Wall St. takes a swipe at AMR

[Bob Owens]

AA wants the pension plans.. it will be up to the unions as to how AA gets them. Freeze and go to an age weighted 401k, all new hires will not be defined benefit eligible, or even more drastic a pre-packaged bk.

Let them go BK if thats the case. If I'm going to lose my DB then the shareholders will lose their stock equity. Sure since most of the stock is owned by large financial institutions that also own a lot of the debt they end up getting equity from the new stock they issue (only the shareholders that dont own debt get screwed, people like us in other words) but we also get most of our pension covered by the PBGC. They lose some and so do we, thats a lot better than just agreeing to lose more to save them from losing, I'm done being the ragged trousered philanthropist. Hell with the shortage we are starting to see as far as mechanics(not just in the airlines but the economy in general) even if they liquidate we will land on our feet. Everyone I know who has quit or been fired and left the industry is doing better than they ever did in the airlines.

In reality the new hires would probably be better off without a DB. Without a pension they will focus more on getting better wages so they can fund their 401Ks. Without a Pension they will be more willing to strike, risk getting fired and engage in illegal job actions or simply leave to greener pastures, bounce from carrier to carrier for whoever gives the best here and now and forget the pie in the sky promises of a reward after a lifetime of loyalty and service. If I had the SWA 401K plan with the 8% match since day one I'd have a million dollars in my 401k by the time I turned 55. With no pension to try and protect there's that much less incentive to give concessions. Workers would come here with the objective of simply make as much as you can while it lasts , no ties, no loyalties, no sentimentalities, take what you can and move on, like locusts, we could be just like the Executives and Wall Street!!

To me something seems amiss with all this pension stuff. I dont think that the airline is looking for a savings down the road but rather a windfall down the road. These funds are huge, when I look at what happened with the supplimental medical, where the company duped their employees into funding a plan that netted the company around $70 million when they terminated it, I suspect that what they are trying to do with the pension is just a gigantic version of the same scam. If they were able to net $70 million when they terminated the supplimental imagine what they would net when they freeze, then later terminate the DB pension plan!

We have a worker at our station, next year he will have 70 years with the company. He lost his wife recently so when he passes away AA is off the hook. His heirs get nothing from AA. Yes they've paid him pension payments for the last few years making him the highest paid mechanic at our station but his salary has been greatly reduced, so he in effect is giving the company back a lot of the pension he earned. Imagine how much this guy would have in the bank to pass on to his heirs if he was putting away 20% with an 8% match and a 5% return for 70 years! AA would still be paying that 8% right up to today and they probably never would have been able to get all the concessions they have over the years.

AA says that they paid around $2 billion into the pension since 2003. Thats $250 million a year to cover around 100,000 people (probably more)in the plan, so it comes out to around $2500 a head. well if they gave us a 5.5% 401k Match and the average salary is $65000 that comes out to $3575 a head. $1000 more. Of course there's less of us so they may save on the total but I assume they expect to grow again in the future. The thing is with the DB they can get a holiday every now and then when the investments more than cover additional installments of cash plus they have a huge bargaining chip in negotiataions, with the DC they have to make those payments no matter what and the employees have less at stake as far as the survival of the company. I know some corporations like to be able to budget, I see it in the Snow business where a company will on average pay more so they dont get whacked when you have a particularly heavy snowfall season but like I said earlier I think there's more to this, than that.

 

[WorldTraveler]

Except that you have repeatedly and stubbornly refused to document your so-called "facts."

P.S. No one is asking for academic citations, just links to sources.

I would be glad to provide you with the source of the data you request.... just tell me what data point you would like to know about and we can discuss it. I would be more than happy to tell you where I - and you- can find the data to be able that are the basis of the decisions I have made.
I have asked for quite some time to discuss the data, the facts; if you were aware of the data that everyone is looking at, you might see things differently.

I don't have a problem with the message, WT. But you have no standing, and the way you continually position DL as all being just short of hand picked by God to be the best airline in the world does nothing to convince people of your sincerity.

You're not a customer ("I have no AAdvantage miles to lose") and you're not an employee or supplier (" nor do I have any financial attachment to American Airlines"). At least I've flown on both Delta and AA in the past three months...

What does who you fly on have to do with a financial analysis? I'm not talking about customer service or product delivery - but those attributes are known about each airline even without setting foot on a plane.

I don't position DL in the manner you see it; you simply are having a real hard time accepting the fact that DL has done what bankruptcy was supposed to do - which is a restructuring. Chapter 11 is a financial restructuring; DL went far beyond that to restructure its entire operation and culture. What DL accomplished in the past 5 years is not much different in scale compared to what CO accomplished in the 1990s.
I believe the real issue is that DL - and not AA - has successfully restructured. You need to recognize that DL did its homework and is reaping the fruits of its labors.

BTW, it is not only I who am saying that DL is one of the best run airlines in the world right now; that was said by executives of many global airlines.

Let's also be clear that the reason you and I have locked horns is because I have called you on the carpet about some basic facts. I don't like doing that to anyone... but I also hold someone who holds themselves out as a professional in the business with stated management experience in the industry to a standard that is far different than people who clearly identify themselves as frontline workers. I don't expect them to know the financial details of the business that you and i know.

I suspect a big part of the war of words is because I have humiliated you in front of a group of people where you have held forth unchallenged by man for quite some time. I am sorry for such humiliation but it seems the lesson is to check and then doublecheck your facts knowing that there are other people here who can and will call you on the carpet for factual errors you may make.
You are welcome to hold me to the same standard; I have repeatedly asked you and others to focus on the facts and stay away from the character assassination and the preoccupation with a resume. If the facts are the facts, it doesn't matter who said them.

While AA certainly has not been turning heads and setting trends the last 8 or so years, I think you're a little harsh in your criticism. AA did not have luxury of a mulilgan (chapter 11). Ofcourse you could argue that they should have filed, but that decision, not to file and only get some concessions seemed like a good idea at the time.



How did the experiment of UAL employees owning a piece of the airline work out ? Not just for the employees but for the company too. An employee is not going to work harder just because they're a 0.000001% owner of a company. There has to be a tangible reward for the harder work, but also punishment for failure.

If you think that Chapter 11 is a mulligan then you clearly don't understand the process - or the pain that the majority of workers in this industry have been through... on top of every other stakeholder including shareholders, debtholders, suppliers... and on and on.

I specifically cited that UAL's employee ownership plan did not work well at all - but that isn't a fault of the ESOP concept because it does work in other industries. Here is a list of the 100 largest employee owned companies in the US. Not sure where you live but the largest, Publix Supermarkets is considered very well run and also excels at customer service.
http://www.nceo.org/main/article.php/id/11/

The notion that employee ownership can't work is made because there are high casualty rates in the concept.

You are correct that you can't expect employees to not share in the rewards of the company... but the employees also have to create a cost structure that reflects the real economics of the industry. When I read on here that people want to have their pay restored to pre-2003 levels AND keep the current level of staffing, I know that they don't understand the business and aren't really serious about turning the company around.

I write what I do because I believe there are enough pepole who get it - and who will be strong enough to do what has to be done to turn AA around.... I don't expect labor to bear the burden which is why I have focused so much of what I have written about the revenue and network aspects of the business which are completely beyond labor's responsibility.

I see very few people on this forum (any airline's) who are willing to call labor AND management on the carpet when it is due. If I am not liked it is because I don't mind offending anyone if that is where the blame lays. But I also don't mind telling any one group that they are doing what they do well... and that is why from a big picture perspective CO in the last decade and DL more recently have been regarded as some of the best run network airlines, a segment of industry that historically is not well run at all.

I have every believe that AMR and AA can return to being one of the most respected and well run businesses in the airline industry. But right now we've got to get past some of the incorrect destructive thinking that I read so much of on these forums... and if you get what it takes to turn the company around, you need to step up to the plate and strart challenging people to think differently - not only for their sake but for yours.

 

[Veritas]

I would be glad to provide you with the source of the data you request.... just tell me what data point you would like to know about and we can discuss it. I would be more than happy to tell you where I - and you- can find the data to be able that are the basis of the decisions I have made.

I am not about to reread dozens of your posts.

You have posted numerous "facts" with no corroboration. When asked for your sources, you offered to reveal them privately. With the exception of a handful of references to SEC filings (without links, mind you) all you had to offer was a couple of press releases.

Many of us do not understand your reluctance to publicly identify where you get your information unless you make up most of it.

 

[WorldTraveler]

I am not about to reread dozens of your posts.

You have posted numerous "facts" with no corroboration. When asked for your sources, you offered to reveal them privately. With the exception of a handful of references to SEC filings (without links, mind you) all you had to offer was a couple of press releases.

Many of us do not understand your reluctance to publicly identify where you get your information unless you make up most of it.

I have never said you had to contact me private for me to tell you where the data came from. I have said if people want more detail other than what is posted, I would provide that to them privately.

The offer remains now as it has before that I will tell you where the data comes from that I use in my posts.... but again you would rather argue about the minutia than deal with the actual data at hand.

I don't expect you to reread dozens of posts... start w/ the ones in this thread alone - or clearly there has been something that I have said that caught your mind. If you are really interested in knowing where what I have said comes from, it will stick in your mind. If you are interested in looking for something to discredit me thaen of course the specific data point won't stick in your mind.

The invitation remains out there for you or anyone else to engage me in the actual data I have used in the past or might use in the future.

As long as you and others refuse to engage the specific data points and instead want to try to discredit my reputation, then you are the ones who lose... because everything I have cited is available in some public form. There are no secrets. And if there are no secrets, then there is every certainty that what I am saying is real - and that makes it all the more scary for you or others to simply blow it off.

Furthermore, your laziness in being willing to actually do a little work to figure some things out for yourself is more than a little frightening. If you have no idea where to turn to find a press release or SEC filing or what to look for if you did know, then you are to be excused and I will certainly help you. But if you genuinely don't know about some of these most basic data sources, then you really have no business asserting that you know anything about the business.

The point is for you to learn - and unlike people like Eric - I will treat private messages as private. If you want to learn, I'll teach you; I would rather you figure out how to search for data yourself and to admit you need help in doing so than for you (collective you) to pretend you know it all when you don't. I'll save you or others the humiliation of having to admit you don't know - but you still have to ask for help.

What I'm proposing isn't really anything different than what anyone who wants to learn anythinng in life needs to do.
Once again, engage the issues.

 

[Bob Owens]

Bob, AA was in the black for all of 1983, 1984, and 1985. How can you claim they were crying the blues while posting profits?

Likewise, in 1987, 1988, and 1989... record profits in 1988 in fact. How is that crying the blues?

When ever contract time came they would dig out the gloomiest of projections. They still do it, and with projections there's no liability.

For instance back in 2009 when the company projected all the white spaces in overhaul they also showed us a projection for RB211 rebuilds and how by 2020 or something like that there would be hardly any RB211 work to do, well if I was sitting in a room in 1990 and looking the projected workload on JT-3s it would probably look the same but all was not lost.

Back in 87, 88 and 89 Crandall would cite the upstarts who are eating away at our market share, 23 years later and we are bigger than we were then and the upstarts he was talking about are gone, replaced by others but still eating and posing an imminent threat.

 

[eolesen]

The point is for you to learn - and unlike people like Eric - I will treat private messages as private.

You mean you didn't like your own words being used to call you out as a fraud?....

Sorry, but when you post smarmy crap like "I'm happy to teach you" yet say stuff (paraphrased) like "back off or I'll bury you" in private, you lose all credibility and benefit of the doubt with me, WT.

You are the one with an axe to grind, sir, so don't expect that to be taken lightly.

Even your last post in the DL forum (which should just be renamed the WT forum, since you've had the last word on over 60% of the posts there in the past 60 days) is about how DL and Skyteam are invading AA's MIA hub.

 

[FrugalFlyerv2.0]

AA wants the pension plans.. it will be up to the unions as to how AA gets them. Freeze and go to an age weighted 401k, all new hires will not be defined benefit eligible, or even more drastic a pre-packaged bk.

Would there be any chance in he11 that any of the unions on property agree to this?

 

[700UW]

I can easily turn that around and say that no mechanic is worth $50/hr. AA and even SW cannot affort to pay you or any of their mechanics $50/hr. To achieve your dream apply at UPS, put yourself out of your misery.

Are you crazy?

An airplane mechanic is responsible for thousands of lives everyday, you pay a car mechanic more than an airplane mechanic, an airplane mechanic can go to jail for doing their job wrong.

You cant put a price on mechanics pay, do you want to see planes fall out of the sky and kill people?

 

[Kev3188]

Veritas--

Here's a couple of good sites to check out:

www.airlinefinanicals.com

www.bts.gov

www.aa.com--> "about AA"--> Investor relations.

 

[WorldTraveler]

You mean you didn't like your own words being used to call you out as a fraud?....
Sorry, but when you post smarmy crap like "I'm happy to teach you" yet say stuff (paraphrased) like "back off or I'll bury you" in private, you lose all credibility and benefit of the doubt with me, WT.
You are the one with an axe to grind, sir, so don't expect that to be taken lightly.
Even your last post in the DL forum (which should just be renamed the WT forum, since you've had the last word on over 60% of the posts there in the past 60 days) is about how DL and Skyteam are invading AA's MIA hub.

I deal with the facts; your name calling and character assassination is simply an attempt to deflect the fact that you made erroneous statements and someone called you out on them.
Regarding your statement about AA pioneering transatlantic presence from inland hubs

Going back a few years from that, AA was a pioneer with inland US-Europe hubs. DL had to go buy the carcass of PAA at JFK & FRA in order to catch up to what AA had been doing from 1987 onward at ORD. And it was 1991 or 1992 before UA was able to catch up to AA. I haven't compared schedules lately, but excluding codeshare partners, it wouldn't surprise me to see that AA was still launching more US-Europe flying than UA is at ORD.

DL began service from ATL to LGW in 1978 before AA was flying the Atlantic at all (other than previously with American Overseas Airlines in the 40s):
From 1945 to 1950, American operated American Overseas Airlines (AOA), a trans-Atlantic division, which served a number of European countries. This was American's first European service. AOA was formed as a result of a merger between the international division of American and a company called American Export Airlines. AOA merged with Pan American World Airways in 1950.
AA began service to LGW from DFW in 1982:
In April 1982, it began interchange service with Alaska Airlines, linking Anchorage and Fairbanks with Houston and DFW via Seattle with 727s. American also returned to Europe with service between London's Gatwick Airport and DFW in May 1982.

http://www.aa.com/i18n/amrcorp/corporateInformation/facts/history.jsp
http://news.delta.com/index.php?s=18&cat=39
And again it is noteworthy that AA’s presence from its inland hubs at DFW and ORD is smaller today than it was in 1991 or even 2000.
As of this July 2011, AA will serve 7 cities nonstop from ORD and 4 from DFW to Europe; DL will serve 21 cities nonstop from ATL, 5 from DTW, and 3 from MSP.
My statement is also correct that DL’s ATL hub (its 2nd largest transatlantic gateway) is larger than AA’s DFW and ORD hubs combined. As of this summer, AA will offer 140 flts/week from ORD with 32,000seats; AA from DFW will have 82 flts/week, 19,000 seats; DL from ATL will have 301 flts/week with more than 71,000 seats/week while DL from DTW will have 104 flts/week with more than 28,000 seats.
AA from JFK will have as of this summer 202 flts/week with 44,000 seats; while DL also from JFK will have 412 flts/week with 90,000 seats.
If you stick to the facts, you should have no problem convincing me and others that you are right.
For your own professional and personal reputation, Eric, accept the fact that you were shown to be wrong and move on.
I welcome you and anyone else’s presence on any forum, including the DL forum. If you have anything to contribute to the discussion about DL and Skyteam’s buildup at MIA, I welcome your comments and simply request that if they can be factually verified, that they be true.

BTW, I noted that AA is still the largest transatlantic carrier from ORD in terms of number of flights with very similar numbers of seats offered by AA and UA.

Veritas--
Here's a couple of good sites to check out:

www.airlinefinanicals.com

www.bts.gov

www.aa.com--> "about AA"--> Investor relations.

Thanks, Kev. I think the information is more than available. But like you, I am interested in helping those who want to learn do so.
The invitation remains for anyone to ask me for the sources for the data I cite and I will be happy to do so.
IN the case above, schedules data including historical schedules is readily available.

 

[PhatSappy]

CUT COSTS?

Where were you in 2003 and since? when we gave back billions?
I am more than qualified to attack AA management on ALL fronts.
I can recall many a ridiculous decision over the years that I can almost bet NO EXECUTIVE ever paid a price for those decisons..

Buying MD11s only to sell them as soon as possible?
Buying Follkers? Biggest mistake ever made..
Spending millions upon millions building hubs in RDU and BNA.....only to shutter them a few years later...
Speninding millions reconfiguring seats for the MRTC campaign! Only to undo that move as soon as possible.
Giving up SJU?
Value pricing?

While you are on a roll here, lets add...
- TWA purchase a total catastrophe
- TWA mis-managers HERE
- Reno Air, 'nuff said there
- Hiring outside consultants like Boston Consulting, taking their advice to get rid of spare parts only to buy them back at triple cost, then hiring Boston Consulting AGAIN FOR MILLIONS to tell us that with our old fleet we should have hung on to the spares. - duh
- Hiring outside consultants to advise on internal moves of personnel, - tech services.

AA is a microcosm of American management today. There are failures all around, and it is sick to see.

Accounting: Remember who cooked the books for Enron? Arthur Anderson, - formerly the world's leading accounting firm. Now destroyed.
Aircraft production -Boeing: Cost overruns, poor management of programs, redundant design teams for wiring systems that are already faulty on the 787.

A college education is wasted in these mis - "managers".

 

[PhatSappy]

Did I forget AirCal? Sorry. Nothing against AirCal or Reno Air "people". Just the principal of buying airlines, selling off the assets and then abandoning the regions to SWA, etc. Bad mAAnagement! Does anyone else here remember CrAAndal stating; "we will grow from within..."? I do. Then he bought AirCal.

 

[eolesen]

Accounting: Remember who cooked the books for Enron? Arthur Anderson, - formerly the world's leading accounting firm. Now destroyed.

Enron cooked their own books, not Andersen. Where Andersen went wrong was in not picking up on Enron's creative accounting.

The conviction against Andersen was overturned by the Supreme Court in 2005 (by unanimous vote, no less). They were accused of shredding documents and obstructing justice; the Supremes found that the judge erred in her instructions to the jury. Andersen argued that they were complying with their own internal policies & controls for document retention, which required shredding working notes, drafts, internal memos for all clients after 90 days. Final reports and other documents relevant to the SEC's investigation weren't destroyed.

AMR had/has the same policy, dating to the 1990's. It's all about managing liability -- documents which don't exist can't be subpoenaed.

In a world where you're convicted by the media before a court, the company was indeed destroyed, but perhaps under false pretenses...

 

[Frank Szabo]

Enron cooked their own books, not Andersen. Where Andersen went wrong was in not picking up on Enron's creative accounting.

The conviction against Andersen was overturned by the Supreme Court in 2005 (by unanimous vote, no less). They were accused of shredding documents and obstructing justice; the Supremes found that the judge erred in her instructions to the jury. Andersen argued that they were complying with their own internal policies & controls for document retention, which required shredding working notes, drafts, internal memos for all clients after 90 days. Final reports and other documents relevant to the SEC's investigation weren't destroyed.

AMR had/has the same policy, dating to the 1990's. It's all about managing liability -- documents which don't exist can't be subpoenaed.

In a world where you're convicted by the media before a court, the company was indeed destroyed, but perhaps under false pretenses...

I met a fellow through a 'running buddy' years ago who was employed by Aurthur Anderson - iin a few conversations, he commented Anderson was like Marwick (KPMG) at THAT time in that the clients paid well for the required results - this was the early to mid 1970s.

I have my doubts as to Anderson's innocence at any level.

 

[Veritas]

I have never said you had to contact me private for me to tell you where the data came from. I have said if people want more detail other than what is posted, I would provide that to them privately.

The offer remains now as it has before that I will tell you where the data comes from that I use in my posts.... but again you would rather argue about the minutia than deal with the actual data at hand.

Why not identify your sources for all to see?

Veritas--

Here's a couple of good sites to check out:

www.airlinefinanicals.com

www.bts.gov

www.aa.com--> "about AA"--> Investor relations.

Thank you.

I am familiar with those sites. One of them is run by a good friend of mine.

The issue is not where to find the data, but identifying the specific data sources used by a an arrogant and condescending poster ("If you want to learn, I'll teach you.")