Article on revenue gains

[FrugalFlyerv2.0]

given that 90% or so of accidents are tagged with pilot error that is sort of a given.

Ahhhh here we go again with the conditions  / pre-qualifications of statements in order to prove to oneself that they were right all along.

 

[robbedagain]

my apologizies on my part for taking it off course    

 

[WorldTraveler]

It's been a while since I read the NTSB report on AA587, but didn't Airbus (and the NTSB) blame the first officer, who had a history of over-zealous rudder usage at higher airspeeds?   AA (and the NTSB) placed some blame on Airbus for designing a rudder that could be moved full-stop at higher airspeeds while Boeing's rudders had limiters that might prevent such a heavy-footed pilot from breaking the tail.

that is exactly what most people remembered.....

and again, the cause of the accident only matters if it was a reason that AA chose not to buy Airbus aircraft. There are people who swore on here that the accident was a reason for AA staying away from Airbus aircraft.

Airbus aircraft or not, the purpose of the thread was that AA used excessively large and heavy aircraft on many of its flights that could use smaller aircraft.

For whatever reason, the statement is true.

 

[comatose]

and the DC10.... how soon after the 330s arrived did the D10s depart, Kev?

robbed,
DL operated the D10s twice... once as backups for the L1011s that were delayed because of Rolls-Royce' problems and then again after the Western merger.


Since this thread is about AA, they did operate A300s and 767s at the same time even though it is a lot harder to understand the rationale for doing so.
AA also operated the D10 and M11 (which was their TPAC plane when SJC was being built up as a hub).

And AA operated the 747SP as its first transpac airplane, operating DFW-NRT when it was first started.

The question is not that AA didn't ever operate multiple widebodies but that they stopped the practice and defaulted to the 763 and 777.

 
 
Is this a typo or can I post this on every AA thread?

 

[dfw gen]

whats is truly amazing is that everyone keeps giving him negative marks yet the negative marks in his profile are going down! how many personalities are you Sybil?

 

[eolesen]

whats is truly amazing is that everyone keeps giving him negative marks yet the negative marks in his profile are going down! how many personalities are you Sybil?

Since positive votes allowed daily are double the negative votes allowed, he uses his fake accounts to offset negatives votes at a rate twice as fast as they accrue.

 

[Jacobin777]

Regarding the article,
 
""AMR Corp. has been a chronic underachiever, particularly in generating revenue," he wrote."
 
I can't recall AA having a revenue problem.
 
Regarding the B777's to LHR, AA had already started to fly B767's to LHR. If AA calculated that certain flight(s) with the B777 weren't profitable or were doing poorly, they could have easily switched to the B767s.
 
One thing not mentioned in the article however is that according to this, AA's cost basis is going to start going up quite a bit:
 
"Five weeks from now, after an 8 percent pay raise, our hourly pay rates will be 12.3 percent higher than when AMR filed bankruptcy. In January 2015, we will receive another 3 percent raise followed by a January 2016 move to the average of pay rates at Delta and United, which we estimate to be another 15–16 percent improvement. With 3.5 percent raises in 2017 and 2018, our pay rates will be higher than those at Southwest, Delta and United, and our 777 captain rates will be 10–12 percent higher than the highest pay rates currently at FedEx and UPS."
 
http://aviationblog.dallasnews.com/2013/11/apa-were-in-a-dramatically-better-position-than-any-of-us-imagined-two-years-after-american-airlines-entered-bankruptcy.html/
 
So in the next 5 years, AA will have an 18% pay increase and wages will be higher than when it filed BK, that to me doesn't sound too good in terms of expenses.

 

[eolesen]

Trying to argue about a mixed widebody fleet in the 1980's and 1990's is ignoring the differences in range available at the time.

AA's primary long-range/high-capacity aircraft in the early 80's was the DC10-30. AA also operated the 74SP because it was the only aircraft in 1987 which could fly DFW-NRT. They kept both fleets until 1991, which is when the MD11's started coming online to cover the schedule.

AA was also taking deliveries of the 763, but they were funding the European expansion in the late 80's, followed immediately by the Latin America expansion.

The 74SP's got shipped up to JFK to cover the LHR schedule for around 12-15 months, when they were replaced by 763s and MD11's. Had the LHR acquisition not happened, the 74SP's would have been gone earlier.

Again, airlines were doing it primarily because of range limitations, and nothing more. Having a more versatile aircraft has made a huge difference in many areas. It's not a coincidence that most of the airlines who are posting high profit margins have simple fleets.

 

[WorldTraveler]

Regarding the article,
 
""AMR Corp. has been a chronic underachiever, particularly in generating revenue," he wrote."
 
I can't recall AA having a revenue problem.
 
Regarding the B777's to LHR, AA had already started to fly B767's to LHR. If AA calculated that certain flight(s) with the B777 weren't profitable or were doing poorly, they could have easily switched to the B767s.
 
One thing not mentioned in the article however is that according to this, AA's cost basis is going to start going up quite a bit:
 
"Five weeks from now, after an 8 percent pay raise, our hourly pay rates will be 12.3 percent higher than when AMR filed bankruptcy. In January 2015, we will receive another 3 percent raise followed by a January 2016 move to the average of pay rates at Delta and United, which we estimate to be another 15–16 percent improvement. With 3.5 percent raises in 2017 and 2018, our pay rates will be higher than those at Southwest, Delta and United, and our 777 captain rates will be 10–12 percent higher than the highest pay rates currently at FedEx and UPS."
 
http://aviationblog.dallasnews.com/2013/11/apa-were-in-a-dramatically-better-position-than-any-of-us-imagined-two-years-after-american-airlines-entered-bankruptcy.html/
 
So in the next 5 years, AA will have an 18% pay increase and wages will be higher than when it filed BK, that to me doesn't sound too good in terms of expenses.

glad you jumped.

