMO, the management failure here was waiting too long to order dozens of new 738s. Had deliveries begun three years ago (in early 2006) instead of this spring, AA would be well on its way to replacing the MD-80s already and most of them would be replaced by late 2011. Alaska replaced its MD-80s with new 737s and said the payback period from fuel, maintenance and fleet simplicity would be just a few years.

AA is expected to have brought in nearly $5 billion last quarter but they are expected to post a loss of $384 million, it wasnt spent on labor.

Actually, about $1.7 billion of it was spent on wages and salaries in the second quarter - that's about 35% of revenue, a much higher percentage of AMR's revenue than the second quarter last year. You've been demanding a larger percentage of AA's revenue for some time now. Well, you finally got it. Enjoy.

 

[The Goose]

Why not? New 738s will burn substantially less fuel than the MD-80s. Would you rather AA waste money on jet fuel?

No argument there.

Upgrading interiors is necessary to continue to attract more revenue. You know, the revenue you want to take home as paychecks.

Since the planes are late all the time, so what?

Winglets? Again, they save fuel, are installed by AA mechanics (one would think you'd be in favor of that) and their cost is negligible. I'd bet that more cash "disappeared" from domestic beverage revenue every year prior to the cashless system than the winglets cost.

Let's just say some of the AA installations were questioned as to their integrity. Management couldn't have found a more inexperienced group to do the installation. That's why APB removed AA as a preferred provider of services.

Goose is right; it is confusing. At least it's confusing for Bob Owens. Capital expenditures like new 738s, new interiors and winglets didn't factor into the net loss for the second quarter. They will save AA billions of dollars in fuel over their useful life, so their purchase makes sense.

GAAP gives corporations a myriad of ways to show/hide things - that's the confusing part if one isn't well versed in accounting.

IMO, the management failure here was waiting too long to order dozens of new 738s. Had deliveries begun three years ago (in early 2006) instead of this spring, AA would be well on its way to replacing the MD-80s already and most of them would be replaced by late 2011. Alaska replaced its MD-80s with new 737s and said the payback period from fuel, maintenance and fleet simplicity would be just a few years.

Agreed. The replacement orders should have begun years ago. Why would one suppose replacement was delayed this long and not started when there was more unrestricted cash available?

Actually, about $1.7 billion of it was spent on wages and salaries in the second quarter - that's about 35% of revenue, a much higher percentage of AMR's revenue than the second quarter last year. You've been demanding a larger percentage of AA's revenue for some time now. Well, you finally got it. Enjoy.

Wages are an all-encompassing item; never a breakdown of who gets what. In AMR's accounting system as with other corporations, even the executive pay is lumped into "wages" yet thrown in our faces when a raise is bargained for - probably their "bonuses" too.

As far as getting a larger chunk of revenue is concerned, revenue will continue to erode in the present financial environment and the percentage of that which is employee compensation will rise until there is a layoff or BK filing in which the workers will be taken to the cleaners. I believe this is being delayed in hopes of another "Cartyesque" ultimatum is presented to the workers similar to 2003 where our union lied for the company's benefit and ultimately it's own financial well-being. Hey - we were dumb enough to fall for it before; right?

 

[Bob Owens]

Why not? New 738s will burn substantially less fuel than the MD-80s. Would you rather AA waste money on jet fuel?

You know a Prius would burn a lot less fuel than my 1995 Suburban, and my wife would love to get one. Would buying the Prius save me money on fuel? Yes, but in the short term it would cost me more to buy it than it would save me. I would also love to put Solar Panels on my roof, same story applies there as well. Investing in long term effeciencies is a luxury. One of the reasons EAL failed is they tried to invest in fuel efficient aircraft at the wrong time-they failed to maintain enough liquidity. I simply dont have the cash flow to make energy saving investments. AA is claiming that they are in such dire straits that they cant offer us any relief from the 6 year recession that they have imposed on us. Before I see AA invest in fuel efficient aircraft I want my pay restored. In the end paying us well would probably save them more money than the fuel savings would.

Upgrading interiors is necessary to continue to attract more revenue. You know, the revenue you want to take home as paychecks.

I thought cheap fares attracted more revenue? If the seats are already sold do you actually believe that new seats will generate more cash? The consumer cant see the seat when he buys his seat on-line at the lowest price. Unhappy workers means unreliable service, that would chase away more passengers than dated interiors.

Winglets? Again, they save fuel, are installed by AA mechanics (one would think you'd be in favor of that) and their cost is negligible. I'd bet that more cash "disappeared" from domestic beverage revenue every year prior to the cashless system than the winglets cost.

