AMR Sees Over $5.5B Cash, Short-Term Invest At End Of 2Q

[Oneflyer]

How? Because they hid money. Funneling it through one subsidiary out to others. There are also accounts in Grand Cayman.
This companies management was/is a master at having a company appear to be running into the ground; via acconting tricks. On paper they make it look insolvent.
To get what is needed. In Arpeys thesis, it is this very strategy that got him hired by Crandall in the first place. Carty stated that he followed the Arpey concept. One of the biggest tricks was by making it look like the "unions" got Carty's resignation. Which in fact they did NOT. He was fired the day before. Using that ploy to keep the cuts. He agreed to this so not to loose all his money.Carty did not walk away with nothing. He walked away with everything.

However now that they tricked the majority of all the workforces and the "so called" unions that represent them. They can show this money. Plus with all the unions working with the UNION BUSTERS and getting trip removals to do so, they have made the UNION's into COMPANY unions.

Now, they can filter the money back. So once the foreign airline ownership goes through we look appealing to other companies. Like TWA/Compton did. It always seems what comes around goes around......
buh-bye

You're a nut. You're also giving Arpey way too much credit.

His thesis? I didn't realize he had a PHD....

Anyone that has ever taken an accounting class realized in that much of the loses that airlines took after 2001 were paper loses. The balance sheet can be easily manipulated, legally. That is the primary reason most financial statement analysis focuses on the cash flow statment and not the income statement.

What AA did is far different than Enron, Worldcom, etc... not only was it legal, its an accepted practice that makes sense to anyone with even a limited amount of accounting knowledge.

 

[buhbye]

<_< -----buh-bye! First my eyesight ain't all that bad, so the large script isn't really necessary! At least not at this end! Now! Are you trying to tell me Icahn was going to "give" money to anyone? "No strings attached!!?" Now why would he want to do that? What third party did he supposedly do this? At the time Compton and Carty were talking buyout, the only dealings Icahn had left with TWA was his caribou agreement! Which at the time of the buyout only had another two years tell termination! Carabu was vary lucrative for him! The only other deal that was going on at the time was with the Unions, and the major Creditors (Boeing, Pratt, etc.) They were near an agreement, but wanted Compton and his Board of Directors out of there! Compton got wind of it and pushed his deal with aa through before the Unions could get their deal off the ground! Icahn may have tired to salvage his agreement with TWA at the last minute when he saw he was losing it with aa, but believe me, any offer made had strings attached! And at that time the aa deal was too far down the road to be stoped! In fact at first Ichan thought because of the wording in his agreement that if aa bought TWA, Caribou would just transfer along with it! As you know, didn't happen!

Nope it is for my eyes! lol, easier to edit... :blush:
Anyway, in the old Ichan SEC filing for purchase of TWA by AA it is very different than the agreement showed in Comptons and others. I can't recall the name of the representitive at this moment. I have all the documents printed up. It was made clear to ole' Carl that Caribu would be over. Ichan tried to get an injuction against the purchase but didn't prevail.
Yes, what ever deal may have been going on, was squelched when KPMG came into the picture.
KPMG has also been under tremendous SEC scrutiny for some time now.
Who knows the motives ole' Carl had, but it was presented.
Thanks, Buh-Bye

 

[buhbye]

You're a nut. You're also giving Arpey way too much credit.

His thesis? I didn't realize he had a PHD....

Anyone that has ever taken an accounting class realized in that much of the loses that airlines took after 2001 were paper loses. The balance sheet can be easily manipulated, legally. That is the primary reason most financial statement analysis focuses on the cash flow statment and not the income statement.

What AA did is far different than Enron, Worldcom, etc... not only was it legal, its an accepted practice that makes sense to anyone with even a limited amount of accounting knowledge.

Have YOU read his thesis? I have. Yes, what some things they may have done are legal, does not make them acceptable.
Me a nut? whatever helps your ego.........I know what I know.
Read Arpey's thesis. Then we shall talk.

 

[eolesen]

Ex-Mod, I’m sure you don’t think DL is doing its bankruptcy “rightâ€￾ because what you really want to see is for DL to fold up shop and let AA move in to pick up the scraps.

Whatever. The only thing DL has done right so far is to let Gerry buy the Spirit out of his own pocket before it was repossessed.

Problem is that we have to figure out who BA colluded to raise fares with. AA, perhaps?

If you could read (doubtful), you'd already know that VS accused BA of telling them that they were going to raise their fuel surcharge.

 

[Oneflyer]

Have YOU read his thesis? I have. Yes, what some things they may have done are legal, does not make them acceptable.
Me a nut? whatever helps your ego.........I know what I know.
Read Arpey's thesis. Then we shall talk.

So you don't consider depreciating assets acceptable?


Where can I find this "thesis"? When was it written? Again, when did he get a PHD?

 

[MCI transplant]

So you don't consider depreciating assets acceptable?
Where can I find this "thesis"? When was it written? Again, when did he get a PHD?

<_< ---- Just a little info., and I'll back out of this one! I don't know if Arpy holds a "Masters", but part of the requirement for one is to write a "thesis!"

 

[Oneflyer]

<_< ---- Just a little info., and I'll back out of this one! I don't know if Arpy holds a "Masters", but part of the requirement for one is to write a "thesis!"

Perhaps when Arpey got his MBA from UT back in the 80s he was required to right one, but most MBAs do no have to write thesis papers as a requirement for graduation.

 

[Oneflyer]

Have YOU read his thesis? I have. Yes, what some things they may have done are legal, does not make them acceptable.
Me a nut? whatever helps your ego.........I know what I know.
Read Arpey's thesis. Then we shall talk.

Ok, so basically Arpey says that traditional airlines need to become more productive, more like Southwest to compete in a deregulated era. What exactly is morally wrong with what he said? Keep in mind he was writing the paper in the early 80s.


Arpey predicted American's predicament
TREBOR BANSTETTER
Star-Telegram Staff Writer

FORT WORTH--Gerard Arpey couldn't have made his case more strongly: "One of the greatest threats confronting the established carriers today," he wrote, "is competition from low-cost, highly productive" airlines such as Southwest.


It could have been an excerpt from American Airlines' 2002 annual report, a year when the carrier lost $3.5 billion amid stiff competition from discounters.


But Arpey, who recently became American's chief executive, wrote those words 20 years earlier -- in a 1982 dissertation he submitted for his master's degree in business administration at the University of Texas at Austin.


At the time, the industry was newly deregulated, and the major airlines were still adapting to the changing environment. Low-fare king Southwest Airlines had just begun adding flights outside of Texas, and the industry "was in a panic" over the emerging, low-fare airlines, said consultant Michael Boyd of the Boyd Group of Evergeen, Colo.


"It was almost like the Red Scare of the 1950s," Boyd said. "It was the low-fare scare."


In his thesis, The Airline Industry in Transition -- from Regulation to Deregulation, Arpey outlined a long-term strategy he believed that the established carriers could use to adapt to the growing competition and survive in a low-fare environment.


Arpey concluded that the major carriers should focus on reducing labor costs and increasing productivity to better compete with low-fare carriers. He also wrote that airlines should increase the efficiency of their aircraft fleets and adjust routes.


And he recommended that airline executives win the cooperation of union members by warning them about the poor financial state of the industry, and use other failed carriers as an example of what would happen if changes weren't made.


For the most part, American and other big carriers didn't adapt, and discounters continued to expand and acquire market share for two decades.


But today, the big airlines are restructuring to meet low-fare competitors head on. And American's turnaround strategy -- crafted last year with Arpey's close involvement and now under his complete control -- bears a remarkable resemblance to the steps he recommended as a 23-year-old business student in 1982.


Though all of the major airlines have cut costs to some extent, American was the first out of the gate last year and has been the most aggressive. It has slashed $4 billion in annual expenses through steep labor concessions, cutting flights, by smoothing out schedules at its hub airports and by retiring nearly 100 airplanes.


Many industry analysts have lauded the strategy as a model for reshaping a traditional carrier.


"The company has set the stage for a recovery," said analyst Ray Neidl of Blaylock & Partners in New York. "With the right cost structure, it should be a tough competitor."


But others caution that cost-cutting alone might not be enough to save the large carriers. Traffic remains weak, the airlines are still saddled with enormous debt loads, and their ability to borrow more money has been sharply curtailed.


"Continued cost progress is imperative, as is industry recovery and access to capital," said analyst Jamie Baker of J.P. Morgan Securities. "Lacking any of of the three likely results in a Chapter 11 challenge by this time next year."


American has also resisted some of the bold actions taken by Delta Air Lines. Delta decided to take on discount carrier JetBlue by launching a low-fare unit called Song, which not only challenged JetBlue on East Coast routes but echoed the discounter's laid-back style.


Delta has also dramatically increased its use of cost-efficient, regional jets, particularly at Dallas/Fort Worth Airport, where the Atlanta-based carrier operates a small hub.


Arpey, who declined to be interviewed for this article, has shown little interest in the "airline-within-an-airline" concept. Though American plans to ramp up its use of regional jets, it hasn't yet launched an initiative to match Delta's.


American also chose not to file for bankruptcy earlier this year, unlike its rival United Airlines. Although bankruptcy can be a "horrible and costly" process, said William Warlick, a bond analyst with Fitch Ratings in Chicago, avoiding it may leave American at a permanent cost disadvantage on items like aircraft leases and debt service costs.


Under Arpey, American has introduced some innovations, such as a $299 walk-up fare from JFK International Airport in New York to three California destinations. And he recently reversed American's "More-room-in-coach" campaign on 25 percent of its aircraft.


But, like Carty before him, Arpey's chief focus is on slashing costs -- something the major airlines have been unable to do on a large scale until now.


Consultant Boyd said American and other executives talked endlessly about adapting to low-fare competitors during the 1980s. They were unable to make significant cost reductions, however, because of labor battles and a continued focus on business travelers, which requires more expensive operations to reduce connection times.


"It's one thing to say it, and another thing to do it," Boyd said. "It may have taken a catalyst like 9-11 to really bring change to this industry."


Growing threats


In the early 1980s, discount carriers were just beginning to emerge as a industry force. Southwest, New York Air and People's Express offered no-frills, cheap flights for people who couldn't afford the expensive fares on big carriers like American or United.


But at the time, the discount carriers were still minor players. For example, in 1982, American Airlines carried 12 times more passengers than Southwest, according to the Air Transport Association.


Last year, American had just three times more passengers than Southwest, and the Dallas-based discounter now competes with American on more than 85 percent of its routes, according to American officials.


Arpey, however, recognized that the low-cost operating structure of these carriers had the potential to make them aggressive competitors on a national scale.


"Because of their comparatively low cost structures, [discount carriers] can charge fares well below the level at which [major airlines] can operate profitably," he wrote in his thesis.


The discounters had steep advantages in labor costs, productivity, cost-efficient city-to-city route structures and no-frills marketing, he said. He predicted that the established carriers would eventually have to change dramatically to compete against the new wave of nimble, cost-efficient upstarts.


"As these new carriers grow and continue to gain market share, it is clear that the existing carriers will have to adapt to the new cost structures against which they must compete," he wrote.


Bob Crandall, who headed American when Arpey was hired, said the young executive's analytical abilities were evident early and helped distinguish him as someone who had the potential to climb to senior management.


"His analytical ability is one of his greatest strengths," Crandall said. "He's a good analyst, a good communicator and very comfortable with numbers and statistics."


Arpey never forgot the central tenet of his graduate paper. He repeatedly warned analysts of the low-fare competition during the 1990s, when he was a fast-rising American executive, and accurately predicted that discount carriers would eventually expand into long-haul markets to challenge the major airlines.


"Southwest may be offering better value" than American, Arpey said during a 1992 conference with airline industry analysts, suggesting that American come up with a strategy to compete in those markets.


And in 1994, he said that "it's just a matter of time before the Southwests of the world and new-entrant carriers get into long-haul markets." Today, lengthy transcontinental routes are the area of fastest growth among discounters like Southwest and JetBlue.


American did attempt to bring its costs down at various times during the past two decades through tough labor negotiating or operational changes, but none of its efforts persisted.


By the late 1990s, the carrier had among the highest costs in the industry and spent billions buying bankrupt airline TWA. Southwest, meanwhile, retained its efficient structure.


When the economy slowed, and high-paying business travelers vanished, American stumbled into the worst losses in the carrier's history.


Strategic flashback


In August 2002, American unveiled the first phase of its plan to deal with the growing financial crisis. As president and chief operating officer, Arpey was closely involved in the plan and, with chief executive Don Carty, co-signed letters in February to labor leaders requesting concessions.


The key elements of the airline's turnaround strategy can all be found in Arpey's 1982 thesis, including:


* Reducing labor costs. "Labor is probably the biggest cost advantage the new entrants have over larger [established] carriers," he wrote. "[Airlines] must take significant steps in narrowing the divergence in labor costs between themselves and the new [low-cost carriers]."


Labor cuts made up nearly half of the American's cost-cutting strategy, with $1.6 billion in payroll reductions through concessions approved this year.


* Enlisting the cooperation of workers by emphasizing the problems in the industry. Arpey wrote that "airline management must first adequately convey the seriousness of the problem to the rank and file union members," and said the demise of Braniff Airlines could be used as an example of what could happen without a cut in labor costs.


Last year, American executives began an intense process of communicating the airline's dire financial condition to union leaders and members through a process they called "active engagement." Executives frequently cited bankrupt carrier United Airlines as an example of how much worse things would be without cost savings.


* Improving employee productivity. Arpey noted in his thesis that Southwest "obtains roughly 50 percent more actual flight time from its cockpit employees than do the established carriers."


The new contracts will increase the amount of time pilots and other workers spend on the job by tightening and eliminating many long-standing work rules.


* Making operations more efficient. Arpey advised that airlines should increase the productivity of their aircraft and realign routes where needed. American has taken those steps by smoothing out hub schedules, reducing the different types of aircraft in its fleet and adding strategic city-to-city flights to compete with discounters like Southwest and JetBlue.


One point Arpey made as a student has not yet panned out. In discussing the need for airlines to reduce labor costs, he noted that, historically, it was extremely difficult to persuade union members to voluntarily reduce labor costs unless an airline was on the brink of collapse.


"It is to be hoped that in the future, airlines will not have to be in such a precarious financial position in order to obtain union concessions," he optimistically predicted.


As American's chief operating officer, Arpey and the rest of the carrier's top management were unable to win concessions this year until airline lawyers were on the verge of filing a Chapter 11 case.

 

[buhbye]

So you don't consider depreciating assets acceptable?
Where can I find this "thesis"? When was it written? Again, when did he get a PHD?

I wasn't talking about depreciating assets.----
He wrote his thesis when he attended the University of Texas.
The Dallas Star Telegram wrote an article about a few years ago.
Happy Hunting. Let me know when you get it.

 

[buhbye]

Ok, so basically Arpey says that traditional airlines need to become more productive, more like Southwest to compete in a deregulated era. What exactly is morally wrong with what he said? Keep in mind he was writing the paper in the early 80s.

Good work "OneFlyer."
However these are only "excerpts" of his thesis. You need to read it in its entirety.
The other financial mismanagement of this company is laid out in the thousands of SEC filings, and the subsidiaries.

Like selling the HDQ building to an AMR subsidiary then leasing it back to AA for much more than necessary. It's legal, but ridiculous.
Then there are the nest-egg funds on top of the SERP and other golden parachute items.
Comparing Crandall's filings to Carty's shows that Crandall while terrible with labor relations, was fiscally ethical in his dealings with AMR.
The long paper trail started as soon as Carty took over.

Let me know when you obtain his thesis.

