AA - Jetblue - Alaska Airlines

[767one]

Does anyone consider US Airways to be a low cost carrier? Prob not - but more importantly the government definitely does not, so hypothetically if AA were to trim wages, benefits etc down to US's levels during the bankruptcy process (which is prob close to what they are asking - correct?), they would still not be considered a lcc.
For AA to become a true lcc (one that the government would recognize as such) - they would have to go way beyond what they are currently proposing.

They have to start somewhere. Sooner or later they will let you know what they really want. More than likely they will boil some frogs. Look up "boiling frog syndrome".

 

[etops1]

US is not a low cost carrier despite its aspirational stock ticker. US is a low-wage, relatively high-cost airline.

About the bolded portion: AA is not slashing pay rates, and thus even if AA achieves everything it seeks in bankruptcy, the wage structure of US will still be substantially lower than AA. (Except for mechanics, Bob). US pilots earn tens of thousands of dollars less than AA pilots and US FAs make, on average, several thousand dollars less than AA FAs.

You keep saying US is low wage but I made over $56,000 last year . We are not that low wage . Of course I fly only intl and I am at top out pay but I am very comfortable with my pay at US and i make it work for me . Would I like more? Of course I would. Who wouldn't ?

 

[etops1]

those points are vividly demonstrated in AMR's 1113 documents (page 44 of the 107 page version) in which AMR notes that LCC's CASM is only slightly below the average of the network carriers yet LCC average employee compensation is average for the low fare carriers.....
AMR also has a graph in their showing that the change in labor CASM at US was the highest (at 24%) of all network carriers during the decade starting 2002 YET
US also has the lowest stage length adjusted passenger RASM and the lowest profit margin for 2011.
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US simply does not have revenue generating capabilities on par with its network carrier peers yet it has costs very close to them....
no other US airline has its revenue generating capabilities as mismatched with its costs as US does.
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Any airline would create better value to AA than US - which is why AMR's creditors - other than labor who are trying to minimize the impact of the 1113 process - will choose any merger partner for AA other than US.
If US was the only option, then they might jump - but they are not.

And you know this because you have spoken to the creditors and they have assured you of this correct ?? Your a piece of work ...

 

[wings396]

those points are vividly demonstrated in AMR's 1113 documents (page 44 of the 107 page version) in which AMR notes that LCC's CASM is only slightly below the average of the network carriers yet LCC average employee compensation is average for the low fare carriers.....
AMR also has a graph in their showing that the change in labor CASM at US was the highest (at 24%) of all network carriers during the decade starting 2002 YET
US also has the lowest stage length adjusted passenger RASM and the lowest profit margin for 2011.
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US simply does not have revenue generating capabilities on par with its network carrier peers yet it has costs very close to them....
no other US airline has its revenue generating capabilities as mismatched with its costs as US does.
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Any airline would create better value to AA than US - which is why AMR's creditors - other than labor who are trying to minimize the impact of the 1113 process - will choose any merger partner for AA other than US.
If US was the only option, then they might jump - but they are not.

Someone like DELTA I'm sure....
The Koolaide supply is endless.....

 

[FWAAA]

You keep saying US is low wage but I made over $56,000 last year . We are not that low wage . Of course I fly only intl and I am at top out pay but I am very comfortable with my pay at US and i make it work for me . Would I like more? Of course I would. Who wouldn't ?

Your W-2 income does not contradict the reality that US employees, overall, are very poorly paid, compared to AA. The pilots are the most extreme examples, of course, followed by the FAs.

 

[wings396]

I won't go as far as to say poorly paid, its more of the missing extras that hurt. Double time is tougher to get, less vac, and the loss of shift premiums. Sure the hourly wages are flat in comparing to years ago, but that holds true just about everywhere. Fwiw, I am not a crewmember, if that's what your refering to.

 

[WorldTraveler]

Delta and Koolaid have nothing to do with it.... it comes down to being able to understand the financials of the airline industry and to know that US doesn't have what it takes to compete in a bid for AMR if it came to a competitive bidding process - and if AMR opens the process for bids from LCC, they will consider all bids - they have a responsibility to take the BEST DEAL.
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Attempting to reduce the discussion to a DL vs us contest misses the fact that LCC MUST demonstrate to the creditors that it is the BEST offer on the table.... and that won't be measured by media hype or Wall Street gurus who are interested in making a buck - and more importantly in continuing to protect the investments they have made into LCC - and those investments become alot less certain if AA emerges as a standalone or is sold in total or parts to other airlines or investors.
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But AMR's creditors will decide what is in THEIR best interest - and it has nothing to do with whatever outside forces you might want to think are involved, including Delta.