Again the Prius and Solar Panels. We have plenty of other stuff to keep mechanics busy, maybe they should stop refusing 3P work. More 3P work would generate an immediate cash infusion, they wouldnt have to wait ten years for fuel savings to pay them back for the costs they are incurring today.

Goose is right; it is confusing. At least it's confusing for Bob Owens. Capital expenditures like new 738s, new interiors and winglets didn't factor into the net loss for the second quarter. They will save AA billions of dollars in fuel over their useful life, so their purchase makes sense.

I didnt say they didnt make sense, I was responding to claims that the company cant afford to pay us, well if they can afford all those other things then they can afford to pay us. Its as iff they are telling the Electric company that they cant pay the electric bill because they are using the money to put solar panels on the roof.

Actually, about $1.7 billion of it was spent on wages and salaries in the second quarter -.

HMM, I thought the numbers werent being released till Wednsday?

that's about 35% of revenue, a much higher percentage of AMR's revenue than the second quarter last year. You've been demanding a larger percentage of AA's revenue for some time now. Well, you finally got it. Enjoy

No I been demanding a fair wage. you know as well as I that the percentage value changed because of the steep reduction in the price of fuel. If I brought up labor costs as a percentage of revenue it was to show that despite the companys claim that labor costs were hurting the company that labor was consuming less than ever(wages were certainly less than ever-keep in mind that executive wages and benifits are part of labor costs as well and over the last six years AA management has recieved large increases in pay-the fact that they moved everyone up a paygrade from Supervisors to managers gave them bi wage increases).Plus that goes back to the arguement that just because a carrier has higher labor costs it doesnt mean that the carrier is at a competative disadvantage. In the case of AA they enjoy lower overall maintenence costs(excluding special fuel saving mods and optional cabin reconfigurations) and pay their workers less than most of their competitors despite the fact that they show higher labor costs than their competitors. AA may have higher labor costs but the end result of costs-CASMs are lower. SWA has lower CASMs but their RASMs are lower as well. SWA subscribes to the theory that if you pay your workers well that they will generate savings that offset the increased lwage cost, sometimes the higher wage can result in labor cost savings as well as operational cost savings.

Heres an example. A motivated happy well paid mechanic (motivated because he's paid well not because he's being threatened with his job), finds a problem a returns an aircraft to service in short order. The unmotivated poorly paid mechanic goes through the motions with no real desire to find the problem, he's just covering his but and keeping busy, the flight gets cancelled and the company calls OT to get it fixed so they can use it the next day. Sure the comp-any paid him less, but then they had to pay more hours to get the same thing done and they lost the revenue that the plane would have generated. The lost revenue numbers add up quick, one lost trip would probably pay several mechanics for several years. So by paying low wages are they really saving money?

These are not threats, Gordon Bethune even wrote about this in his book about restoring Continental, its a fact of life, it's not even intentional, if the mechanic is not 110% into the job he will not do it as quickly or efficiently, he cant vary the quality of the product but the pace at which stuff is put out can vary greatly with the mindset he has when he approaches the job. Money is a motivator, no matter how many times fools will claim the opposite that fact will never change. The only time money is not a motivator is when there is no need for it, when that happens let me know.

New fuel efficient aircraft, wingletts, new interiors, I'm all for it, AFTER you restore my pay. Even new airplanes break and need to be maintained.When you are paying off that new fuel efficient airplane you can only realize the fuel savings when its flying, and that requires labor.Go cheap on labor and your airplane may not fly as much as it could.

 

[FA Mikey]

You know a Prius would burn a lot less fuel than my 1995 Suburban, and my wife would love to get one. Would buying the Prius save me money on fuel? Yes, but in the short term it would cost me more to buy it than it would save me. I would also love to put Solar Panels on my roof, same story applies there as well. Investing in long term effeciencies is a luxury. One of the reasons EAL failed is they tried to invest in fuel efficient aircraft at the wrong time-they failed to maintain enough liquidity. I simply dont have the cash flow to make energy saving investments. AA is claiming that they are in such dire straits that they cant offer us any relief from the 6 year recession that they have imposed on us. Before I see AA invest in fuel efficient aircraft I want my pay restored. In the end paying us well would probably save them more money than the fuel savings would.

