US Air to Address Creditors on Takeover plan

[Buck]

Would like to know how many AA main line Fleet Service workers are there 7000? any one have a good number?

As of 3/26/2012 at 6:45 pm cst there are 10,596.

 

[Buck]

So when US Airways held its annual media day for aviation reporters in the museum’s beautiful 299-seat theater last Wednesday, it would have been an ideal place to anticipate a song and dance from the airline executives on hand.

Instead, US Airways executives offered what struck me as a reasonably forthright presentation laying out where their airline, the smallest of the top five carriers, now stands. They also gave some insight into the ways the domestic air travel system is being fundamentally redefined in 2012.

Sure, there was a little bit of the old soft shoe from Doug Parker, the amiable chief executive of US Airways, which is among the airlines rumored to be in talks about acquiring American Airlines out of bankruptcy.

Mr. Parker acknowledged the “rumors and speculation” about American, but insisted that whatever might transpire in the discussions, consolidation “is no longer an imperative” in the airline industry.

 

[Mrs. McFly]

Doug Parker sure is acting like consolidation is imperative in the industry. Why stir the soup putting out tidbits that US has been talking to AA unsecured creditors if not serious? I still can't get my head wrapped around the motive, nor can I see a majority jumping on this bandwagon.

 

[eolesen]

Consolidation isn't necessarily imperitive for the industry. There are some people who think that if you don't have >20% market share, you are insignificant. Never mind that in the 90's there were lots of profitable airlines which made do with their 10-15% shares. If you look in other segments like hotels, smartphones, automobiles, retailing, there isn't a huge cry to have fewer brands. Why it needs to be that way in airlines is a bit boggling at times.

You certainly don't hear the guys at HA, AS, NK, B6 or even VA talking about consolidation -- they just do their job and run their airlines.

But US seems to think it has to happen, perhaps because they've been a bit pigeonholed into the role of that regional carrier who has a couple international routes.

 

[AAviator]

(referee shirt on)

It's game time....

PFTWEEEEEEEEET!

<crackle..crackle..pop pop pop> (sounds of static)

"GOOD EVENING AND WELOCOME TO AIRLINE TALK SLAP DOWN"

"TODAY MATCH WILL BE A GOOD ONE! TALK IS CHEAP BUT AIRLINES AIN'T!! TONIGHTS EXCHANGE WILL BE TO HOPEFULLY GET THROUGH THE MECHANICAL PERSPECTIVE OF WHAT IT WILL TAKE TO HAVE A SUCCESSFUL AIRLINE MERGER"

(cue hottie in bikini to walk around ring...... on the top-pair in front are the letters AA. Neatly positioned on her ample back side are the letters LCC)


(in the background crowds are going wild, the 300 seat arena is standing room only.. Mostly LCC employees waving the same articles from yahoo airline news, some wearing LCC gear, and a larger rather unruly bunch in the back chanting "ziggy zoggy ziggy zoggy OY OY OY".. One looks like Doug Par.....)

<camera moves to the brightly lit press booth, with two suited commentators>

"Good evening folks, tonight's fight should be a good one. <camera breaks to the guy on the right> "Thats right Bob, tonight will be a long over due match.. A match that has crippled a process. A process if mergers and integrations".
<camera breaks left>

"You are right Tom. We've been bombarded in the airline sector with media reports of American Airlines drop into Bankruptcy four months ago. The media has gone wild with reports of USAirways grabbing AA and heading to the end zone".

<laughter>

"Well, no Bob, this isn't football"!

<more laughter>

"It really isn't that simple"

<more laughter>

"So what is tonight all about then Tom?"

"I'll tell you Bob,.. There has been a brewing of discontent out there in the airways.. A long time industry giant, AA has fallen into bankruptcy. Its age, and failure to evolve in a dynamic industry has taken its toll. A toll so great that the old airline has been forced to take the route a lot of others in the industry have already traveled."

"Right Tom. AA is in tight spot"

"Not only that Bob, there is an airline out there trying to grab the keys to the AA car if you know what I mean"

<laughter>

"Ok Tom, before we go ring side, lets have a look at the competitiors"

"Great"!

<camera pans out over the hangar floor, then zooms in on the close left corner>

"Do you see that Tom?"

"I sure do Bob.. Its BoeingBoy, looking relaxed, lean and slightly tanned"

" Retirement looks good on him, don't you think Bob"?

< BoeingBoy, sitting on his stool leaning back aginst the ropes, arms resting comfortably up and over the top ropes... He nods and winks at the camera>

<camera slowly pans to the opposite corner>

"And what is that Bob?"

"I guess tonight's match is a tag team match Tom"

<laughter>

"Well Bob, from here it looks like we have etops1, usa1, wings 396, and USA320Pilot fighting over the stool over there!"

<laughter>

"Ok Tom,
so what is tonight really, really all about?"

