ASMs

[Bob Owens]

AS AA seeks to increase flying by regional partners unions at other carriers are seeking to curtail this outsourcing of work.

"The pilots also have more recently taken a hard-line stance with the carriers regarding regional subsidiaries, saying the new, merged United should end the outsourcing of flying to its regional partners."

http://www.travelweekly.com/article3_ektid220520.aspx

Over the last 7 years the Eagle fleet has actually seen some growth while the AA fleet has shrunk by 200 aircraft.

Even with the 6% cap the Eagle fleet is around 50% the size of the AA fleet.

As AA retires its fleet of around 250 MD 80 aircraft its not hard to imagine that a lot of the flying done by MD-80s today would be done by AE in the future, especially if the pilots come to some sort of an agreement on pilot integration. Figure if AE gets half it would be another 1500 mechanics jobs. That would bring us down to around 8000 mechanics.

 

[Interested]

I was under the impression that the new 737's are a one for 1 or 2 MD-80's. Some where I read (but forgot where) that we're supposed to end up with close to 250 737's.

 

[Hopeful]

I was under the impression that the new 737's are a one for 1 or 2 MD-80's. Some where I read (but forgot where) that we're supposed to end up with close to 250 737's.

Does not compute for a 1 for 2 exchange. We had a maximum of 275 MD-80s.....Not sure of the current number, but if I had to guess, I would say its in the low 200s.

 

[FWAAA]

At the time of the TWA asset purchase, AA flew 259 MD-80s; another 103 were added as a result of the asset deal, for a maximum of 362 MD-80s. Total mainline fleet count was 881 (712 nAAtive and 169 TWA LLC).

At the time of the concessions, AA flew 77 738s from the first batch of orders 1997-2000. Recall that the 738s were originally ordered to replace the 727s - replacing the MD-80s was not the first priority 10-13 years ago when fuel was still less than a dollar a gallon.

AA won't end up with a 738 to replace every MD-80, but AA may fly 250 or more 738s by time all the current orders (and expected subsequent orders) are delivered.

I agree with Bob Owens that it is likely that Eagle will end up flying more of the former MD-80 routes IF (and that's a big IF) AA and the APA can agree on more 70-100 seaters. As Boyd and others have been saying, the era of the 50-seaters is over. Passengers like them marginally more than turboprops but with fuel over $2/gal, they just don't make as much sense as they did when fuel was $0.75/gal or less. Eagle has already parked some of its 37 seaters and I see the 44 seaters (scope-busters) and some 50 seaters being parked in the next few years.

As to Bob Owens' main point: Assuming that there is a tradeoff between jobs and wages (I don't know with certainty that there is, but it seems reasonable to me to assume there is), wouldn't it be better to get higher wages even if it means fewer mechanics?

 

[Bob Owens]

At the time of the TWA asset purchase, AA flew 259 MD-80s; another 103 were added as a result of the asset deal, for a maximum of 362 MD-80s. Total mainline fleet count was 881 (712 nAAtive and 169 TWA LLC).

At the time of the concessions, AA flew 77 738s from the first batch of orders 1997-2000. Recall that the 738s were originally ordered to replace the 727s - replacing the MD-80s was not the first priority 10-13 years ago when fuel was still less than a dollar a gallon.

AA won't end up with a 738 to replace every MD-80, but AA may fly 250 or more 738s by time all the current orders (and expected subsequent orders) are delivered.

I agree with Bob Owens that it is likely that Eagle will end up flying more of the former MD-80 routes IF (and that's a big IF) AA and the APA can agree on more 70-100 seaters. As Boyd and others have been saying, the era of the 50-seaters is over. Passengers like them marginally more than turboprops but with fuel over $2/gal, they just don't make as much sense as they did when fuel was $0.75/gal or less. Eagle has already parked some of its 37 seaters and I see the 44 seaters (scope-busters) and some 50 seaters being parked in the next few years.

As to Bob Owens' main point: Assuming that there is a tradeoff between jobs and wages (I don't know with certainty that there is, but it seems reasonable to me to assume there is), wouldn't it be better to get higher wages even if it means fewer mechanics?

The only options that have been offered are lower real wages and less mechanics.


247 at present
http://www.aa.com/i18n/amrcorp/corporateInformation/facts/fleet.jsp

 

[Hopeful]

At the time of the TWA asset purchase, AA flew 259 MD-80s; another 103 were added as a result of the asset deal, for a maximum of 362 MD-80s. Total mainline fleet count was 881 (712 nAAtive and 169 TWA LLC).

