Credit Defaults on AMR soar to nearly 3X levels af industry

[chris perry]

I have said since my first day at DFW, AMR has one of the best Marketing/PR departments around. The view from the public and Media perception in no way reflects reality. Also for those that haven't been here at AA in the last six months. This company is far different and so much worse than even 2 YEARS AGO.... One only has to take an elevator downs stairs to realize.You go from admirals clubs and VIP carts ,to sewer leaking from the ceiling for the last 20 years.The yearly pipe rupture and tsunami in our work areas is nice too..

 

[Frank Szabo]

They've told each of the unions what they ultimately want, Hopeful. It's called "the offer on the table".

I don't know how much clearer the company's position could be. The only evidence I've seen that they want to spin off or outsource overhual is from everyone here and in the breakroom.

Maybe, just maybe, there really isn't a grand plan beyond the offer on the table.

It appears (to me, anyway) we're seeing a repeat of the time leading up to April 2003. People are being hired inflating the workforce then, all of a sudden, we'll be told about the dire straights of the company (again) even though the problem is caused by those about to collect some stock. The TWU will want to "save jobs".

Fool us once, shame on AMR. Fool us twice, ... - WTF - it worked before, right?

 

[WorldTraveler]

I have said since my first day at DFW, AMR has one of the best Marketing/PR departments around. The view from the public and Media perception in no way reflects reality. Also for those that haven't been here at AA in the last six months. This company is far different and so much worse than even 2 YEARS AGO.... One only has to take an elevator downs stairs to realize.You go from admirals clubs and VIP carts ,to sewer leaking from the ceiling for the last 20 years.The yearly pipe rupture and tsunami in our work areas is nice too..

AA WAS one of the best run airlines in the world from a marketing and PR standpoint at one time. I'm not sure that can be said from any perspective now.
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I don't think any of the existing airline went through facilities falling apart as bad as you describe and what others have said about how bad things are in disrepair - but EA and PA surely did. I'd be curious to hear the perspective of people that were at the former 4 bankrupt carriers but it will take years to fix up AA's facilities - and a whole lot of money.
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I was in AA's two main older domestic terminals a couple months ago at DFW and they were in pretty sad shape on the main level.

 

[737823]

AA WAS one of the best run airlines in the world from a marketing and PR standpoint at one time. I'm not sure that can be said from any perspective now.
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I don't think any of the existing airline went through facilities falling apart as bad as you describe and what others have said about how bad things are in disrepair - but EA and PA surely did. I'd be curious to hear the perspective of people that were at the former 4 bankrupt carriers but it will take years to fix up AA's facilities - and a whole lot of money.
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I was in AA's two main older domestic terminals a couple months ago at DFW and they were in pretty sad shape on the main level.

What is your opinion about ATL, MSP, or JFK for DL? I've been to the A, B, C terminals at DFW and all of the above and IMHO DFW facilities are superior. Sure they're no LHR T5 or DTW McNamara Terminal but they're adequate and get the job done. Same can be said for AAs BOS facility-terminal B has nothing on DLs terminal A but it's been refurbished and serves it's purpose.

Josh

 

[IORFA]

Don't worry about DFW, the airport board already approved, and if I am not mistaken work has already begun in terminal A where Eagle used to depart from. When finished ALL terminals will be redone except D, for obvious reasons. The work is supposed to involve higher ceilings and I assume more windows for more light. Also a complete redo of all utilities in all terminals, once again except D. This should really help A as it will remove the outdated glass walled boarding areas. I think it was around a 1.3 Billion project. Plus the airport board is almost finished with all the new jet bridges, that were paid for from the revenue from the oil and gas leases on the property from a few years ago. I am sure someone else with more knowledge will chime in soon. Please feel free, we like to hear about upgrades at DFW, since they are needed.

 

[FWAAA]

I've heard numbers of $1.3 billion, $1.9 billion and even all the way up to $3 billion for the DFW terminal refurbishment program; this article from last month says $1.9 billion:

http://www.aviationrecord.com/FC/FCnews/Texas-lures-Aussies-for-stopover-302.aspx

 

[eolesen]

The gas wells are indeed funding a lot of the new development at DFW and keeping landing fees quite low, so it's a much lower cost airport than anything else its size. As a side note, Bill Frainey died while on the business trip mentioned to Australia trying to drum up connecting traffic to Europe via DFW...

The only thing wrong with AA's terminals is they're a bit dated. Last renovation was about 20 years ago. Great food options in A now, especially with the former TrAAm stations turned into sit-down restaurants.

MSP is dated as well. ATL is a decent terminal to connect thru if you're on DL or departing from the T gates (where AA is), but security is the pits. Nowhere near enough lanes for an airport that busy.

I refuse to fly thru DL's Third-Worldport at JFK. They've done patchwork fixes to the Pan Am terminal, but it's still as much a dump as it was in 1991...

 

[WorldTraveler]

I suppose a detour to discuss terminal facilities is reasonable...
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Not sure why ATL, MSP, and JFK were picked as the airports of comparison for DFW but.
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I personally think AA's facilities at DFW are more than just a bit "dated" which implies "old" ... DFW is also worn and the fact that the airport is spending as much as ATL is spending for a whole new int'l terminal at ATL shows they need to do more than just put some current colors on the walls.... glad the oil wells might help pay for some of the cost of moving walls.
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I don't think ATL or MSP appear worn or dated..... I personally am not much a fan of the layout of MSP airport which is a great place to spend a few hours walking off calories to get around the entire complex but MSP is a combination of concourses, some of which are quiet modern (probably half of DL's ops are on the newest concourse) while even the F concourse which is heavily used by DL is fresh even if it isn't completely new.
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ATL is just plain simply the most efficient design to move 75M passengers a year through of any airport in the world... there is NO wasted space and if ATL has a fault it is that the middle terminal complex should be increased in size by about 125% in order to accommodate the huge volums of people that move through it. But ATL is constantly upgrading and it is kept clean and decent appearing and is generally highly functional. ATL has added more security positions and continues to add more; I rarely spend more time in line for security in ATL than I do anywhere else although the fact that the fact that almost the entire airport goes through one security checkpoint area removes any sense of privacy you might wish for.
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DL's terminals at JFK are the well known achille's heel among all US airport terminals but it should also be kept in mind that the Worldport was built before the age of airport screening which is why a big part of the problem is that it just doesn't work from a passenger and workflow standpoint - undoubtedly why DL and the PANYNJ have decided just to blow it up and start over. DL clearly has alot of work to do to have decent facilities at JFK but keep in mind that DL has still managed to nearly double its JFK operation in the past 5 years, including attractive enough premium traffic to improve their average fares in alot of key markets where DL historically was not as strong.
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Returning to the topic of finances and BK, it is very possible that AA could reduce its airport lease expenses in BK. DL and NW both rejected and/or insert language in many of their airport contracts allowing them to later reduce the size of their facilities and they acted on many of those after the merger was completed. UA/CO won't be able to do that as easily and AA obviously isn't working through a merger but still has a lot of facility leases that are mismatched to AA's current or potential future needs. AA also just finished an expense overhaul of LAX and JFK and is about ready to finish MIA which will add alot of expense.... it is possible that AA could renegotiate some of those leases to reduce their near term payments while the company is getting back on its feet.
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Finallly, while there might be a desire to compare the quality of terminals among airlines, there is plenty of factual evidence that DL's terminal costs at its hubs are some of the lowest among the US carriers. ATL is now a 30 year old terminal so there are no huge costs on DL's books for ATL which is why they can accept the new int'l terminal even though DL will not pay for all of it, MSP has been incrementally increased in size and expenditures, NW did a masterful job of designing and constructing DTW at low costs, and MEM and SLC fall under the "dated, functional, but cheap" category. The ability of airlines to control costs at their hubs is directly related to how competitive they can be in serving connecting passengers which is a key part of traffic carried by every US airline and is absolutely necessary to support int'l operations. ORD is embarking on an expensive overhaul that will add alot of costs to AA and UA and will particularly impact their ability to handle connecting passengers. MIA will be a very nice but expensive airport.... AA's costs at MIA already are about $18/passenger based on 2009 MIA data and will jump as the new terminal costs are added. In contrast, ATL, DTW, and MSP costs are less than $5 per domestic passenger and $10 per int'l passenger, some of the lowest costs at large airports in the US.
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BTW, airport costs by carrier can be calculated from the annual reports for each airport... they are all public entities and thus have pretty open books. They also generally report their receipts by carrier as well as boardings by carrier so it isn't hard to calculate total costs per carrier. It is also possible based on construction contracts to know how much each carrier will have to spend in the future based on their current boardings.
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Bottom line is that pretty is nice when it comes to buildings but airlines must have low costs on their terminals if they want to be able to compete effectively.

 

[eolesen]

Josh asked about MSP, ATL, and JFK.

While rents are indeed a concern, the airlines don't usually have a lot of control over what the airport does. They can try, but when the airport wants to build a palace, they do so. Just look at the battles in Chicago. Ask people in IND and STL how they feel about their airport expansion projects... Or people in BUF and ROC who lost air service after new terminals were built and airlines left because of the higher operating costs... Then there's the most ridiculous example -- Mid-America airport in Mascoutah, IL. They built an entire airport terminal without any airlines willing to fly there...

