JUSTICE DEPT SUES TO BLOCK US/AA MERGER

[Jacobin777]

http://apps.fas.gsa....4.x=Search FY14

You can look up NYC to LON and see this fare is still 3X higher than what AA bid for that route and almost 2X higher than AA bid for LAX to TYO.

The winning bid for DFW-SEL is slightly above what AA bid to win DFW-TYO.

AA might have 6 year contracts in the bag but if labor continues to see pay well below their peers while the company racks up very strong profits, the wheels will fall off the bus very quickly.
The biggest change in AA's costs was for labor. Revenue went up nicely for this month but they didn't have to go into BK to do that.

Thanks for the link, appreciate it.

Now your comments spell of hypocrisiy. On the one end you praise DL when DL has record earnings/revenues and state AA can't compete but then harp on AA and spell "gloom and doom" for AA because they have record earnings/revenues and then extrapolate it to employees being unhappy.

That illogical argument doesn't fly (no pun intended).

Going to BK helped as it added to their bottom line (as per interest,etc.). AA has been able to refinance a number of loans at great rates-even during BK. This will help.

Overpaid? The only ones that were overpaid were those at the top. If not for all the games played with the RLA workers would likely have been able to get even higher wages. Funny you should bring up foreign carriers, they pay their workers better than AA does, in fact AA pays their mechanics in Europe around $10/hr more than they pay their American mechanics, and thats not even factoring in what AA takes back from their mechanics for medical, vacation, Holidays and sick time.

I would not be surprised if the more successful AA gets the more labor strife they will face. Just because you got your crappy deals in place that does not mean you will have labor peace.

1)Proves my point that carriers around the world have not been "taking from the workers" to order thousands of planes.

2)This "games played" is nothing but childish thought/comment. There are standards, regulations, etc. AA has a publicly traded company and as a U.S.-based company has laws, rules, etc. to adhear to.

3)Given how many employees AA has and given its part of the S&P 500, the pay structure of top AA management is much, much lower than comparable S&P 500 companies.

 

[WorldTraveler]

No, it is not hypocritical to praise DL's revenues but express concern for where AA is. AA has shown two SOLID months of profits - but non-BK companies don't report on a monthly basis so you really don't know how well AA has done relative to them. The best metric is the guidance that other airlines have provided and the monthly RASM that most of the industry reports. On that basis, the industry is expected to have a pretty strong summer.

It doesn't change that AA has added a lot of capacity to markets that it isn't certain whether they can be profitable year round. Perhaps AA will pull down a lot of that new capacity in the winter but it isn't hard to make money in the summer.

If AA continues to be profitable in the winter, including in the Pacific where I have been the most critical, then by all means they have turned the corner and they are well-positioned to effectively compete.

But it also doesn't change that the Wright Amendment will come in about a year along with the beginning of Open Skies in many countries in Latin America. Further, the DL/VS joint venture has yet to be approved - the codeshare just started - so there are still a whole lot of changes that have yet to happen in order to see how well AA fares relative to the rest of the industry.

Again, this is good news and good progress, but it is hardly reason to say every problem has been solved and it is only smooth sailing ahead.

 

[AANOTOK]

...so using that logic/info, AA's profit does not/should not "make it even harder to argue that AA can't make it standalone".

 

[MUTATIS MUTANDIS]

Friday, Aug 23
5:06 PM
US Airways faces a lawsuit over frequent flyer miles

• US Airways Group (LCC) is forced to face a lawsuit from a frequent flier claiming the carrier is cheating its loyalty rewards program members when it determines how many miles they’ve flown by crediting them with fewer miles than they’ve actually flown.
• A district judge in Chicago has denied the airline’s bid for dismissal of the lawsuit filed this year by a Dividend Miles program member.
• The airline accounts for the discrepancy by saying that it counts miles based on point-to-point distance and not the flight’s actual rout, but the judge said that elsewhere in the membership guide, the airline says the points earned are based on actual miles

Friday, Aug 23
5:06 PM
US Airways faces a lawsuit over frequent flyer miles

• US Airways Group (LCC) is forced to face a lawsuit from a frequent flier claiming the carrier is cheating its loyalty rewards program members when it determines how many miles they’ve flown by crediting them with fewer miles than they’ve actually flown.
• A district judge in Chicago has denied the airline’s bid for dismissal of the lawsuit filed this year by a Dividend Miles program member.
• The airline accounts for the discrepancy by saying that it counts miles based on point-to-point distance and not the flight’s actual rout, but the judge said that elsewhere in the membership guide, the airline says the points earned are based on actual miles And you wonder why DUI DOUG is blocked by the DOJ? PLEEZ!