 

[CactUS4Ever]

Your W-2 income does not contradict the reality that US employees, overall, are very poorly paid, compared to AA. The pilots are the most extreme examples, of course, followed by the FAs.

I make more at US than my friends at AA as an AMT and thats base rate so I dont know where your getting that US is poorly paid and we have a better pension plan than AA. Your probably thinking years ago salaries with the paycuts.

 

[FWAAA]

I make more at US than my friends at AA as an AMT and thats base rate so I dont know where your getting that US is poorly paid and we have a better pension plan than AA. Your probably thinking years ago salaries with the paycuts.

If you read post #28, you'll note where I excluded the mechanics from the poorly paid characterization. The worthless union has proven particularly ineffective at raising mechanic pay at AA. The real disparity in pay is in the most expensive part, the pilots and the FAs. That's where US gets away with paying its E190 and A320 pilots less per hour than nonunion jetBlue pays its pilots.

Every single AA captain earns a higher hourly rate than any US captain. That's right - the most junior AA captain on an MD-80 earns a dollar more per hour than the most senior US A330 captain. AA's 737 pilots earn about $40/hr more than US East A320 pilots. If US pilots' earnings were equal to AA's pilots, that would cost US tens of millions of dollars, annually (if not over $100 million). US FAs average almost $10,000 less than AA FAs, although Parker recently offered US FAs large raises that would have helped close the gap.

 

[etops1]

If you read post #28, you'll note where I excluded the mechanics from the poorly paid characterization. The worthless union has proven particularly ineffective at raising mechanic pay at AA. The real disparity in pay is in the most expensive part, the pilots and the FAs. That's where US gets away with paying its E190 and A320 pilots less per hour than nonunion jetBlue pays its pilots.

Every single AA captain earns a higher hourly rate than any US captain. That's right - the most junior AA captain on an MD-80 earns a dollar more per hour than the most senior US A330 captain. AA's 737 pilots earn about $40/hr more than US East A320 pilots. If US pilots' earnings were equal to AA's pilots, that would cost US tens of millions of dollars, annually (if not over $100 million). US FAs average almost $10,000 less than US FAs, although Parker recently offered US FAs large raises that would have helped close the gap.

Correct .

 

[wings396]

Delta and Koolaid have nothing to do with it.... it comes down to being able to understand the financials of the airline industry and to know that US doesn't have what it takes to compete in a bid for AMR if it came to a competitive bidding process - and if AMR opens the process for bids from LCC, they will consider all bids - they have a responsibility to take the BEST DEAL.
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Attempting to reduce the discussion to a DL vs us contest misses the fact that LCC MUST demonstrate to the creditors that it is the BEST offer on the table.... and that won't be measured by media hype or Wall Street gurus who are interested in making a buck - and more importantly in continuing to protect the investments they have made into LCC - and those investments become alot less certain if AA emerges as a standalone or is sold in total or parts to other airlines or investors.
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But AMR's creditors will decide what is in THEIR best interest - and it has nothing to do with whatever outside forces you might want to think are involved, including Delta.

You never quit, go fill out an app with Delta already.
Everything is no good for anyone unless it boosts DELTA.
Do us all a favor, and let the creditors and the companies decide what route they want to take...

 

[WorldTraveler]

You never quit, go fill out an app with Delta already.
Everything is no good for anyone unless it boosts DELTA.
Do us all a favor, and let the creditors and the companies decide what route they want to take...

once again, it has nothing to do with Delta. The longer you continue to attempt to connect something that doesn't go together, the more it demonstrates that you can't handle the reality that US will have to compete with other potential buyers IF it comes down to a bidding process.
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The sooner you accept that, the sooner you can start planning for that reality.
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The most likely outcome remains that AA will restructure and emerge on its own - and NO bids will be accepted. Since I've said that several times a week for the past two months, I have a hard time grasping how you think DL has anything to do with it.

 

[johnny kat]

WT, with all due respect your analysis of US is completely flawed. If you look at the most recent analysts figures for JBlu, Alaska, and US quite a different story unfolds. Based on two important numbers for any airline: Market Cap and REVENUE, you will see that JBLU currently has a market cap of 1.34 bln and revenue in 2011 of 4.5 bln. AK has a market cap of 2.48 bln and 2011 revenue of 4.32 bln. To review both airlines together have aprox. 9 bln in revenue and have market cap of aprox. 9 bln. So for the sake of argument AA merges with both. Just what will the merger expense sheet for the three airlines to merge look like? Not to mention IT and customer service issues

Then, we come to USAirways which has a market cap of just a piddly 1.33 bln....BUT...Revenue for 2011 of a whopping 13,000,000,000 (BILLION). These numbers unveil the true story. US in its' own right is a dynamo. The company plainly does more with a lot less than the others. Which highlights the strength of the US franchise even with all the issues the airline has. US simply cannot be ignored the math bares this out.

