1Q Loss over $1 Billion

Airlines9

Member
Apr 22, 2003
28
0
9/11 happened over 18 months ago. How come AMRs'' 1Q is worse than the one that followed 9/11. Carty has said that they have cut costs by nearly $2 Billion. If that is so why are losses getting bigger not smaller. The answer is bad management. Carty and his gang of 40+ VPs, good old boys, must go. Carty has no idea how to run an airline in this environment. What real changes has he made in the last year or so. None I can see. Just cut backs, but no new business plan. What has he done to improve labor relations? He has no respect for the Unions and wants to use them as an excuse for his poor management. Carty has done everything to protect his and his buddies butts when AMR goes into bankruptcy. Saying that he is sorry that he got caught is just wrong.

Nothing has change at HQ. They all have their club memberships, the limos, the bumping of rev passengers, golden parachutes, and a pension plan that will be protected in bankruptcy. Are the Union members pensions protected? No. Carty has said that the Pilots pension is one of the first things he would look at in bankruptcy court. Look at USAirs pension plan today.

The only thing that will save AMR is new Management, not just new contracts.
 
OP
A

Airlines9

Member
Apr 22, 2003
28
0
----------------
On 4/23/2003 9:40:47 AM KCFlyer wrote:

Guess what...the club memberships, limos, bumping of rev passengers, golden parachutes and pension plans COMBINED would not cover a billion dollar quarterly loss.   Perhaps you should focus on saving your company and not on perks that have been a part of management for the past 100 years.  Not defending the perks, but just suggesting that you win the war one battle at a time.  Save your company first, then reform executive pay second. ​

KCFlyer,

So you think its OK for management to ride around in limos & play golf at their clubs because its part of the, "past 100 years?" Thats the problem with AMR they are running the company the old fashion way and that does not work in todays market. So its fine that Management will keep their pensions and perks while I vote myself out of a job and wonder how I will keep my house on unemployment. Management should keep everything and I lose it all. All because I did a great job and they did a bad one. Sounds fair.

Do you really think that these new contracts will save AMR? The only thing that will save AMR is new Management. I hope I get my wish tomarrow.
 

KCFlyer

Veteran
Aug 20, 2002
10,694
1,324
www.usaviation.com
----------------
On 4/23/2003 9:56:04 AM Airlines9 wrote:

KCFlyer,

So you think its OK for management to ride around in limos & play golf at their clubs because its part of the, "past 100 years?"

REad a little further - I believe I said "Not defending the perks".

Thats the problem with AMR they are running the company the old fashion way and that does not work in todays market. So its fine that Management will keep their pensions and perks while I vote myself out of a job and wonder how I will keep my house on unemployment. Management should keep everything and I lose it all. All because I did a great job and they did a bad one. Sounds fair.

You're putting a lot of words in my mouth there. Let me ask you this - you are a banker, I own a company that might have to file bankruptcy. I let my CEO go and I don't have anyone to replace him yet, but I'd really like you to restructure my debt, and while you're at it, I'd like to talk to you about loaning me a billion dollars or so to help me emerge stronger. Would that sound like a good deal to you when it a whole bunch of YOUR money that I'm asking for?

Isn't there about 50 of those "old fashioned" execs you love to hate who are pulling in the perks...because the top dog is gone, it seems to me you'd still resent top dog #50 because he still had the same perks as number 1. So you bring in a new guy. Yep, U brought in Dave (but not nearly so close to their bankruptcy date), and by golly, it looks like the troops over at U are just loving him to death. Just check out the U board. Oh, and it wasn't that long ago that the U board approved "retention bonuses" for their execs, including the "new guy", Dave.

Do you really think that these new contracts will save AMR? The only thing that will save AMR is new Management. I hope I get my wish tomarrow.

Now for the fun part - name for me the 50 guys you'd bring in to treplace these country club prima donnas. Hell, name the ONE guy you'd bring in. Don't say "Crandall" either - I seriously doubt he'd come to work for a dollar a year, and I know you wouldn't want to see his (or anyone elses) "employment package" to bring him on board. And I really don't think there'd be a helluva lot of respect towards him when he approaches you and tells you that Carty underestimated what cuts were needed.

----------------​
 

copilot

Member
Aug 23, 2002
20
0
Just think how much AMR would have lost if any of the top Management that they are so worried about would have left the company. LOL...
 