Rather than go off on a tangent about which airport is best for connecting in an economics thread, I'll start this one to discuss airports..... http://airlineforums.com/topic/50780-connecting-airports/

 

[WorldTraveler]

I'm not interested in a discussion of trying to pick favorite airports because they are invariably tied to emotions regarding preferred airline and hometown.
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While it is true that airports often try to build palaces, airlines esp. at their hubs do have a great deal of control over what the airports do. In most large US airports, the primary airline tenants do have the ability to reject proejcts which they deem as unnecessary or too expensive... obviously in cities where there is not a dominant airline, it is harder to do. The city of Atlanta has tried several times to build more int'l terminal than DL wanted and DL had the right to stop the project until the costs were brought down to levels DL could support.
At airports where airlines operate out of separate terminals, one airline can do what they want while others are free to do what they want. The LAX terminal renovations are an example of this... although LAX is a unique airport.
At MIA, many airlines tried to get out of paying for the new terminals which they believed disproportionately helped AA.. and I believe the courts have ruled the airport can assess charges to each airline who uses the facility as is customary, even if other carriers don't want it.
The upshot is that MIA will probably not be attractive for LFCs because of its high costs for all tenants - which may be what AA wants even if it makes MIA uncompetitive on airport costs relative to other Latin connecting hubs.
On the other hand, the people of MIA will pay a premium for its facilities but local passengers rarely realize it since the $10-20 really isn't that noticeable to a local passenger, esp. on an int'l itinerary.
Back to AA, part of the reason why they are spending so much on facility upgrades now - JFK, MIA, and now DFW (even if the airport itself pays for a large portion of those upgrades through airport funds) is because AA's facilities had not been improved over the past several years... so, AA will have a spike in its airport expenditures that other carriers will not.

 

[eolesen]

They haven't? That's been one of Bob's pet peeves here -- AA spending money on passenger related stuff and not salaries.

Let's have some specifics of what AA has failed to do with facilities over the past ten years, because as someone who has qualified for EXP three of the last five years, and PLT for the other two, I just don't see it.

 

[WorldTraveler]

It is doubtful that we will get anywhere since beauty is in the eyes of the beholder so it is not worth trying to argue about who has the better terminals.
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I already said that AA has rebulit its JFK and MIA terminals and renovated its LAX terminal, and has upgraded its ORD facilities far more recently than 20 years ago which even you acknowledge has how long it has been for DFW.
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DFW is clearly the airport in question and the fact that the airport is spending that kind of money says there is a need - whether oil wells provide the money or not.
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It makes alot more sense that DFW looks the way it does given that it is on the verge of an extreme makeover.
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What was 2E and 3E are worn and dated. The fact that others on here say as much and state that other parts of AA's physical plant (even away from the public eye) is in serious need of repairs confirms that my observations are not unique.
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What hasn't changed and won't even w/ the remodel is that AA's DFW terminals are the least friendly for connecting passengers of any major US airport and perhaps only are surpassed by CDG among major global airports- whcih is not surprisingly of a similar design.
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Perhaps the extreme makeover of DFW is coming now because AA finally has realized it will never be able to build the westside terminal complex it has talked about that would be friendly to connecting passengers as well as locals.
Even though DFW is one of the newer airports in the country and was opened just a few years before deregulation, neither DFW or AA had the foresignt to build a connecting passenger friendly terminal for AA's then new headquarters wihch were being moved from NYC. While the first concrete was still drying, ATL was building the world's largest passenger terminal complex that was specifically designed for the connecting operations that were/are the backbone of DL and EA. 25 years ago, UA rebuilt its ORD facilities to world class levels.

While you will certainly take it as a slam, the reality is that AA has had 30 years to rebuild its DFW facilities but is now forced to come up with 1/2 mile long pedestrian bridges, moving sidewalks, and one sided access to aircraft, all of which increase costs and minimize the efficiently with which AA can operate in its largest hub, also the 2nd largest in the USA.
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Given that AA's financial situation and the upcoming unwinding of the Wright Amendment will make it too risky and too costly to rebuild DFW, one of the world's newer and larger airports will stand as one of the least functional for the purpose for which it is now used - not unlike the former Pan Am Worldport at JFK.
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That inefficiency does come with a price tag although admittedly, it is one of AA's smaller worries right now.

