merger could come in 2 weeks

[jimntx]

For the most part, FAA minimums. That being said, there are exceptions, the New York to West Coast transcons have greater than minimum staffing (I think), and International flights are not usually FAA minimum; though I think that some of the 737 service from MIA to the Caribbean is minimum crew.

When I first started in 2000 a lot of flights had "extras" added--usually when there was a meal to serve in coach. Of course, that has gone by the 9-11 wayside.

The company recently reduced the seating on some 737s below 150 for the Main Cabin Extra initiative; so, they could legally staff with just 3 f/as, but they decided that at least for now it was too messy to contend with; so they are still staffed with 4 f/as. The mess grew out of a crew flying one 737 into a hub, then changing planes. If you come in with only 3, but your next a/c requires 4 then you have to provide a 4th flight attendant at that hub. And, the leg after that one might be back to a 3 f/a configuration.

 

[wings396]

Jim, don't know what your obsession is with me today especially on the profit remarks. As I have said, I have never been one to toss the US profits around. Please get your act together on this prior to using me in a generalized manor.

 

[CallawayGolf]

700, as I posted on another thread, the phrase "record profits" is a meaningless term unless put into context. If US Airways had never made a profit ever, but made $1.42 profit last quarter, it would still be a record profit. Also, as I asked wings396, please recalculate those profits with AA pilot/flight attendant pay rates instead of LCC pay rates, and tell me how much of that profit is left. DP has "promised" us not only our current pay rates, but restoration of some of the pay and benefits we have lost. I'm going to assume that your pilots and flight attendants will not stand for us getting pay and benefits that they do not receive; so, where is the money coming from to pay for all this largesse? Merger synergies? That's consulting company claptrap. Show me the money.

I think this merger might prove fatal to both our airlines. I hope I am proved wrong.

If you go back and look at the projections that DP used to line up the investors for the 2005 HP/US merger you would find that his numbers were very accurate for the next two years in terms of synergy savings and bottom-line return on investment for the new equity group. He projected synergy savings prior to the deal closing and acquiring US out of bankruptcy and then tracked and reported them to be very much in line with what the Barbell Acquisition Group had forecast. Profits for LCC were attained in 2006 and 2007. One of the conditions for the HP/US merger was that labor contracts would be "cost-neutral" as the work forces were combined. Subsequent history has proven the the LCC pilots and FAs were even more eager to ensure that this "cost-neutral" requisite was maintained as neither group would take a single step towards getting any kind of wage improvements for far longer than DP could have every predicted, especially since he kept offering them money and they chose, of their own volition, to remain in status quo.

So based on a whole host of reliable and verifiable history, if DP says there are synergies to be attained in a merger, then the investment community has good reason to believe him. If he says those synergies can be attained with the foretasted changes in labor rates, then intelligent people with money to place on the outcome of his Management experience and expertise should have a high degree of confidence that he isn't making up numbers or making projections that cannot be reasonably attained; rather they should and very likely will back his plans and put their money down on the table to see him deliver on the returns they are seeking for their investment.

DP has been leading a major airline longer than any other current CEO in the business today and he has already proven himself a savvy and dependable leader in one of the toughest industries in the country. When fuel spiked in 2008 he did what he had to do to ensure the survival of the Company outside of bankruptcy protection. If this merger goes through he will be certainly be cemented in history as a leader among leaders who successfully merger not one, but two major airlines in less than a decade to build - out of the pits of others' failures and bankruptcies - the largest a perhaps the most profitable airline in the world. What's not to like?

 

[UPNAWAY]

The profit would be cut in half if the unions were paid Americans rate, there have been many stories in that reguard in the last few weeks.

 

[UPNAWAY]

I also do not think Parker will go the "Cost cutting" route that he had to do with both AWA & US to survive.

 

[wings396]

Nice post, I find it laughable that some on here continue to question how the combined airline can pay who what and be profitable without having all of the data in front of them. Were not at a loss on here when it comes to a bunch of armchair CEO's...

 

[Jester]

Where is DP going to get the money to pay the AA unions what he promised?

There are profits to be made without regards to wage differences, some of which could happen without any merger, but they will be there even more with a merger, and the Tempe boys know this to be true.

For example, AA fleet replacement will provide a significantly lower operating cost structure with the retirement of MD-80s in favor of A320s and B737s. Dumping American Eagle to a fee for service operator will improve the bottom line. Of course, AA's lower wage and benefit structure post-bankruptcy. Again, these things would happen regardless of merger, and I think with a new wage and benefit structure AA would be profitable again, especially with its highly desirable hub locations.

However, with a merger, it eliminates one more competitor, even though there is not much direct competition on segments, but connecting flights there would be one less fare to compare. It expands the network for both US and AA where they are weakest... AA along the east coast and US in the central plains and Latin America, thus providing coverage where the respective customer base would not need to consider an alternative carrier. It reduces Administrative overhead and duplication of executive positions. And maybe, a consolidation of hubs by downsizing low-profit margin operations.

So it isn't simply a matter of higher profits through wage reductions that makes a joint AA-US a more profitable, but in addition, to reduced general expenses and improved revenues.

 

[cynic]

Dumping American Eagle to a fee for service operator will improve the bottom line.

I think Piedmont and PSA will be gone soon as well.

 

[jimntx]

For example, AA fleet replacement will provide a significantly lower operating cost structure with the retirement of MD-80s in favor of A320s and B737s. Dumping American Eagle to a fee for service operator will improve the bottom line. Of course, AA's lower wage and benefit structure post-bankruptcy. Again, these things would happen regardless of merger, and I think with a new wage and benefit structure AA would be profitable again, especially with its highly desirable hub locations.

However, remember that all those new, fuel-efficient a/c come with a massive amount of debt. Debt service tends to reduce profits because the loans have to be paid back in real cash money, you know. And, I don't know where you got the incorrect information that AA's wage and benefit structure is lower post-bk. As a matter of fact I got a 3.5% raise with the signing of the new contract. (Not that I'm bragging. The increase in my insurance premium eliminated the entire gross raise--forget the net raise.)

It is supposed to become lower because of the 2000+ f/as who took the "early out" enabling us to hire again. But, that hasn't happened yet. We have a couple of classes in training, but they are not yet on the payroll, and most of those who elected the early out have not yet left.

And, I'll believe the "fare increase due to reduction in competition" when I see it. There have been several mergers over the past few years, and the average flyer is still paying less for a ticket today than they did 20 years ago.

 

[ChockJockey]

If you go back and look at the projections that DP used to line up the investors for the 2005 HP/US merger you would find that his numbers were very accurate for the next two years in terms of synergy savings and bottom-line return on investment for the new equity group. He projected synergy savings prior to the deal closing and acquiring US out of bankruptcy and then tracked and reported them to be very much in line with what the Barbell Acquisition Group had forecast. Profits for LCC were attained in 2006 and 2007. One of the conditions for the HP/US merger was that labor contracts would be "cost-neutral" as the work forces were combined. Subsequent history has proven the the LCC pilots and FAs were even more eager to ensure that this "cost-neutral" requisite was maintained as neither group would take a single step towards getting any kind of wage improvements for far longer than DP could have every predicted, especially since he kept offering them money and they chose, of their own volition, to remain in status quo.

So based on a whole host of reliable and verifiable history, if DP says there are synergies to be attained in a merger, then the investment community has good reason to believe him. If he says those synergies can be attained with the foretasted changes in labor rates, then intelligent people with money to place on the outcome of his Management experience and expertise should have a high degree of confidence that he isn't making up numbers or making projections that cannot be reasonably attained; rather they should and very likely will back his plans and put their money down on the table to see him deliver on the returns they are seeking for their investment.

DP has been leading a major airline longer than any other current CEO in the business today and he has already proven himself a savvy and dependable leader in one of the toughest industries in the country. When fuel spiked in 2008 he did what he had to do to ensure the survival of the Company outside of bankruptcy protection. If this merger goes through he will be certainly be cemented in history as a leader among leaders who successfully merger not one, but two major airlines in less than a decade to build - out of the pits of others' failures and bankruptcies - the largest a perhaps the most profitable airline in the world. What's not to like?

Well said.

 

[dash8roa]

Cant be too many leaving when US made record profits last year while AA showed losses.

Its more having to do with US low wage scales and 2 trips in chapter 11. I speak from experience that AA frequent flyer program is much better than the US product. More open seats on comparable routes and no so called processing fees to redeem mileage awards. And who can forget the time when US charged for water.I hope the merger will not turn AA into just a larger Airways.

 

[johnny kat]

dash8roa:

I hope the merger will not turn AA into just a larger Airways.
____________________________________________________________________

AA will most certainly become a larger Airways. Believe me when I tell you that it will not take the US mgmt. team long to get into every single detail and will chop, cut, reduce, renogotiate every thing in order to eke out the last dime on any thing. Everything will have to earn its' cost or it will simply go away. Just ask any US employee and they will cite numerous examples for you.

Here a couple of examples I noticed immediatley after US/HP. First crew accomodation contracts were renegotiated in order to get the cheapest hotels for RONS. Then the coat closets were removed from every Airbus and 757. Extra rows of seats were added to increase capacity on board. Even now the A321's are having more seats installed at the secondary exit row in front of the f/a jumpseat. Anything that does not produce revenue has been removed from the a/c.

I don't know how the FF's have fared but judging from the load factors, management seems to be going about the business of making sure the company isn't wasting money or leaving any revenue opportunities behind. If you check in for a trip at US you had better be rested and ready to go, because you are going to work your a## off.

 

[robbedagain]

IVE long noticed that the coat closets are gone and i believe theyre not even on the 737 400 but i could be wrong

 

[johnny kat]

The 737-400s still have the coat closet at the boarding door. The 767s and A-330s still have them as well. There are still a couple of A319s that have them. however, more seats have been added on most aircraft.

 

[traderjake]

AA will most certainly become a larger Airways.

No it will not, not if the New AA intends to compete with Delta and United.