AMR Needs More Revenues, Funding To Meet Liquidity Needs

[JS]

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On 6/12/2003 12:16:17 PM KCFlyer wrote:

Apparently they don't know what they are doing. Almost every flight I've been on (AA, UAL, and DL) has been completely full. Yet they are losing money.
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If the airlines didn't match competitor's fares, there would be more empty seats, and they would be losing MORE money.

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No, I didn't. And guess who cut back flights out of LAS and OAK...here's a hint...it wasn't Southwest.
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JetBlue did not start the LGB operation in order to fly short-haul flights. JetBlue flew to LAS and OAK to hold on to the LGB slots and to make Californians aware of the new airline.

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That was my point FWAAA - JS indicates that EVERY fare at the individual level is profitable - I disagree.
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They are profitable at the margin. The total fixed costs is higher than all those marginal profits, and the result is a loss for the airline as a whole.

If you stop selling any fare that is less than systemwide average cost, your fixed cost stays the same but total revenue decreases. The result is even greater losses.

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That's right. What I am trying to say is that the airlines are doing a fabulous job of keeping passengers from taking the big leap to pay a fare that will help the airline attain a profit. 21 day advance not low enough? Wait a few days - they'll lower it. And the good old airlines are doing just that. It paid the customer to wait. And the airlines are even giving the customer an incentive to delay the purchase until really close to flight time....the airlines like the plan so much that they bought the companies that provide this service and named them Priceline and Hotwire. With all the fluctuating fares, if the $148 Las Vegas trip isn't offered, the customer now knows how low they were willing to go...wait until a couple of days before they wanted to go, and put in a bid for that $148. And the airlines are giving it to them. Priceline and Hotwire are a boon to the folks who want a quick weekend getaway. Has anybody noticed that the airlines that don't participate in Hotwire and Priceline are also showing profits? I'll betcha that some businesses even use that service to meet their last minute travel needs.
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I don't know of any business that would use Priceline for air travel. I don't even use Priceline for hotels on business, and I'm the cheapest business traveler you'll find. I usually get hotel rooms (business or leisure) on Expedia.com for much less than the published rate but without the irritation factor of Priceline.

Re flucuating fares -- people who wait for a fare to drop are typically leisure travelers who aren't committed to a particular destination. I just don't think there are that many people who play these fare games. Besides, if they do play games in a high-fare market, good for them (e.g., "Should I wait for a sale before paying $500 to fly DEN-STL?" is a perfectly reasonable question).

 

[N305AS]

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On 6/12/2003 3:30:16 PM JS wrote:

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On 6/12/2003 3:22:15 PM N305AS wrote:

The sad fact is, that when it comes to pricing, it''s a "monkey-see, monkey-do" industry. Or as one CEO bluntly put it:

"We''re only as smart as our dumbest competitor."


The only way to have the entire industry change their pricing models would essentially require collusion; the carriers would have to get together and collectively agree to start a whole new way of pricing their product.

Of course, they''d also have to collectively agree to not mess with it for a certain timeframe. Otherwise, it would last MAYBE one day before someone realized they were losing revenue relative to their competitors, and lowered prices to stimulate demand.

It could work, but of course the government would quickly put a stop to the practice and consumer groups would cry foul since they couldn''t get their precious $99.00 coast-to-coast roundtrips anymore.

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So I take it you like OPEC? That''s exactly what they do. They set the price, and off the record the members sell a little more than they had agreed to, but it''s still a pretty good cartel.

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I think you''ve misunderstood, JS. I have no love for OPEC, nor do I wish to see the airlines operated in such a fashion; it''s exactly how they did prior to the Deregulation Act of 1978.

The CAB set the fares, and everyone charged the same amount. Airlines competed on scheduling, amenities, and service. Why? Because you couldn''t compete on fares! Everyone charged the same rate!

Now, if the airlines were collectively losing money on a particular route, they''d petition the CAB to increase the fares, and it was typically done without hesitation.

Today, competition is based on price alone. Loyalty goes right out the window if a person can save $10.00...and that''s why it''s as cutthroat as it is.

 

[JS]

Sure, regulation had some benefits, but the negatives were worse. Fares were equally high then rather than equally low today. Also, they couldn''t compete that much on scheduling. You had to have authority to fly certain routes.

