American Needs US Air Merger: Analyst

[700UW]

AA took concessions in 2003 and I know Mechanics at US I believe make more, better check AA's wages, you might be surprised, all their unionized workers are in contract negotiations or they are getting ready to vote on a TA.

 

[BoeingBoy]

better check AA's wages, you might be surprised,

Wages are only part of the story. On average, AA's employee costs are among the highest.

Jim

 

[US1YFARE]

But referring to PHL as some great prize where ANY airline would want to deal with the "philly factor" is laughable.

no kidding. particularly when there are no flight delays and issues in the NY airports. EWR is a breeze to get through any time of day. :blink:

 

[ebwgs]

no kidding. particularly when there are no flight delays and issues in the NY airports. EWR is a breeze to get through any time of day. :blink:

The same can be said of ANY airport. Yes, even Philadelphia.

 

[back2CLT]

I'm just curious, does US every actually discuss the profitability of each hub/station? People on here cite PHL as #1, CLT as #2, and PHX as #3 as a known truth. I certainly see the logic in that ranking, but the way people talk about it with such unwavering certainly makes me think that US must disseminate this info, and if so, where can I can go to get these financial stats?

 

[redheadtempe33]

I'm just curious, does US every actually discuss the profitability of each hub/station? People on here cite PHL as #1, CLT as #2, and PHX as #3 as a known truth. I certainly see the logic in that ranking, but the way people talk about it with such unwavering certainly makes me think that US must disseminate this info, and if so, where can I can go to get these financial stats?

I'm sure the company knows but they don't distribute it and as for people's unwavering certainly ... they have no basis in fact. They are just guessing. That said, I did once see a presentation comparing LGA to other stations to the other large stations. PHX, CLT, DCA, and PHL all make money. LGA does not (currently) and BOS was right on the fence, hence their "core network" strategy.

 

[700UW]

Wages are only part of the story. On average, AA's employee costs are among the highest.

Jim

Because AA doesnt outsource like US and the other airlines do.

 

[SparrowHawk]

A few points to ponder.

If AA does indeed "need" US then it puts the Tempe Frat Boys in the drivers seat regarding who occupies Mahagony Row. Good for US and it's Employees, Bad for Customers of the merged carriers.

If US were the aquiring carrier they could maintain their brand identity.

Personally I think this merger is a stinker from the jump. A classic case of what looks good on paper being a nightmare in reality.

 

[nycbusdriver]

I'd like to see us get our acts together and build something.

Won't happen....CAN'T happen....until upper management comes to the conclusion that labor is not the enemy and begins to treat us like valuable assets.

I never see that happening with this management team, so until the BOD fires the bums (also unlikely), nothing will be built from the mess that is LCC. What you see now is what you get, or worse.

 

[nycbusdriver]

The plan released earlier this month calls for $5.2 billion over the next 12-15 years:

http://www.philly.com/inquirer/business/20100507_Airport_planning__5_2_billion_expansion.html#axzz0p9H2gZFe

Figure with cost overruns and construction delays, it should be done by 2030 at a cost of $12 billion or so.

IMHO, I think you are wrong by a factor of at least 5. It will take $12 billion just to pay the graft.

 

[redheadtempe33]

Because AA doesnt outsource like US and the other airlines do.

True, AA does not outsource their maintainence and their only express carrier, Eagle, is wholly owned, so almost all of their labor is "in-house". However, US pays a 757 captain $144, American pays $174. I couldn't find exact FA pay rates, but American FA's are usually said to have the second highest pay in the industry (behind Southwest) and amoung the lowest line hours (74 I think).
Add these high pay rates on top of the in-house maintainence, plus the cost of benefits (the health insurance cost alone for AA must be huge), pensions, 401k, etc. = highest CASM in the US.
I just don't see (short of bankruptcy) how they will do it long term. Internationally they can probably do well, but they compete with SWA in LA and Dallas, UA and SWA in Chicago, and JetBlue (amoung many others) in NY. Miami is really their only stronghold left.

EDIT: Found FA rates. In 2008 ther average FA salary at AA was $49,776. At US it is $39,716. SWA is $53,027. CO is $49,061. Data is from MIT's airline data project.

 

[DCaf]

LMAO!!!!!!!!! Where did you hear that? PHL is by far the biggest revenue generator, and highest O&D. DCA/Shuttle is high O&D and commands a high premium. CLT is a fantastic hub made better by it's low costs.

Laugh all you want, but read what I wrote. CLT is the most profitable, not the biggest revenue generator. I assume Philly, with all the international flights, generates more gross $$. Where did I hear this? Can't say, but it's someone who would know.

 

[700UW]

CO's are amongst the highest paid FAs, they are IAM.

 

[Our_Returning_Champion]

Why absorb the debt and headaches associated with USAir? Just wait until they expire then cherry pick the leftovers.

Even Bob Crandall wouldn't invest in an airline.

 

[redheadtempe33]

Why absorb the debt and headaches associated with USAir? Just wait until they expire then cherry pick the leftovers.

Even Bob Crandall wouldn't invest in an airline.

The same could be said for AA.
It is very unlikely that any of the remaining "large" (SWA,AA,UA,CO,US,DL,Air Tran,JetBlue,Alaska, and Hawaiian) airlines will go under. Chapter 11 maybe, but I just don't see any liquidations in the near (or far) future. Chapter 11 is just too easy and there is always someone willing to invest in airlines for some reason.
WOW. Now that I actually typed that out, it is hard to believe that their are 10 airlines (plus Allegiant, Frontier, Virgin America and Spirit) serving just the domestic US.