AMR expects Q2 loss because.....

[AANOTOK]

http://startelegram.typepad.com/sky_talk/2010/07/most-airlines-expected-to-make-money-in-q2-except-amr-1.html

Profit expectations range from $504 million for Delta Air Lines to a mere $7.5 million for JetBlue. However, analysts predict AMR will post a 3-cents per share or a $10 million loss for the quarter.

"One analyst, Stifel Nicolaus' Hunter Keay, says the loss is "largely due to uncompetitive labor costs."

Sorry boys and girls, but with what I have given back and the increased productivity I have given them because of the cuts, I will no longer subsidize their ignorance and lack of direction. (Deleted by moderator.) From the nickle and diming of the passengers to the 1.6 billion annually I have helped give back, and yet this team cannot figure out how to turn a profit is simply insane. The only carrier that cannot figure it out. What a joke!

 

[JFK Fleet Service]

So which is it? Are we losing $10 million or making $20 Million?


"...Less than three weeks ago, the consensus was that AMR would lose 5 cents a share, or about $17 million, in Q2 2010.It was the only carrier among the nine largest U.S. airlines projected to lose money in the second quarter, usually one of the industry's most profitable."


DallasNews.com

 

[AANOTOK]

So which is it? Are we losing $10 million or making $20 Million?


"...Less than three weeks ago, the consensus was that AMR would lose 5 cents a share, or about $17 million, in Q2 2010.It was the only carrier among the nine largest U.S. airlines projected to lose money in the second quarter, usually one of the industry's most profitable."


DallasNews.com

This is AA. So much can change between June 22nd and July 13th.

 

[eolesen]

Uh, AMR ain't the ones predicting or expecting to post a loss. It's the analysts who follow the stock.

After June's traffic figures started to come out, these guys re-run the models. Most have issued revised outlooks.

I know you guys don't like to hear the truth at times, but there's no arguing that when it comes to the dollar amount of total wages paid (not book rates) as a component of expenses, AMR comes out higher than the other guys because AMR has more employees per seat mile than the other guys. You can't argue that no matter how you try.

And when you're dealing with razor thin margins, that extra 5% (or more) in expenses is going to mean all the difference between posting a profit and posting a loss.

 

[AANOTOK]

Uh, AMR ain't the ones predicting or expecting to post a loss. It's the analysts who follow the stock.

After June's traffic figures started to come out, these guys re-run the models. Most have issued revised outlooks.

I know you guys don't like to hear the truth at times, but there's no arguing that when it comes to the dollar amount of total wages paid (not book rates) as a component of expenses, AMR comes out higher than the other guys because AMR has more employees per seat mile than the other guys. You can't argue that no matter how you try.

And when you're dealing with razor thin margins, that extra 5% (or more) in expenses is going to mean all the difference between posting a profit and posting a loss.

Uh, then E, they will continue to shrink to profitability.
Uh, or then E, as much as you hate to pay it, they can actually charge what it cost to fly you from point a to point b.
Uh, or then E, they will file BK and just wipe the slate clean.

Uh, E, what they won't get is another concessionary contract.
Their choice.

 

[Bob Owens]

Uh, then E, they will continue to shrink to profitability.
Uh, or then E, as much as you hate to pay it, they can actually charge what it cost to fly you from point a to point b.
Uh, or then E, they will file BK and just wipe the slate clean.

Uh, E, what they won't get is another concessionary contract.
Their choice.

Thats just the Corporate Media doing their thing. Dont sweat any of it. Expect even more when the ballotts go out. Who cares whether they lose money or not? The people who own this compay reward our execs when the post losses, if they dont care why should we?

 

[700UW]

Add the cost of all the maintenance that the legacies farmout and I bet the legacies cost would be the same as AA

 

[eolesen]

Wrong.

The cost of AA's (labor + MMR) is still greater than the cost of Brand X's (labor + outsourcing expenses + MMR).

The numbers are all there on the quarterly financials to see.

Just go to the statement of consolidated operations, and look for the line marked either wages or salaries, and then look for the aircraft maintenance, materials, and outside repairs. Take an Advil, Add those two lines together, and then divide by available seat miles to get your comparison.


For starters...

DL = 1672+374=2046 / 53301 = .0384 per ASM
AA = 1703+ 267=1970 / 36847 = .0535 per ASM

 

[Birdman]

Add the cost of all the maintenance that the legacies farmout and I bet the legacies cost would be the same as AA

According to our own mAnAgement, the other legacies are reconsidering their outsourcing practices due to rising costs.

 

[eolesen]

According to our own mAnAgement, the other legacies are reconsidering their outsourcing practices due to rising costs.

Oh, well that changes everything... They'll be back up and running by the end of the year, right?

No, didn't think so.

 

[Bob Owens]

Wrong.

The cost of AA's (labor + MMR) is still greater than the cost of Brand X's (labor + outsourcing expenses + MMR).

The numbers are all there on the quarterly financials to see.

Just go to the statement of consolidated operations, and look for the line marked either wages or salaries, and then look for the aircraft maintenance, materials, and outside repairs. Take an Advil, Add those two lines together, and then divide by available seat miles to get your comparison.