 

[mga707]

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On 6/12/2003 3:22:15 PM N305AS wrote:

The sad fact is, that when it comes to pricing, it's a "monkey-see, monkey-do" industry. Or as one CEO bluntly put it:

"We're only as smart as our dumbest competitor."


The only way to have the entire industry change their pricing models would essentially require collusion; the carriers would have to get together and collectively agree to start a whole new way of pricing their product.

Of course, they'd also have to collectively agree to not mess with it for a certain timeframe. Otherwise, it would last MAYBE one day before someone realized they were losing revenue relative to their competitors, and lowered prices to stimulate demand.

It could work, but of course the government would quickly put a stop to the practice and consumer groups would cry foul since they couldn't get their precious $99.00 coast-to-coast roundtrips anymore.

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Wow--deja vu all over again:
Bob Crandall to Howard Putnam (Braniff's sinking-ship CEO, 1982), paraphrased:
"Howard, let's stop this *&%$@$%& right now! It isn't making either of us a &%$#&%@ dime--you raise your &^%*$@# fares right now and I'll raise mine!"

Yeah, the folks at the FTC loved that little taped conversation...

 

[NewHampshire Black Bears]

Oh, by the way.
Our "friends" B6, based ONLY in JFK, just ordered 200(100 seat) RJ''s.

As someone once said,
"How do you like THOSE apples" ?????????

NH/BB''s

 

[NewHampshire Black Bears]

Ah, "NO PROBLEM" !!!!!!!!!
The MAJORITY of the "NIT WITS" (union employees)that I work with(here at AA), will PROSTITUTE themselves, so as to keep their "jobs" !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

NH/BB''s

 

[NewHampshire Black Bears]

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On 6/12/2003 912 AM capeman wrote:

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On 6/11/2003 8:31:55 PM Winglet wrote:

Sale of Eagle? Then use of RJs in mainline AA? It''s all set up. The APA gave away scope along with cutting loose 25% of it''s seniority list. Those 25% may come back but only under "cost neutral" contract conditions. A management masterstroke.

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AMR already owns Eagle. Shuffeling Eagle to AA certificate will not generate cash. It is like taking a quater out of your pocket that has a hole in it and putting into your other pocket with a hole. It leaves you with no money. AMR needs to generate cash now. Otherwise it is BK.


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ATTENTION ALL YOU "YES" VOTERS.

"AMR needs to generate cash NOW, otherwise it is "BK".

Please allow me to assume that all you "yessie''s" REALLY DO KNOW what the above quotation means !!!!!!!!!!

GOD protect us, FROM(the majority of ) OURSELVES.

NH/BB''s

 

[Bob Owens]

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On 6/12/2003 9:25:53 PM JS wrote:

Sure, regulation had some benefits, but the negatives were worse. Fares were equally high then rather than equally low today. Also, they couldn't compete that much on scheduling. You had to have authority to fly certain routes.

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The negatives were worse?

The fact is that under regulation airfares decreased more than in deregulation.

There is no reason to assume that if the industry had remained regulated that the average fare would be higher than it is today, as the downward trend in airfares was constant through the regulated era.

Under regulation the airliners went from 150mph to 600mph.

The airline industry went from the DC-3 to the 747, enabling nearly all Americans access to air travel.

Aviation was at the forefront of technology under regulation, todays 777 has less computing power than most home PCs.

The speed of airliners are decreasing in favor of better fuel economy.

Delays, cancellations, oversold trips, densely seated aircraft, hub flying all add to the unpleasentness of air travel which at one time was considered a fun part of the whole travel experience.

Lets go back to regulation. When an industry has to rely on government bailouts and ripping off its employees its time for the government to insure that this "essentail industry" is run responsibly so that all parties are well served.

