460 jets ordered

[eolesen]

We will see how prepared management is with finding an MRO to do the 757 heavy checks that are sitting idle. BTW, how much is that costing AA in potential revenue???????

Depends -- with all the capacity that should have been taken out of the system according to WT, it might be cash positive to have that many ASMs sitting on the ground, and doing spot cancels or equipment swaps to cover them...

I've said it before -- the cost of outsourcing when you own the tooling is a lot different than the cost of outsourcing on a new aircraft type.

It's an unshakable fact that AA doesn't own any A320 tooling whatsoever today, and IIRC, overhaul of the CFM56's is already outsourced?

What's the cost of new tooling? Is there an associated cost to adding the A320 to AA's overhaul certificate? Is all that really worth it in order to maintain control over the work (which apparently AA doesn't really have as much control over if what you're saying about 1D is true)?

If the costs of adding A320 overhaul are high enough, I could easily see a scenario unfolding where AA keeps the 737 in-house and the A320's wind up somewhere like AAR.

 

[Hopeful]

Depends -- with all the capacity that should have been taken out of the system according to WT, it might be cash positive to have that many ASMs sitting on the ground, and doing spot cancels or equipment swaps to cover them...

I've said it before -- the cost of outsourcing when you own the tooling is a lot different than the cost of outsourcing on a new aircraft type.

It's an unshakable fact that AA doesn't own any A320 tooling whatsoever today, and IIRC, overhaul of the CFM56's is already outsourced?

What's the cost of new tooling? Is there an associated cost to adding the A320 to AA's overhaul certificate? Is all that really worth it in order to maintain control over the work (which apparently AA doesn't really have as much control over if what you're saying about 1D is true)?

If the costs of adding A320 overhaul are high enough, I could easily see a scenario unfolding where AA keeps the 737 in-house and the A320's wind up somewhere like AAR.

I have to say I agree with this post 100%
AA could simply choose to outsource the entire A320 family from the get-go. IIRC, when AA first received the A300's, the heavy checks were outsourced for the first 25 aircraft. Once the fleet went above 25, it was brought in house.

 

[WorldTraveler]

The industry is coming to grips with the reality of $3/bbl oil. OPEC sells a product and just like any good merchant, they are going to continue to push the price up and gain the highest revenue until they find they cannot raise the price any further.
AA's move to buy the most fuel efficient aircraft is their way of coping with that part of the reality.
.
Carriers throughout the industry are starting to release their winter schedules and everything says there will be alot of capacity that some thought "sacred" that will be pulled by each carrier. According to some schedule "watchers", AA is uploading cuts for the spring forward from ORD and CO is doing the same thing from EWR... on top of alot of winter reductions from WN. DL said on their earnings call that they will take more domestic capcity out than originally planned.

Low fare carriers - whose business model is built on stimulating deep discount traffic - could find they cannot continue their growth plans the way they once did. Remember that in the 2003-2005 low fare carrier buildup, WN had a huge fuel price advantage, B6 had tons of room to grow at JFK, and the network carriers were all on the ropes.
.
None of those factors are true today and the network carriers realize they must hold onto what they currently have - something they could not do years ago.
.
that said, it is very likely that at this point AA does not want the additional 757s... and in fact may be outsourcing these 7 they intend to keep and then will turn around and get rid of a few from their mainline fleet that the TWU thinks they will get to repair one day.
DL just said that they expect to reduce maintenance spending by $250M in the rest of the year based on aircraft retirements.... not sure how that is calculated but that is a huge decrease in spending. If AA knows they will be replacing 757s and M80s beginning just 2 years from now, they will start deferring a lot of maintenance.
Remember also that part of the Airbus and Boeing deals may be to accept the old aircraft w/o the usual end of lease maintenance... if these aircraft - esp. the M80s - wll never fly again, there is no reason to spend money on maintenance as part of the lease returns.
.
It is also VERY likely that Airbus is either assuming the cost of paying for tooling for the new 320s or arranging MRO services... you can take your pick which AA is likely to choose.

 

[Buck]

Depends -- with all the capacity that should have been taken out of the system according to WT, it might be cash positive to have that many ASMs sitting on the ground, and doing spot cancels or equipment swaps to cover them...

I've said it before -- the cost of outsourcing when you own the tooling is a lot different than the cost of outsourcing on a new aircraft type.

It's an unshakable fact that AA doesn't own any A320 tooling whatsoever today, and IIRC, overhaul of the CFM56's is already outsourced?

What's the cost of new tooling? Is there an associated cost to adding the A320 to AA's overhaul certificate? Is all that really worth it in order to

maintain control over the work (which apparently AA doesn't really have as much control over if what you're saying about 1D is true)?

If the costs of adding A320 overhaul are high enough, I could easily see a scenario unfolding where AA keeps the 737 in-house and the A320's wind up somewhere like AAR.

The company could have control over the work at 1D. But it is going to take the right person at the helm locally. When a leader has burned the bridge and left a small band to perform a rear guard, that rear guard is ultimately given up for slaughter.
Mechanics are still bidding off and there are other hangars more than willing to take them.

We are having a issue in obtaining all of the equipment we need, however the manager is determined to provide for the workforce. It is a struggle for local management with, I guess finance, for funding. So were is the line drawn? Does the company fund there own or farm out the aircraft?

 

[star power]

I asked Walt what AA position was on the EU Cap and Trade scheme on greenhouse gases ? Walt said that AA position is that its a consumer market damaging scheme. He said the AA is working on a MOU with some third parties players within the EU, since this EU Cap and Trade scheme starts Jan 01, 2012 and the US Gov't, mainly US Congress has stated a Congressional Mandate that no US airlines pays to the EU any tax levee for a Cap and trade scheme.

 

[JFK Fleet Service]

Cap and Trade? Carbon Offsets? Smells like yet another custom made scam for Golden Showers.They are the largest trader of NYMEX crude futures and there is no evidence of them manipulating that market is there?


I can hardly wait for the "Research Notes" from GS regarding "Tightness in the market" with regard to carbon offsets.

 

[TIME FOR CHANGE]

How Can AA Buy Aircraft and Continue to Lose Money?
– Usually, buying new aircraft requires a significant, upfront cash payment when the plane is delivered. American’s new deal is based on operating leases, allowing us to lease the aircraft from the manufacturer, and we do not start paying on the lease until we receive the plane. Think of it like buying a house. You can purchase the house outright, which requires a lot of cash. You can get a mortgage that still requires a significant down payment, or you can lease it, typically with a small deposit. American chose to lease our new aircraft under favorable terms. This gives us the most financial flexibility with the least amount of upfront cash. Long-term, the new B737 and A320 families will help us reduce the cost of our operations by improving fuel efficiency, lowering maintenance costs, increasing dependability, and, we hope, customer satisfaction.

You must be Jeff Brundage because that is the same bull sit he spewed on that stupid blog on jetnet. You may have to change your aliass
Commented by: J BRUNDAGE (7/29/2011)
Comment: We have received a number of comments on how the company can afford new aircraft, but says we can't afford employee raises. I understand the question and I think there are two important things to consider.

First of all, buying new aircraft usually requires a significant, upfront cash payment. This deal is based on leasing the aircraft from the manufacturer – we don't start paying on the lease until we receive the plane.

Imagine this is like buying a house. You can purchase the house outright, which requires a lot of cash. You can get a mortgage that still requires a significant down payment. Or you can lease it, typically with a small deposit. American chose to lease our new aircraft under favorable terms. This gives us the most financial flexibility with the least amount of upfront cash.

Secondly, the bottom line is that the company has to be successful in every aspect of our business. Think of it as a checklist. We've taken clear steps in improving our network through our joint businesses and cornerstone strategy. We've implemented a host of customer service improvements and have acted judiciously on our non-labor, non-fuel costs, which are actually among the lowest in the industry. Now we've made this aircraft order that will allow us to accelerate our fleet renewal that will lower costs and improve customer service.