"Bob, tonight is all about logistics and numbers. One camp says, all they need to do is come up with the money. A blind eye has been turned on anything else. EVERYTHING else. The belief is that only "labor has to be on board"

"Whooooa Bob, Isn't that how we got into the housing crisis with sub-prime debt, mortgages that will never get paid off, and the like??"

"Well yes Tom, it is. Looking past the down payment, the supporting details are elusive. While in one corner, the details are evident and hashed out.. In the other, well..."

<break to the center of the ring>

<A microphone drops down from the ceiling, LL cool J's "momma said knock you out" is playing in the back ground, and announce steps up and directs the scantily clad woman from the ring>
"Folks, I'd like to read you the following"

The other day BoeingBoy said the following:

The problem Doug will have is financing. Since US stock is worth relatively little compared to what it was worth in the DL attempt, most of the offer will have to come from debt or equity financing. Buying a $24 billion or so a year company, even when it's in bankruptcy, won't be cheap. Throw in the extra cost in just employee expenses that an AA/US merger would result in for the US employees - AA is proposing that it's pilots will make more on the A320/321/737-8/9 than anything east operates including the 330. The end result - a US/AA merged company will have many of the same problems that AA had going into bankruptcy. So Doug is going to have a little problem convincing the unsecured creditors that 1 ) his plan will be more successful than a stand-alone AA and 2 ) give them a bigger return than anything that AA can come up with. And it's at that point that Doug runs into the problem of what US adds to AA, not what AA adds to US.

Jim

"To that statement, etops1, without supporting theory..Theory that is inevitably coupled with a merger. Thinking beyond "connecting the dots"..

Doug will get all the financing he needs . The problem Doug will probably face is convincing AA employees that this deal is good for them .

"What we have is a disagreement as to the obstacles of a union between the two"

"Gentlemen, lets have a fair fight"


Ding.

 

[AAviator]

"Whack!" <like in a cartoon, BoeingBoy appears to connect with a famously obvious right hook. LOOK OUT etops1. Right in the onion. etops1 head snaps back . He falls backwards with his lights out, his arms never even come out>

"Well Bob,That didn't take long"


"Remember Tom, this is a tag team of sorts"

"oh yea, Bob"

<camera pans to the LCC corner, USA320Pilot is now cowering behind the remaining members of his team.. It appears he has wet himself>

 

[flybynite]

LOL

 

[AAviator]

 

[libertybell]

As of 3/26/2012 at 6:45 pm cst there are 10,596.

Im under the information that fuelers and utility are in the total 10,596 how many Ramp Service workers? I hear AA Mgt wants to eliminate fuelers and uitlity how many in that group?

 

[JFK Fleet Service]

There is no utility classification,cabin service is currently performed by Fleet Service Clerks.Fueling is also performed by FSC's.

They are proposing to eliminate 4200 positions in the classification via outsourcing.

 

[etops1]

"Whack!" <like in a cartoon, BoeingBoy connects with a famously obvious right hook. He connects with etops1. Right in the onion. etops1 head snaps back . He falls backwards with his lights out, his arms never even come out>

"Well Bob,That didn't take long"


"Remember Tom, this is a tag team of sorts"

"oh yea, Bob"

<camera pans to the LCC corner, USA320Pilot is now cowering behind the remaining members of his team.. It appears he has wet himself>

Lets see who gets the last laugh ... Prick

 

[AAviator]

Lets see who gets the last laugh ... Prick

<camera zooms from the ring view to the announcers booth>
"Well Bob, thats was a little longer than we like to see here in the sporting world"

"I agree Tom,.. We were hoping for a little more substance from etops1, and wow... out cold for that long.. to get up and to still be talking smack.. just wow!"

"Well said Bob, That "Just you wait and see" position, while rallying, is really thin veneer"

"I know Tom.. do you think any of the others in the LCC corner will step up and present anything beyond "just you wait and see"? Some substance would sure be refreshing".

"Thats a good question Bob. You are correct.. There's a lot of money in the capital markets, and looking past a dollar sign, you really have to look at what you're getting into. We've heard all the stories in the housing melt down.. Money readily available, and potentially accessible, but when pulls the trigger without getting the big picture, the wheels are sure to fall off."

<camera zooms to BoeingBoys corner>

ESPN Airline interviewer: "Hey BoeingBoy, you've really put a hurting on etops1. Could you have gone a little easier on him?"

BB: "What are you talking about?"

ESPN Airline interviewer: " That hit could be outlawed'

BB: "Nah, I didn't hit him at all.. The reality of economics caught up with him.. I didn't touch him".

ESPN Airline interviewer: "you mean the lightbulb of economics suddenly came on for etops1?"

BB: 'Nah, for some it never will, economics did. Its that thing they never seem to grasp. It came out of nowhere. I never touched him. it exists, although some prefer to stick their head in the sand"

ESPN: "I noticed you didn't even take your glasses off out there! Can I ask why?"

