American Posts 111 Million 4th Qtr Loss

[Hopeful]

AAmech:
I am closer to retirement age than you might think. Having been in this industry for over 3 decades, this is by far the worst I have ever seen happen to airline employees of all classifications EXCEPT executives. My grim outlook is based on the changes I have seen in this industry. Just look around you! AA is full of employees from failed carriers like PANAM, EASTERN, BRANIFF, and most recently TWA who were told of the shared sacrfices they must endure in order to survive.
Don't for one minute think that AA can't join these carriers in the archives of great airlines.
Unlike you, I would NEVER advise a younger employee to leave AA or any carrier for that matter to go work for AirTran or Jetblue! I would advise them to get the hell out of this industry alltogether.

The greed of corporate airline executives have destroyed the once great and admirable profession of the airline employee. So now it is just about staying alive and hoping some stock options will offset all the concessions that were jammed down our throats by threats.

AAMECH, you may not be near retirement agt or even close to it, but keep in mind that AA will look to alter the pension. And when that they comes and you happen to reach my stage of the game, let's see how "hopeful" you are.

I guess at the end of 5 years, you think AA is going to give us back everything they took from us? Each and ever one of those things taken away from us will have to be fought for all over again. It took over forty years to win them, but just weeks to wipe them out!


by the way AAMECH, can I assume you are based in TULSA?

 

[flyhigh]

Can somebody please tell me why protecting executive pensions in the same way everyone else's is protected is bad or wrong?

How can you say it is greed hopeful when you earlier state that the company has to put away over half a billion in pension funds for all other employees??? How can you reasonable say that it is prudent to only protect the pensions of some employees while leaving another group out in the wind?

This company has made tremendous strides. The reality is that bankruptcy was a reality if changes weren't made. We all say let's protect this profession and stuff like that, but we're all to happy to go to Wal-Mart and Home Depot. I know, I know, not you. Well, let's think bigger than that for a second. Just like Wal-Mart and Home Depot have put family owned stores across this country out of business, low cost carriers are doing the same in this industry. Sears has become a niche player in the face of Wal-Mart's competition. When was the last time you heard people going to the hardware store...been a while hasn't it? They go to Lowes & Home Depot to buy a hammer. Why? Price!!!! The same reason they go to AirTran, Southwest, and jetBlue. Well, if that's where the business is, and you want to continue to have a job of this nature, the revenue base upon which your pay is drawn has shrunk. These are realities of life.

As for the concern that profit sharing doesn't kick in until $500M. Well, yes, that is higher than competitors, but AA has a deeper hole to climb out of. Not only do they have to pay the pension liabilities you mentioned, but their is a significant debt load that has to be taken care of on top of lots of assets that will have to be replaced. By starting at the $500M mark, it gives AMR an amount of money to put in the bank to finance growth and investment. While that may seem crazy to some, the reality is, it is necessary to re-invest in a company. They can't just continue to fly the same old planes forever...

 

[Hopeful]

I suppose you forgot about Carty & Co. and their SERPS!

My point about pensions is that it is the next major expense that can be contolled and possibly eliminated aside from fuel.

Let me ask you this, FlyHigh:
Do you think that the next time AA comes to the employees with their hand out and singing the bankruptcy blues, that we should give them more?

That is what this is all about!

My point about executive greed is that the employees are forced to work for less in order to compete with the low cost carriers. When CEO's and the other executives succeed in raping the employees, they are considered geniuses and are handsomely awarded.

 

[WingNaPrayer]

There is also the fact that AMR says the pay and perks have to continue, and increase, in order to keep the execs from jumping ship. IMHO, they should be heartily ejected from their overpaid positions because it is their direct failure to perform that has put the airline in the shape that it is in. Instead, AMR chooses to reward them with increasing pay and unheard of stock perks.

Believe me, if I felt that the corporate level was actually earning the pay and perks, I would be the first to line up and support them, but clearly . . .they are not.

Labor has been dipped, double dipped and triple dipped, and I fear that it is just a very short matter of time before AMR comes back to the AA/AE labor force and starts their imminent doom song and dance in order to drive employee pay and incentives even lower. When they do . . . and labor is stupid enough to buy into it yet again . . . then every one of you deserves to loose your job, unionized or not.

