For Airlines, Cash Can Be a Fickle Thing

[Hatu]

Considering how much cash United Continental has gone through in the last several years, the $10.3 billion cash pile at American Airlines doesn't seem as big. American Airlines faces some of the same issues that United did a few years ago.

First, American Airlines has nearly $17 billion in debt on its books. Roughly half of that amount is due in the next 5 years. Earlier this year, CEO Doug Parker told employees that paying down debt will be the company's first priority in terms of allocating its cash.

Second, Parker has stated that American needs to make some "catch-up" capital investments, just as United Continental did. American already has commitments to spend $19.5 billion on new aircraft and engine purchases in the next 5 years. Any non-aircraft capital expenditures would add to that total.

Lastly, American Airlines expects to incur $1.2 billion of cash integration costs over the next two years.

On the flip side, American Airlines is currently much more profitable than United. That said, it has not reached the toughest stage of the integration process yet: converting to a single passenger reservation system. United performed quite well during the first year or so after its merger, and it was only later that integration problems undermined its profitability.

http://www.fool.com/investing/general/2014/03/24/for-airlines-cash-can-be-a-fickle-thing.aspx

 

[Thomas Paine]

And over that same 5 year period AA expects to earn around $17.5 billion in profits. So they could pay off all the debt, not just that which is due in the next five years, and still have $10 billion or they can pay what's due, like the rest of us mere mortals usually do, if we are lucky, and have $20 billion in cash.

No matter how you try and spin it, they got plenty of money and there is ZERO reason why we should have to be working under these terms other than they are greedy bastards and the government helped them do it.

 

[FWAAA]

Why do people keep posting links to every blog piece written by Adam Levine-Weinberg for Motley Fool as if it's gospel?    

 

[john john]

As one of the only unionize employee groups that still has profit sharing kept it coming

 

[FWAAA]

As one of the only unionize employee groups that still has profit sharing kept it coming

Don't pre-merger AA employees still have profit sharing equal to 5% of the profits?    Management offered 15% first dollar profit sharing, but the pilots gave up 2/3 of it (10%) in exchange for slightly higher hourly rates instead of simply demanding higher hourly rates.    Never trade away profit sharing.    Because of the me-too clauses, the pilots' give-back was shared by all other AA workgroups, who all received insignificant hourly increases in exchange for two-thirds of their profit sharing.    .   
 
Have any pmAA workgroups given back that last 5%?    

 

[john john]

Don't pre-merger AA employees still have profit sharing equal to 5% of the profits?    Management offered 15% first dollar profit sharing, but the pilots gave up 2/3 of it (10%) in exchange for slightly higher hourly rates instead of simply demanding higher hourly rates.    Never trade away profit sharing.    Because of the me-too clauses, the pilots' give-back was shared by all other AA workgroups, who all received insignificant hourly increases in exchange for two-thirds of their profit sharing.    .   
 
Have any pmAA workgroups given back that last 5%?

So all AA unionize employees have future profit sharing and the US flight attendance mechanics pilots and fleet service does not. Now that is just great labor relations

 

[eolesen]

You get what you negotiate. And sometimes, you don't even need to negotiate -- AA's non-union employees have always had profit sharing, and won't have to worry about it being negotiated away for some negotiator's idea of a short term gain.

 

[john john]

And sometimes, you don't even need to negotiate -- AA's non-union employees have always had profit sharing, and won't have to worry about it being negotiated away for some negotiator's idea of a short term gain.

So you can declare all non-union AA employees will always get profit sharing 2014 2015 2016 ect.

 

[dfw gen]

So you can declare all non-union AA employees will always get profit sharing 2014 2015 2016 ect.

nope twu negotiated it away for a 4.3% base pay raise. We just received our one and only profit sharing check.thats for twu represented employees cant vouch for non union.

 

[eolesen]

So you can declare all non-union AA employees will always get profit sharing 2014 2015 2016 ect.

If it meets the thresholds, absofrackinglutely, based on past practice. The company isn't stupid -- they know canceling the plan would force a union vote.

For non-union ee's, there are two plans -- one for management L4 and below (analysts, supervisers, hourly employees including agents and support staff), and another for management L5 thru what I'm guessing is L8.

The L5+ plan can't pay out if the L4- plan hasn't paid out.

It's also happened in the past where the L4- play paid out, but the L5+ plan participants got a couple systemwide fee-waived D2 passes and a "thanks for coming to work" letter instead of a payout.

So yes, as certain as anything is concerning airlines, I'm fairly confident that the payouts will continue. Nothing will destroy what little trust there is faster than eliminating profit sharing for the non-union folks.

 

[john john]

The company isn't stupid --

Management at US does not get future profit sharing. So it is your belief that management at AA will get future profit sharing because of past practice.
Now that is smart

 

[AA-MRO.COM]

I would be very surprised if the AA profit sharing payout equates to more than 4.5 percent. But hey u never know

 

[MetalMover]

So yes, as certain as anything is concerning airlines, I'm fairly confident that the payouts will continue. Nothing will destroy what little trust there is faster than eliminating profit sharing for the non-union folks.

What they should be thinking about is how much better off they would be if that profit sharing amount were given in form of a raise.  It would equate to increased pay in OT and holiday premium. Better yet, a few more bucks in their checks to help pay for increased medical costs.
 
Kind of like saying..."Gee I don't care about getting raises, I'll just wait for my IRS refund every year"