To highlight: AK/JBLU equal 9 bln in rev to US 13 bln in rev.

The choice is simple do you have the cost of and uncertainty of two airlines and AA, or do have just one merger with US to deal with?

Me thinks you are working over time out in SLC or ATL trying to kill public opinion on this board (a little like Tokyo Rose) because you know that US and AA are truly a big and real threat to DL. Let's review, a merger with US would bring the most profitable hub in the United States (Charlotte) on board with AA thus giving DL even more to deal with in ATL, The PHL hub with its' huge exposure to the southern NYC market and surrounding huge population centers plus the remaining LGA slots combined with AA large NY presence would all but negate DL's recent gains in NY. The PHX hub would appear to the weakest link but the strength of the other two more than make up the lesser PHX hub. The focus hub at DCA would be a crown jewel for any airline but especially sweet for a carrier with a name like American Airlines. All of these assets makes US the diamond in the rough.

Labor Issues at US are not insurmountable by any means. It would appear that the employee number at AA would guarantee the AA unions would remain and the US unions would go away...Problem solved

The wages at US are not as low as you keep talking about. They are on par with all the others. Of course everyone is seeking a raise. But the combined revenue and cost savings associated with the merger plus all of the new revenue and synergies IMO would make it possible for wages to meet or exceed UA/CO and DL.

It is admirable that you love your employer so much. But you must remember that most of the folks at US are very dedicated as well...don't kid yourself if you think the employees are not every bit as engaged, dedicated and interested in succeeding as the employees of DL,AA and all the rest.

On a side note I think a lot of the folks at JBLU are former US people who were furloughed during the bad times. Some of these people because of their negative experience have nothing good to say about US and you can't blame them but the numbers are too big to ignore.

 

[WorldTraveler]

sorry but if US is such a powerhouse in terms of its ability to produce revenue, its market cap and profit margin should show it. The fact that LCC handles more than 3X more revenue but has a market cap almost identical to JBLU should tell you how Wall Street values LCC.
There are lots of ways to look at the value of a company but a high market cap relative to revenue is indicative of a company that can generate PROFITS, not just handle lots of revenue. That is why US has one of the lowest ratios of market cap to revenue.
LCC's market cap is about 1/10 of its annual revenue.
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Although WN is a different kind of airline, they are only a little bit larger than US but their market cap is 4X larger.
Among the nationwide network carriers, Delta right now has the best ratio of market cap to revenue.... 1 to 4 or about 2.5X better than LCC; UAL's ratio is about 1 to 5 - about twice that of LCC.
ALK has one of the best ratios in the US airline industry at better than 1 to 2.
Sorry, those are just basic calculations with data that you can get right off Yahoo finance.
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You'll have to talk to FWAAA regarding the salary statements.... I have simply noted the labor CASM and average salary comparisons in aggregate.
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I'm sorry that the numbers don't say what you want them to say - but it has nothing to do with me. They are what they are.
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I don't think anyone realistically thinks that AMR or any other airline could merge with two other airlines at the same time. It is a given that if they go after one, the other will wind up in someone else's arms.

 

[wings396]

If you read post #28, you'll note where I excluded the mechanics from the poorly paid characterization. The worthless union has proven particularly ineffective at raising mechanic pay at AA. The real disparity in pay is in the most expensive part, the pilots and the FAs. That's where US gets away with paying its E190 and A320 pilots less per hour than nonunion jetBlue pays its pilots.

Every single AA captain earns a higher hourly rate than any US captain. That's right - the most junior AA captain on an MD-80 earns a dollar more per hour than the most senior US A330 captain. AA's 737 pilots earn about $40/hr more than US East A320 pilots. If US pilots' earnings were equal to AA's pilots, that would cost US tens of millions of dollars, annually (if not over $100 million). US FAs average almost $10,000 less than AA FAs, although Parker recently offered US FAs large raises that would have helped close the gap.

As I said, I'm not a crewmember. I would like to know why you thrive on rubbing this lowest paid issue in peoples face on a regular basis? Do you think that anyone wants to be in that position? Once you put a fair amount of time in at an airline, you are pretty much stuck there. Sure you can leave and start all over again at the bottom. Be thankful of where you are now, for one never knows....
Wo is me....