 

[KCFlyer]

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On 6/13/2003 6:39:12 PM Bob Owens wrote:

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Lets go back to regulation. When an industry has to rely on government bailouts and ripping off its employees its time for the government to insure that this "essentail industry" is run responsibly so that all parties are well served.
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You sure you want that Bob? Because I can pretty much assure you that if the government starts regulating the airlines again, they aren''t going to be using the "industry leading" wages of the past as their guideline. Instead, demand number one from the government will be that the airline had better be profitable at the fare that they set or close their doors. And the fares that they set are going to be governed by the carriers that are making money, and whose seat mile costs are lower than the major airlines current costs. So you really won''t win...instead of the big evil managment sitting up there telling you what you can or can''t make, you''ll have Uncle Sam to tell you that a mechanic is a GS17 so that''s what you''ll be paid. Remember - under regulation American Airlines (or United or Delta or you name it) was a fraction of it''s current size. Indeed, as large as the airlines are today, the government may order two or three to shut their doors and begin regulating with a significantly smaller domestic fleet. My guess is that if it came to that, the government would look to see who is already in bankruptcy and who is the closest, and shut them down. Then y''all will look at the 90''s a 00''s as the "good old days when we had jobs".

 

[JS]

I hate to disappoint you, Bob, but a lot of those nifty things you listed were not caused by regulation. Think carefully, did airliners increase in speed from 150 MPH to 600 MPH because of the fares? Engineers improved the jet engine so that it became viable for commercial aircraft. Engineers didn''t give a flip about the fares.

 

[Bob Owens]

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On 6/13/2003 8:28:29 PM KCFlyer wrote:

You sure you want that Bob? Because I can pretty much assure you that if the government starts regulating the airlines again, they aren't going to be using the "industry leading" wages of the past as their guideline.


How can you assure me of that? The industry leading wages of recent years were less than they were under regulation. In fact a starting mechanic wages are less in unadjusted dollars today than they were 20 years ago. Not too many places can match that!

Instead, demand number one from the government will be that the airline had better be profitable at the fare that they set or close their doors. And the fares that they set are going to be governed by the carriers that are making money, and whose seat mile costs are lower than the major airlines current costs. So you really won't win...instead of the big evil managment sitting up there telling you what you can or can't make, you'll have Uncle Sam to tell you that a mechanic is a GS17 so that's what you'll be paid

Are you saying that the government would tell workers that are doing the same job that they are going to be paid less because their company is not making money?

Remember - under regulation American Airlines (or United or Delta or you name it) was a fraction of it's current size.

Yes but there were a lot more carriers. Overall employment growth in this industry has not exceeded overall employment growth in the rest of the economy. However wages in this industry have fallen way behind everyone else.

; Indeed, as large as the airlines are today, the government may order two or three to shut their doors and begin regulating with a significantly smaller domestic fleet. My guess is that if it came to that, the government would look to see who is already in bankruptcy and who is the closest, and shut them down. Then y'all will look at the 90's a 00's as the "good old days when we had jobs".

I doubt that. Obviously you did not work in this industry during this period. as far as finding a job, life does not begin and end with AA or any other airline. I've worked for at least six carriers already, I'd hoped that this was my last stop. I've seen many other mechanics voluntarily leave this industry, even recently, some miss working on the planes but none of them have expressed a desire to come back. I like the work, thats why I'll fight to get back what we lost. If it becomes hopeless, I'm sure that I'll find another job, in another industry where I know that I'll be home on the Holidays,weekends, nights etc. So even if I did have to accept less as a starting rate that has to be weighed against all the other things that we give up to work for the airlines. Unless you've worked shift work including weekends & holidays over a long period of time you have no idea of how tough it really is to give all that up especially if your wage does not reflect that sacrifice.
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It remains to be seen what will happen over the few holidays that the contract still acknowledges. They are expecting workers to show up and work eight hours for four hours pay. Since most full time workers get paid holidays that means they get eight hours of pay while working zero hours on the holiday. Now we are expected to work the holiday, put in eight hours, for four extra hours in our pay. I suspect that they will see massive absenteeism on those days. From a strictly dollar/time perspective they are better off losing four hours pay while getting a whole day of quality time with their families and friends, although this would be a violation of the sick time policy if they were in fact "fit" for work. But then again since many no longer see this as a long time career I suspect that this will be common.

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[KCFlyer]

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On 6/14/2003 5:28:05 PM Bob Owens wrote:

Remember - under regulation American Airlines (or United or Delta or you name it) was a fraction of it''s current size.

Yes but there were a lot more carriers. Overall employment growth in this industry has not exceeded overall employment growth in the rest of the economy. However wages in this industry have fallen way behind everyone else.


???? Nobody made the big carriers absord the Republics and Ozarks and Westerns and Nationals and Piedmonts - ANd back then there wasn''t Southwests and Airtrans and JetBlues - two of them are already of significant size and the third is growing rapidly.