AAObserver

Member
Apr 18, 2003
89
0
So let's get this straight -- hiring a new CEO will fix the problem but ratifying the contracts with $1.8 billion in concessions won't?

News flash: Hiring a new CEO will cost far more than Carty ever has. No qualified individuals are going to take over Carty's job with all it's pitfalls for less than double what he is currently making.

Hiring a new CEO will add more to the cost structure, but the consessions will drastically reduce the cost structure. It doesn't take a doctorate of economics to see that replacing the CEO isn't a magic pill.
 

KCFlyer

Veteran
Aug 20, 2002
10,694
1,324
www.usaviation.com
----------------
On 4/23/2003 9:16:08 AM Airlines9 wrote:

9/11 happened over 18 months ago. How come AMRs'' 1Q is worse than the one that followed 9/11. Carty has said that they have cut costs by nearly $2 Billion. If that is so why are losses getting bigger not smaller. The answer is bad management. Carty and his gang of 40+ VPs, good old boys, must go. Carty has no idea how to run an airline in this environment. What real changes has he made in the last year or so. None I can see. Just cut backs, but no new business plan. What has he done to improve labor relations? He has no respect for the Unions and wants to use them as an excuse for his poor management. Carty has done everything to protect his and his buddies butts when AMR goes into bankruptcy. Saying that he is sorry that he got caught is just wrong.

Nothing has change at HQ. They all have their club memberships, the limos, the bumping of rev passengers, golden parachutes, and a pension plan that will be protected in bankruptcy. Are the Union members pensions protected? No. Carty has said that the Pilots pension is one of the first things he would look at in bankruptcy court. Look at USAirs pension plan today.

The only thing that will save AMR is new Management, not just new contracts.

----------------

Guess what...the club memberships, limos, bumping of rev passengers, golden parachutes and pension plans COMBINED would not cover a billion dollar quarterly loss. Perhaps you should focus on saving your company and not on perks that have been a part of management for the past 100 years. Not defending the perks, but just suggesting that you win the war one battle at a time. Save your company first, then reform executive pay second.​
 
Aug 20, 2002
1,423
90
Valhalla
www.usaviation.com
----------------
On 4/23/2003 10:18:20 AM AAObserver wrote:

So let''s get this straight -- hiring a new CEO will fix the problem but ratifying the contracts with $1.8 billion in concessions won''t?

News flash: Hiring a new CEO will cost far more than Carty ever has. No qualified individuals are going to take over Carty''s job with all it''s pitfalls for less than double what he is currently making.

Hiring a new CEO will add more to the cost structure, but the consessions will drastically reduce the cost structure. It doesn''t take a doctorate of economics to see that replacing the CEO isn''t a magic pill.

----------------​

Yeah but it would make certain posters here feel good and more productive! Certainly the passengers would return in droves and AA could raise the fares and continue to do business the old fashioned way! Maybe this new CEO could also prohibit the use of personal computers by those pesky pax who want value for their money!

Problem solved. Don''t make me post long-winded nonsense complete with ridiculous numbers and grammar!!!!
 

Resman1

Member
Aug 29, 2002
44
0
The reason for the continuing losses:
An idiotic fare structure, AA talks about the
"revenue premium" we have versus WN and low cost carriers
since we sell international and domestic first and
business class. WN''s highest domestic fare is 299.00, according to 2002 filings, they are within 1 cent of our revenue per passenger mile. Management still thinks there are people willing to pay a walkup fare 12-15 times the cost of the lowest non-refundable. We need to immediately slash our full fare First, Coach and Business class fares to make flying an option for the last minute business traveler. Currently, unless you are flying JetBlue, Airtran or Southwest, you are better video conferencing because it''s much cheaper than actually traveling. Look at our current full fare coach DFW-LGA it''s currently 1,200.00
each way!!! How many of those do we sell? Not many, why not reduce it to 800.00 roundtrip? I would rather see 800.00 revenue than the current 0.00 we are getting. Also the vast majority of those full fare seats we sell are
issued with the huge corporate discounts we give. So even though it may track that we sold a full fare ticket, it''s much, much less after the IBM, Dell or whatever corp discount. Price your product fair and honestly and don''t nickel and dime the customer for everything and customers will return. Until then, there is no chance even with bankruptcy.
 

Todd B

Advanced
Jan 11, 2003
228
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This was posted in another thread by wingnaprayer-

AMR Reports First-Quarter Loss of $1.04 Billion

FORT WORTH, Texas, Apr 23, 2003 /PRNewswire-FirstCall via COMTEX/ -- AMR Corporation (NYSE: AMR), the parent company of American Airlines, Inc., today reported a first quarter net loss of $1.04 billion, or $6.68 per share. This compares with a net loss of $1.56 billion, or $10.09 per share, in the first quarter of 2002, which included a cumulative effect of accounting change of $988 million, or $6.38 per share.

"Our first quarter results were truly dreadful," noted AMR's Chairman and Chief Executive Officer Don Carty. "The results we reported today clearly demonstrate the negative effects from high fuel prices leading up to the Iraq war, and passenger concern about traveling before and after fighting commenced," Carty said.

"The fact remains that we are confronting a brutally difficult financial and business environment," he said. "We are beset on all sides by a struggling economy, the continued uncertainties regarding hostilities in the Middle East, concerns regarding the SARS outbreak, fuel prices that are significantly higher than they were a year ago, and fare levels that are at 30-year lows. All told, it's a perilous climate and our success is far from assured," Carty said.

In keeping with the provisions of SFAS 109, AMR's first quarter 2003 results do not reflect a benefit for federal and state income taxes. Conversely, AMR's first quarter 2002 results did reflect a tax benefit.

Comparison of First Quarter Results
(in millions)
2003 2002
Loss Before Income Taxes and
Cumulative Effect of Accounting Change $(1,043) $ (863)
Income tax benefit --- (288)
Loss Before Cumulative Effect of
Accounting Change (1,043) (575)
Cumulative Effect of Accounting Change,
Net of Tax Benefit --- (988)
Net Loss $(1,043) $(1,563)


Additionally, given the fluidity of AMR's current situation, the planned conference between AMR's Senior Vice President and Chief Financial Officer Jeff Campbell and members of the financial community and the media will not occur today as previously scheduled.

Statements in this news release contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended, which represent the Company's expectations or beliefs concerning future events. When used in this news release, the words "expects," "anticipates," and similar expressions are intended to identify forward-looking statements. All forward-looking statements in this release are based upon information available to the Company on the date of this release. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Forward-looking statements are subject to a number of factors that could cause actual results to differ materially from our expectations, including the uncertain financial and business environment for the Company even with the ratification of the labor agreements. These uncertainties include, but are not limited to, the struggling economy, high fuel prices, conflicts in the Middle East, the SARS outbreak and historically low fare levels. Additional information concerning these and other factors is contained in the Company's Securities and Exchange Commission filings, including but not limited to the Form 10-K for the year ended Dec. 31, 2002.

Detailed financial information follows:


AMR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
(Unaudited)

Three Months Ended
March 31, Percent
2003 2002 Change
Revenues
Passenger - American Airlines $3,394 $3,484 (2.6)
- Regional Affiliates 326 326 ---
Cargo 134 134 ---
Other revenues 266 219 21.5
Total operating revenues 4,120 4,163 (1.0)

Expenses
Wages, salaries and benefits 2,123 2,080 2.1
Aircraft fuel 729 527 38.3
Depreciation and amortization 338 341 (0.9)
Other rentals and landing fees 291 289 0.7
Commissions, booking fees and
credit card expense 255 320 (20.3)
Maintenance, materials and repairs 231 266 (13.2)
Aircraft rentals 190 226 (15.9)
Food service 149 170 (12.4)
Other operating expenses 683 673 1.5
Total operating expenses 4,989 4,892 2.0

Operating Loss (869) (729) 19.2

Other Income (Expense)
Interest income 13 18 (27.8)
Interest expense (192) (166) 15.7
Interest capitalized 19 22 (13.6)
Miscellaneous - net (14) (8) 75.0
(174) (134) 29.9

Loss Before Income Taxes and
Cumulative Effect of Accounting Change (1,043) (863) 20.9
Income tax benefit --- (288) *
Loss Before Cumulative Effect of
Accounting Change (1,043) (575) 81.4
Cumulative Effect of Accounting Change,
Net of Tax Benefit --- (988) *
Net Loss $(1,043) $(1,563) (33.3)

* Greater than 100%

Note 1: Certain amounts have been reclassified to conform with 2003
presentation.

Note 2: Regional Affiliates include American Eagle Airlines, Inc.,
Executive Airlines, Inc., Trans States Airlines, Inc. and
Chautauqua Airlines, Inc.


