AA reports record quarterly and yearly profit
- Thread starter WorldTraveler
- Start date
And that's the point Nyer, every time the financials don't go the companies way, they take pretty much what ever they want, and we just say thank you may I have another.NYer said:
So when the financials are off the charts good, as in , the best they've ever been, you'd think they could reward everyone instead of a few chosen groups.
Giving the ground workers the 4% without a JCBA would take nothing more than a key stroke on the keyboard.
I'm blaming both unions here too. The IAM for not backing out, as they rightly should, by any measure of past history of such things. And The Twu for the whole Association scam crap sandwich they continue to shove down our throats. This whole scene is the textbook example of how not to best serve the membership.
OP
- Dec 5, 2003
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- Thread Starter
- #34
given a potentially $3 to 4 billion decrease in AA's fuel costs IF fuel stays at current rates, there is a lot of AA's network that should improve dramatically in profitability.
however, remember that many were arguing how well AA would do this quarter because they didn't have fuel hedge losses and, exactly as I expected, revenue would be significantly different between AA and its competitors. In fact, the difference between AA's RASM growth (-1% on a combined system basis) and DL's (+4.6%) amounted to a difference in revenue of more than $400 million just for the quarter.
given that AA says its revenue performance will likely be pressured for at least 2 more quarters, the revenue difference could easily approach $1.5 billion over the 4 quarters in which AA has shown revenue weakness.
secondly, ALL carriers are benefitting from lower fuel prices. While some carriers have hedging losses and DL's hedge losses appear to be the largest among US carriers IF FUEL PRICES REMAIN WHERE THEY ARE NOW the difference in revenue is very close to the difference in hedge losses at DL.
finally, there is no assurance that fuel prices will remain this low and gasoline prices in the US are starting to head back up. and low fuel prices do hurt certain countries worse than others, including developing world economies such as in Latin America where AA has a larger exposure than other carriers.
so, yes, AA could use its overall fuel cost gains to add new routes but it still has to deal with revenue weakness and increased growth of competitive capacity that is far more of an AA than an industry problem.
but fuel prices will not stay low for ever and when fuel prices go back up - and they will - AA will be in a worse position than they are now both because they don't hedge (and AA execs acknowledged that they can't buy long term fuel contracts at present prices) while other carriers do and will continue to hedge but AA's revenue weakness will be magnified as its costs grow disproportionate to its competitors.
and also be aware that there are significant parts of AA's labor groups that are not happy that AA will be spending $2 billion on share repurchases even as AA labor groups are being told that profit sharing is not available to them and even with the increased contracts that MIGHT be spread to all employee groups, they will still end up short of competitors' employees in terms of total compensation.
and, as has been stated multiple times before, LAX is the most competitive Asia market from the US and is also one where AA has been historically very weak from a revenue perspective - and there is no evidence that AA's revenue performance is improving relative to its peers.
by the time AA is in a position to start a new LAX to Asia route (presumably next summer) the financial situation for the industry could look a whole lot different.
WorldTraveler said:
If IAG's strategy behind the purchase of EI is what I think it is, I wouldn't declare victory for the DL/VS JV quite yet.
Let me remind you that you used to tout the advantages AF/KL gave Delta. Not anymore and certainly not in the event that IAG completes its purchase of EI. As if Delta could fight on equal terms with IAG in its own markets. Now, tell me why didn't you predict that?
OP
- Dec 5, 2003
- 21,709
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- #36
uh, Parker himself noted that the DL/VS alliance is pressuring AA's revenue performance in LHR markets.
EI is a pretty small player to/from Europe and won't change AA/BA's strategy to/from Europe.
EI could provide some more LHR slots to BA and could carry some connecting traffic over DUB instead of LHR but they aren't going to move the dial significantly.
If anything, BA control of EI could result in higher fares.
AF/KL as well as LH provide DL and UA with significant presence in continental Europe. AA/BA does not have anywhere near that presence and very little in the N. Europe which is much less exposed to financial problems.
EI could help AA/BA with that but DL and UA both fly to Ireland, have significant operations at LHR relative to AA's own metal operations, and have better continental European networks than AA/BA as well.
if anything, EI helps AA/BA in competing with DL and UA. but not by any significant amount compared to AF/KL and LH.
oh, and it is also worth noting relative to this topic that even above what was discussed, AA still has over $650 million of Venezuela currency that it cannot expect to repatriate. It revalued that and took an impairment based on exchange rates it has been able to achieve but has repatriated a small minority of the total cash that AA has in Venezuela.
add in the RASM growth shortfall relative to DL and UA which several analysts questioned AA execs about and which they said won't change much for a couple more quarters and the Venezuela issue and AAs revenue related issues are bigger than the hedge issues at DL.
and they finally have confirmed what I said that AA's key markets at DFW, MIA, and DCA are seeing significant amounts of low fare competition which are pressuring AA's yields. there is no indication that will decrease any time soon and will realistically only grow.
EI is a pretty small player to/from Europe and won't change AA/BA's strategy to/from Europe.
EI could provide some more LHR slots to BA and could carry some connecting traffic over DUB instead of LHR but they aren't going to move the dial significantly.
If anything, BA control of EI could result in higher fares.
AF/KL as well as LH provide DL and UA with significant presence in continental Europe. AA/BA does not have anywhere near that presence and very little in the N. Europe which is much less exposed to financial problems.
EI could help AA/BA with that but DL and UA both fly to Ireland, have significant operations at LHR relative to AA's own metal operations, and have better continental European networks than AA/BA as well.
if anything, EI helps AA/BA in competing with DL and UA. but not by any significant amount compared to AF/KL and LH.
oh, and it is also worth noting relative to this topic that even above what was discussed, AA still has over $650 million of Venezuela currency that it cannot expect to repatriate. It revalued that and took an impairment based on exchange rates it has been able to achieve but has repatriated a small minority of the total cash that AA has in Venezuela.
add in the RASM growth shortfall relative to DL and UA which several analysts questioned AA execs about and which they said won't change much for a couple more quarters and the Venezuela issue and AAs revenue related issues are bigger than the hedge issues at DL.
and they finally have confirmed what I said that AA's key markets at DFW, MIA, and DCA are seeing significant amounts of low fare competition which are pressuring AA's yields. there is no indication that will decrease any time soon and will realistically only grow.
The 4% bump for groups that had an agreement by the date the company set was nothing more than to speed up the process of nego's for all groups that did not have an agreement yet. The company was simply trying to push all the groups forward in nego's. A mere carrot if you will. Fully knowing the mechanics would not meet this date as their nego's (for a SJCBA) is on hold for the slow a$$ NMB to make a decision. The company is now and will for the future, save money, for that group, as far as the 4% bump goes. I really can't believe you all cannot see this. It was a move by the company that they new they would reap the rewards plain and simple. Open your eyes people, what does it take for Gods sake???AANOTOK said:
Sorry for the confusion. There are two cases before the NMB. One is the association and the other is that there are 3 groups (dispatchers, instructors, sim techs) wanting an election to get out. I wanted to be clear on which you were referring to.swamt said:
I was talking about the NMB's case to decide on this association crap. As we have seen by the co pushing the deadline for the 4% added raises for all who come to an agreement by the date as well as retro pay for the pilots is what got the pilots to agree to allow a vote, and it also worked with F/A's. The mechanic and related groups are possibly left out of these perks because of the delay from the NMB. Although no fault of the mechanic and related group they are still without the 4% bump like the other groups are enjoying or will enjoy should the pilots vote this in. Pilots voting will end Jan 31st and we will find out then, but I have also been reading of some resistance from the US pilot group to vote this in, but, the AA pilots way out number the US pilots. The same as the AA mechanics way out number the US mechanics... Good luck to you guys. Hopefully a good 2015 year for us all...Bogey said:
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