Yes I stand corrected You're right, I forgot about the TWA MDs....But I was thinking about the original "Boeing Only" committment which I thought precluded the TWA purchase. Which if is the case , then the MD80 count was obviously a lot less.

 

[will fix for food]

There are a lot of rumors flying around Eagle these days but none of them are that Eagle will remain a stand alone airline with larger aircraft capable of replacing MD-80 routes.

 

[eolesen]

Over the last 7 years the Eagle fleet has actually seen some growth while the AA fleet has shrunk by 200 aircraft.

Are you sure about that, Bob?

Year end 2002, the Eagle fleet had 286 active aircraft. (source - 2002 10-K)

As of June 30, Eagle had 264 active aircraft. (source - 2Q10 10-Q)

If you include the 21 CR7's slated for delivery in 2010 and 2011, that brings it up to 285 aircraft, which is one less than in 2002, and assumes that Eagle doesn't retire any more of the E-135's or E-140's.

As AA retires its fleet of around 250 MD 80 aircraft its not hard to imagine that a lot of the flying done by MD-80s today would be done by AE in the future, especially if the pilots come to some sort of an agreement on pilot integration. Figure if AE gets half it would be another 1500 mechanics jobs. That would bring us down to around 8000 mechanics.

I don't know how you expect Eagle to do that, Bob. The only way to do that would be to pull back on all the new markets they've opened, and that can't happen because of the ASM cap (IIRC, markets never flown by AA or which weren't flown as of 1993 aren't subject to the cap). Or, as noted, there's scope relief, which I'm doubtful will happen outside of a courthouse.

You also left out the fact that by the end of 2012, there will be another 70 738's in the fleet, and a few more 777's. And it wouldn't surprise me to see AA wind up with around 300 738's -- confirmed orders bring the fleet up to 195 by the end of 2012.

 

[will fix for food]

I thought Eagle's fleet numbers as quoted by Bob were off but didn't have anything to back it up.

I am really shocked to see that everyone is so focused on Eagle and is ignoring JetBlue. There are more than a few people at Eagle that think AMR is maneuvering to make JB the feeder in the northeast via the new partnership. If that can be accomplished Eagle would be sold to JB, Eagles smaller EMB's would be traded in for EMB-190s and JB would become the new Eagle with larger equipment.

That's one of the rumors anyway.

 

[eolesen]

There are more than a few people at Eagle that think AMR is maneuvering to make JB the feeder in the northeast via the new partnership. If that can be accomplished Eagle would be sold to JB, Eagles smaller EMB's would be traded in for EMB-190s and JB would become the new Eagle with larger equipment.

That's one of the rumors anyway.

I don't buy it. Eagle is a shadow of what it used to be in the Northeast. The whole deal with Jetblue appears to be "the enemy of my enemy is my friend" and all about combating DL at JFK. I don't see it being anything more than that.

Besides, there won't be any E-190's operating with AA flight numbers under the current pilot scope clause, and if they simply try to fly as "preferred interline" you'll lose the better screen positioning within the GDS, which puts online connections ahead of interline connections. That means only AA.com or Jetblue.com will be giving those types of connections preference, and changing terminals at JFK is inherently dangerous to your travel plans...

 

[will fix for food]

I don't buy it. Eagle is a shadow of what it used to be in the Northeast. The whole deal with Jetblue appears to be "the enemy of my enemy is my friend" and all about combating DL at JFK. I don't see it being anything more than that.

Besides, there won't be any E-190's operating with AA flight numbers under the current pilot scope clause, and if they simply try to fly as "preferred interline" you'll lose the better screen positioning within the GDS, which puts online connections ahead of interline connections. That means only AA.com or Jetblue.com will be giving those types of connections preference, and changing terminals at JFK is inherently dangerous to your travel plans...

I thought that particular rumor was a little farfetched myself but I don't think A/A and JB are done. I think they will be getting a lot cozier in the future.

 

[WorldTraveler]

AA's ASMs and revenue are fare more important than the number of aircraft in the fleet. AA has indeed eliminated alot of aircraft but they have grown revenue - as have other carriers despite their own capacity reductions. But AA's mainline capacity between 2003 and 2010 has only been reduced by 6% - compared to 10% for UA.... DL is not a valid comparison because of the NW merger and CO has increased capacity.