Indeed, as large as the airlines are today, the government may order two or three to shut their doors and begin regulating with a significantly smaller domestic fleet. My guess is that if it came to that, the government would look to see who is already in bankruptcy and who is the closest, and shut them down. Then y''all will look at the 90''s a 00''s as the "good old days when we had jobs".

I doubt that. Obviously you did not work in this industry during this period. as far as finding a job, life does not begin and end with AA or any other airline. I''ve worked for at least six carriers already, I''d hoped that this was my last stop. I''ve seen many other mechanics voluntarily leave this industry, even recently, some miss working on the planes but none of them have expressed a desire to come back. I like the work, thats why I''ll fight to get back what we lost. If it becomes hopeless, I''m sure that I''ll find another job, in another industry where I know that I''ll be home on the Holidays,weekends, nights etc. So even if I did have to accept less as a starting rate that has to be weighed against all the other things that we give up to work for the airlines.

Oh, I differ here. The choice the government will give you will be to work for less or close the doors - pretty much what you''ve got now.

Unless you''ve worked shift work including weekends & holidays over a long period of time you have no idea of how tough it really is to give all that up especially if your wage does not reflect that sacrifice.

I''m no stranger to shift work. I''ve done quite a bit of it in my time, including the infamous "swing shift". But I''ve also worked nights, weekends and holidays - many times for 36 hours straight...on a salary (no overtime, no shift differential, no holiday pay). So please don''t talk to me about wages not reflecting sacrifice.​

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[Bob Owens]

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On 6/14/2003 658 PM KCFlyer wrote:

Oh, I differ here. The choice the government will give you will be to work for less or close the doors - pretty much what you've got now.

And what do you base that assumption on?

I'm no stranger to shift work. I've done quite a bit of it in my time, including the infamous "swing shift". But I've also worked nights, weekends and holidays - many times for 36 hours straight...on a salary (no overtime, no shift differential, no holiday pay). So please don't talk to me about wages not reflecting sacrifice.

Have you done it on a consistant basis, like for 10 or more years straight? Or was it only occasionally? Was it indoors or outdoors? What were you doing?​

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[KCFlyer]

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On 6/16/2003 946 AM Bob Owens wrote:

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On 6/14/2003 658 PM KCFlyer wrote:




Oh, I differ here. The choice the government will give you will be to work for less or close the doors - pretty much what you''ve got now.

And what do you base that assumption on?

I doubt seriously that many Congressmen will want to piss of their constituents by raising airfares to a point where a large number of them will not be able to afford to fly. Therefore, it''s going to be up to the airlines to keep costs down to maintain affordable airfares. It''s pretty much what you''ve got now.

I''m no stranger to shift work. I''ve done quite a bit of it in my time, including the infamous "swing shift". But I''ve also worked nights, weekends and holidays - many times for 36 hours straight...on a salary (no overtime, no shift differential, no holiday pay). So please don''t talk to me about wages not reflecting sacrifice.

Have you done it on a consistant basis, like for 10 or more years straight? Or was it only occasionally? Was it indoors or outdoors? What were you doing?
When you go 36 hours without sleep, does it really matter if it''s indoors or out? FWIW, I did bank software conversions. I was usually on the road from Saturday until Thursday - every week. The typical conversion meant we left Dallas on an early morning flight on Saturday, arrived at the bank around noon, and worked all day and all night Saturday, all day and as far into the night was we needed to on Sunday, and were there during the day to train bank employees and at night to train the operators on how to run the updates. Once the initial 36 hour shift was done, then the typical workday was about 18 hours. We''d fly home Thursday, go in to the office on Friday to prep for the next conversion, stay up late on Friday to do laundry and pack for the departure that next Saturday. I did that for about 3 years. Holidays were a primo conversion date because we had the "luxury" of an extra day to get the bank converted and in balance. About once a month we were able to stay in the local office for a week to give us a break from the road.
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[James T. Kirk]

Well Bob I see you still here. What’s the problem can’t decide on which $100,000 dollar a year job your going to take? From the way you talked a few months ago, I just convinced you would have jumped in on one or two by now. I’m sure one of them will come crawling to before to long, then you want need to lower your self anymore