johnny kat
Senior
- Oct 11, 2011
- 343
- 330
Just to add...if US goes under I believe it will be because of the price of fuel and nothing else.
USAirways Purchases Domain Name for AA Merger
- Thread starter Hope777
- Start date
Even if AA abrogates the contracts, the AA pilots and FAs will still make significantly more money than the US pilots and FAs. AA's pilots will still make a lot more money than the West pilots. Because of the TWU's uselessness, the mechanics will not make more than US mechanics.
The reason that US and AA don't make sense as merger partners is because the US employees would inherit the AA contracts with their much higher pay for pilots and FAs, and those raises would make the US part extremely unprofitable. US is barely profitable as it is; raise pilot and FA pay to match the post-bankruptcy AA pay and the small US profits turn to huge losses.
50 seat RJs have higher seat mile costs than larger RJs (70-90 seaters), especially when fuel is $3.30/gal like today. AA is plagued with too many 50 seaters and not enough 70-90 seaters. US has more larger RJs but still has too many 50 seaters.
Not at all. Their labor rates on $ per seat mile are the highest, as well as the fuel bill. Nothing at all "ecomomic" about them. They produce lower "segment" costs, but unless there's a sweet spot of revenue (enough) on any given segment, they are extremely uneconomic at current fuel prices.
Think about it.. If they were so great, why hasn't LUV and B6 and Spirit taken to them with a vengeance? Economics.
Smaller aircraft make sense in some markets. But with fuel where it is, the smaller you go, the more money you lose. Airlines want scope relaxed so that they can pay regional rates vs. mainline rates to the operators.
I'm scratching my head on your response...
You say: "The above sums it up".. Next, you answer my question with: "I don't know". Then you say: "IMHO, US really has nothing to lose by going full throttle after AA. Why not?"
Welllll,
If US succeeds in a hostile buyout of AA, all those problems are in your lap.
Now what? You're right there with USA320Pilot, usa1, etops1, ets.etc...
AA + LCC NO WAY!!!!
Why can't the LCC folks answer basic question???????
Probably because your questions are flawed. Your assumption that US had the highest costs in the industry is not accurate. Perhaps you are basing this on a CASM formula which does not take into account an adjustment for stage length of flights. US, with many more short haul flights than our competitors will show a higher casm but when you factor in the adjustment for stage length we are the lowest of the legacy carriers.
True, some of our lower costs come from lower labor costs but it is not as significant as most people would assume. When US was seeking to merger with DL, I did a little investigating and found out I was paid more at US than my counterparts at DL. Most positions in the company are paying at or near the industry average. Pilots and FA's would be an exception due to their refusal to agree on a contract.
In my opinion, a US-AA combination would beat an AA stand alone hands down. But I don't see a hostile take over. I believe AA will be on board with the merger be it prior to emerging from bankruptcy, or shortly thereafter.
Probably because your questions are flawed. Your assumption that US had the highest costs in the industry is not accurate. Perhaps you are basing this on a CASM formula which does not take into account an adjustment for stage length of flights. US, with many more short haul flights than our competitors will show a higher casm but when you factor in the adjustment for stage length we are the lowest of the legacy carriers.
True, some of our lower costs come from lower labor costs but it is not as significant as most people would assume. When US was seeking to merger with DL, I did a little investigating and found out I was paid more at US than my counterparts at DL. Most positions in the company are paying at or near the industry average. Pilots and FA's would be an exception due to their refusal to agree on a contract.
In my opinion, a US-AA combination would beat an AA stand alone hands down. But I don't see a hostile take over. I believe AA will be on board with the merger be it prior to emerging from bankruptcy, or shortly thereafter.
And there is a big part of the problem. Assume that mechanics, fleet and agents are paid similarly at both airlines. AA's bankruptcy term sheets presented to the pilots and FAs do not cut their payrates by any substantial amounts. Scheduling and workrule changes (resulting in headcount reductions) account for the bulk of the wage savings. Even after Ch 11, AA's pilots and FAs will earn thousands of dollars more per year than US pilots and FAs. From where does Doug Parker propose getting the money to raise the pay of US pilots and FAs to the AA levels if the airlines are combined? AA's revenues? That will simply transform a profitable post-Ch 11 AA into a money-losing AA.
USA320Pilot
Veteran
- May 18, 2003
- 8,175
- 1,539
AMR regional carrier seeks $75 mln in cost cuts
Click here to read the story.
