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On 10/7/2002 8:36:48 PM Bob Owens wrote:
Is'nt this similar to what happened in 92?
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Yes...and no.
In 1992, while I was still at AA, Crandall implemented a fare structure which the industry refused to match. I believe it was Simple SAAver. There were four fares...one for first class, one for full fare coach, one 14-day advance purchase fare and a 21-day advance purchase fare. It was a good idea, yet AA took a blood bath in the resulting fare war.
There was also a $165 million write off for a project involving Marriott, a car rental company (Avis?) and someone else for a one-stop CRS for the business traveler. I don't remember the name. The project was a flop and the $165 million was a result of the penalties paid to AA's partners, R&D costs and other expenses.
This also occured at a time AA was in bitter, extended contract negotiations with APFA. AA/AMR did anything possible to make the financial losses seem worse than they really were. As you may remember, this was one of many factors leading to the flight attendant strike of 1993.
The similarity is they took the losses in one year as a one-time charge. I don't recall there being any change in accounting practices as this appears to be. However, since negotiations with the APA have commenced, I fully expect AMR to point to this $900 million charge as one reason they can't meet APA's many demands.