Whether there are employees who think so or not, the executive level heartily laughed their corporate asses off at each and every one of you when you voted to give in to the wage concessions last spring. My opinion stands. AMR did not need the concessions, and they have made very little difference.

They say there is a sucker born every minute. Last spring, at AMR there were about a hundred thousand of them.

If the bankruptcy scare tactics start again, then by all means, let them file. At least you'll all have the pleasure of knowing that you did your part last spring and the incompetence at the AMR Executive Level still couldn't get off their dead butts and make it work. And . . . if they do ultimately file, most of the executive level will be pounding the streets and many of them are not spring chickens anymore.

Finally, you have to decide whether or not the Shrub is going to let his home state airline go belly up. My best guess is he won't.

 

[flyhigh]

Hopeful...I did not forget the SERPS...however you failed to answer my question as to why it is wrong to protect all pensions equally.

As for if I think more should be given, I would be inclined to say yes. Here is why. If AMR's expenses are in line or better than all other carriers (including LCC's), with the exception of certain labor groups, and they're still loosing money, I think it is necessary in order for the company to compete. AMR, nor any other company, is not a jobs program whose is existence is based solely on being there for you. The industry has moved to a period where low costs prevail, and ticket prices are lower. If the revenue base does not support what it used to, then what wlse should they do???

As for Wing's comments, I wish I could believe you, however, I don't see you supporting any mgmt team no matter the circumstances.

The team at AMR has made dramatic strides in cutting costs. They've done what UA couldn't...remove costs without the costly bankruptcy process. They've done what DL can't...remove costs associated to labor. It's truly a testament to the intelligence of the team there. I wish my airline had as quality a group...

 

[Andre1980]

AMR did not need the concessions, and they have made very little difference.

They say there is a sucker born every minute. Last spring, at AMR there were about a hundred thousand of them.

If the bankruptcy scare tactics start again, then by all means, let them file. At least you'll all have the pleasure of knowing that you did your part last spring and the incompetence at the AMR Executive Level still couldn't get off their dead butts and make it work. And . . . if they do ultimately file, most of the executive level will be pounding the streets and many of them are not spring chickens anymore.

Finally, you have to decide whether or not the Shrub is going to let his home state airline go belly up. My best guess is he won't.

That sounded like stupidity to me. AMR did not need concessions after burning heavy cash day in and day out for the past 2 or 3 years and they could have sustain those losses FOREVER? Bush will not have AA go belly up? You really believe this TRASH! WAKE UP THIS IS THE 21ST CENTURY AND DEREGULATION DIED IN THE LAST CENTURY, NO GOVERNMENT IS GOING TO PROP UP THE AIRLINES ANY MORE!!!!!

 

[Hopeful]

FLYHIGH:
Of course I'd like to see all pensions protected equally, but you do know who we are dealing with. We will never ever get back what we lost.

 

[Whadayano]

As for if I think more should be given, I would be inclined to say yes. Here is why. If AMR's expenses are in line or better than all other carriers (including LCC's), with the exception of certain labor groups, and they're still loosing money, I think it is necessary in order for the company to compete.

Well JBLU had costs of 6.07 cents/ASM (available seat mile) in the thrid quarter. AMR, with wage cuts fully implemented, had costs of 10.25 cents. LUV, which also reported last week, has ASM costs of 7.69 cents. So yes AMR has made big strides (costs were over 12.5 cents an ASM at the peak) but is not in the same league as the two leading low-cost guys.

 

[MrMarky]

You just have to chuckle a little when you read the press release that opens this thread. All kinds of spin about how AA's operations and financial performance are improving.

The fact is, they lost $1.2 BILLION last year! This is good news? It's like Detroit saying they only had 500 murders last year, compared to 750 the year before.

If you take that release and substitute the words "TWA" every time "American" is mentioned, you'll have a carbon copy of what TWA had been putting out for ten years before they were gobbled up by AA.

All this after billions in concessions from the workers and cost cutting that has turned domestic coach service into something indistinguishable from Southwest. Not to mention virtual extortion in dealing with key vendors and suppliers.

Meantime Continental, with labor costs close to parity with AA, and America West are showing black ink.

This is unbelievable when you're talking about the world's largest carrier, with a global network of lucrative routes, a huge alliance and code-share network, strategic fortress hubs that stifle meaningful competition, a greatly rationalized fleet with renegotiated and vastly reduced payment outlays, a relatively low-wage work force (vis a vis their previous status and that of the competition), and you can go on and on.