 

[Oneflyer]

I wasn't talking about depreciating assets.----
He wrote his thesis when he attended the University of Texas.
The Dallas Star Telegram wrote an article about a few years ago.
Happy Hunting. Let me know when you get it.

That is the Fort Worth Star Telegram, the article is above. No offense, but it doesn't sound like this "thesis" as you call it, is much more than any other paper most MBA students write. You're really stretching when you talk about something someone did when they were 23 or 24 years old and had relatively little work experience.

Good work "OneFlyer."
However these are only "excerpts" of his thesis. You need to read it in its entirety.
The other financial mismanagement of this company is laid out in the thousands of SEC filings, and the subsidiaries.

Like selling the HDQ building to an AMR subsidiary then leasing it back to AA for much more than necessary. It's legal, but ridiculous.

What exactly qualifies to determine the proper lease rates for Centerport?

 

[Bob Owens]

Accounting tricks? Accounts in the Caymans? What planet are you on? This isn't a John Grisham paperback...

Since the evaporation of Worldcom and Enron, little things like Sarbaines-Oxley exist in the real world and prevent that type of crap from happening.

From everything I've read the government is really only concerned with companies hiding debts from their investors, not assetts.

Who knows, maybe Arpey got his ideas from Grisham?

 

[buhbye]

That is the Fort Worth Star Telegram, the article is above. No offense, but it doesn't sound like this "thesis" as you call it, is much more than any other paper most MBA students write. You're really stretching when you talk about something someone did when they were 23 or 24 years old and had relatively little work experience.
What exactly qualifies to determine the proper lease rates for Centerport?

None taken; since I have the document and you don't. It might be a stretch for the unimaginative, but if you look at his thesis and the plan the company is following it is parallel.
What the problem is:
Why sell something you own in the first place? Except to generate cash, and then have it as a loss to AA in paying rent?
Just not good business sense if you are trying to get AA out of the red.
That is the point though; make AA to always generate a loss, so you can get more from the "workers."

 

[Bob Owens]

None taken; since I have the document and you don't. It might be a stretch for the unimaginative, but if you look at his thesis and the plan the company is following it is parallel.
What the problem is:
Why sell something you own in the first place? Except to generate cash, and then have it as a loss to AA in paying rent?
Just not good business sense if you are trying to get AA out of the red.
That is the point though; make AA to always generate a loss, so you can get more from the "workers."

Exactly. The simple fact is that when airlines show big profits their workers want some of it, so keep the airline in a near permanent state of crisis and use the airline to generate huge profits for related business that are not labor intensive.

Along with centerport is the fact that AA buys every seat on Eagle, thus guaranteeing that they are profitable which is something that most carriers that operate such small equipement have a hard time doing.

I'd love to see that thesis.

 

[Oneflyer]

None taken; since I have the document and you don't. It might be a stretch for the unimaginative, but if you look at his thesis and the plan the company is following it is parallel.
What the problem is:
Why sell something you own in the first place? Except to generate cash, and then have it as a loss to AA in paying rent?
Just not good business sense if you are trying to get AA out of the red.
That is the point though; make AA to always generate a loss, so you can get more from the "workers."

What you're saying doesn't even make sense. I wouldn't generate cash and it wouldn't create a gain or a loss. Both intities are owned by the same company.

There are a ton of ways to make a company look like its losing money, thousands of Americans do it every year when they don't pay as much tax as they owe. What you are coming up with is a very complicated solution to a very simple problem.

Exactly. The simple fact is that when airlines show big profits their workers want some of it, so keep the airline in a near permanent state of crisis and use the airline to generate huge profits for related business that are not labor intensive.

Along with centerport is the fact that AA buys every seat on Eagle, thus guaranteeing that they are profitable which is something that most carriers that operate such small equipement have a hard time doing.

I'd love to see that thesis.

Another red heiring, Eagle is profitable, AA buys every seat, bla, bla, bla.

Its all owned by AMR, it doesn't matter.

AMR is reporting loses not AA, there are no huge profits elsewhere.

You are believing something so that it fits what you want to believe, not looking at the facts in an educated manner.