AA is quite generous

Hopeful

Veteran
Dec 21, 2002
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If AA & UAL can afford $14 billion to build a runway, they can afford to pay their workers decent raises.
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UAL, American offer to fund O'Hare runway work, but at a price
By John Pletz and Greg Hinz
Dec. 17, 2008
(Crain's) — The two largest airlines at O'Hare International Airport told the city they're ready to support construction of additional runways, but they want to extend a deal that allows them to maintain control of the majority of airport gates.
United and American in September sent the city a letter outlining a proposal under which they'd be willing to finance the completion of the previously estimated $14-billion expansion of O'Hare, according to sources who read the letter.
In it, the airlines offer to commit to funding to complete runways, but there's no mention of a new terminal the city also wants to build on O'Hare's west end. The airlines also seek to extend the master use agreement, which runs through 2018, that specifies what rights the carriers have to gates at O'Hare and how much they have to pay for them.
It's unclear whether the city has responded to the airlines' offer. But it will test Mayor Richard M. Daley's resolve to complete the O'Hare project with his desire to bring more carriers and competition to the airport.
The city still wants to push ahead with the terminal, even if the airlines won't fund it, sources say, though it's unclear from where funding will come. The city wants the terminal for future growth and to attract more carriers to the airport.
The city is trying to increase the number of shared-use gates, allowing it to control which airlines use them throughout the day. Airlines historically paid for terminal construction and expansion, allowing them to keep other airlines from using their gates, even when they are idle.
The airlines hold the key to the O'Hare expansion because they must agree to pay higher landing fees and rents that would repay the debt needed to finance the project.
In the letter, which the city confirms but declines to release, the airlines take a more conciliatory tone than in a June 6 letter in which they balked at planning for the next stage of the airport expansion because of then-record fuel prices and carrier cutbacks.
The city and the airlines decline to comment on the letter. Privately, the airlines and city officials say they're optimistic that they'll reach a deal soon, perhaps early next year, to go ahead with the project.
United CEO Glenn Tilton said last month after opening the new runway built as part of Phase One that he was confident a deal would get done. He declined to speculate how soon.
"As long as we're talking, I have no worries," he said. "We're talking."
The airlines want additional runways that would improve the efficiency of O'Hare, which remains one of the country's most delay-prone airports, costing the carriers money. They are banking on future growth in air travel.
But they also have an interest in maintaining their dominance at the airport and don't want to pay for a terminal that would be used by competitors. The airlines want to extend the use agreement, which expires in 2018, or about four years after the city's target date to complete the expansion.
However, they question the need for a new terminal at a time when airlines are cutting back schedules. The city wants to attract more airlines to increase competition, passengers and revenue. Last week, Virgin America announced service from Boston to California instead of Chicago because it was unable to get gates at O'Hare.
(Reporter Paul Merrion contributed to this story.)
 
If AA & UAL can afford $14 billion to build a runway, they can afford to pay their workers decent raises.

Impossible to argue with flawless logic like that. Restore and more.

Continuing the thought: If AMR can afford to pay $9.5 billion for jet fuel this year (estimated 2008 full year expense), then AA can surely afford to give decent raises.
 
Oil currently down to $38 and change per barrel. AAs fuel bill for 2009 should be less than half what it was for 2008 at this rate. This sure can't hurt the argument for getting some decent contracts for the employees. :up:
 
Don't want to sound like a company flack, but the logic is flawed. If the fuel bill was $100 million in 2008 and we lost $300 million, cutting the fuel bill to $50 million in 2009 does not mean that we automatically have $50 million to dispense as raises. Everything else being equal, it only means that the loss for 2009 will now be $250 million.
 
How about never getting a raise again? Isn't that what happens when an employee reaches what AA calls "Max Pay"? All incentive for doing a good job flies right out the window with nothing left to work for. I could never work for a company that doesn't recognize hard work and dedication with earned and deserved raises (other than that COLA crap which is stuck somewhere in the 1960s)

AA is dragging their feet on all union contracts right now because they don't have to amend. In fact, they don't have to do squat. Just because a contract becomes amenable doesn't mean it must be amended.

