LEE: No merger for American Airlines

[BoeingBoy]

There is much more in his post than that. Run down the list and dispute some more of it if you would please.

Bob is good at taking little nuggets of information and making a motherlode of them...

"When you can fly cheaper than drive, when the cab ride costs more than the airfare and get there 10 times faster and still claim that flyers are not reaping the rewards from all that has happened its obvious that you have unrealistic expectations."

The rise of the low cost carriers is at least as responsible for that as anything. Their low cost business model allows them to reduce fares below what a legacy can make money at.

He cites labor costs at 28% as if its high, in fact its lower than its ever been.

Because fuel, averaged per calendar year, is the highest it's ever been. As expenses go up due to fuel, even the same total labor cost would be a smaller percentage of expenses.

Worker productivity as a measure of revenue has more than doubled while wages are lower than they were ten years ago.

Revenue fluctuates with the economy and size of the carrier (mergers). Since revenue production is partially out of the carrier's hands (competition) and almost entirely out of the hands of the employees, a better metric is ASM's per employee, which decreased through 2001, after which the cut in number of employees (capacity controls, furloughs, outsourcing) started increasing productivity again. But from 2006 a plateau has been reached with productivity remaining nearly constant. Note that the things Bob doesn't like - cuts - are the very things that increased productivity which he credits to the employees.

The fact is, and Mr Leee didnt bother himself with such things, is that wages as a perecentage of expense are lower than they ever were.

Look how much fuel has increased in the last decade, measured as average cost/calendar year. Even slowly rising wages/benefits become a smaller percentage of expenses give the rapid rise in expenses cause by the price of fuel.

Jim

 

[American6]

I want a merger. AA needs to merge with US Airways to save half of those 13,000 jobs AA wants to cut to save labor costs and to save routes.

 

[brokenwrench]

Yes, and I'm sure a Non Union Delta would do wonders for your group in a merger. The US deal may not be great, but it's better than what AA can/will offer. You need to look at the "Big Picture" with the long term viabilty of the airline in the coming years. Without this merger, AA will shrink and fall even further behind DL & UA.

Wings, I'm not a delta cheerleader like WT but I would take Delta over US any day of the week and twice Tuesday.

 

[will fix for food]

His opinion is meaningless, but let him rant away.
I'm sure his holiday weekend BBQ at Hortons place will be great....

Here is an article from a better known and respected source:

http://www.aviationweek.com/Article.aspx?id=/article-xml/avd_05_21_2012_p05-01-459357.xml&p=2

Parker has seen the writing on the wall. Merging with American is the only salvation left from withering on the vine. He will do or say anything to make it happen. It will be interesting to see what he will come up with when he has to actually commit to putting a plan on paper as opposed to vague generalities.

 

[tom barry]

AA isn't going with DEL-DUH.
AA isn't going with USeless Airways.
AA WILL stand alone.
The AMT's will go (pray GOD) with AMFA,
And the rest will be History(thanx to the IDIOCY of the FSC's) as AA climbs back UP and OUT of the # 3 position !

(I wonder if Vegas has a "line" on my prediction yet) ?

 

[CactUS4Ever]

AA isn't going with DEL-DUH.
AA isn't going with USeless Airways.
AA WILL stand alone.
The AMT's will go (pray GOD) with AMFA,
And the rest will be History(thanx to the IDIOCY of the FSC's) as AA climbs back UP and OUT of the # 3 position !

(I wonder if Vegas has a "line" on my prediction yet) ?

That is some Dream you just had...We used to Dream like that at TWA...

 

[wings396]

Yea, ok Tom. Good luck on that. Everyone except Horton and his cronies feels differently about that.

 

[Flying low]

AA isn't going with DEL-DUH.
AA isn't going with USeless Airways.
AA WILL stand alone.
The AMT's will go (pray GOD) with AMFA,
And the rest will be History(thanx to the IDIOCY of the FSC's) as AA climbs back UP and OUT of the # 3 position !

(I wonder if Vegas has a "line" on my prediction yet) ?

Don't you mean the AMT's will go AWAY...

 

[WorldTraveler]

Here is an article from a better known and respected source:

http://www.aviationw...-459357.xml&p=2

Parker has seen the writing on the wall. Merging with American is the only salvation left from withering on the vine. He will do or say anything to make it happen. It will be interesting to see what he will come up with when he has to actually commit to putting a plan on paper as opposed to vague generalities.

This is the key to the reason US is pushing for the merger....

"In a perfect world, AMR could expand without the inconvenience or cost of combining disparate workforces while helping to limit the potential upheaval of new entrants pressuring those second-tier operators. And it would marginalize US Airways, which AMR believes has little scope for growth in its hub markets in Phoenix, Charlotte, N.C., and Philadelphia, and allow the remaining “Big Three” to build on a domestic capacity initiative started three years ago that has already boosted U.S. load factors to industry highs."

US' future is highly threatened with the prospect of having an even larger and stronger AA, DL, UA, and WN on the east coast where before US really had to deal with just DL.
Thus, the chances long term of US making it in that competitive environment are slim.

Note also how elevated LCC stock is on talk of a merger; it is 50% higher than other network carrier stocks based solely on hopes of a merger. US mgmt is ALREADY making out like bandits just by talking up a merger which probably won't even happen. They want to keep the euphoria of a potential merger going as long as possible since they get much of the financial benefit without having to deliver a single thing to show that the merger could actually work.

 

[wings396]

Ya ok WT. Go back over to the DL boards, so you can play with yourself over the euphoria about the 717's and the pilots TA. Too bad that you are on the outside looking in with all of this going on. Guess you shouldn't have left a few years ago. BTW, is your bro still sweatin bullets over there at AA?
You and him can keep praying that this merger doesn't happen all you want.
Are you guys headed over to Hortons this weekend for a BBQ? Maybe Richard will be there too......

 

[AA89]

Bob is good at taking little nuggets of information and making a motherlode of them...

"When you can fly cheaper than drive, when the cab ride costs more than the airfare and get there 10 times faster and still claim that flyers are not reaping the rewards from all that has happened its obvious that you have unrealistic expectations."

The rise of the low cost carriers is at least as responsible for that as anything. Their low cost business model allows them to reduce fares below what a legacy can make money at.

He cites labor costs at 28% as if its high, in fact its lower than its ever been.

Because fuel, averaged per calendar year, is the highest it's ever been. As expenses go up due to fuel, even the same total labor cost would be a smaller percentage of expenses.

Worker productivity as a measure of revenue has more than doubled while wages are lower than they were ten years ago.

Revenue fluctuates with the economy and size of the carrier (mergers). Since revenue production is partially out of the carrier's hands (competition) and almost entirely out of the hands of the employees, a better metric is ASM's per employee, which decreased through 2001, after which the cut in number of employees (capacity controls, furloughs, outsourcing) started increasing productivity again. But from 2006 a plateau has been reached with productivity remaining nearly constant. Note that the things Bob doesn't like - cuts - are the very things that increased productivity which he credits to the employees.

The fact is, and Mr Leee didnt bother himself with such things, is that wages as a perecentage of expense are lower than they ever were.

Look how much fuel has increased in the last decade, measured as average cost/calendar year. Even slowly rising wages/benefits become a smaller percentage of expenses give the rapid rise in expenses cause by the price of fuel.

Jim

It looks like you did what FWAA did and picked a few "nuggets" but ignored others. In addition, as FWAA did you ignored the point of Bob's post: Continually taking from labor and using the bamkruptcy laws to take more than is necessary to become a profitable business is wrong and in this case will not work.
The employees that are left after this will not have even the good will that the other carriers had after emerging. It's just "plane dumb".

 

[BoeingBoy]

It looks like you did what FWAA did and picked a few "nuggets" but ignored others.

I could have kept going but assumed, mistakenly I guess, that you would get the point.

AA is in bankruptcy and has filed to abrogate the union contracts. As I said shortly after AA filed for bankruptcy, your choice is either watch AA impose it's term sheets or negotiate something different, and about all negotiating will do is move the furniture around - the total amount of $ cuts will stay about the same.

You can moan about the cuts being excessive, the execs enrichening themselves, the unfairness, subsidizing passengers, or whatever you want but your fate is in AA's and the Judges hands in a process both designed and that has historically given the company going through it all the power. All the moaning won't mean a thing in the courtroom.

Jim

 

[Soaring Eagle]

I honestly feel that a merger with AS would be of more benefit to AA. A merger with AS would result in far less, if any layoffs. It would also give AA a HUGE presence on the west coast, which could eventually turn into a successful feeder operation for a nice Pacific route structure from SFO, LAX, and SEA. A merger with AS would just produce more benefits. This would all be dependent of course, on AA being able to resist its strange need (based on history) of buying an airline (Air Cal, Reno) and then dismantling the route structure.

If anyone believes for a minute, that a merger with US Airways is not going to result in massive layoffs, they are dreaming. There would be hub closings. No matter what Parker says, there would be a reduction in the route system. Phoenix would be history. Parker obviously wants DFW for east-west connections and there would be no use to maintain PHX as anything other than a focus city. CLT is the one positive thing that US would bring to AA. I will admit that CLT would fit nicely in AA's route system. I don't see PHL maintaining its current level of service. Yes, I know the O&D is good, but I think the focus would shift to the NYC and BOS areas.

I'm just afraid that my co-workers at AA are buying into Parker's lies about no layoffs. I can't think of a single merger that has not resulted in no layoffs. It seems to me that at least with an AS merger, the reductions would largely be limited to redundancies in management, rather than in the operational area.

 

[wings396]

You may as well forget about AS, Given that DL already has them under the covers. What will AS do for you in the Eastern part of the US?

 

[wings396]

Do you really believe that there is ANY way out of your mess without layoffs?
At least with US there will be less, with chances of future growth that will enable many to return.