Cancellations

[TWU informer]

It isn't the load factors that have changed.  The fuel price has changed thus driving the need for the decision.  Had fuel prices not changed we would still be operating the flights.

Also, I think Bob O. has a valid point.  There's a political lobbying aspect to this as well given the hearings that have been taking place in D.C. recently.  We have been active in supporting the Air Transport Association's effort to push for a one-year fuel tax holiday.

[post="307545"][/post]​

Who is "WE"?

Do you have a mouse in your pocket?

Please elaborate on who "WE" consist of when you post such information.

 

[Connected1]

When does one think that suppply vs demand, and price to provide service should dictate the industry instead of continuous Government Welfare checks to float over capacity?

[post="307552"][/post]​

There are a number of ways to look at the issue.

First, as a member of management and a steward of our shareholders' money, I expect the company to explore every angle possible to offset the increased price of fuel. Although management is not responsible for setting political policy, they are responsible for trying to influence it in the company's favor. Some on this board have thrown out criticisms of management saying that resources spent lobbying Congress for fuel relief would be better spent than that for the WA. The fact is that management has been keenly focused on reducing the overall tax burden on the airline for a long time now.

Second, as a member of the voting public, I expect the government to make good decisions as to how it raises and spends money. In this sense, I would agree with folks like Rod Eddington that the U.S. airline industry is broken and should be given a chance to shake out. On the other hand, you also have to ask yourself whether a federal tax on aviation fuel was ever a good idea in the first place. If it wasn't ever a good idea in the first place, then I'm not sure that you can call the removal of the tax a "subsidy" to the airline industry. Airline assistance grants akin to those doled out after 9/11 are a completely different story, though. Hopefully those never return.

 

[Connected1]

Who is "WE"?

[post="307573"][/post]​

"We" are American Airlines who, along with the lion's share of other majors (including Southwest), are due-paying members of the Air Transport Association. The ATA often represents the entire industry on issues of broad impact such as this. Other than paying dues, we also provide data to the ATA in conjunction with the other airlines so that they may substantiate their arguments. The ATA currently has an interesting fuel analysis on the front page of their website that likely was derived from data provided to them by member airlines either directly or through DOT Form 41.

 

[Connected1]

When AA begins a 1.5% reduction due to "Fall Schedule", they claim it is because of high fuel cost and the media feeds on the negative like sharks in blood water.

[post="307561"][/post]​

The reduction announced yesterday is in addition to the normal reduction in the fall schedule. Our fall schedule pulldown happened on 23AUG05.

 

[TWU informer]

"We" are American Airlines who, along with the lion's share of other majors (including Southwest), are due-paying members of the Air Transport Association. The ATA often represents the entire industry on issues of broad impact such as this. Other than paying dues, we also provide data to the ATA in conjunction with the other airlines so that they may substantiate their arguments. The ATA currently has an interesting fuel analysis on the front page of their website that likely was derived from data provided to them by member airlines either directly or through DOT Form 41.

[post="307579"][/post]​

DOT Form 41,

Isn't that the same antiquated Civil Areonautics Board requirement from the past that is never audited and provides bogus outsource numbers?

 

[TWU informer]

The reduction announced yesterday is in addition to the normal reduction in the fall schedule. Our fall schedule pulldown happened on 23AUG05.

[post="307581"][/post]​

And how much influence did fuel prices have on the "fall pulldown" amount?

If fuel was year 2000 prices would the "fall pulldown" equal the same amount?

 

[Connected1]

It receives more audit attention than anything said on this board...point being?

 

[Connected1]

And how much influence did fuel prices have on the "fall pulldown" amount?

If fuel was year 2000 prices would the "fall pulldown" equal the same amount?

[post="307600"][/post]​

The fall pulldown was no more drastic than usual but it did occur a bit earlier this year. However, our flight schedule regardless of season is probably more depressed than it otherwise would have been. Higher fuel prices haven't been completely offset by revenue so they have caused a net cash drain for a long period of time now. That has hampered our ability to acquire new aircraft and grow.

 

[TWU informer]

It receives more audit attention than anything said on this board...point being?

[post="307603"][/post]​

The point is I do not trust anything confirmed or reported via DOT Form 41.

 

[TWU informer]

Higher fuel prices haven't been completely offset by revenue so they have caused a net cash drain for a long period of time now. That has hampered our ability to acquire new aircraft and grow.

[post="307605"][/post]​

Please help me to understand the "Growth" idea of management?

We are in a severe over capacity problem in the industry, the glut of seats is why revenue cannot offset fuel prices, and you want to grow the airline.

No wonder this industry is in the shape it is in! With folks like you being "stewards" for the share holders, they best be investing elsewhere, while the rest of us seek different employment.

 

[FWAAA]

Please help me to understand the "Growth" idea of management?

We are in a severe over capacity problem in the industry, the glut of seats is why revenue cannot offset fuel prices, and you want to grow the airline.

No wonder this industry is in the shape it is in! With folks like you being "stewards" for the share holders, they best be investing elsewhere, while the rest of us seek different employment.

[post="307613"][/post]​

I'm not positive, but I think that some believe that growth will spread the fixed costs over a larger number of ASMs and bring down the CASM to a low enough point that AA can triumph over weaker rivals (those who can't grow and thus reduce their CASM as far).

I agree with you that severe overcapacity is a huge problem right now (especially legacy overcapacity) but I'm not convinced that AA should shrink to help remedy that problem. I'd rather see AA grow (by adding international service that B6 and WN and FL can't do anything about) than see AA shrink.