Remember, y'all are dealing with Mercer now, not the usual AA stooges. Mercer is mean, dark, and cutthroat. No one is going to end up with anything agreeable. The unions, as usual, will buckle.

Some nice flat screens should do it.
 
Looking at the numbers a bit more honestly than the headline figure, does anyone know what the cost of project completion is? The $14 billion figure is for the entire project, and the article said that AA/UA would fund the remainder, not the entire thing.

But really, this is all about keeping VX out of ORD. Shame on both AA and UA for adopting sneaky, anti-competitive measures like this.
 
What's also lost in the kerfuffle is that there's a difference between funding the completion and paying for the completion.

The way I'm reading it, AA and UA are simply backing the construction loans needed to get the job finished. The credit market sucks, especially for municipal projects, and it's entirely possible they have access to credit that the City doesn't have.

If AA and UA get a sweetheart lease from playing the role of the bank, then it's going to pay off in spades.
 
Don't want to sound like a company flack, but the logic is flawed. If the fuel bill was $100 million in 2008 and we lost $300 million, cutting the fuel bill to $50 million in 2009 does not mean that we automatically have $50 million to dispense as raises. Everything else being equal, it only means that the loss for 2009 will now be $250 million.

Jimmy, if only AAs fuel bill was only $100 million per year. In 2007 AA spent about $6.67 BILLION on fuel. Back in March, AA expected to spend almost $10 BILLION on fuel for the year 2008 based on fuel at about $110 per barrel. Figure that for every $10 increase in the price of oil per barrel equals about $800 million per year for AA - of course the same holds true for every decrease in the price of oil per barrel. Suddenly that $300 million loss you speak of is gone. I realize there are other factors; however, like I said before the extra 5 or 6 BILLION in savings on fuel sure could come in handy. ;)
 
Pay off for whom might I ask?

EXECUTIVES MAYBE?
Employees maybe?
Did you ever think that if AA and UA don't keep companies like VX etc. out of ORD then AA employees will pay for it? Entry of VX into ORD would be a huge reason for AMR to demand even more concessions and your union would most likely agree/cave in first. On the other hand you're already used to givnng concessions so in a way it may be a wasted effort. :rolleyes:
 
Jimmy, if only AAs fuel bill was only $100 million per year. In 2007 AA spent about $6.67 BILLION on fuel. Back in March, AA expected to spend almost $10 BILLION on fuel for the year 2008 based on fuel at about $110 per barrel. Figure that for every $10 increase in the price of oil per barrel equals about $800 million per year for AA - of course the same holds true for every decrease in the price of oil per barrel. Suddenly that $300 million loss you speak of is gone. I realize there are other factors; however, like I said before the extra 5 or 6 BILLION in savings on fuel sure could come in handy. ;)

I agree, but ya better hope that revenue doesn't come in $5 or $6 billion lower as well - that's the current worry of the day at HDQ. If revenue holds up and fuel stays down, happy times are indeed ahead.

Oil down to below $34/bbl this morning:

http://biz.yahoo.com/rb/081219/business_us_markets_oil.html
 
Jimmy, if only AAs fuel bill was only $100 million per year. In 2007 AA spent about $6.67 BILLION on fuel.

Ever heard of an example? Your statement that because fuel prices were down meant there would be money for raises is fallacious. When a company is losing money, unless a savings--such as a reduction in fuel costs regardless of the actual amount--is greater than the amount of the loss, it does not "free up" funds for raises. It simply reduces the loss.

I've seen no figures that indicate that the reduction is fuel costs offsets the losses being incurred. Reduces the losses, yes. Eliminate them? I haven't seen any such figures.
 
Ever heard of an example? Your statement that because fuel prices were down meant there would be money for raises is fallacious. When a company is losing money, unless a savings--such as a reduction in fuel costs regardless of the actual amount--is greater than the amount of the loss, it does not "free up" funds for raises. It simply reduces the loss.

I've seen no figures that indicate that the reduction is fuel costs offsets the losses being incurred. Reduces the losses, yes. Eliminate them? I haven't seen any such figures.


Example or not, the fact is - that the cost of fuel is going down much faster than the amount of business is. Furthermore, I implied that it strengthens the argument for better contracts - not some wholesale company giveaway. :blink: