Parker makes low-ball offer to AMR creditors to merge US with AA

[WorldTraveler]

which airline is suffering operationally?

To be fair, AA has done a very good job of overcoming the fall "labor debacle" while one of their other major network competitors has taken months to overcome some technology issues.... which explains to a large degree why UA's RASM has trailed the industry.

US is in the top tier of the industry, operationally.

 

[PITbull]

Pit,
a little balance would be helpful.

Even in AA's early BK documents, they proposed costs that were lower than one major competitor but only 1% lower than the other - and that was almost a year ago. The competitive situation has continued to move - it always does - and it isn't at all clear where AA's costs will be relative to the industry post BK.

US has actually done about average to slightly above average in the industry regarding revenue production driven in part by the poor operational performance at some carriers. US has been near the top tier in terms of operational performance; operational performance at more than one airline is accompanied by above average revenue production.

US hasn't generated revenues sufficiently large to start passing out pay raises in masse again but US mgmt is not the baffoons that you might want them to be and AA mgmt or their business model is not as proven as you might want to hope they are either.

WT,

The revenues generated by the operation at U has everything to do with the culture of the employees. They go above and beyond best customer performance. They are a sensitive group, and often buy into the "poor company; need to compete with much lower costs mantra". They've been beaten down to think that they should be lucky to have a job and that there ale many folks out there that would do the job for less.. BS. So, their performance shows that they are grateful to the CUSTOMERs for continuing to travel with them and keep them in the air.

Performance is ALL labor driven; mangement is just riding on their coat tails; never happy, unless they can be bigger with bigger salaries and perks that go along with that for their careers. Keep in mind the stock performance only started to rise when their is a rumor of merger. Before that, the stock was between $4- 7 and often times sitting bleow $5.I Can't see what this merger would do for labor, besides fill up the grievance log books and court rooms with seniority issues, and joint contract issues ect..and for stock holders, the rise is so short lived. As Warren Buffet once was quoted back in the late 90's, worst investment he has ever had in his buiness career is buying US Airways stock or any airline.

For U to offer 70% to the creditors plus $8.5 billion in stock, and 13% of the new comany to the AA pilots, that really doesn't leave much left for an outside investor or the rest of labor. US Airways pilots already have a share of the current US Airways, something like 10%, what happens to that, pray tell?????

After 25 years of flying and repersenting labor, I know very well that the airline industry is all about customer service, not just the pulbic that fly, but also the employees are customers too. Management forgets who butters their bread.

I will not get behind any kind of merger for US Airways, and I will be highly visible and vocal in my perch UNTIL labor agrees to the contract they feel they deserve after a decade of concessions.

They haven't shared in any of the success of the airline that they contrbute to day in and day out 365 days a year. Only the untalented, egotistical, users, and yes proven record of baffune-type managemnt style with no other business plan, after 3 restructuring agreements, other than CONSOLIDATION!!!!! PIGGY BACKING ON ANOTHER AIRLINES HARD WORK AND DEDICATION TO RIGHT THEIR OWN AIRLINE TO EMERGE SOLO.

 

[PITbull]

PITBULL Parker is smart in a sense that he got AA labor onboard first yet he doesnt have contracts with us pilots or f/as but he still has managed to to turn profits after profits while the airline suffers operationally

Profits are short lived. He's creating numbers to lure in the creditors of AA. Business can do this creative accounting that is legal to make their books look good. Profits generated come from the work that labor continues to do, providing the best customer service and putting their differences at bay when it comes to their professionalism out in the field.

Yes, he "leaped frogged" over AA mangement, which tells you the character, tenanciity, and boldness that an impulsive egomaniac he is.

He actually was interfeing with AA' period of "exclusivity", and could have been sued. His lawyers must have jumped in and muzzeled the management bigmouths quickly. And they stopped interfering, untill AA mangement decided to "explore" a possible merger to satisfy the creditors.

It aint' over till the fat lady sings...

 

[PITbull]

PITBULL Parker is smart in a sense that he got AA labor onboard first yet he doesnt have contracts with us pilots or f/as but he still has managed to to turn profits after profits while the airline suffers operationally

Profits are short lived. He's creating numbers to lure in the creditors of AA.
Businesses can do this creative accounting that is legal to make their books look good. Profits generated come from the work that labor continues to do, providing the best customer service and putting their differences at bay when it comes to their professionalism out in the field.

Yes, he "leaped frogged" over AA mangement, which tells you the character, tenanciity, and boldness that an impulsive egomaniac he is with no other plan to sustain profitability unless he rides on AA.