Actually Bob for the average non mechanic the Prius would still save them money. As with any aging vehicle in your analogy maintenance issues start to pile up. I wonder if that happens with 20 year old airplanes? Things wear out or just break. A broken vehicle at the shop is a huge inconvenience, just like a broken plane forcing delays. A factor in moving to a newer vehicle or in AA's case newer planes. There are other issues as well. Pulling it down to the single issue of fuel costs was ridiculous, but you knew that.

What a shame EAL spent money on 757's and A300's and deployed them into the Caribbean, its SJU hub, Central and South America. That sounds like a sure fire way to lose your butt. And al these years I have heard the IAM swear it was Frank Lorenzo and, Texas Air's cannibalization and stripping away of assets. If they had the fore sight and knowledge, they would have done it like AA and made big buckets full of money and used 757's and A300's throughout the Caribbean its SJU hub, Central and South America. Oh wait never mind.

I thought cheap fares attracted more revenue? If the seats are already sold do you actually believe that new seats will generate more cash? The consumer cant see the seat when he buys his seat on-line at the lowest price. Unhappy workers means unreliable service, that would chase away more passengers than dated interiors.

They are trying to keep their VFF's. They bring in the bulk of the revenue. They are there on loyalty but also for value. With fares pretty consistent among carriers, they need to provide the value and a clean cabin. The VFF's know the interiors of all our AC. They have been there so many times they know the best and worst seats, the announcements and simple inflight fixes for broken things.

Bob if tomorrow AA announced it was giving each employee one million dollars, we would still see the complaining and the same laziness from the same people. Nothing would change.

 

[Bob Owens]

Actually Bob for the average non mechanic the Prius would still save them money.

Over the long haul yes, but you would still need to have the capital to aquire the new car first.

What a shame EAL spent money on 757's and A300's and deployed them into the Caribbean, its SJU hub, Central and South America. That sounds like a sure fire way to lose your butt. And al these years I have heard the IAM swear it was Frank Lorenzo and, Texas Air's cannibalization and stripping away of assets. If they had the fore sight and knowledge, they would have done it like AA and made big buckets full of money and used 757's and A300's throughout the Caribbean its SJU hub, Central and South America. Oh wait never mind.

If you recall they blamed Borman for screwing up the Airline and Lorenzo for delivering the death blow.

Bob if tomorrow AA announced it was giving each employee one million dollars, we would still see the complaining and the same laziness from the same people. Nothing would change.

So that justifies underpaying everyone? Give me the million and you'll never see me post on this board again.

 

[FA Mikey]

Over the long haul yes, but you would still need to have the capital to aquire the new car first.

That is exactly what AA is doing, planing for the long haul. A note from one of the companies press reports says, AMR with its financing moves, including completion of a $520 million offering, it can press ahead with an ambitious fleet upgrade. AMR said it could now finance all 84 Boeing 737 jets it expects to add through 2011 -- it previously had arrangements only into late next year.

If you recall they blamed Borman for screwing up the Airline and Lorenzo for delivering the death blow.

They walked in to the fire with there eyes wide open. IAM had an agenda against Borman. It was willing to take the airline and al its people down just to screw him. A classic out of the frying pan and and to the fire.

So that justifies underpaying everyone? Give me the million and you'll never see me post on this board again.

I never said that. What I said was any amount of additional pay would have little to no effect on the employee moral or work ethic. It would only produce a new set of complaints against the company.

 

[Barfbag]

The planes are full, so how is that possible?....

Sad, yet not too surprising. No doubt, some will write it off as Swine Flu, turtle mating season, whatever.

Fact remains that costs are exceeding revenues. Doesn't matter how full the planes are.

I just heard that AMR, sold most of it's summer inventory very early at fire-sale prices, and that's, that.

 

[Bear96]

Bob if tomorrow AA announced it was giving each employee one million dollars, we would still see the complaining and the same laziness from the same people. Nothing would change.

I agree.

 

[Bob Owens]

That is exactly what AA is doing, planing for the long haul. A note from one of the companies press reports says, AMR with its financing moves, including completion of a $520 million offering, it can press ahead with an ambitious fleet upgrade. AMR said it could now finance all 84 Boeing 737 jets it expects to add through 2011 -- it previously had arrangements only into late next year.

Thats fine but dont use it as an excuse to not pay us.
Like I said you cant tell the electric company you cant pay them because you want to invest over the long haul and put solar panels on the roof.

I never said that. What I said was any amount of additional pay would have little to no effect on the employee moral or work ethic. It would only produce a new set of complaints against the company.

Rubbish, do you think that the high morale at SWA has nothing to do with pay? If thats the case then we should be paying our executives the same as the average worker since pay has nothing to do with morale or ethics.