BB: "What for?"

<camera pans over to the LCC corner. It appears there's a little activity over there>

 

[WorldTraveler]

Consolidation isn't necessarily imperitive for the industry. There are some people who think that if you don't have >20% market share, you are insignificant. Never mind that in the 90's there were lots of profitable airlines which made do with their 10-15% shares. If you look in other segments like hotels, smartphones, automobiles, retailing, there isn't a huge cry to have fewer brands. Why it needs to be that way in airlines is a bit boggling at times.

You certainly don't hear the guys at HA, AS, NK, B6 or even VA talking about consolidation -- they just do their job and run their airlines.

But US seems to think it has to happen, perhaps because they've been a bit pigeonholed into the role of that regional carrier who has a couple international routes.

those are all very valid observations, E, but at the time there were NO US airlines that had more than 10-15% shares and in reality AA, DL, and US were all fairly closely matched in terms of size - even if each had distinct market strengths. CO, NW, and US were in the 2nd tier (in terms of size) but CO and NW partnered close enough to overcome the size difference while US adapted by discounting fares - which is exactly what produced the revenue disadvantage they have had.
Actually, American business (and globally as well) has become much more highly concentrated among a few brands... and there have indeed been a consolidation of brands in the hotel industry.
There are three car manufacturers in the US and they have been pretty successful at limiting the growth of new entrants and in locking up the market among existing mfrs (which obviously include foreign makes as well). The auto industry has significant barriers to entry of newcomers and a very large support structure that is necessary to provide a nationwide product.
It is the same in the airline industry.
Airlines are network businesses, esp. the legacy airlines. They have tried for 35 years to grow to be "one size fits all"... in contrast, low fare carriers such as B6 or even quasi legacy airlines like AS have well-defined niches that they defend and use to generate revenue even though they compete with larger carriers. WN is really in the middle since they have recognized a need to grow even though they, like B6, have a very loyal following.
.
DL's decision to move forward with the NW merger in 2008 changed the dynamics of the network industry because AA, DL, and UA could not be on the same size again - and strategically, there is no way that all 3 airlines can be equal since only two of the the three (AA, DL, and UA) are strong in any global region or sub-region with the exception of Latin America where AA is dominant. AA strategically then becomes a Latin American specialist without a strong enough European or Asian presence to compete and a 4th place ranking within the US - or they must grow.
US is the classic example of why size matters - because they are still trying to be a network competitor to AA, DL, and UA without having the mass of the big 3.
AA's unwillingness to cut capacity - as has always occurred in restructuring efforts in the past - and its intention to add capacity later on - even though it is doing it from the same 5 cornerstones - is what shows they recognize the need to grow.
Problem is that DL and UA have grown larger by mergers that have offset the decrease in capacity that has come in specific markets by adding more bulk nationwide and worldwide.
The flaw in AA's plan is that it expects to be able to grow off of the same network it has right now even though demand will decrease as fuel prices continue to rise.
And the flaw with an AA-US merger (aside from the financial mismatch which will result) is that AA-US still won't have the size necessary to compete in many regions.
AA is trying to add mass through partnerships but there simply is no evidence in the airline industry that has been successful against other carriers who carry that capacity on their own planes - or regional carriers that they completely control.
.
Obviously AA will continue to push for restructuring on its own, arguing that it will be capable of competing on its own despite being smaller and through aggressive growth on its same network...it is precisely those elements which make AA's restructuring plan unique from anything before it... and the only way that AA will convince creditors that they can do it is by demonstrating they can do it with what they have right now.
Creditors are just not going to sign onto a plan that is radically different from anything that has been used to restructure in the past without some pretty solid evidence that it will work.
Evidence is very strong that size matters in the network airline industry and that capacity must be cut at the individual market level in order to offset the decreased demand that comes as prices rise.

 

[FrequentFlierCA]

I understand that ol' Douggie Boy in gung ho for (another) wedding. After all, his airline is the ugly duckling of the industry and everyone else has already paired off.

But shouldn't he get his own house in order before trying to add a roommate? US is still so dysfunctional it basically operates as two separate airlines. How would that mess benefit anyone at AA?

 

[TWU informer]

I understand that ol' Douggie Boy in gung ho for (another) wedding. After all, his airline is the ugly duckling of the industry and everyone else has already paired off.

But shouldn't he get his own house in order before trying to add a roommate? US is still so dysfunctional it basically operates as two separate airlines. How would that mess benefit anyone at AA?

My opinion is that even though US is still dysfunctional operating as two airlines, it is no more dysfunctional than AA and its gang of incompetent management trying to get bailed out by millions of dollars worth of consultants and advisors.

AA reminds me of an overly large cat that has crapped in the litter box working hard to cover up the turd as if once covered, the turd will not be detected.

WE ALL SEE IT, STOP TRYING TO COVER IT UP!