Merger Relief for American Airlines: April 24, 2012

[AA89]

I don't see this as about what's good for Tom Horton. Frankly I could not care less about the guy or what his stake in this is. It's the AA employees who are going to suffer if this merger happens. Doug Parker is a snake in the grass. He's lied to his own employees, and he's lying to AA'ers now when he says he'll raise their pay and not cut any jobs.

Can you name one airline merger in history that has resulted in higher pay and no job cuts?

What Parker is selling is pure fantasy.

Who knows what Parker's goal is but one would hope that eventually it is a sucessful airline. Is his goal to make tons of money? Probably. But so is every other greedy hose bag at the other airlines.
So for most of us who think the merger might make good business sense and would love the bonus of seeing Horton leave without the biggest payoff, this is a no-brainer.
Now here is an impartial opinion based on facts and not emotion. On the bottom of page 8 you will see the writer's estimate of no job losses beyond what AA is attempting in BK. At this point I think we would take our chances on the merger supporting higher wages in the future vs 6+ years of The Horton Gang's plan.


http://www.airlinefinancials.com/uploads/American_and_US_Airways_ver_2.pdf

 

[brokenwrench]

Really?

AA wants to lay off over 13,000, US will only lay off just over 6,000.

Dont let the facts get in your way now.

From the US T/A
"Shop Work. Article 1 of the M&R CBA and all other applicable sections and attachments to the M&R CBA and relevant LOAs shall also be modified to establish that the Company's decision of whether to in-source or outsource shop work will be determined on a transparent basis by conducting a financial and business analysis that is shared with the TWU."

Say goodbye to those jobs. Any numbers in the back shop?

Furlough Protection. For the two year period following the Closing Date, the Company will maintain (i.e., protect from furlough) those approximately 4,500 AMTs at TULE.

24 months after the ink dries bye bye TULE.

 

[WorldTraveler]

It will take several years to just get even with the lift we gave to DAL with around 40 B757's. Rode on one of them in DAL's jumpseat, full airplane. FO turns around and tells me, "Thanks for the airplanes dude, we're kickin' a## with them". He was right. You think DAL and UAL will stand around without a competive response? sure, we'll stroll right in and take them down. Maybe we'll do it with the A319's. Great plan AA has paying it's Captains $100,000/year less then Asian carriers. The should go well with the turnover and training expenses. Call up Bev Goulet in NY. Ask her what cost number she used for that one.

While you're at it with the 'name one merger' game, tell me one labor intensive, service orientated company that succeeded with an expansion after kicking their employees in the face. I can only speak for the pilot group. We are done with the current AA leadership. That group includes current and former military officers, including Colonels/LT Colonels/Commanders. Business school MBA graduates, med school graduates, Ivy league law school graduates. In fact it's a group with a far more impressive academic pedigree than exists in the upper levels AA/AMR. Ask around about Senior VP Jeff Brundage's education. Two years of culinary school.

I believe it was actually less than 20 ex-TW 757s that DL picked up... but your point remains that competitors don't sit still. You are absolutely right that AA employees have to get onboard and decide that saving the company is worth it in order to save their careers.... there are obviously alot of AAers who don't believe that but I truly do hope enough people see value that they do put forth the effort to turn things around.
.
Forgive me if I've missed what you have posted elsewhere, but what is your plan B - or more significantly your desired outcome?
.
BTW, running a kitchen can teach one a great deal about working in a pressure cooker situation... I'm less concerned about where one has been to school than with the lessons they have learned.

 

[eolesen]

AA wants to lay off over 13,000, US will only lay off just over 6,000.

Dont let the facts get in your way now.

AA wants to lay off without cutting pay for the ones who remain.

US will trade pay for jobs.

My opinion only, but trading pay for jobs is shortsighted. I thought most people learned that lesson back in 2003. Apparently not.

 

[FWAAA]

I don't understand the fixation on airplanes that used to be in the fleet. Would AA be stronger today and DL be hobbled if AA had kept those 19 ex-TWA 757s?

AA returned 19 ex-TWA 757s to the lessors in 2007 and early 2008 and claimed that doing so would save about $50 million per year. DL subsequently leased 17 of them.

In the years since AA returned those 757s, AA has taken delivery of over 100 new 738s that are more fuel efficient than the 757s it returned.

 

[Mach85ER]

World Traveler,

Here are some thoughts on the current situation:

-AA should have gone Chapter 11 in 2003.
-Horton's plan for growth at the cornerstones will not work
- AA needs to merge with USAirways (preferbaly while in BK) to get the hubs in CLT/PHL/PHX. With these addedroutes, AA can compete with DAL and UAL. Without this capacity, the future of AA sounds doubtful
-AA has given up competing. In the past, an attack at a hub would be met with a response. Boston is an example of not competing
-AA should send the Embraers back to Brazil.
-There has to be changes in AA management.
-No confidence in Horton and the rest of senior management.

Now WT, feel free to shoot down the above concepts. While you're at it, could you provide a rough summary of your airline experience in management or labor?

Thanks

 

[JFK Fleet Service]

Boston? Hell,Spirit and their foray into DFW would have gotten a nuclear response.

 

[wings396]

World Traveler,

Here are some thoughts on the current situation:

-AA should have gone Chapter 11 in 2003.
-Horton's plan for growth at the cornerstones will not work
- AA needs to merge with USAirways (preferbaly while in BK) to get the hubs in CLT/PHL/PHX. With these addedroutes, AA can compete with DAL and UAL. Without this capacity, the future of AA sounds doubtful
-AA has given up competing. In the past, attack at a hub woul be mt with a response. Boston is an example of not competing
-AA should send the Embraers back to Brazil.
-There has to be changes in AA management.
-No confidence in Horton and the rest of senior management.