AMR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
(in millions, except per share amounts)
(Unaudited)

Three Months Ended
March 31,
2003 2002
Basic and Diluted Loss Per Share
Before Cumulative Effect of Accounting Change $(6.68) $(3.71)
Cumulative Effect of Accounting Change --- (6.38)
Net Loss $(6.68) $(10.09)

Number of Shares Used in Computation
Basic and Diluted 156 155


AMR CORPORATION
OPERATING STATISTICS
(Unaudited)

Three Months Ended
March 31, Percent
2003 2002 Change
American Airlines, Inc. Mainline Jet
Operations (except as noted)
Revenue passenger miles (millions) 27,838 27,817 0.1
Available seat miles (millions) 40,274 40,089 0.5
Cargo ton miles (millions) 490 463 5.8
Passenger load factor 69.1% 69.4% (0.3) pts.
Passenger revenue yield per
passenger mile (cents) 12.19 12.52 (2.6)
Passenger revenue per available
seat mile (cents) 8.43 8.69 (3.0)
Cargo revenue yield per
ton mile (cents) 27.38 28.74 (4.7)
Operating expenses per available
seat mile (cents) (*) 11.39 11.30 0.8
Operating expenses per available
seat mile (cents) (**) 12.44 11.37 9.4
Fuel consumption (gallons, in millions) 725 745 (2.7)
Fuel price per gallon (cents) 94.0 67.2 39.9
Operating aircraft at period-end 812 852 (4.7)

Regional Affiliates
Revenue passenger miles (millions) 1,165 1,022 14.0
Available seat miles (millions) 1,987 1,728 15.0
Passenger load factor 58.6% 59.1% (0.5) pts.

AMR Corporation
Average Equivalent Number of Employees
American Airlines 92,200 97,800
Other 11,800 11,700
Total 104,000 109,500


* Excludes $423 million and $27 million of expenses incurred related to
Regional Affiliates in 2003 and 2002, respectively.

** Includes $423 million and $27 million of expenses incurred related to
Regional Affiliates in 2003 and 2002, respectively.

Note 1: Certain amounts have been reclassified to conform with 2003
presentation.

Note 2: American Airlines, Inc. 2003 operating expenses include expenses
incurred related to fixed fee per block hour agreements with
Regional Affiliates -- American Eagle Airlines, Inc., Executive
Airlines, Inc., Trans States Airlines, Inc. and Chautauqua
Airlines, Inc. whereas 2002 operating expenses include expenses
incurred related to fixed fee per block hour agreements with
Regional Affiliates -- Trans States Airlines, Inc. and Chautauqua
Airlines, Inc.

Note 3: Regional Affiliates include American Eagle Airlines, Inc.,
Executive Airlines, Inc., Trans States Airlines, Inc. and
Chautauqua Airlines, Inc.

SOURCE AMR Corporation

Corporate Communications of AMR Corporation, +1-817-967-1577,
or corp.comm@aa.com
 

AAOutsider

Newbie
Apr 20, 2003
3
0
----------------
On 4/23/2003 10:15:46 AM Resman1 wrote:

Management still thinks there are people willing to pay a walkup fare 12-15 times the cost of the lowest non-refundable. We need to immediately slash our full fare First, Coach and Business class fares to make flying an option for the last minute business traveler. Currently, unless you are flying JetBlue, Airtran or Southwest, you are better video conferencing because it''s much cheaper than actually traveling. Look at our current full fare coach DFW-LGA it''s currently 1,200.00
each way!!! How many of those do we sell? Not many, why not reduce it to 800.00 roundtrip? I would rather see 800.00 revenue than the current 0.00 we are getting. Also the vast majority of those full fare seats we sell are
issued with the huge corporate discounts we give. So even though it may track that we sold a full fare ticket, it''s much, much less after the IBM, Dell or whatever corp discount. Price your product fair and honestly and don''t nickel and dime the customer for everything and customers will return. Until then, there is no chance even with bankruptcy.
----------------​

I am afraid, really afraid you do not understand the first thing about running an airline.

Fallacy#1- AMR has not adjusted its pricing model.

Not true. They have cut many last-minute fares in some markets more than others. An AA EXP friend of mine used to pay a full-Y fare of $1,500 (with corporate discount) roundtrip between LAX and IAD. Now, he pays between $900 to $1000. He could pay much less if he wanted to, even without the corporate discount and even given the fact that he makes his reservations 3 to 4 days out. If he is any example, business travelers on American are certainly not paying what they used to pay.

Fallacy#2 - Just cut business fares.
First of all, WN can charge that $299 or less on every seat because its costs per available seat mile allow it to make money at that $299 or less on every seat. The operative term here is on "every seat."

With its current cost structure, it would be suicide for AMR to abandon its current yield management practices (what in fact you are suggesting). Why? Because the $299 (your hypothetical amount) paid for some (maybe all) of the seats in coach does not even cover the total costs per mile of a seat in coach. If AMR can''t hope to make up what it loses on the coach seat with a business seat, specifically in markets where it is the market share leader, then how have they really been helped by lowering the business fares.

(Disclaimer: Having said all this, it is true that in some markets AA is being forced into these suicidal practices. Reality of the times, more than what AA would prefer to do.)

Fallacy#3 - Corporate travelers are stealing from us.

What do you propose that AA cancel these corporate contracts and turn over all of that business travel to a competitor who would be more than willing to offer the same or similar discount. It is too common and lucrative a business practice for another competitor not to do this, especially with the large corporations you''ve mentioned.

The basic premise of most of these contracts is that AA will earn more money in the end by offering a discount in return for more or all of that company''s share of business travel. Isn''t that the same thing you are proposing AA do for everyone by cutting its walk-up fare on LGA-DFW to $800? Contradicting yourself there aren''t you?

It makes sense to do this for corporate customers, and not everyone, because with corporate customers there is some degree of certainty that volume of purchases will support certain strategic routes and there is also more upside potential in revenue since corporate contracts are not just a single transaction aimed at attracting a single consumer whose buying habits clearly do not promise more revenue for AA into the future.

Fallacy #4 - Carty does not recognize that the current yield model may not be working.

Wrong. He does. He has publicly stated that the airline through its own research has determined that business travelers (AA''s bread and butter customers) are only willing to pay a 30% premium for the products that AA has to offer. They may have been willing or forced to pay more in the past; however, that is what they are realistically willing to pay now. This 30% is what Carty in other public statements has referred to as AA''s network premium.

It would be wrong to assume that AA is getting that 30% or asking for that 30% on every route now. Carty has never publicly explained how the volatility of the current pricing environment is keeping AA from realizing that 30% network premium. One of the factors might have been the fare sale that UA ran shortly after it filed for bankruptcy. There are other factors.

Whatever the case, going forward, AA believes that it can realize that 30% premium. To make a profit, however, with only a 30% network premium on full-Y fares and business/first class fares, AA has to cut its costs (specifically, labor costs). Much before 9/11 when AA was in some instances earning a network premium of higher than 30%, it could sustain a higher cost structure. Those days are gone.

Truth #1 - AA''s employees wrongly think that cutting business fares will mean more revenue and no pay cuts or work rule concessions.

Your current pay was negotiated at a time when AA was making a higher network premium than the 30% it reasons it can make now. How does it make sense at all that cutting fares to a point far below AA''s historical network premium of the ''90''s and with no sense of how to achieve the 30% network premium is going to generate the revenue to pay your current wages? That''s it; it makes no sense.

While we are on the subject, your current pay was negotiated prior to $5 billion in losses that had to be financed somehow. Given that some part of your wages contributed to that $5 billion, AA has over the last two years virtually borrowed to pay your cheques. If you eventually team up to save AA, you''ll realize that AA has to pay off the money before it can begin to grow again. Finance costs and principal payments will be a drain on AA''s earnings for years to come. It is clear AA wanted a six-year contract from all of you in part so that it could maintain labor costs at a steady-state while it paid off those loans. As it turned out, this wasn''t just selfish thinking on management''s part, since in the TA''s you were all supposed to get a wage adjustment based on AA''s investment-grade rating.

I continue to wish you all the best, but that is not going to happen until you recognize that some meager bonuses and pension payouts are not the problem. Frankly, it is laughable to think that AA''s employees are arguing over bonus amounts that are chump change compared to what Mullin got at Delta, Bethune at Continental, Tilton at United, and every other major corporate executive in America.
 

WXGuesser

Advanced
Aug 20, 2002
234
0
www.usaviation.com
Now, now, AAOutsider, don''t try to mess up the employees revenge by pointing out silly things like facts.

You can''t possibly expect them to accept any responsibility for the present troubles! This is America! We don''t accept responsibility, we blame others.

What were you thinking?

TANSTAAFL
 

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