AA reports healthy profit

[WorldTraveler]

http://finance.yahoo.com/news/american-airlines-group-reports-record-120000010.html

$400M profit

RASM up 3%

$243M in interest expense

AA mainline has a 2% ex-fuel CASM advantage relative to DL and 8% relative to UA

Latin America and Atlantic RASM down on more capacity, domestic RASM up on strong yield growth slight capacity growth; Pacific RASM up on less capacity

Jet fuel price 2% higher than DL.

 

[commavia]

First full quarter post-merger, and operating and net margins were higher than the industry benchmark, Delta.  Wow.
 
Most of the "hard work" of the merger is still ahead, for sure, but it's quite clear that, just as predicted, the competitive landscape is definitely shifting.
 
Congrats to AAers.

 

[WorldTraveler]

indeed AA is doing well.

BK does that for you. But those lower costs can be short lived if labor costs continue to grow at the double digt pace they have in this quarter. And if they don't grow, there will be a lot of unhappy people who supported the merger and aren't reaping the benefits of it.

So does the fact that UA is doing so poorly. UA is an enormous company and spreading its revenues to AA and DL add a lot to the latters' coffers.

There is no doubt that AA and DL are both benefitting from UA's woes.

Also, DL is now larger than UA in terms of revenue so it is realistically an AA-DL horserace - and we have yet to see the revenue impact to AA after the slots are removed from DCA and LGA and reassigned to new competitors in addition to WN's growth at DAL


My point remains that AA has too much capacity in a number of key regions when their RASM fell in two of their key region - Atlantic and Latin America. It is only because they are pulling capacity in the Pacific that they have reversed the RASM decline, but the actual profitability is still elusive.

Still, AA is doing well and AA people do deserve some good news after years of struggling.

 

[UPNAWAY]

WT the one thing you can bank on from this mgmt. team is they will rebalance unprofitable flights to profitable ones. Flying routes just to fly them or for market share will not happen much anymore.

 

[1AA]

WT the one thing you can bank on from this mgmt. team is they will rebalance unprofitable flights to profitable ones. Flying routes just to fly them or for market share will not happen much anymore.

And you know this how?

 

[WorldTraveler]

WT the one thing you can bank on from this mgmt. team is they will rebalance unprofitable flights to profitable ones. Flying routes just to fly them or for market share will not happen much anymore.[/size]

bingo and that is precisely my point.

I have repeatedly said there are places where new AA can grow and make money at the same time.

A whole lot of the nAAtive fans look at US' route system with scorn while believing that AA can make its own network work.

If that was the case, AA wouldn't have walked away from as many markets as they have in NYC or allow competitors to grow in AA's top markets.

It also means that adding or retaining capacity in the Atlantic and to Latin America while watching RASM go down in the process is not sustainable. AA's consolidated RASM is higher than UA's but still below DL's.

AA and US both added a lot of capacity both to appease regulators but also because AA and US both have more airplanes and employees than they know what to do with.

 

[FWAAA]

WT the one thing you can bank on from this mgmt. team is they will rebalance unprofitable flights to profitable ones. Flying routes just to fly them or for market share will not happen much anymore.

Gwen - is that you?   Always there to support HP management.  
 
More of the same freaking nonsense that everything old AA did was "wrong" and the proof is that "AA went bankrupt."    Cause we all know that US has done nothing but report healthy profits since the merger of US and HP.   GMAFB.  
 

And you know this how?

I figure it's either Doug's wife or kids.      

 

[1AA]

Gwen - is that you?   Always there to support HP management.  
 
More of the same freaking nonsense that everything old AA did was "wrong" and the proof is that "AA went bankrupt."    Cause we all know that US has done nothing but report healthy profits since the merger of US and HP.   GMAFB.  
 
I figure it's either Doug's wife or kids.      

Oh so AA went BK because they do not know how to run an airline. Tell me how many times USAir went into BK? AA did not go bankrupt. They filed for BK with over $5 billion in cash. Did USAir have that kind of cash when they filed twice?

 

[AANOTOK]

It doesn't seem to me that Wall Street is to overly impressed with this "record" news, or they are still trying to decipher it all. Of course the analyst are still pumping.

 

[700UW]

US filed twice, Parker was not CEO at either time.
 
And you gave concessions in 2003 to AA and you werent in bankruptcy.
 
And now AA filed, so does it really matter anymore?

 

[FWAAA]

Oh so AA went BK because they do not know how to run an airline. Tell me how many times USAir went into BK? AA did not go bankrupt. They filed for BK with over $5 billion in cash. Did USAir have that kind of cash when they filed twice?

You may not have caught my sarcasm.   
 
Parker never had to file for Ch 11 as HP had already done that years before he took over.   He was handed US Airways in 2005 as it exited from its second bankruptcy.   Parker didn't have to file for Ch 11 because the combined HP/US had very low payrates and very low labor costs compared to AA.
 
AA didn't "go bankrupt" in the typical sense.  Unlike most debtors,  AA had no shortage of money to borrow.   
 
AA filed for Ch 11 primarily to drive a stake thru the heart of labor and the lingering cries of "Restore and More."   AA's pilots and FAs wanted gains from 2008 until 2011 and AA was unwilling to hand out any gains.
 
My point to the US cheerleader is that there's a constant drumbeat that AA "went bankrupt" and thus that must be proof that every decision of prior AA management was sub-optimal.  Now, the new sheriff, Parker and his sidekick Kirby, are announcing all sorts of "changes" that are meant to deflect any critique of the poor management of US Airways.

 

[1AA]

You may not have caught my sarcasm.   
 
Parker never had to file for Ch 11 as HP had already done that years before he took over.   He was handed US Airways in 2005 as it exited from its second bankruptcy.   Parker didn't have to file for Ch 11 because the combined HP/US had very low payrates and very low labor costs compared to AA.
 
AA didn't "go bankrupt" in the typical sense.  Unlike most debtors,  AA had no shortage of money to borrow.   
 
AA filed for Ch 11 primarily to drive a stake thru the heart of labor and the lingering cries of "Restore and More."   AA's pilots and FAs wanted gains from 2008 until 2011 and AA was unwilling to hand out any gains.
 
My point to the US cheerleader is that there's a constant drumbeat that AA "went bankrupt" and thus that must be proof that every decision of prior AA management was sub-optimal.  Now, the new sheriff, Parker and his sidekick Kirby, are announcing all sorts of "changes" that are meant to deflect any critique of the poor management of US Airways.

Sounds about right, but wait for 700UW to chime in on your explanation. I'll just sit back and get more comfortable in the mean time.

 

[WorldTraveler]

sorry but there is no "typical" or "atypical" BK. AA was living on borrowed money and nothing more. Other carriers may have reached the end of their borrowing limit but AA got two rounds of concessions from its lenders and its employees. That isn't substantially different from what US did.

I'm not sure what any of this matters other than that AA continues to benefit from BK aided cost reductions.

As I have noted would be the case, AA is being dramatically helped by UA's blunders - but likely so is everyone else.

AA has yet to do any of the integration work - labor or operational - that have plagued many other mergers.

AA might well overcome it all but AA labor is not going to be any more content to accept low pay and record profits any more than US people were. THAT will be the thread that holds AA and US together.

 

[MAH4546]

One of the more interesting tidbits from the "State of the Airline" report today: looking at acquiring 777-200LRs for ULH flying, specifically mentioned MIA-JNB.

 

[robbedagain]

that indeed is interesting mah  I wonder if theyre lookin at duplicating what dl does by buying used planes for new routes