AMR to Cut American Eagle Costs by $75 Million as Most Jobs Safe
Click here to read the story.
AMR Eagle President and Chief Executive Officer Dan Garton's Letter to Employees: March 21, 2012
Click here to read Garton's letter to Eagle's employees.
AMR Eagle's Business Plan Presentation: March 21, 2012
Click here to view the PowerPoint Presentation.
AMR Labor Negotiations Update (Public): March 16, 2012
Click here to read the story.
The company and its unions are engaged in a well-defined, court-supervised process that is specifically designed to guide fair and equitable changes to collective bargaining agreements, and we remain focused on reaching consensual agreements with our unions.
Company negotiators continue to be responsive to union requests for information and provide proposals that are designed to achieve the necessary $1.25 billion in sustainable, annual employee cost savings. This week, American responded to direct feedback from the unions at the negotiating table and presented an amended active medical proposal to all of its unions. The amended proposal adjusts employee contributions among the three plans and changes some of the plan designs and out-of-pocket expenses, while still meeting the company’s savings target in this area.
Today, American also responded to the letters sent by the APA, APFA and TWU to the National Mediation Board (NMB) last week requesting a Board proffer of voluntary binding interest arbitration. We responded to the NMB that we believe the company’s current approach to negotiations within the 1113 process – a process that requires the Court to determine what is necessary for a successful reorganization – is in the best interest of our employees and all our stakeholders, and that we did not think it appropriate to abandon that process in favor of arbitration.
We recognize the changes needed to realize our necessary cost savings are difficult, but they are necessitated by the fact that we have lost more than $10 billion in the last 10 years and continue to lose money each month.
We are at a critical point for our airline – and have only one chance to get it right. The best outcome for our employees is an airline that emerges quickly from restructuring with the needed structural changes, begins to grow, earn a profit and create long-term opportunities for our people.
Abandoning this tried, trusted and proven process now could bring unacceptable risks and jeopardize American’s future. We urge union leaders to focus their attention on the bargaining table and work to reach consensual deals. That should be our joint priority.
Click here to read the story.
AMR to Cut American Eagle Costs by $75 Million as Most Jobs Safe
Click here to read the story.
AMR Eagle President and Chief Executive Officer Dan Garton's Letter to Employees: March 21, 2012
Click here to read Garton's letter to Eagle's employees.
AMR Eagle's Business Plan Presentation: March 21, 2012
Click here to view the PowerPoint Presentation.
AMR Labor Negotiations Update (Public): March 16, 2012
Click here to read the story.
The company and its unions are engaged in a well-defined, court-supervised process that is specifically designed to guide fair and equitable changes to collective bargaining agreements, and we remain focused on reaching consensual agreements with our unions.
Company negotiators continue to be responsive to union requests for information and provide proposals that are designed to achieve the necessary $1.25 billion in sustainable, annual employee cost savings. This week, American responded to direct feedback from the unions at the negotiating table and presented an amended active medical proposal to all of its unions. The amended proposal adjusts employee contributions among the three plans and changes some of the plan designs and out-of-pocket expenses, while still meeting the company’s savings target in this area.
Today, American also responded to the letters sent by the APA, APFA and TWU to the National Mediation Board (NMB) last week requesting a Board proffer of voluntary binding interest arbitration. We responded to the NMB that we believe the company’s current approach to negotiations within the 1113 process – a process that requires the Court to determine what is necessary for a successful reorganization – is in the best interest of our employees and all our stakeholders, and that we did not think it appropriate to abandon that process in favor of arbitration.
We recognize the changes needed to realize our necessary cost savings are difficult, but they are necessitated by the fact that we have lost more than $10 billion in the last 10 years and continue to lose money each month.
We are at a critical point for our airline – and have only one chance to get it right. The best outcome for our employees is an airline that emerges quickly from restructuring with the needed structural changes, begins to grow, earn a profit and create long-term opportunities for our people.
Abandoning this tried, trusted and proven process now could bring unacceptable risks and jeopardize American’s future. We urge union leaders to focus their attention on the bargaining table and work to reach consensual deals. That should be our joint priority.
johnny kat
Senior
- Oct 11, 2011
- 343
- 330
Now what? You're right there with USA320Pilot, usa1, etops1, ets.etc...
AA + LCC NO WAY!!!!