 

[700UW]

US Airways to Spectrum Target Older CLOs to Cut Borrowing Costs

By Christine Idzelis - Aug 26, 2013 1:33 PM ET

US Airways

Borrowers seeking shorter-dated maturities need “adequate free cash-flow,” Cohen said.
US Airways, the carrier merging with AMR Corp.’s American Airlines, obtained $1.6 billion of term loans in May to refinance debt and split them into separate maturities.

The interest rate on the six-year $1 billion piece was set at an initial 3.25 percentage points more than Libor, compared with the 2.5 percentage point spread for the $600 million portion that has a maturity of 3 1/2 years, Bloomberg data show. Each loan has a 1 percent floor on Libor.

After the merger, which the U.S. Justice Department is seeking to block, the interest rate on both pieces would decrease by 25 basis points. A basis point is 0.01 percentage point.

Structuring a loan to include a shorter-term piece is less common in buyout financings because private-equity firms typically prefer to push out the risk of refinancing as far as possible, Broadbent said.
“One place you are going to see them is for bigger deals where you are looking for sheer capacity,” he said. “With a $4 billion or $5 billion term loan you are going to want to make sure you can dip into every pocket in order to get that done.”

 

[eolesen]

Increased wages come about the same way as increased fuel costs, increased landing fees etc. We do not negotiate based upon AA's bottom line, we negotiate based upon what similarly situated mechanics make.

Yep, that approach has really worked out well for the large, unionized carriers, eh?...

While you love to point to WN's wages, you still won't touch their work rules. Go figure.

 

[Jacobin777]

No, it is not hypocritical to praise DL's revenues but express concern for where AA is. AA has shown two SOLID months of profits - but non-BK companies don't report on a monthly basis so you really don't know how well AA has done relative to them. The best metric is the guidance that other airlines have provided and the monthly RASM that most of the industry reports. On that basis, the industry is expected to have a pretty strong summer.

It doesn't change that AA has added a lot of capacity to markets that it isn't certain whether they can be profitable year round. Perhaps AA will pull down a lot of that new capacity in the winter but it isn't hard to make money in the summer.

If AA continues to be profitable in the winter, including in the Pacific where I have been the most critical, then by all means they have turned the corner and they are well-positioned to effectively compete.

But it also doesn't change that the Wright Amendment will come in about a year along with the beginning of Open Skies in many countries in Latin America. Further, the DL/VS joint venture has yet to be approved - the codeshare just started - so there are still a whole lot of changes that have yet to happen in order to see how well AA fares relative to the rest of the industry.

Again, this is good news and good progress, but it is hardly reason to say every problem has been solved and it is only smooth sailing ahead.

You have double standards DL. You completely praise DL when DL decides to expand and then not utter a word when they end routes (and don't tell me DL hasn't ended many international routes out of JFK).

AA doesn't have to be most to be showing vast improvements in the Pacific-even a marginal improvement will be good.

 

[MCI transplant]

Overpaid? The only ones that were overpaid were those at the top. If not for all the games played with the RLA workers would likely have been able to get even higher wages. Funny you should bring up foreign carriers, they pay their workers better than AA does, in fact AA pays their mechanics in Europe around $10/hr more than they pay their American mechanics, and thats not even factoring in what AA takes back from their mechanics for medical, vacation, Holidays and sick time.

I would not be surprised if the more successful AA gets the more labor strife they will face. Just because you got your crappy deals in place that does not mean you will have labor peace.

Reality check here! ------ A Union Carpenter in the city of Chicago, Obama's home town, makes $45.00@ hour!

 

[eolesen]

So become a union carpenter if you want to make what a union carpenter in the City of Chicago makes...

I'll guarantee that's not what carpenters in all of Illinois make, though. Lots of non-union companies out there, so trying to set a wage on what only a subset of that particular skill can drive is a bit specious, and reeks of cherry picking.

I know of a couple non-union shops in Illinois specifically who didn't pay as much as what a union shop did, but they managed to keep their guys on payroll when there wasn't work, unlike the union shops, who would only pay that $45 when you were working...

 

[MCI transplant]

So become a union carpenter if you want to make what a union carpenter in the City of Chicago makes...

I'll guarantee that's not what carpenters in all of Illinois make, though. Lots of non-union companies out there, so trying to set a wage on what only a subset of that particular skill can drive is a bit specious, and reeks of cherry picking.

I know of a couple non-union shops in Illinois specifically who didn't pay as much as what a union shop did, but they managed to keep their guys on payroll when there wasn't work, unlike the union shops, who would only pay that $45 when you were working...

I put that number out there strictly for comparison E! ----- Yes we all know there are "non Union carpenters" out there that make less. We also know there are " non Union AMT's out there that make less. And as I'm sure you'd point out, more, than AA AMT's. But than again, even though carpenters are skilled people, they don't have to sign off everything they do either! And let's not under value that! Every time an AMT signs off what he does, he is putting his livelihood on the line. If he screws up, people could potentially get killed! A carpenter, Union, or non Union, not so!

