AA Facing Hefty 2008 Loss

WingNaPrayer

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CHICAGO -(Dow Jones)- Facing a hefty financial loss in 2008 and the loss of its spot as the world's biggest airline by passenger traffic, AMR Corp's (AMR) American Airlines is initiating long-range plans aimed at shoring up financial stability and keeping a competitive edge.

The soaring cost of jet fuel, up more than 80% from last year, is expected to end a two-year string of annual profits for American and for the U.S. airline industry.

Analyst Ray Neidl at Calyon Securities on Thursday forecast a wider loss for American than earlier projected, as the price of jet fuel continues its relentless rise. He expects AMR to lose $7.75 per share in 2008, more than his earlier forecast for a loss of $7.02 per share.

Nearly all airlines have said they will cut seat capacity this fall, weeding out flights that don't make money. Airlines, including American, have already announced some of the schedule changes which will be in place by the fourth quarter of the year.

In a memo to employees Wednesday, American said cutbacks would reduce its workforce by year's end by 7,000 employees, or about 8%. That matches the 8% capacity reduction the airline announced in May.

LINK to Full Story

A WallStreet Journal On Line Story
 
Don't mean to sound like Little Mary Sunshine, but I don't think that the cuts will stop at 8%--particularly if the price of jet fuel continues to go up. As the song says, "Something's gotta give."

If jet fuel continues to rise, I think another layoff/furlough round will occur in the 1st quarter next year.

When things look blackest, I'm always there with the voice of doom.
:lol:
 
I'm already saying that I believe the same - I don't think the cuts will stop at less than 20% when all is said and done.

15K people and a couple of hundred planes have to go. Sad as it sounds, that's the way I see it.
 
The unfortunate reality is that AMR, while being the most aggressive, is probably doing the most responsible thing with these cuts. Obviously, it sucks if you are one of the people laid off or let go, but for those left with the company, I hope you appreciate that AMR is taking these actions while UAL and others were slow to act. This may be the first time in the history of the US airline industry that someone is doing something without regard for what others do/don't do.
 
The unfortunate reality is that AMR, while being the most aggressive, is probably doing the most responsible thing with these cuts. Obviously, it sucks if you are one of the people laid off or let go, but for those left with the company, I hope you appreciate that AMR is taking these actions while UAL and others were slow to act. This may be the first time in the history of the US airline industry that someone is doing something without regard for what others do/don't do.


Are you serious? DAL UAL and CAL all announced their layoffs before AMR announced the big cuts.. It doesn't matter who you are, this is the smart thing to do in this environment.. Its not like the carriers are doing it years behind the other one.. UALs and CALS cuts have been by far the mostt aggressive.. AMR needs to cut about 250-300 super 80 craft, thats just the cold hard facts.
 
AMR needs to cut about 250-300 super 80 craft, thats just the cold hard facts.

Uh, no can do. That would be the entire fleet of MD80s, and we ain't got nuthin' to replace them just sittin' around, ya know. There are only 36 (IIRC) 737s scheduled for delivery over the next 3 years. That won't exactly replace capacity lost if you grounded the entire MD80 fleet.

In due time. In due time. Patience, children.
 
Uh, no can do. That would be the entire fleet of MD80s, and we ain't got nuthin' to replace them just sittin' around, ya know. There are only 36 (IIRC) 737s scheduled for delivery over the next 3 years. That won't exactly replace capacity lost if you grounded the entire MD80 fleet.

In due time. In due time. Patience, children.

I've said in a previous post or two the Wall Street Journal reported some ailines are trying to back up their delivery dates on new aircraft.

With AA wanting more 73s, we may well be willing to swap around build dates with Boeing. There was no specific number reported, but the strategy seems to be stonewalling the unions and adding to the 737 fleet in order to get rid of more S80s, enabling the company to lay off a greater number of workers associated with the S80 lines/components. If they take this path, the 36 737s scheduled could easily double in number.

Just a guess, but ...
 
There are only 36 (IIRC) 737s scheduled for delivery over the next 3 years. That won't exactly replace capacity lost if you grounded the entire MD80 fleet.
It is 70 deliveries presently scheduled for 2009 and 2010 and possibly more:
American, the world's largest airline by traffic, may try to speed up deliveries of Boeing 737-800s in addition to the 70 joining its fleet in 2009 and 2010, Chief Executive Officer Gerard Arpey said at the conference.

Bloomberg

At the same time, it intends to take delivery 34 new Boeing 737-800s in 2009 and 36 of those airplanes in 2010.

The Dallas Morning News
 
Are you serious? DAL UAL and CAL all announced their layoffs before AMR announced the big cuts..

Wrong. AMR was first out of the gate with announcing capacity reductions on May 21 at their annual meeting.

They didn't specify where the cuts would be or what the body count would be, but knowing AMR, they definitely knew the details and kept them close to the vest for whatever reasons they did (renegotiating with the unions, perhaps?).

UAL made their announcement on the 737 grounding on or about June 3. Stuff was leaked two days before the actual announcement, but it still took another week or two before the furlough impact was fully released.

CAL announced on June 5.

DAL? They aren't making any cuts. They're merging with NW and keeping everyone employed...




I forget who said it, but there is at least one analyst who said airlines will survive with $150+ fuel. They'll just be 35-40% smaller than they currently are. I agree with that. It's entirely possible to see airline seats shrink down to where they were just after deregulation. And that's OK in my book. I'd rather see a profitable and reliable industry than the current Wal-Mart environment we have today...
 
I have it from a pretty good source that three 737's are coming on line in Sept. Whether these are a result of speeding up the previous delivery schedule or in addition to, I don't know. I have heard the delivery schedule, already adjusted upward at least twice, might be changed again. What effect this has on the MD80 groundings I don't know either.

BTW, BWI-SJU is only going away for three months and will be back in Dec.

MK
 
I have it from a pretty good source that three 737's are coming on line in Sept.
I hope that this source is not the same person who recently reported that Gerard Arpey said that American Airlines did not spend a lot of money to train the recently recalled former TWA flight attendants only to furlough them again a few months later.