AMR loses $389 million in 2010, excluding special items

[737823]

I am eagerly awaiting the APFA Hotline this Friday for the predictable "the company says they have no money for our contract yet they have money to purchase new aircraft". It won't be long until the unionists are along touting how their concessions made the purchase possible and despite the dismal performance they need their pre-2003 contract restored.

AA really needs to get it house in order. Management needs to stop holding itself to high esteem for not filing in 2003 and get serious about bringing down costs. The order of 2 aircraft is strange, but I imagine AA will convert the -200ER orders for larger -300ER models. They desperately need to establish a presence in places like HKG, SIN, TLV and secondary European markets (also not so secondary like Amsterdam or Frankfurt). It seems Horton is the likely successor of Arpey and perhaps its time for the management realignment to occur.

Josh

 

[AAStew]

Gee, I really hope the executive PUPS aren't affected too badly!

Don't worry, they thought ahead! Their bonuses aren't tied to any silly little thing like running a profitable airline!

 

[737823]

From your lips to God's ears, but I wouldn't bet the rent money on it. The company is saving over $1 million/day with the 3 major unions working under the 2003 RPA. Now, granted that $1 million is what they are saving by not paying us what we would have been making if it weren't for the RPA. But, do you think that any of us would ratify a new contract that didn't at least restore us to the pay rates we lost in 2003? And, I'm not sure that would suffice either. It would for me, but then I don't have children to support. A friend at SLT (soon to be a DFW friend, we both got our transfers home to DFW) is a single parent with 3 small children. The last number I saw from the proposed health insurance rates would put her monthly premium at over $1000! She's flying high time just to keep a roof over their heads. How could she possibly be expected to pay that kind of health insurance premium?

Ohhhhhhhhh,.......So not getting what they think they SHOULD get is a very large paycut?
Tell me FWAAA, does that defense apply to us union folk?
8 years and counting with no increase.....How large would you say our paycut is?

In reality, who would want the "talented" SOBs? I'm sure if the present infestation of (mis)management is so much in demand, there would have been many offers for their "services" by now and at least one or two would have been lured away by the dollar'$ siren song.

Just like the "lawyers on the steps" and a host of other lies put forth by both the company and their "subsidiary", the TWU, I find the gullibility factor of American's workforce off the charts, in general, as the "true believers" are still saying the company would have filed for bankruptcy.

In truth, we may have made a good decision at the time. Now that the Chapter 11 of the US Code has changed somewhat, it may make a filing now extremely unpalatable to Centrepork - nobody really knows as a filing of the magnitude of AMR hasn't happened since October 2005. If it isn't that bad (as will, no doubt, be said by the pro-company forces here), why the rush to file by Delta and Northwest, getting in under the wire?

I'll not vote to subsidize the company any longer and hopefully others feel the same way.

The fact of the matter is your collective bargaining agents agreed to offer AMR the concessions in 2003 and YOU (or at least the majority of your co-workers) favored the concessions. Face the facts-in 2003 the unions at AA were truly in the fetal position and were willing to offer the company whatever was necessary for the company to continue operating and eventually restructure. Say what you want now, but the fact is union AA employees were deeply concerned with AA's survival and the security of their jobs. We also know that you have all fared significantly better than your counterparts at DL, NW, UA, and US who had their pay slashed contracts gutted, pensions frozen, and a new contract and work rules imposed. The attitude that AA owes you some debt for making sacrifices that helped keep YOUR job and YOUR airline viable has got to end.

While it may seem harsh, the fact of the matter is you all need the company more than the company needs you. AA could post flight attendant job postings on AA.com and quickly attract hundreds of thousands of applicants and could easily scoop up furloughed mainline and regional pilots and same for furloughed mechanics. APA, APFA, and TWU's unwillingness to enter binding arbitration is revealing as it shows they know full well they are in a superior position to their counterparts and have put forth unreasonable demands. I am no stakeholder in AA beyond my AAdvantage account but it is clear AA is trailing its competition largely attributed to its labor cost disadvantages and unwillingness of management to re-invest in its facilities, aircraft and maintain a competitive global route network.

Josh

 

[jersey777]

I am eagerly awaiting the APFA Hotline this Friday for the predictable "the company says they have no money for our contract yet they have money to purchase new aircraft". It won't be long until the unionists are along touting how their concessions made the purchase possible and despite the dismal performance they need their pre-2003 contract restored.

AA really needs to get it house in order. Management needs to stop holding itself to high esteem for not filing in 2003 and get serious about bringing down costs. The order of 2 aircraft is strange, but I imagine AA will convert the -200ER orders for larger -300ER models. They desperately need to establish a presence in places like HKG, SIN, TLV and secondary European markets (also not so secondary like Amsterdam or Frankfurt). It seems Horton is the likely successor of Arpey and perhaps its time for the management realignment to occur.

Josh

YOU listen to the APFA hotline? Boy, you are a total airline nerd.

 

[FWAAA]

There are no steps for them to have been on. Its a strreet level entrance. Thats was a lie, one of many others.

New York or Wilmington? In any event, "on the courthourse steps" is an old phrase used to describe lawyers on the verge of filing papers at a courthouse - it doesn't mean the lawyers are physically standing on the steps. When I've been in that situation, I'm generally standing in the clerk's office.

Anyway, keep on believing that Arpey was chicken and would not have filed Ch 11, unlike UA, US, DL and NW.

Heres the thing, if the shareholders agree to pay bonuses to the executives without profits then obviuosly profits dont matter. If it doesnt matter to them why should they matter to us?

On this subject, you're simply wrong. You've been wrong about it for several years. At least you're consistent, even if you're incorrect.

AA's shareholders and board have not agreed to pay bonuses to the executives in the absence of profits.

From the Proxy Statement (near bottom of p25):

Since 2001, no payment has been made to them under the financial component of our short-term
incentive programs since we have not met the required 5% pre-tax earnings margins during that
time, and they have not received any discretionary short-term incentive awards

http://phx.corporate-ir.net/phoenix.zhtml?c=117098&p=IROL-secToc&TOC=aHR0cDovL2lyLmludC53ZXN0bGF3YnVzaW5lc3MuY29tL2RvY3VtZW50L3YxLzAwMDA5NTAxMjMtMTAtMDM3NjM1L3RvYy9wYWdl&ListAll=1

In sum, no executive bonuses have been authorised or paid in 10 years.

See the chart on page 34 of the Proxy Statement. Notice the $0 for all execs in the column labeled "Bonus?"

It's apparent that you (and most of your fellow AA employees) don't understand executive compensation. It is a complex web of base salary and assorted long-term compensation, most of which is "at-risk."

I realize that the reports that Arpey and the other greedy bastard execs earned millions in variable compensation in recent years angers you and your fellow employees, but to describe the compensation paid to Arpey and the others as "bonuses" is simply not accurate.

 

[737823]

YOU listen to the APFA hotline? Boy, you are a total airline nerd.

Nah I read it online. It's quite comical and I even shared it with a colleague when he shared the details of his abysmal experience on JFK-NRT. It quickly sorted things out for him and better understand why AA's problems, particularly why AA employees are disgruntled.

Josh

 

[Vortilon]

The fact of the matter is your collective bargaining agents agreed to offer AMR the concessions in 2003 and YOU (or at least the majority of your shareholders) favored the concessions. Face the facts-in 2003 the unions at AA were truly in the fetal position and were willing to offer the company whatever was necessary for the company to continue operating and eventually restructure. Say what you want now, but the fact is union AA employees were deeply concerned with AA's survival and the security of their jobs. We also know that you have all fared significantly better than your counterparts at DL, NW, UA, and US who had their pay slashed contracts gutted, pensions frozen, and a new contract and work rules imposed. The attitude that AA owes you some debt for making sacrifices that helped keep YOUR job and YOUR airline viable has got to end.

While it may seem harsh, the fact of the matter is you all need the company more than the company needs you. AA could post flight attendant job postings on AA.com and quickly attract hundreds of thousands of applicants and could easily scoop up furloughed mainline and regional pilots and same for furloughed mechanics. APA, APFA, and TWU's unwillingness to enter binding arbitration is revealing as it shows they know full well they are in a superior position to their counterparts and have put forth unreasonable demands. I am no stakeholder in AA beyond my AAdvantage account but it is clear AA is trailing its competition largely attributed to its labor cost disadvantages and unwillingness of management to re-invest in its facilities, aircraft and maintain a competitive global route network.