In comparison, AA's regional capacity (owned and contract) has grown by about 25% but that number is actually about equivalent to what the F100s were flying.

Remember that AA had More Room throughout Coach in 2003 so they have added alot of capacity just by putting seats back on the plane - and that capacity has been added at very low incremental costs; further the 738s hold more pax than the MD80s do.

Despite its losses, AA has done a pretty good job of getting rid of low revenue flying while holding onto onto higher revenue flying.

I would agree that the B6 agreement is as much about holding onto AA's postion in the NE, esp. NYC. AA is now #3 in NYC (LGA,JFK,EWR) behind CO and DL. Given that CO and DL both have costs about 20% lower than AA's, it will be very difficult for AA to regain that market share without reducing costs - even though CO's costs will go up w/ the UA merger.

Given AA and AE's high costs, AA labor needs to have strict scope agreements or AMR will contract out that flying... but ultimately, unless AMR gains lower costs, AA's revenue will shrink.

 

[Bob Owens]

AA's ASMs and revenue are fare more important than the number of aircraft in the fleet.

To you maybe, but from our perspective the more aircraft the more checks, pireps etc, more work.

AA has indeed eliminated alot of aircraft but they have grown revenue - as have other carriers despite their own capacity reductions. But AA's mainline capacity between 2003 and 2010 has only been reduced by 6% - compared to 10% for UA.... DL is not a valid comparison because of the NW merger and CO has increased capacity.

Agreed, their capacity has only shrunk by 6% and their revenue has increased but our headcount has shrunk by around 35% (in other words we are much more productive) and our wages are still much less than they were in 2003, we want some of that in between windfall.


ASMs eventually translate into Aircraft and a loss of work, as you pointed out the 25% increase that Eagle saw equates to our F-100 flying. We dont want to see a similar thing happen with our MD-80 flying.

 

[WorldTraveler]

I agree, Bob, that AA labor must be vigilant in protecting scope, esp. as long as AA's labor costs remain above average.
Yes, the F100s were mainline aircraft and that flying is essentially being done by AE etc... but the F100 could not be profitably flown by AA. The fact that other maiinline/network airlines are reducing and not replacing their 100 seat aircraft while even LFCs are buying fewer 100 seaters than larger aircraft says that operating 100 seat aircraft by mainline carriers (network and LFC) is difficult to do economically.

But simply having more airplanes does not make an airline more productive. If AA can find ways to use more assets efficiently, you win.

While some maintenance work is related to age, most is related to use - hours flown/cycles.

Also,, AA's productivity (ASMs produced per employee) is about 20% less than it is at CO, DL, or UA.
Average employee expense (salary plus benefits) per full-time employee (FTE) at AMR is comparable to that at CO, DL, and UA.
It is AMR's lower productivity that directly translates into AA's 20% higher labor CASM and thus lower profits than its network carrier peers.

 

[MCI transplant]

AA's ASMs and revenue are fare more important than the number of aircraft in the fleet. AA has indeed eliminated alot of aircraft but they have grown revenue - as have other carriers despite their own capacity reductions. But AA's mainline capacity between 2003 and 2010 has only been reduced by 6% - compared to 10% for UA.... DL is not a valid comparison because of the NW merger and CO has increased capacity.

In comparison, AA's regional capacity (owned and contract) has grown by about 25% but that number is actually about equivalent to what the F100s were flying.

Remember that AA had More Room throughout Coach in 2003 so they have added alot of capacity just by putting seats back on the plane - and that capacity has been added at very low incremental costs; further the 738s hold more pax than the MD80s do.

Despite its losses, AA has done a pretty good job of getting rid of low revenue flying while holding onto onto higher revenue flying.

I would agree that the B6 agreement is as much about holding onto AA's postion in the NE, esp. NYC. AA is now #3 in NYC (LGA,JFK,EWR) behind CO and DL. Given that CO and DL both have costs about 20% lower than AA's, it will be very difficult for AA to regain that market share without reducing costs - even though CO's costs will go up w/ the UA merger.

Given AA and AE's high costs, AA labor needs to have strict scope agreements or AMR will contract out that flying... but ultimately, unless AMR gains lower costs, AA's revenue will shrink.

:unsure: -------- Does that mean less in Executive Bonus? :huh: