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AA in trouble?
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Lots of pilots retiring on the news, too! They don't want to lose their pensions in bankruptcy like all the other used-to-be "majors"... :(
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And they've just signed a giant order... :ugh:
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Oh Yeah
In 1990, AA became the world's largest airline with more than USD $1b in cash reserves. They're stock price was $88 per share. Today they have very nearly the highest costs in the industry, are third-largest, despite their huge fleet and bloated payroll; stock price:$2 and change, and is probably over-valued at that.
What we have here is a grotesquely obsolete business model. |
Does anyone really understand airline economics?
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Dear SFi145
Do I understand economics? No, but a good way to make a small fortune in aviation is to start with a large one! :) |
What I don't understand is that the current market capitalization of AMR (AA's parent) is $663 million dollars. This is about the price of 2.5 B777s. Yet among its 619 aircraft AA has 47 B777s - doesn't make any sense to me. So presumably most of the fleet is actually leased from other companies.
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As Stelios from EasyJet once said. |
What we have here is a grotesquely obsolete business model. |
Say what you want, but unions are killing the industry.
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net worth
according to company figures via bloomberg, AMR's net fixed assets (cast - depretiation of all their assets, mostly aircraft) was $15.1bn as at 30 June 2011. long term debt was 10bn and other long term liabilities was another 10bn. there was also 1.8bn of short term debt.
what do you think the stock should be worth now? |
In 1990, AA became the world's largest airline with more than USD $1b in cash reserves The media keeps quoting that the reasons for its continuous losses is due to its high labor wages . However if you look at the pilot payscales ( not sure about flight attendants and mechanics ) as quoted on APC they dont seem to differ much from that of other legacies ( for eg : Delta ) Question How many think that AMR's reason for continuous losses is due to its High Labor wages ? Or is it due to something else like say old airplanes ( they have too many Maddogs flying around ) |
In general airline losses are due to one thing- they sell their tickets too cheaply!!!!
This is the only business that sells a lot of their product - mostly economy seats - below cost. And try and recover the loss on business class and freight. Sure - its due to stiff competition - but other industries also face competitors and I dont see them selling their product below cost.:ugh: |
cash
as at 30 June cash was 318 mil and short term investments was 4.8bn BUT on the other side of ledger there is 9.7bn of short term liabilities which includes the 1.8bn of short term debt.
just putting the facts out there... |
Home Alone
If you remember the movie "Home Alone"....the characters played by Joe Pesci and Daniel Stern....the idiot burglers....well, that is typical airline management.
We can argue all day and all night about unions this and unions that....but, with management like the burglers in "Home Alone"... well, what the hell do you expect!!!!! |
Say what you want, but unions are killing the industry. Wages are about 40% of what they were 20 years ago at AA, adjusted for inflation. Executives get the credit when companies are successful. They get the blame when they're not. American Airlines flight attendants protest bosses' executive bonuses at JFK airport BY LORE CROGHAN DAILY NEWS STAFF WRITER Wednesday, April 20, 2011 American Airlines flight attendants picketed at JFK Airport Wednesday to protest fat bonuses for their bosses in the face of big losses for their carrier. About 30 workers and retirees waved signs saying "Bonuses for Failure?" and chanted "Down with corporate greed" on the sidewalk across the roadway from American Airlines' terminal. Drivers of some passing cars honked to show solidarity with the flight attendants, many dressed in their navy-blue work uniforms. "The top people have a lot of nerve taking their bonuses," said demonstrator Connie Patrick, 62, of Newtown, Conn., who has worked as a flight attendant for the airline for 43 years. "They're a bunch of Bernie Madoffs." The top five execs have reaped $100 million in bonuses since 2005, while the carrier lost more than $4.2 billion. In 2003, the flight attendants agreed to cuts in pay and benefits worth $340 million annually, which they say kept American out of bankruptcy. "We were promised when American got back on its feet that we would share in the profitability," said another protestor, Marilyn Catania, 60, of Rockville Centre, L.I. "But only the top people get the money. "I had hoped to retire by now, but I'm going to have to work a few more years," said Catania, who's been an American flight attendant for 40 years. The carrier's flight attendants earn $30,000 to $40,000 per year, which puts them in the middle of the pack on pay among the major airlines, said flight attendant Raymond Lewis, 40, of Stroudsburg, Pa., who's a rep for their union, the Association of Professional Flight Attendants. "A regular work schedule is 75 to 80 hours a month, but most people I know in New York can't live on that," said flight attendant Jan Gadd, 44, of the lower East Side. "Most work at least 100 hours; I know people who work 140 hours to make ends meet." The union issued a mock "14-count indictment" of their bosses charging "managerial incompetence" and "moral bankruptcy." Protests were also held at LaGuardia Airport and nine other airports nationwide where the carrier has a presence. It employs nearly 18,000 flight attendants. Their union has been in labor contract negotiations for three years. The union bought a half-page ad in Wednesday's USA Today that trumpeted, "Wall Street greed is alive and well at American Airlines," and debuted a TV commercial that takes aim at American's CEO, Gerard Arpey. After the protests, a company spokeswoman defended the bonuses and offered a hopeful word about labor negotiations. "Performance-based compensation plans are considered good corporate governance," Missy Cousino said in a statement. "We remain committed to working with all the unions to reach agreements addressing the needs of both parties that are in the long-term best interests of the company and all of its employees," she added. |
Correct me if I'm wrong...
but, isn't American the only remaining major airline in the U.S. that still offers a defined-benefit pension plan?
If this is correct, could it be possible that management is playing with the numbers to get rid of the pension liability? Others did this..... |
What trouble?
The senior execs got their 100M in bonus payout so no trouble. Isn't that how their job performance/success is measured?
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Quote: Say what you want, but unions are killing the industry. Except they're not. Wages are about 40% of what they were 20 years ago at AA, adjusted for inflation. Executives get the credit when companies are successful. They get the blame when they're not. Quote: American Airlines flight attendants protest bosses' executive bonuses at JFK airport BY LORE CROGHAN DAILY NEWS STAFF WRITER Wednesday, April 20, 2011 American Airlines flight attendants picketed at JFK Airport Wednesday to protest fat bonuses for their bosses in the face of big losses for their carrier. About 30 workers and retirees waved signs saying "Bonuses for Failure?" and chanted "Down with corporate greed" on the sidewalk across the roadway from American Airlines' terminal. Drivers of some passing cars honked to show solidarity with the flight attendants, many dressed in their navy-blue work uniforms. "The top people have a lot of nerve taking their bonuses," said demonstrator Connie Patrick, 62, of Newtown, Conn., who has worked as a flight attendant for the airline for 43 years. "They're a bunch of Bernie Madoffs." The top five execs have reaped $100 million in bonuses since 2005, while the carrier lost more than $4.2 billion. In 2003, the flight attendants agreed to cuts in pay and benefits worth $340 million annually, which they say kept American out of bankruptcy. "We were promised when American got back on its feet that we would share in the profitability," said another protestor, Marilyn Catania, 60, of Rockville Centre, L.I. "But only the top people get the money. "I had hoped to retire by now, but I'm going to have to work a few more years," said Catania, who's been an American flight attendant for 40 years. The carrier's flight attendants earn $30,000 to $40,000 per year, which puts them in the middle of the pack on pay among the major airlines, said flight attendant Raymond Lewis, 40, of Stroudsburg, Pa., who's a rep for their union, the Association of Professional Flight Attendants. "A regular work schedule is 75 to 80 hours a month, but most people I know in New York can't live on that," said flight attendant Jan Gadd, 44, of the lower East Side. "Most work at least 100 hours; I know people who work 140 hours to make ends meet." The union issued a mock "14-count indictment" of their bosses charging "managerial incompetence" and "moral bankruptcy." Protests were also held at LaGuardia Airport and nine other airports nationwide where the carrier has a presence. It employs nearly 18,000 flight attendants. Their union has been in labor contract negotiations for three years. The union bought a half-page ad in Wednesday's USA Today that trumpeted, "Wall Street greed is alive and well at American Airlines," and debuted a TV commercial that takes aim at American's CEO, Gerard Arpey. After the protests, a company spokeswoman defended the bonuses and offered a hopeful word about labor negotiations. "Performance-based compensation plans are considered good corporate governance," Missy Cousino said in a statement. "We remain committed to working with all the unions to reach agreements addressing the needs of both parties that are in the long-term best interests of the company and all of its employees," she added. |
What I don't understand is that the current market capitalization of AMR (AA's parent) is $663 million dollars. This is about the price of 2.5 B777s. Yet among its 619 aircraft AA has 47 B777s - doesn't make any sense to me. So presumably most of the fleet is actually leased from other companies. |
Seriouly doubt that 120K figure. I cannot recall, but are FA's limited to 1000 hours per year as the pilots are? even if you selling back vacation, etc. 120K is a stretch. :rolleyes:
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Originally Posted by kick the tires
(Post 6732415)
Stelios has made a large fortune from starting with a small one!
I wonder what ol' 411A would have made of this? |
This whole thing is a joke. The pilots bet the whole company on a pay rise.. its totally dumb - don't these people see whats happening in the real world? They should close the doors and start over.
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close the doors
When you get the knowledge and the pain that it takes to become an airline pilot. You can talk! Pilots are grossly underpaid so that you can fly for $100, a seat. :=
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my friend thats the most stupid thing anyone could say. It costs a lot of money to become a professional at many things - what about a doctor or a dentist or even some professional sports people. The over riding point is that you have to understand the market you are in and things get priced accordingly. These pilots are holding the entire company to randsom and putting at risk not just the executive but also the smaller people who perhaps clean the offices, man the phones or maintain the aircraft. All for what? You know what is great about USA is that you are free - and that means these poor pilots were free to not be pilots or free to work at another airline.
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Pieceof cake,
I don't understand your POV. You say (a) the pilots are holding the company to ransom (I assume that's by leaving in droves) yet you also say (b) that the wonderful thing about the US is that pilots can do just that. If my pension pot was about to be decimated you can bet your bottom dollar that I'd be out like a flash too. How is that holding the company to ransom? |
@28L - I don't think this is too hard to understand?:-
“ Unions for the pilots, flight attendants and ground workers want to recoup at least part of the $1.6 billion in annual concessions made to avert bankruptcy in 2003, while American has said it has an $800 million-a-year labor-cost disadvantage to rivals..." So these guys want to squeeze AMR dry leaving it uncompetitive. Or have I missed something? |
You know forget AMR the whole industry is in a hole, and why?
When you read this how is it ever good :- By Steve Rothwell and Mathew Carr Oct. 4 (Bloomberg) -- Airline profits forecast to total $28 billion in the three years through 2012 may be unsustainable as over-capacity and looming regulatory costs weigh on margins, the head of the IATA industry association said. Airlines will generate net income equal to 0.8 percent of revenue next year, a margin that may shrink further if economic growth slows to less than 2.4 percent, Tony Tyler, chief executive officer of the International Air Transport Association since July 1, said in an interview in London. “The natural condition of the airline industry is crisis,” Tyler said. “Occasionally, we’ve had short periods where the conditions are quite benign and everything goes quite well, and the danger is to believe that’s normal -- and that’s wrong.” |
are FA's limited to 1000 hours per year as the pilots are? |
Time for reregulation.Oh sure Bubba and his overweight wife and kids will not be able to fly and alot of ERJ/CRJ pilots will be out of a job but that is the only way an airline can be restored.They need to charge what it actuslly costs to fly me or you to places we need to go.
It is always amusing to watch how the anti unionists will drop everything at the doorstep of the unions. Let us not forget United 232 & Eastern 401.What did they have in common? Half empty wide bodies flying on domestic routes.That certainly was not a union decision but a management one. While the "shared sacrifice"mantra is good for the airline "shared prosperity" becomes "putting the squeeze on airlines"? Give me a break! |
jeff748
Say what you want, but unions are killing the industry.
TWA lasted 75 years AA have done very well but they, like millions of other companies, think that they can always 'fix it' and 'renew' and 'rebuild' and 'expand once again'. The answer is: No. It is impossible to say if they have five or 15 more years left in them but the only certainty is that they will not continue in this form for too much longer. Those that are taking their pensions and bailing now, have learnt the lesson from others. It can eb said that it is not all the fault of mgmt, because what is happening to AA is just the usual life cycle of a successful company and you cannot expect humans to always learn from the past. |
You say don’t blame unions but that’s the collective force that is keeping costs where they are. Which is exactly what you Yrecognise when you say its time to start charging people what it actually costs to fly from A to B. There is clearly something wrong with an industry when the front page of London’s FT markets section says “AMR is the only big US national carrier not to have passed through Chapter 11 in the last decade”.
That’s a joke and typically at the core of the problem is wage costs associated with pilots – just look at Aer Lingus. Frankly whilst being a pilot may mean an investment in ones self and it may be a skilled profession it isn’t immune from the same commercial realities as any other business. |
alouette3
From wiki-On UA232, 111 died and 185 survived. I'd guess there weren't many open seats!
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pilots...free to work at another airline. |
Another tidbit about AA
Little bird told me they are giving up on the USPS domestic mail contract because it requires too many folks at corporate to administer the contract. That can't be good...
edit--I believe AA is the largest outfit among the majors doing the bulk of their maintenance in-house. The race to the bottom continueshttp://images.ibsrv.net/ibsrv/res/sr...s/censored.gif |
What does this even mean? "Excellent understanding of how the seniority system works... "
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can you say "ironic"?
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typically at the core of the problem is wage costs associated with pilots So please tell me how you are going to save the airline by cutting pilot pay?? |
No word from Wino? :confused:
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@yokebearer - those %'s are meaningless in isolation without knowing the detail. After all other staff costing 25% would be a bargain if they generate 99% of revenues. The problem with pilots is that they are just a cost. A necessary one but its not like people choosing AMR on the quality of the flying. Answer this - when flying New York to LA what is the average pilot doing?
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