Josh

You don't know what you're talking about. Fared better then our counterparts? They lost their DBP plans in exchange for the 401k contribution type; however, their pay and benefits are still better than ours.

Your fascination with AA flying to TLV...well Aerosmith has a song - it's called "Dream On".

 

[737823]

"While no one could possibly deny how horrible this restructuring agreement is, bankruptcy would almost certainly be worse," said John Ward, president of the Association of Professional Flight Attendants.

"It's not a good agreement, it's not even a decent agreement, it's a horrible agreement, but it is better than any agreement we will get out of bankruptcy," said John Darrah, president of the Allied Pilots Association.

http://www.nytimes.com/2003/04/15/business/american-airlines-unions-vote-today-on-concessions.html
Josh

 

[FWAAA]

In truth, we may have made a good decision at the time. Now that the Chapter 11 of the US Code has changed somewhat, it may make a filing now extremely unpalatable to Centrepork - nobody really knows as a filing of the magnitude of AMR hasn't happened since October 2005. If it isn't that bad (as will, no doubt, be said by the pro-company forces here), why the rush to file by Delta and Northwest, getting in under the wire?

GM and Chrysler were much larger than AMR and quickly completed their Ch 11 cases, The Goo . . . uh, I mean, Frank.

Yes, no large airlines have filed in the past five years, as all the candidates had already filed. AA is unlikely to throw away nearly $3 billon in market cap by filing today, but if AA runs low on cash and finds it difficult to borrow more, look for a filing.

 

[Veritas]

The attitude that AA owes you some debt for making sacrifices that helped keep YOUR job and YOUR airline viable has got to end.

While it may seem harsh, the fact of the matter is you all need the company more than the company needs you.

So said, condescendingly, patronizingly and arrogantly, by the one whose industry was saved by a government bailout (TARP).

 

[FWAAA]

You don't know what you're talking about. Fared better then our counterparts? They lost their DBP plans in exchange for the 401k contribution type; however, their pay and benefits are still better than ours.

Probably depends on the workgroup. Overall, however, the employees at the bankrupt airlines fared much worse than AA employees in terms of pay and benefits.

Take UA for example. On May 1, 2003, concessions worth $2.56 billion per year for six years took effect, on the same day that AA's concessions worth $1.62 billion per year for five years (now going on eight years). As UA had fewer employees than AA, each employee faced much larger concessions, on average, than AA's employees.

That's not all for UA's employees. On July 21, 2005, a second round of concessions worth another $700 million a year were enacted.

http://www.usatoday.com/travel/flights/2006-02-01-united-timeline_x.htm

That's $3.2 billion of wage cuts at UA, double the paycuts at AA. And a complete outsourcing of heavy airframe overhaul when UA closed the OAK and IND bases. Double the paycuts and much heavier mechanic job losses.

Similar story at US (two Ch 11 filings and multiple concessions), NW and DL. Some of the bankrupt airline employees have begun to get raises, but most still make less (and are more productive) than AA's employees.

 

[commavia]

Some of the bankrupt airline employees have begun to get raises, but most still make less (and are more productive) than AA's employees.

Uh, and not to mention - there are far less of them. A big part of why AA's labor costs are higher than its peers - on both an aggregate and unit basis - is because AA has so many employees. Other U.S. carriers filed for bankruptcy, and in addition to freezing and/or dumping defined benefit pensions, cutting base hourly pay scales below AA's, and tearing up work rule protections, they have also outsourced heavy overhauls to third parties (in many cases in foreign countries) and much of their domestic flying to regional operators.

If I remember correctly, per the last numbers I saw (which was about 6 months ago), AA does more of its own overhaul maintenance - in terms of both actual aircraft serviced and dollars spent - internally than any other U.S. legacy carrier, and generates more of its system-wide ASMs from mainline capacity (and not regionals) than any other U.S. legacy carrier.

Would AA employees have preferred the other approach?

 

[Bob Owens]

75% increase in productivity

As even Bob Owens understands (and has previously posted), most of AMR's losses over the past decade consisted of non-cash deductions (like amortization and depreciation, primarily representing the deduction of airplane purchases) and non-cash writedowns/writeoffs of assets (goodwill, route authorities, slots and airplanes that lost their value faster than expected). Creative accounting? Hardly. Fairly standard Accounting 101.

By selling billions of dollars of new stock, by issuing billions of dollars of new debt and by selling billions of dollars of non-core assets (like Hotwire, Orbitz, Beacon, ARINC, etc), AMR has managed to continue as a going concern despite billions of dollars of losses since 2001.

But if we tried it we would be in jail. Just because its legal and adhres to FASB guidelines doesnt mean that its not creative. The writedown of values without actaully suffering a loss is something that corporations (who only pay tax on their profits) can do but private citizens (who pay tax on their revenue)can not do. The fact is the rules are pretty creative,I'm sure that most of us would like to not only be able to write off all the expense of running our homes, which is real and the costs are realized, but also be able to amortize the cost of the home and then also write off the loss when the market value of the home dips but not have any tax liability when it goes up unless we sell it.


The fact is in any other industry what AMR has accomplished would be touted as miraculous. AA did not alter their business model as far as labor, in fact they insource more than ever. Yet despite that AMR has seen a 75% increase in productivity (revenue per employee)over the last decade.

 

[Bob Owens]

Uh, and not to mention - there are far less of them. A big part of why AA's labor costs are higher than its peers - on both an aggregate and unit basis - is because AA has so many employees. Other U.S. carriers filed for bankruptcy, and in addition to freezing and/or dumping defined benefit pensions, cutting base hourly pay scales below AA's, and tearing up work rule protections, they have also outsourced heavy overhauls to third parties (in many cases in foreign countries) and much of their domestic flying to regional operators.

If I remember correctly, per the last numbers I saw (which was about 6 months ago), AA does more of its own overhaul maintenance - in terms of both actual aircraft serviced and dollars spent - internally than any other U.S. legacy carrier, and generates more of its system-wide ASMs from mainline capacity (and not regionals) than any other U.S. legacy carrier.

Would AA employees have preferred the other approach?

Would AA? Obviously not. They continue to bring work back in house, contractually they could shed around 20% of their mechanics but instead they are looking to hire 900 more. (Once the contract passes they will really be hurting, a lot of guys are just sticking around for the retro. We are talking mass exodus, like "83". I'm not just talking about retirees, for many this has become the "second job", they are tired but they dont want to walk away from three years of retro.)

Isnt AA looking to shed its Regional carrier? Didnt Delta just put in a big order that will phase out their regional partnerships?

 

[Bob Owens]

Probably depends on the workgroup. Overall, however, the employees at the bankrupt airlines fared much worse than AA employees in terms of pay and benefits.

Take UA for example. On May 1, 2003, concessions worth $2.56 billion per year for six years took effect, on the same day that AA's concessions worth $1.62 billion per year for five years (now going on eight years). As UA had fewer employees than AA, each employee faced much larger concessions, on average, than AA's employees.

That's not all for UA's employees. On July 21, 2005, a second round of concessions worth another $700 million a year were enacted.

http://www.usatoday.com/travel/flights/2006-02-01-united-timeline_x.htm

That's $3.2 billion of wage cuts at UA, double the paycuts at AA. And a complete outsourcing of heavy airframe overhaul when UA closed the OAK and IND bases. Double the paycuts and much heavier mechanic job losses.

Similar story at US (two Ch 11 filings and multiple concessions), NW and DL. Some of the bankrupt airline employees have begun to get raises, but most still make less (and are more productive) than AA's employees.

Typical lawyer, keep repeating the same lies and hope they will stick.

The fact is that when you take you average worker, include benifits, vacation, holidays, sick time etc, most of those who went BK are as well as or better off than AA. Delta makes quite a bit more than we do. So does Continental.

At AA the TWU had hired ECLAT to do the numbers, the same company that the company hired to sell the union on concessions. ECLAT way undervalued our concessions.

UA eliminated the workers on the front end and the full value of those eliminated workers was put iinto their valuation, AA eliminated them over time and did not include the value of those workers, UA started recalling workers before AA did. In all AA eliminated around 30,000 workers since the concessions, only a fraction of which was included in the concessions so you would need to add at least a billionto AAs figure.

UAL mechanics did not take double the paycuts we did. when you factor everything in they earn about as much as we do.

The second round of concessions was an attempt to catch up with what AA got with the threat of BK.

More productive? You have no valid way of determining that because as you said, they all outsourced the OH. You dont really become "more productive" if all your work is sent out, what you end up with is a false indicator.