I'd rather see DL, CO, UA, NW and US/HP do the shrinking.

And if those legacies do some shrinking, and AA sees some international growth, then maybe, just maybe, AA could actually grow some of its domestic business to connect people to its expanded international offerings.

I think there's still room for a full-service AA among the discount bus-lines that masquarade as airlines these days. But I don't think there's room enough for AA, DL, CO, UA, NW and US/HP in their current sizes. Somebody's gotta shrink/go out of business/merge/combine/whatever to reduce the number of legacy planes with domestic F class seats to a more rational level.

 

[TWU informer]

I'm not positive, but I think that some believe that growth will spread the fixed costs over a larger number of ASMs and bring down the CASM to a low enough point that AA can triumph over weaker rivals (those who can't grow and thus reduce their CASM as far).

I agree with you that severe overcapacity is a huge problem right now (especially legacy overcapacity) but I'm not convinced that AA should shrink to help remedy that problem.   I'd rather see AA grow (by adding international service that B6 and WN and FL can't do anything about) than see AA shrink.

I'd rather see DL, CO, UA, NW and US/HP do the shrinking.  

And if those legacies do some shrinking, and AA sees some international growth, then maybe, just maybe, AA could actually grow some of its domestic business to connect people to its expanded international offerings.

I think there's still room for a full-service AA among the discount bus-lines that masquarade as airlines these days.   But I don't think there's room enough for AA, DL, CO, UA, NW and US/HP in their current sizes.   Somebody's gotta shrink/go out of business/merge/combine/whatever to reduce the number of legacy planes with domestic F class seats to a more rational level.

[post="307620"][/post]​

That is exactly what the other legacies are thinking too, with BK Judge assisting them in reducing cost, instead of growth.

Can AA outgrow the BK Judge? With what cash?

Now if there were an early out retirement package, with a B-scale pension (401k) no Defined for newbies, and say a twenty five year progression to top pay, and maybe no medical benefits until 10 years of service or pledge to support "working together", whichever comes first, pre-fund retirement medical at 50% of gross pay, then the union's precious dues would be intact, growth would happen and a much lower cost structure would emerge, AA could hire more overhead management, give retention bonuses to "keep" the precious growth monger leaders, and...

...The BK Airlines would still have a cost advantage over AA.

Oh my, one thing, nobody would want to work for AA anymore. Except of course the retention bonus earners and other overpaid over head.

 

[coolflyingfool]

There is no way that cancelling 30 flight a day will really help all that much. 30 flight out of almost 2500 isn't even a drop in the bucket. These flights are not even 4 and 5 hour flights but rather 3 hours or less. How long is DFW-AUS? Good thing they stopped 2 of those. A lot of fuel saved there. I am shocked that AA went out and announced this. I would have kept my mouth shut and just cancelled the flights and left it at that. Since they were cancelled so close to the actual flight dates, do the crews still get paid? Something doesn't smell right with this whole thing. I don't understand. just my thoughts..........

 

[BoeingBoy]

Cool,

You're right in one sense - we're not talking about hundreds, or even tens of million of dollars here. But in this climate of high fuel prices, every little bit helps, and it's surprising just how fast it adds up.

I certainly don't have accurate data for AA's operation, but thanks to US's monthly filings required by the BK court I have those. Using that, here's what we have:

* Fuel is about 2 cents per seat mile on average at current prices,
* DFW-AUS is about 200 miles one-way, and
* AA uses -80's with about 130 seats on this route.

So, 2 cents per seat mile X 130 seats = $2.60 per mile.

$2.60 per mile X 200 miles one way = $520.00 one way.

$520 one way X 2 (there & back)= $1,040 per R/T.

$1,040 per R/T X 2 R/T's cancelled per day = $2,080 per day.

$2,080 per day X 24 days the flts are cancelled = $49,920

$49,920 in savings from cancelling 2 R/T's DFW-AUS per day for 24 days.

Assuming that there are no other savings at all - just from the fuel not burned.....

Jim

 

[TWU informer]

Cool,

You're right in one sense - we're not talking about hundreds, or even tens of million of dollars here.  But in this climate of high fuel prices, every little bit helps, and it's surprising just how fast it adds up.

I certainly don't have accurate data for AA's operation, but thanks to US's monthly filings required by the BK court I have those.  Using that, here's what we have:

* Fuel is about 2 cents per seat mile on average at current prices,
* DFW-AUS is about 200 miles one-way, and
* AA uses -80's with about 130 seats on this route.

So, 2 cents per seat mile X 130 seats = $2.60 per mile.

$2.60 per mile X 200 miles one way = $520.00 one way.

$520 one way X 2 (there & back)= $1,040 per R/T.

$1,040 per R/T X 2 R/T's cancelled per day = $2,080 per day.

$2,080 per day X 24 days the flts are cancelled = $49,920

$49,920 in savings from cancelling 2 R/T's DFW-AUS per day for 24 days.

Assuming that there are no other savings at all - just from the fuel not burned.....

Jim

[post="307834"][/post]​

That's pretty good fuzzy math.

Now can you calculate the lost revenue? Your math assumes not one passenger, not one ticket sold.

Surely out of those 48 Trips there was some revenue that is now lost and should be deducted from your so-called fuel savings.

Imagine the savings AA would have using your math if they shut down 2200 flights per day.