AA has most definitely had and still does a revenue problem. Moving up in revenue IS the reason for the merger, remember?

and yes AA's costs ARE going up which is why so many of us have said all along that the fundamentals of the merger make the merger all the more problematic.

Add in that AA/US will face a larger amount of new competition across its network than any other airline has ever faced during the first year of its merger and brushing off the revenue issues is a recipe for disaster.

The Wright Amendment, DCA slot divestitures, Latin America, LHR... all of these areas of AA's core network will suffer huge hits in revenue and some of it only because AA chose to merge rather than stay independent.
 

Trying to argue about a mixed widebody fleet in the 1980's and 1990's is ignoring the differences in range available at the time.

AA's primary long-range/high-capacity aircraft in the early 80's was the DC10-30. AA also operated the 74SP because it was the only aircraft in 1987 which could fly DFW-NRT. They kept both fleets until 1991, which is when the MD11's started coming online to cover the schedule.

AA was also taking deliveries of the 763, but they were funding the European expansion in the late 80's, followed immediately by the Latin America expansion.

The 74SP's got shipped up to JFK to cover the LHR schedule for around 12-15 months, when they were replaced by 763s and MD11's. Had the LHR acquisition not happened, the 74SP's would have been gone earlier.

Again, airlines were doing it primarily because of range limitations, and nothing more. Having a more versatile aircraft has made a huge difference in many areas. It's not a coincidence that most of the airlines who are posting high profit margins have simple fleets.

CO, DL, and NW all introduced lighter 240-300 seat aircraft into their fleets in the 2000 time frame. In fact, NW's prime reason for not selecting the 777 was because the majority of the uses for a 250-300 seat airplane was going to be flying to Europe where the 330 was more than capable. And they still used the 330 to fly some Pacific routes.

AA could have easily chosen to right-size its fleet to its network but they didn't.

They could have converted 765s to standards similar to what they are now doing with the 321s on the transcons - but they didn't.

AA lost a decade plus because they were paralyzed by inaction in dealing with their most pressing issues... and yet their competitors kept moving.


Making the merger is now much harder and much more necessary because AA dealt with so few major strategic issues for so long.

 

[Jacobin777]

glad you jumped.

AA has most definitely had and still does a revenue problem. Moving up in revenue IS the reason for the merger, remember?

and yes AA's costs ARE going up which is why so many of us have said all along that the fundamentals of the merger make the merger all the more problematic.

Add in that AA/US will face a larger amount of new competition across its network than any other airline has ever faced during the first year of its merger and brushing off the revenue issues is a recipe for disaster.

The Wright Amendment, DCA slot divestitures, Latin America, LHR... all of these areas of AA's core network will suffer huge hits in revenue and some of it only because AA chose to merge rather than stay independent.
 


AA lost a decade plus because they were paralyzed by inaction in dealing with their most pressing issues... and yet their competitors kept moving.


Making the merger is now much harder and much more necessary because AA dealt with so few major strategic issues for so long.

 
AA doesn't have a revenue problem. It never did. Its always had an expense problem. I don't care what the "lollipops" Parker gave for the merger.

All the major carriers face competition, from each other and from LCC's. Even with the NW merger, DL has always had competition as well.

DL lost many, many years as well while it was being poorly managaged but it hasn't stopped it from growing-organically and via mergers. If run properly, I don't see why AA can't be competitive as well.

My main problem with the merger was they way it happened-not with the merger itself. My other main problem is that IMHO AA will have an expense problem in a few years.
 
I also believe the various unions especially the pilots and f/a unions will want Parker and his team out if Parker & Co. start making cuts which the unions don't feel as "favorable".


 

 

[eolesen]

Again, ignoring facts to try and make your point?...

AA could have chosen to right size their fleet if they could get financing, but that wasn't going to happen in 2002, nor was it going to happen until the labor cost disadvantages were addressed.

 

[FWAAA]

Again, ignoring facts to try and make your point?...

AA could have chosen to right size their fleet if they could get financing, but that wasn't going to happen in 2002, nor was it going to happen until the labor cost disadvantages were addressed.

Agreed.   I have no proof, but I suspect that Boeing and Airbus weren't surprised by the November 29, 2011, Ch 11 filing.    Not only do I suspect that they weren't surprised - my suspicion is that they were in the know and may have even had some input in the matter.    You don't order 500 new planes with a lot of manufacturer-arranged/provided financing without those important vendors being clued-in on your plans for the immediate future.    Especially when your costs are out-of-whack with your two biggest competitors.   
 
Recall that AA was arranging 1110-eligible financing in 2009-11 as it borrowed lots of cash in preparation for the filing.   Except for Jamie Baker of JP Morgan Chase, who was very surprised, the rest of the world should have seen it coming. 

 

[WorldTraveler]

NW's 330s and DL and CO's 764s all were ordered, financed, and deliveries of the 764s began before 9/11.


Jacobin,
I agree with your post... only to note that AA is still catching up. Other carriers are continuing to develop and improve. I can't conceive how AA is going to catch up to and bypass airlines that have had a significant head start.

 

[dfw gen]

There's the delta reference!
Go tesm delta! Woo hoo!

 

[AirLUVer]

I should really be ignoring you, world traveler, but you really have to keep in mind that the 777 has a huge advantage with freight capacity and cargo container capacity, over the 767-400 and A333.

One of the main reasons that AA operated the A300 was because of the number of freight containers that could be carried in addition to the larger number passengers, in comparison to the Boeing 767 300.


Believe it or not it's not all about the passenger revenue.