One of the items left on the to-do list is to secure competitive labor contracts. You're probably asking why is the company focusing on this "last," but the truth is that employee contracts were one of our first priorities. That's why we opened negotiations early with our workgroups – to try to get competitive contracts that were good for employees and the company. But that was a long time ago with some of our unions and we couldn't stand by idly. We had to tackle other areas of the business at the same time.

It comes down to agreement. We were able to create our joint businesses because our partner airlines were willing to agree on a solution that benefited all of our companies. We were able to make this purchase because the manufacturers were willing to agree to market competitive lease conditions and financing. Now we need next-generation contacts, ones that will hopefully provide increases in our employees' W-2s, and make us able to compete and tie the whole package together. But to get them, we need to make agreements with our unions.

We're getting there. We have reached tentative agreement with the TWU Simulator Technicians and the Ground School and Simulator Pilot Instructors workgroups just this week. We are actively negotiating with our labor unions to achieve agreements that are good for employees, help secure our future and allow us to beat the competition. Because only then will the picture be complete and we can truly start to capitalize on returning this airline to its rightful place as industry leader.



BLAH BLAH BLAH BLAH BLAH
he needs a good kick in the nads

 

[Buck]

You must be Jeff Brundage because that is the same bull sit he spewed on that stupid blog on jetnet. You may have to change your aliass
Commented by: J BRUNDAGE (7/29/2011)
Comment: We have received a number of comments on how the company can afford new aircraft, but says we can't afford employee raises. I understand the question and I think there are two important things to consider.

First of all, buying new aircraft usually requires a significant, upfront cash payment. This deal is based on leasing the aircraft from the manufacturer – we don't start paying on the lease until we receive the plane.

Imagine this is like buying a house. You can purchase the house outright, which requires a lot of cash. You can get a mortgage that still requires a significant down payment. Or you can lease it, typically with a small deposit. American chose to lease our new aircraft under favorable terms. This gives us the most financial flexibility with the least amount of upfront cash.

Secondly, the bottom line is that the company has to be successful in every aspect of our business. Think of it as a checklist. We've taken clear steps in improving our network through our joint businesses and cornerstone strategy. We've implemented a host of customer service improvements and have acted judiciously on our non-labor, non-fuel costs, which are actually among the lowest in the industry. Now we've made this aircraft order that will allow us to accelerate our fleet renewal that will lower costs and improve customer service.

I am.....

One of the items left on the to-do list is to secure competitive labor contracts. You're probably asking why is the company focusing on this "last," but the truth is that employee contracts were one of our first priorities. That's why we opened negotiations early with our workgroups – to try to get competitive contracts that were good for employees and the company. But that was a long time ago with some of our unions and we couldn't stand by idly. We had to tackle other areas of the business at the same time.

It comes down to agreement. We were able to create our joint businesses because our partner airlines were willing to agree on a solution that benefited all of our companies. We were able to make this purchase because the manufacturers were willing to agree to market competitive lease conditions and financing. Now we need next-generation contacts, ones that will hopefully provide increases in our employees' W-2s, and make us able to compete and tie the whole package together. But to get them, we need to make agreements with our unions.

We're getting there. We have reached tentative agreement with the TWU Simulator Technicians and the Ground School and Simulator Pilot Instructors workgroups just this week. We are actively negotiating with our labor unions to achieve agreements that are good for employees, help secure our future and allow us to beat the competition. Because only then will the picture be complete and we can truly start to capitalize on returning this airline to its rightful place as industry leader.



BLAH BLAH BLAH BLAH BLAH
he needs a good kick in the nads

You must be Jeff Brundage

I am....

 

[Rogallo]

I am....

May I be the first then to tell you to piss off!!

 

[jimntx]

...Cap and Trade scheme starts Jan 01, 2012 and the US Gov't, mainly US Congress has stated a Congressional Mandate that no US airlines pays to the EU any tax levee for a Cap and trade scheme.