Now WT, feel free to shoot down the above concepts. While you're at it, could you provide a rough summary of your airline experience in management or labor?

Thanks

Thanks for your post. Perhaps something of this sort coming from an actual employee of AA wil get thru to him.
I know that the letter written by Bates didn't get thru, but maybe it will start to penetrate his Delta programmed brain. If you can actually read any of his page long posts before dozing off, you would tend to think that he was/is an airline CEO.

Either way, this AA/US deal means trouble for Delta, so he is dead set against it. Mr WT would prefer for US to die off and go away, while AA remains a smaller carrier in Delta's
Rear view mirror.

 

[WorldTraveler]

World Traveler,

Here are some thoughts on the current situation:

-AA should have gone Chapter 11 in 2003.
-Horton's plan for growth at the cornerstones will not work
- AA needs to merge with USAirways (preferbaly while in BK) to get the hubs in CLT/PHL/PHX. With these addedroutes, AA can compete with DAL and UAL. Without this capacity, the future of AA sounds doubtful
-AA has given up competing. In the past, an attack at a hub would be met with a response. Boston is an example of not competing
-AA should send the Embraers back to Brazil.
-There has to be changes in AA management.
-No confidence in Horton and the rest of senior management.

Now WT, feel free to shoot down the above concepts. While you're at it, could you provide a rough summary of your airline experience in management or labor?

Thanks

thanks for your reply, Mach.
I agree with all of your ideas except for one - the merger with US. The simple fact is that as much as labor might want it as a means to reduce the size of the cuts, I have yet to hear any non-labor creditor express a desire to reduce the size of the labor cuts which would put the company at greater risk of failure after it leaves BK. AMR's creditors will receive the greatest recovery by having the deepest cuts.... that is the unfortunate reality and that is why labor and other business interests are often on a collision path - and that doesn't change in BK.

.
NYC is more significant to AA than BOS. BOS was overrun by a low fare carrier with some of the lowest costs. AA's losses in NYC were to network carriers that has been aggressively taking AA's best customers.
Just a note on competition.... DOT data shows that VX and B6 continued to grow their presence in key DFW and ORD markets where they have added service. AA's average fares have come down and those carriers shares have continued to grow. Further, NK is picking up significant amounts of share in the markets it added from ORD - and even though it has low average fares (at least as reported to the DOT which doesn't include all the baggage fees at the market level), it is injecting itself into the markets.

AA has an enormous need to defend its network against competitors and the most serious challenge is in Dallas where NK is aggressively growing and WN is counting down the days before it can do a full scale assault on the market.

Your pessimism in AA's turnaround plan is not unreasonable... but expecting US which has had no better success in defending its key markets is not the place you will find answers.

 

[Mach85ER]

FWAAA, Eolesen,

You're up to bat.

 

[ChockJockey]

but expecting US which has had no better success in defending its key markets is not the place you will find answers.

US has had no success in defending its key markets of CLT, DCA, PHL, and PHX, where it is the #1 carrier at each?

 

[wings396]

Don't waste your time with this guy. He never has, and never will have anything positive to say about US. While US is small in comparison to DL, they have been a thorn in Delta's side for many years. His quest for Deltaflot will never subside...
He has yet to admit why he is so consumed by Delta, and what affects thier well being after several requests to do so. I could only care so much about a race that I had no horse in.....
He is being a " Deltoid" for some valid reasons, and it ain't just because he saw a few of their L-1011's at his local airport when he was a kid..

 

[eolesen]

FWAAA, Eolesen,

You're up to bat.

No thanks. I'm on record as thinking that backing the US merger is labor cutting off your noses to spite your faces.

Others have posted their success in negotiating labor agreements, so I won't repeat it. The one thing they do well is they have a decent operation. That's it. Their service is questionable from first hand experience, their lounges are on par with a Host Marriot restaurant from 1985, and I'd rather drive than fly Mesa Airlines as a commuter partner. I'm actually surprised they haven't been asked to leave Star Alliance.

Strategically, a merger might work since it reduces competition in the short term, but the only thing labor achieves is getting rid of Horton whilst simultaneously further reducing their pay & benefits further than what either the LBO or term sheets are going to accomplish.

At the end of the day, I'd think AA would be better off cutting 15% at DFW, getting 70 seaters with F for the thinner markets out of LGA and using the excess aircraft to add more point to point, all stuff that can be done without US.

Fact is that Redding is gone. Brundage is leaving. Garton has been pushed off to the side. Del Valle is gone. You can go ahead and blame Horton for inheriting the sinking ship, but frankly, I think I'd give the current management team a shot before I'd go trusting US management to be any better.

Seriously, how many of the current crop were even VP's at AA during the 2003 debacle? It's a seriously shrinking list.

 

[WorldTraveler]

US has had no success in defending its key markets of CLT, DCA, PHL, and PHX, where it is the #1 carrier at each?

now that it has reduced its network and allowed competitors to carve up the local market at LAS, PIT, BWI, a bunch of cities in the SE... oh and NYC... yes, it has defended its CURRENT key markets.
But US wouldn't be so worried about a merger with everyone else if it had defended its markets in the first place.
And just because they don't have a hub in those cities doesn't mean they can't still be the largest airline.
.
wings,
you can't seem to grasp that I support what wins... and I'm harsh on US because they haven't demonstrated an ability to win in a real long time. Not even sure how long.
.
AA can indeed be turned around and it doesn't need US to do it. E's assessement of what AA needs is actually alot closer to reality than what AA's plan entails.

 

[TWU informer]

YAWN