This is called a "controlled descent". It is a descent nonetheless.

It wasn't very long ago I looked hopefully on the same exact spin from TWA. "Gee we made great strides in improving operational performance", "Gee, we've cut this cost and that cost", "Gee, our dedicated employees have saved the day with another giveback", "Gee, last year's 4th quarter performance was 85% worse! At this rate we will be profitable in 2042", "Gee, if not for those pesky one time extraordinary charges, we'd have actually shown a profit/smaller loss/breakeven/better than expected nosedive/improvement (pick one)", "Gee, our 'Vision 2000' (enter your favorite phrase) plan has resulted in this improvement and that improvement, and if it wasn't for the fact that we had to pay taxes, fuel and aircraft leases, we would have actually come close to breaking even!"

If you were to sniff around a little and scratch beneath the surface, you'd probably find that AmTrak is doing a better job.

 

[flyhigh]

Whadayano...I would compareosts more to WN than B6. Keep in mind that B6 is still living in a period of maintenance holidays and low lease payments. If AA could get cost just above WN, I think they would be in great shape. What does it take to do that, and can it be done??? Well, if I recall correctly, WN farms out all overhaul work to Mexico (plz correct me if I'm wrong on that...not trying to fan flames). Well, I think the answer to if it can be done on this issue is no. Which I agree with. However, AA could do a much better job of insourcing. With three overhaul bases (TUL, AFW, & MCI), there is capacity. DL has done an exemplary job of branding their overhaul group and making an insource driven group. Doesn't AMR/AA still put together WN's in-flight mag??? Why not fix their planes in MCI where WN could fly them in pretty easily. As AMR's fleet is comprised of more 737's which would commonize (not a word I know) it with the WN fleet, it could be a very win-win situation. But there are other issues. That's the problem. Should an AA 738 captain make more than a WN captain? Some people mention CO and their costs, but it's not a pure cost issue....look at the CO contracts and the efficiencies in it. I think CO still has a much less restrictive RJ clause than AMR. As long as issues like that exist, AA will continue to struggle. Because CO (and DL for that matter) can launch RJ's at will, thus feeding their mainline system, they will continue to be at an advantage.

 

[FWAAA]

You just have to chuckle a little when you read the press release that opens this thread. All kinds of spin about how AA's operations and financial performance are improving.

The fact is, they lost $1.2 BILLION last year! This is good news? It's like Detroit saying they only had 500 murders last year, compared to 750 the year before.

If you take that release and substitute the words "TWA" every time "American" is mentioned, you'll have a carbon copy of what TWA had been putting out for ten years before they were gobbled up by AA.

All this after billions in concessions from the workers and cost cutting that has turned domestic coach service into something indistinguishable from Southwest. Not to mention virtual extortion in dealing with key vendors and suppliers.

Meantime Continental, with labor costs close to parity with AA, and America West are showing black ink.

This is unbelievable when you're talking about the world's largest carrier, with a global network of lucrative routes, a huge alliance and code-share network, strategic fortress hubs that stifle meaningful competition, a greatly rationalized fleet with renegotiated and vastly reduced payment outlays, a relatively low-wage work force (vis a vis their previous status and that of the competition), and you can go on and on.

This is called a "controlled descent". It is a descent nonetheless.

It wasn't very long ago I looked hopefully on the same exact spin from TWA. "Gee we made great strides in improving operational performance", "Gee, we've cut this cost and that cost", "Gee, our dedicated employees have saved the day with another giveback", "Gee, last year's 4th quarter performance was 85% worse! At this rate we will be profitable in 2042", "Gee, if not for those pesky one time extraordinary charges, we'd have actually shown a profit/smaller loss/breakeven/better than expected nosedive/improvement (pick one)", "Gee, our 'Vision 2000' (enter your favorite phrase) plan has resulted in this improvement and that improvement, and if it wasn't for the fact that we had to pay taxes, fuel and aircraft leases, we would have actually come close to breaking even!"

If you were to sniff around a little and scratch beneath the surface, you'd probably find that AmTrak is doing a better job.

AMR lost $1.04 billion in the first quarter of 2003.

Losing $1.2 billion for the entire year is good, considering that the concessions didn't kick in until halfway thru the second quarter.