 

[IORFA]

WT- If you have trouble connecting in DFW, then you need to request assistance. With the new airport train it shouldn't take more than 10 minutes, probably less, to get anywhere in DFW. Of course, I am to assume that you can read the signs at the train stops to make sure you get on the correct train. I personally have made 15 minute connections in DFW that involved taking the train to a different terminal. Passengers shouldn't have any trouble with 30 minutes. I just can't fathom why anyone would think it was inefficient. I would imagine that the walkways aren't used nearly as much as they were BEFORE the train was finished. Unless you have the time and want the exercise, there is no reason to walk from C to D or from A to B. I am not an expert on A/C efficiency, so maybe a different layout would be better for the operation, but I venture that it isn't that bad. I mean Eagle gets their own terminal, International has its' own terminal and Domestic is in 2 different terminals which are side by side. Don't forget the fact the airport is bisected by a toll road/highway. Very easy for locals to get to from different parts of the Metroplex. Wait till its done before you complain so much. You might be surprised.

 

[737823]

It is doubtful that we will get anywhere since beauty is in the eyes of the beholder so it is not worth trying to argue about who has the better terminals.
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I already said that AA has rebulit its JFK and MIA terminals and renovated its LAX terminal, and has upgraded its ORD facilities far more recently than 20 years ago which even you acknowledge has how long it has been for DFW.
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DFW is clearly the airport in question and the fact that the airport is spending that kind of money says there is a need - whether oil wells provide the money or not.
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It makes alot more sense that DFW looks the way it does given that it is on the verge of an extreme makeover.
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What was 2E and 3E are worn and dated. The fact that others on here say as much and state that other parts of AA's physical plant (even away from the public eye) is in serious need of repairs confirms that my observations are not unique.
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What hasn't changed and won't even w/ the remodel is that AA's DFW terminals are the least friendly for connecting passengers of any major US airport and perhaps only are surpassed by CDG among major global airports- whcih is not surprisingly of a similar design.
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Perhaps the extreme makeover of DFW is coming now because AA finally has realized it will never be able to build the westside terminal complex it has talked about that would be friendly to connecting passengers as well as locals.
Even though DFW is one of the newer airports in the country and was opened just a few years before deregulation, neither DFW or AA had the foresignt to build a connecting passenger friendly terminal for AA's then new headquarters wihch were being moved from NYC. While the first concrete was still drying, ATL was building the world's largest passenger terminal complex that was specifically designed for the connecting operations that were/are the backbone of DL and EA. 25 years ago, UA rebuilt its ORD facilities to world class levels.

That inefficiency does come with a price tag although admittedly, it is one of AA's smaller worries right now.

You either have no clue what you're talking about or are trying to take every opportunity to slander AA. The layout at DFW makes a lot sense as its possible to get to any gate to any other gate in 10 minutes. Before the Skylink opened in 2005, the TrAAin wasn't ideal as it was unidirectional, but now that the Skylink is and has been fully operational for 5+ years connections are painless. My travel rarely takes me to/from/through as other gateways are often more convenient for me but it certainly isn't a bad airport. As I've said before, a DFW connection is vastly preferable to ATL, JFK, or MSP. How efficient is a DL connection from A9 to E28? I did something like that last time I flew BOS-ATL-MEX and after a delayed departure I almost missed the connecting flight in ATL. One could make a compelling argument that in DFW the Skylink is more accessible to the gates and is therefore more efficient to minimize connection time.

Again my travels haven't take me here in years but what about CVG?Although DL has cutback CVG since DTW has come online I wouldn't consider it efficient. Since you're the airport efficiency expert are those buses to the regional concourse "efficient"? I seem to remember CVG also had a train but only connected two of DLs three concourses.

AA's facilities are adequate. The JFK terminal is fantastic, MIA has improved with the new D concourse and trains, LAX T4 is sufficient, LGA is LGA (always has been and always will be awful), BOS Terminal B was recently refurbished. AA has an awesome new terminal shared with Virgin and swank Admirals club at SFO. Can't wait to see it when I visit next month.

Josh

 

[jimntx]

Given that DFW was designed with the idea that the majority of the passenger traffic would be O&D--NOT connecting--I think they have done a pretty good job at adapting to the current realities. I am the first to admit that AA and the airport board took way too long to admit that the Skylink was needed and to get it built.

The first time I changed planes at DFW back when it was brand-new, I swore I would never fly AA through DFW again. My late wife and I were traveling from IAH to BHM via DFW at Christmas. (Is that snickering I hear in the back?) We arrived from IAH in Terminal A. We had 30 minutes to make our flight to BHM which was departing from a high-numbered gate in C. This was before the trAAin was even built. We had to run from one terminal to the other carrying Christmas presents (we had checked our bags) with my wife in high-heels. (Remember when people use to dress to travel? I was wearing a suit and tie. Of course, we would need those for the midnight Eucharist on Christmas Eve.)

DFW is vastly improved from those days. I'm not sure why WT mentioned 2E and 3E as being worn and dated. If he means gates at DFW, they were NEVER AA gates. E terminal was always DL's bailiwick.