I do know a few things for sure US is not in bankruptcy and is not near insovency. Contracts are being settled. F/A duty rigs and pay will soon be much better than AA currently has. To name a few.
AA, on the other hand, is not any where near having its' house in order and is insolvent I find it humorous that you continue to brag about your pay, how smug. I guess it's true pride comes before the fall. Wow, I am so glad that I am not you. Maybe you can paint the "LCC and AA no way!!!" slogan on the side of those really modern MD-80's if it will make you feel any better about the condition of your company or your future paycheck.
So once again let me reiterate that AA cannot ignore US's 13 billion in revenue that it needs to be able to compete with UA and DL. US has a modern fleet that when combined with AA's future orders from Airbus and Boeing will give it a fleet that is newer on average than the rest. US has a very valuable, attractive portfolio of slots at slot controlled ariports. US still has enough slots in the NY market when combined with the AA slots to put AA on par with DL in the New York market. US has a very good hub operation out of PHL that is very competitive with UA in EWR. US has a succesful hub in CLT. AA, on the other hand has yet to make it's first dollar out of the southeast (remember RDU,BNA).
I think your eye sight is a bit myopic about the pilot scenario playing out at US. Yes, it is a hell of their own making. And yes, they and the courts will have to bare the brunt of the burden to straighten it out. But, that is only part of the dynamic. Unfortunate, yes. US has yet to see the spat with pilots stop the company from combining the two networks and continuing operations. A merger with US has less regulatory issues than with DL. You should be so lucky to combine with US. The other alternatives for your company are less than appealing.
They are:
1.) AA languishes because it does not have the size to compete with DL and UA, thus it does not have enough revenue generation and must seek BK reorganization a second time further weakening AA.
AA + LCC NO WAY!!!!
I do know a few things for sure US is not in bankruptcy and is not near insovency. Contracts are being settled. F/A duty rigs and pay will soon be much better than AA currently has. To name a few.
AA, on the other hand, is not any where near having its' house in order and is insolvent I find it humorous that you continue to brag about your pay, how smug. I guess it's true pride comes before the fall. Wow, I am so glad that I am not you. Maybe you can paint the "LCC and AA no way!!!" slogan on the side of those really modern MD-80's if it will make you feel any better about the condition of your company or your future paycheck.
So once again let me reiterate that AA cannot ignore US's 13 billion in revenue that it needs to be able to compete with UA and DL. US has a modern fleet that when combined with AA's future orders from Airbus and Boeing will give it a fleet that is newer on average than the rest. US has a very valuable, attractive portfolio of slots at slot controlled ariports. US still has enough slots in the NY market when combined with the AA slots to put AA on par with DL in the New York market. US has a very good hub operation out of PHL that is very competitive with UA in EWR. US has a succesful hub in CLT. AA, on the other hand has yet to make it's first dollar out of the southeast (remember RDU,BNA).
I think your eye sight is a bit myopic about the pilot scenario playing out at US. Yes, it is a hell of their own making. And yes, they and the courts will have to bare the brunt of the burden to straighten it out. But, that is only part of the dynamic. Unfortunate, yes. US has yet to see the spat with pilots stop the company from combining the two networks and continuing operations. A merger with US has less regulatory issues than with DL. You should be so lucky to combine with US. The other alternatives for your company are less than appealing.
They are:
1.) AA languishes because it does not have the size to compete with DL and UA, thus it does not have enough revenue generation and must seek BK reorganization a second time further weakening AA.
johnny kat
Senior
- Oct 11, 2011
- 343
- 330
2.) AA, because of DL's competive response gets broken into pieces and merged or sold off.
How's that bor a bit of smug USAirways AArogance.
How's that bor a bit of smug USAirways AArogance.
maybe the extra money will come from the rise in airfares due to the elimination of competition
Maybe a US/AA route system would be radically different than you think? Radically changing your numbers. I could see 25% or more of the US Airways system going away, which is 25% of what you, DL and UA need. I can also see the newer US fleet easing the AA aging fleet problem, saving them many millions ..... I also think wall street has more confidence in Parker than Horton. That's why the cash is lining up in PHX.
On another note .... the US - DL, LGA - DCA slot swap indicates to me that there's nothing going on with a DL, US merger.
On another note .... the US - DL, LGA - DCA slot swap indicates to me that there's nothing going on with a DL, US merger.