Typical current Congress. Every U.S. airline will lose landing rights in Europe. That'll show them Brits and Germans. I bet that will make them scared in a hurry. British Airways, Lufthansa, and Air France will laugh all the way to the bank.

I wonder what the reaction would be if the 3 above airlines announced they weren't going to pay some tax that the U.S. Congress passed (that would, of course, assume that Congress became capable of doing anything).

 

[frontline]

You must be Jeff Brundage because that is the same bull sit he spewed on that stupid blog on jetnet. You may have to change your aliass
Commented by: J BRUNDAGE (7/29/2011)

BLAH BLAH BLAH BLAH BLAH
he needs a good kick in the nads

I have to notice that you didn't bother to try to refute any of his points. Do you have an actual argument are or are you just spewing anti-company hatred?

 

[odie01]

I have to notice that you didn't bother to try to refute any of his points. Do you have an actual argument are or are you just spewing anti-company hatred?

I don't think its company hatred, they are doing what they are supposed to do. If you look at it from their standpoint.. We're the ones folding like a cheap card table, the twu.

 

[Duke787]

http://www.tulsaworld.com/business/article.aspx?subjectid=45&articleid=20110731_45_E1_ULNSnA54227&allcom=1


kind of sad, and scary

 

[WorldTraveler]

The city of Tulsa and a good chunk of wealth in E. Oklahoma is tied to AA's maintenance operations at TUL.... they cannot afford to see AA's impact on the region diminish - although it is quite likely that the influx of new aircraft will result in reduced work volumes at TUL.

 

[odie01]

American Airlines Order Turns To Dismay
By Darren Shannon
Washington

The fanfare was loud and generated the desired attention, but now that the euphoria has subsided it is apparent that AMR Group’s deals with Airbus and Boeing to overhaul American Airlines’ narrowbody fleet are more wishful thinking than concrete achievement.
For one thing, there is no firm order for 460 aircraft. Under American’s labor contracts—notably its agreement with the Allied Pilots Association—the carrier cannot add a new aircraft type, even a different variant, until a pay scale has been negotiated. From this perspective, American only has the authority for the 100 leased Boeing 737-800s it plans to add from 2013-17, while the remaining deals for both current model and new-engine-option Airbus narrowbodies—never mind the nonexistent re-engined 737—must now go through the rigors of employee approval.
And time is not on American’s side. President/CEO Gerard Arpey may believe the deals will “be a catalyst” to jump-start stalled labor negotiations, but similar expectations from the operator’s 2008 arrangement for up to 100 Boeing 787s have yet to yield an accord and that order still remains absent from Boeing’s orderbook, despite a supposed 2014 first delivery date.
This aside, American’s ambitious plan also calls for the replacement of its aging MD-80s and Boeing 757s (almost 340 aircraft as of July 20) in just five years, but offers no details on how it will integrate so many aircraft that quickly or even how many narrowbodies it eventually wants in its fleet. The carrier also leaves open the idea that similarly sized Airbus and Boeing aircraft could be assigned to similar operations, even the same route, but with no clarification on how, or why, this would be implemented.
American’s financial woes also trouble industry observers. On the same day it unveiled the aircraft deals and a proposed divestiture of regional affiliate American Eagle Airlines (two key tenets of its Flight 2020 restructuring plan) the airline also posted a net loss of $286 million as costs—notably fuel—wiped out gains from a 7.8% rise in revenue. Delta Air Lines and United Continental Holdings, meanwhile, though posting reduced profits, still returned net incomes of $198 million and $538 million, respectively, and sales growth in excess of 10%.
Investors reacted immediately, and despite all the good news, including speculation that the operator was getting each new aircraft at half price, AMR’s share price started a slow downward trend that continued for nearly a week. The aircraft order may be the savior that Arpey and his management team have trumpeted, but for now, they appear to be the only ones to share that vision.