For starters...

DL = 1672+374=2046 / 53301 = .0384 per ASM
AA = 1703+ 267=1970 / 36847 = .0535 per ASM

Quarterly finacials are even less useful than annuals. Its not a big enough window for making comparasions.

Something with those numbers doesnt seem right.

AA Passenger miles flown 2009 =196,939,000,000
Delta Passenger miles flown 2009=161,904,000,000

AA Fleet size= 615
Delta Fleet size =745

http://en.wikipedia.org/wiki/World%27s_largest_airlines

If your numbers are correct the .0151cent difference is most likely because of the winglets, new interiors and other expensive Mods that AA has been doing. The question is really what would it cost AA if they sent all that work out?

AA also does a lot of 3P work, the labor costs of providing 3P work distort our maint costs/ASM because although that labor produces Revenue it doesnt produce any ASMs, thus artificailly driving our maint cost per ASM up. Ironically the company uses the 3P work against us, the more we do the more they get to use it against us.

While Delta does some 3P work as well they try to sub it out.

Another factor thats not put in there is the loss of use time.

If you look at the above numbers AA had 130 less airplanes in 2009 but produced 35 billion more ASMs. How were they able to do this? A big part is the short turn times our OH can deliver and the fact that once they send them out our guys on the line dont have to spend weeks cleaning them up. How much of a savings is there by not having to pay leases or loan payments on over 130 aircraft? Delta gets arount 217 million ASMs per aircraft per year, AA gets 320 million.

AA produced 18% more ASMs with a fleet that was 17% smaller, giving AA roughly a 35% advantage with (according to your very narrow numbers which are distorted due to the items mentioned earlier) a 28% cost disadvantage in that quarter. That disadvantage was probably easily wiped out by the cost savings of needing 130 less aircraft. Once those Mods are done the numbers will be even more in AA's favor.

So yes AA may have spent .0151 cents more for maintenance in that quarter but they got 32% more ASMs per aircraft than Delta did last year.

AA was able to produce more ASMs with less aircraft than Delta. While Delta may be saving money on maintenance they are spending it on having a fleet that is 17% bigger that delivers 18% less ASMs. Thats like buying an extra car so you wont have to change the oil as much.

Imaging what AA could save if they had a motivated workforce!!! They could continue to reduce headcount and see an increase in ASMS, but unfortunately they think they can terrorize us into giving them all we have to give. They can take away our benifits and workrules but they cant make us give them a servicible aircraft on time. For every concession they extract its that much less effort they get when that plane breaks. We , without a doubt have the best quality OH that can be had but they are still machines, and they break, and when they do thats when the real cost of concessions hit the company.

 

[Bob Owens]

Oh, well that changes everything... They'll be back up and running by the end of the year, right?

No, didn't think so.

Of course not, they would not be able to get the mechanics.

 

[eolesen]

Quarterly finacials are even less useful than annuals. Its not a big enough window for making comparasions.

Something with those numbers doesnt seem right.

AA Passenger miles flown 2009 =196,939,000,000
Delta Passenger miles flown 2009=161,904,000,000

AA Fleet size= 615
Delta Fleet size =745

http://en.wikipedia.org/wiki/World%27s_largest_airlines

Ah, Wikipedia, the epitome of quality & reliability for researching airline traffic information..... is wrong.

The table you quoted from shows DL and NW separately, which throws off just about all of your response. The consolidated RPM's for DL+NW = 262 vs 161, which is a pretty big variance. The fleet number you used is correct and reflects the consolidated fleet minus RJ's.

Re-sharpen your pencil, re-run your analysis using accurate numbers, and get back to us, OK?

 

[TWU informer]

Re-sharpen your pencil, re-run your analysis using accurate numbers, and get back to us, OK?

LOL

 

[Bob Owens]

Ah, Wikipedia, the epitome of quality & reliability for researching airline traffic information..... is wrong.

The table you quoted from shows DL and NW separately, which throws off just about all of your response. The consolidated RPM's for DL+NW = 262 vs 161, which is a pretty big variance. The fleet number you used is correct and reflects the consolidated fleet minus RJ's.

Re-sharpen your pencil, re-run your analysis using accurate numbers, and get back to us, OK?

Like I said the Mods we've been doing and the 3P work we do drive up our costs, they may produce revenue or operating cost savings down the road but they dont produce any ASMs. This distorts our maint casms.

Admittedly the Merger screws up the numbers as far as the number of asms produced per aircraft per year so I'll have to find out what Delta had as far as Fleet size and ASMs prior to the merger. Cant simply add the numbers because Delta shed aircraft with the merger.The 2009 Delta 10K shows a total fleet size of 983, includes NWA(308), still larger than AMRs which is in the low 900s and they have less Regionals 247 to 740 vs our roughly 300 to 600. Generallly the smaller aircraft produce less ASMs per year.The NWA numbers really cant be used because they flew a lot more International as a percentage of their operation than AA does (44% vs 39%) and they had 747-400s. Prior to the merger Delta and AA had more simliar fleet types and operations. Both had mainly 757, 767, 737 and Md-80s. I believe Delta had a younger fleet.