He actually was interfeing with AA' period of "exclusivity", and could have been sued. His lawyers must have jumped on his back and muzzeled the entire management bigmouths quickly. And they stopped interfering, untill AA mangement decided to "explore" a possible merger to satisfy the creditors.

It aint' over till the fat lady sings...

 

[WorldTraveler]

Pit,
as usual we agree on MOST things and anyone should be able to see that US has not established that it can make money at industry standard pay rates.

Culture and respect for employees most definitely does translate into improved revenues... but all the culture in the world can't overcome a business plan that is trumped by competitors - in part because of size.

US has not been able to compete in the same league as other carriers precisely because it has not had the financial strength to engage in prolonged market share battles with larger network carriers or better financed low fare carriers.

US has not had the size to compete for corporate contracts which lock in potentially large volumes of high yielding traffic.

Culture is great but don't dimiss that there are very well reasons why size could help US better compete.... but that doesn't necessarily mean that all of the market share that has been lost will be regained - but there is the possibility that the rate of market share losses can be slowed.

 

[Bob Owens]

Pit,
as usual we agree on MOST things and anyone should be able to see that US has not established that it can make money at industry standard pay rates.

Culture and respect for employees most definitely does translate into improved revenues... but all the culture in the world can't overcome a business plan that is trumped by competitors - in part because of size.

US has not been able to compete in the same league as other carriers precisely because it has not had the financial strength to engage in prolonged market share battles with larger network carriers or better financed low fare carriers.

US has not had the size to compete for corporate contracts which lock in potentially large volumes of high yielding traffic.

Culture is great but don't dimiss that there are very well reasons why size could help US better compete.... but that doesn't necessarily mean that all of the market share that has been lost will be regained - but there is the possibility that the rate of market share losses can be slowed.

Jet Blue and Southwest consistantly earn profits and are much smaller. Maybe not opening up new routes that start fare wars, such as stepping on UAs dick in Houston may make more sense.

 

[WorldTraveler]

B6 and WN have traditionally enjoyed much lower total labor costs because they have lower seniority employees and keep growing which keeps a fresh supply of entry level employees coming thru the door.

B6 has been able to battle the network carriers because of its low costs.

As I have stated many times before, WN either enters markets where it can be large enough to win vs. other carriers in the market or it does not enter those markets. There are very few markets where WN has been content to maintain fairly small market shares except in NE markets where there is limited space to grow.

And yes WN decided to focus its Houston efforts on HOU even though N. Houston is a far richer region of the city.
And your comments validate what I have said that AA and UA have this sense of needing to be in each other's faces, usually to the detriment of both. Other airlines manage to be happy finding their own niche.

 

[FWAAA]

Jet Blue and Southwest consistantly earn profits and are much smaller. Maybe not opening up new routes that start fare wars, such as stepping on UAs dick in Houston may make more sense.

I'd agree with you if AA had announced several daily EWR-IAH flights. THAT would incite a fare war. Connecting IAH to JFK once a day so that Houston residents can easily connect to AA's international schedule is not encroaching on UA's local traffic between NYC and Houston.

 

[jimntx]

And, how many passengers are we talking about. 50? 100? Every day? That's going to so fill up a 777 or even a 757. In the meantime, we have a S80 or 737 going empty most of the time. This is almost as smart as running a DFW-ATL flight every hour on the hour every day with 35 passengers on one flight, 68 on the next, 42 on the next, etc. But, during Christmas they are all full. (Mostly passengers connecting to DL flights who couldn't get on Dl's DFW-ATL service. Though, that may be changing. DL appears to have upgraded (at least some of) that route to mainline from the previous rjs.

I lived in Houston for 30 years. AA is NOT the prom queen in Houston. When AA decided that if you wanted to go anywhere much on AA, you had to change planes at DFW, there wasn't a whole lot of goodwill created. And, yes I know all about the IAH-MIA flights. I've worked them. A lot of those passengers are there because they had no other choice. Continental's (now, United) flights to Central/South America nonstop from Houston were full.

 

[WorldTraveler]

I still haven't heard the aircraft type but if it is anything above a CR7, it is more than is necessary to carry the percentage of passengers AA can possibly expect to gain on the route.
Anything larger than a CR7 outside of the summer season means AA is going to have to cmopete in the local market; even if it is only the int'l market AA is after, they are going to have to go up against UA which does a very good job of commanding the loyalty of the local IAH market despite their recent missteps.

Jim,
actually load factor on DFW-ATL for both DL and AA has taken a dive in the past several months due to dramatically higher fares since FL left the market due to WN's acquisition of them.
AA and DL carry almost identical shares of the local ATL-DFW (RT) market with DL getting a higher average fare. DL's LF is about 10 points higher than AA's because DL has a larger hub and has the potential to carry more pax beyond ATL not served by AA from DFW than AA has to carry pax from ATL to destinations not served by DL from ATL.
Both of those average fare and load factor phenomena are common among network carriers.... the carrier that has the largest hub usually commands the highest average fare and load factor.
I don't think AA or DL have run RJs on a regular basis between ATL and DFW for years.
DL has upgraded several markets from DFW to other DL hubs but AA still carries the larger share of the local market, exactly because of the principle that the carrier with the largest hub carries the majority of the traffic and AA at DFW is the 2nd largest hub behind DL at ATL.

Therefore, enjoy the empty seats on ATL-DFW. There aren't too many markets where both carriers can carry fewer pax and make more money than they did before but this is one of them.
Give them the whole can.

 

[Glenn Quagmire]

B6 and WN have traditionally enjoyed much lower total labor costs because they have lower seniority employees and keep growing which keeps a fresh supply of entry level employees coming thru the door.

WN has lower seniority employees?

I would like to see the seniority lists. LUV has grown significantly, but they do not have many people leaving to find greener pastures.

 

[luvthe9]

http://www.youtube.com/watch?v=-mJUyYskVYI&feature=youtu.be

 

[jimntx]

WN has lower seniority employees?

I would like to see the seniority lists. LUV has grown significantly, but they do not have many people leaving to find greener pastures.

You missed the point. AA hasn't had (before now) that many people leaving for greener pastures, either. However, AA has not had new hires coming in on a regular basis (none whatsoever for flight attendants since 2001) like WN has had. The new hires at WN lower the overall average seniority for a workgroup.

 

[WorldTraveler]

thank you, Jim.

growth is part of the formula the LFC airlines use to keep their labor costs down; in converse, it is why AA's labor costs became the industry's highest because they stopped growning and nearly every employee became top of scale.

That is why AA's labor costs will go down just by virtue of laying off/voluntarily furloughing thousands of employees and then turning around and hiring new employees.

Q doesn't get that part of the reason that DL has been as aggressive in offering voluntary hiring (besides providing an out for disgruntling employees)? Surprise, surprise, they have the lowest CASM among the network carriers.

 

[jimntx]

I still haven't heard the aircraft type but if it is anything above a CR7, it is more than is necessary to carry the percentage of passengers AA can possibly expect to gain on the route.
Anything larger than a CR7 outside of the summer season means AA is going to have to cmopete in the local market; even if it is only the int'l market AA is after, they are going to have to go up against UA which does a very good job of commanding the loyalty of the local IAH market despite their recent missteps.

Jim,
actually load factor on DFW-ATL for both DL and AA has taken a dive in the past several months due to dramatically higher fares since FL left the market due to WN's acquisition of them.
AA and DL carry almost identical shares of the local ATL-DFW (RT) market with DL getting a higher average fare. DL's LF is about 10 points higher than AA's because DL has a larger hub and has the potential to carry more pax beyond ATL not served by AA from DFW than AA has to carry pax from ATL to destinations not served by DL from ATL.
Both of those average fare and load factor phenomena are common among network carriers.... the carrier that has the largest hub usually commands the highest average fare and load factor.
I don't think AA or DL have run RJs on a regular basis between ATL and DFW for years.
DL has upgraded several markets from DFW to other DL hubs but AA still carries the larger share of the local market, exactly because of the principle that the carrier with the largest hub carries the majority of the traffic and AA at DFW is the 2nd largest hub behind DL at ATL.

Therefore, enjoy the empty seats on ATL-DFW. There aren't too many markets where both carriers can carry fewer pax and make more money than they did before but this is one of them.
Give them the whole can.

1. The half (or more) empty airplanes on the DFW-ATL route for AA has been going on for several years now. I brought the point up at a public meeting over 3 years ago that we seemed to be kidding ourselves that we were competing with DL on that route.
2. Up until about 6 months ago or so, most of the DL a/c at Terminal E were RJs; so, since about the only place you could go on DL from DFW was to ATL, I assumed those rjs were going there. I don't ever remember AA flying rjs on that route.
3. The service standard at AA for several years has been to give the whole can.
4. I have taken another pay cut to subsidize those empty flights (and others that AA flies "to compete"), and you want me to enjoy them? I think not.

Note to company cheerleaders FWAAA and E: don't even think of jumping in and pointing out that I got a 3% raise on date of signing of the latest screw over of the flight attendants. For an 80-hour month, that "raise" grosses me almost $90/month. 5.5% of my paycheck is now going to the 401-K (which I'm sure the company is getting a kickback on). Effective 01JAN13, my insurance premium is increasing from about $40/month to $115/mo and my annual deductible is increasing from $150/yr to $750/yr. Show me the raise.