 

[WorldTraveler]

You have double standards DL. You completely praise DL when DL decides to expand and then not utter a word when they end routes (and don't tell me DL hasn't ended many international routes out of JFK).

AA doesn't have to be most to be showing vast improvements in the Pacific-even a marginal improvement will be good.

there are no double standards. Expansion is not the key - making money is. You and others seem to think that AA should get credit for operating flights just to have an impressive route map. I have absolutely no problem if AA pulls capacity in one area and redeploys it someplace else that makes money. DL has indeed pulled a lot of capacity to secondary cities in Europe in favor of adding capacity to AMS and CDG, which was the majority of the way NW operated to Europe and forms the majority of AA's system as well. Secondary cities get hit the most when the economy is weak, as it is in Europe. UA has also pulled back service to secondary cities...but they haven't add much back elsewhere.

AA is a for-profit airline. We're not talking Aeroflot of the communist era.

The simple fact is that AA lost 1 cent for every 5 in revenue it brought in on the Pacific in the 1st quarter of 2013, the most recent quarter for which data was available.

Despite having the largest exposure to Japan, DL managed to make money across the Pacific despite the drop in the yen. In fact, DL's profit margin on the Pacific was 12%, virtually identical to AA's in Latin America.
I respect what AA has done in Latin America... maybe you would do well to acknowledge that DL has built a very durable and profitable network of which the Pacific is a very core part.

And just as AA has implemented a number of strategies to grow and protect its advantage in Latin America and at the expense of other carriers, you shouldn't be surprised that DL will do the same thing in Asia and in other key parts of its network.

AA's Latin America performance is subsidizing its loss-making flying in other parts of the world, including Asia.
DL's profits in Asia are going directly to the bottom line because each of DL's operating regions are making money - which is precisely what the goal of any profit-motivated company should be.

 

[Rogallo]

I put that number out there strictly for comparison E! ----- Yes we all know there are "non Union carpenters" out there that make less. We also know there are " non Union AMT's out there that make less. And as I'm sure you'd point out, more, than AA AMT's. But than again, even though carpenters are skilled people, they don't have to sign off everything they do either! And let's not under value that! Every time an AMT signs off what he does, he is putting his livelihood on the line. If he screws up, people could potentially get killed! A carpenter, Union, or non Union, not so!

Smart Ass:
1; A wise guy, know-it-all
2; Someone who is sarcastic, in a cutting yet witty manner. A person capable of making a remark that could be interpreted as a insult or a joke depending on the sensitivity of the listener and the specific situation. A smart ass is not necessarily a bad person just usually perceptive

 

[Jacobin777]

there are no double standards. Expansion is not the key - making money is. You and others seem to think that AA should get credit for operating flights just to have an impressive route map. I have absolutely no problem if AA pulls capacity in one area and redeploys it someplace else that makes money. DL has indeed pulled a lot of capacity to secondary cities in Europe in favor of adding capacity to AMS and CDG, which was the majority of the way NW operated to Europe and forms the majority of AA's system as well. Secondary cities get hit the most when the economy is weak, as it is in Europe. UA has also pulled back service to secondary cities...but they haven't add much back elsewhere.

AA is a for-profit airline. We're not talking Aeroflot of the communist era.

The simple fact is that AA lost 1 cent for every 5 in revenue it brought in on the Pacific in the 1st quarter of 2013, the most recent quarter for which data was available.

Despite having the largest exposure to Japan, DL managed to make money across the Pacific despite the drop in the yen. In fact, DL's profit margin on the Pacific was 12%, virtually identical to AA's in Latin America.
I respect what AA has done in Latin America... maybe you would do well to acknowledge that DL has built a very durable and profitable network of which the Pacific is a very core part.

And just as AA has implemented a number of strategies to grow and protect its advantage in Latin America and at the expense of other carriers, you shouldn't be surprised that DL will do the same thing in Asia and in other key parts of its network.

AA's Latin America performance is subsidizing its loss-making flying in other parts of the world, including Asia.
DL's profits in Asia are going directly to the bottom line because each of DL's operating regions are making money - which is precisely what the goal of any profit-motivated company should be.

Wait a minute there WT. You are doing the same thing which you used to do on other forum(s). I have NEVER stated that AA should be the biggest, etc. carrier in the world I have always stated AA should be a profitable entity and no matter how you spin it, as of 08-27-2013, it certainly is. I also expect AA to be competitive and profitable in the future.

DL's Pacific network came vastly via the acquistion of NW. While it has improved upon it, by no means did it build it via "ground up". The same can be said of AA and Latin America as well (especially MIA).

"Asia Pacific was a minor preoccupation for pre-merger Delta. Passenger revenue from the region was typically 2% of passenger revenue, according to data Delta supplies to US DOT and interpreted by the MIT Airline Data Project."*-

CAPA

No, all of DL's profits on various sections don't go to the bottom line. How is that Trainer facility coming along? Oh that's right, its losing tens of millions of dollars.

A stabilizing yen will help DL, but that is still causing problems:

"Delta has already worked to reduce capacity into Japan and Mr Bastian said that as the carrier looks towards the end of 2013 and 2014 it would take additional steps to rationalise its Japanese capacity “in light of the new economics and weaker yen”."*

*-CAPA.

Not only that, I believe the Japanese economy/financial sitatuon is getting worse. This will impact DL much, much more than AA.


Regarding military contracts for DL:

"Delta president Ed Bastian estimated the US defence business accounts for about 3% of Delta’s corporate base, and that ticket revenues during that space in the last few weeks were down 15% to 20%."*

*-CAPA

To make matters worse, DL has to deal with an expanding WN@ATL.

"“It’s going to allow us to compete even more effectively with Delta,” (WN)Chief Commercial Officer Bob Jordan said in an interview. “We’re doing really well today, actually gaining local market share. That’s the name of the game. It’s higher- yielding passengers too.”"*

*-Bloomberg

 

[WorldTraveler]

I'm glad you recognize that AA should be profitable.... but being profitable means not rejoicing because a company is larger than yours but has to lose money to do so - whether in total or in a specific city, such as LAX.

Every airline has to support a certain amount of strategically necessary but unprofitable flying. Every airline has had periods when they lose money…
But AA has unique in the industry in continuing to try to stick with its Pacific strategy even after going thru BK and when it is losing money at levels far in excess of what BK can fix or what any other airline has sustained. If you can find another example, tee it up and we’ll discuss it.

I have always acknowledged that NW handed DL a great opportunity with the Pacific routes; you could never find anything saying otherwise. But the market has changed dramatically over the past five years and it is DL, not NW, that has adapted to the market and is making money. The extensive buildout of SEA and DTW came under DL’s watch as did winning access to HND.

Yes, the Trainer refinery has indeed pushed down the crack spread for DL and for other airlines, AA included. You don’t see the crack spread on an income statement but it wouldn’t be what it is if DL hadn’t bought Trainer. The effects of Trainer have far exceeded the cost. You also seem unable to grasp that DL didn’t buy Trainer to make a profit on a standalone basis. The analysts couldn’t grasp that concept either when they were dissing the transaction.

Yes, DL will rationalize capacity to reflect market realities…. Just as AA and UA and a lot of other carriers are doing. Again, you can’t seem to grasp that success is based on ADAPTING to the market, not acting as if you are invincible enough to overcome it.

DL in fact is the largest winner in the 2014 GSA awards. You can find the press release on the GSA site. DL didn’t bid under $400 for a TPAC flight or under $300 for a TATL flight in order to win.

If you aren’t aware that WN is substantially smaller in ATL than they FL was at the time of the FL merger and continue to pull down capacity, then I can’t help you. DL also said on its last earnings conference call that its profit margin in ATL has improved by 3 points. If WN is succeeding at what they want to do in ATL and DL can make more money in the process, then it is no wonder that DL and WN manage to compete so well side by side so both can turn their competitive assaults on other airlines.

 

[eolesen]

Every time an AMT signs off what he does, he is putting his livelihood on the line. If he screws up, people could potentially get killed! A carpenter, Union, or non Union, not so!

Don't flatter yourself, MCI... Mechanics don't have a corner on the "accidentally killing people due to a screw up" market...

You're right that they don't sign off on every step, but they do have just as much liability when it comes to screwing up.

If an ironworker screws up on the job, cranes fall off of buildings, and falling objects will kill or maim co-workers or passers by, particularly on urban jobs.

If a carpenter doesn't do their job correctly, the structure they're working on can collapse, killing occupants.

If a plumber doesn't get the piping right on a gas system, people die.

If an electrician screws up, houses burn down or people get electrocuted.

If an HVAC tech screws up the exhaust on a furnace, people die.

Heck, you don't even need to be a skilled worker... if a prep cook in a restaurant forgets to wash his hands after handling raw meat, and then cross-contaminates other food heading out to be served, people can die...

Think I'm being ridiculous? 3000 people a year die from food poisoning just in the US. That's more than have died in plane crashes worldwide due to mechanic's error over the past 20 years....

So, it ain't all falling on the AMT's or pilots shoulders. There are lots of other professions and trades that carry equally large responsibility and liability for killing other people due to screwing up...