Amr 2003 Annual Report

[Bob Owens]

The Company has sent out the annual report.

It makes good reading.

After you read this you can see how the TWU failed to do their homework, they simply took the worst that the company had to say and told us as they fought to preserve their $3.1 million and keep up the dues flow.

Example F Frequent Flyer Program


"At December 31, 2003 and 2002, American estimated 9.3 million free travel awards were expected to be redeemed,,,

"The Company's total liability for future AAdvantage award redemptions for free, discounted or upgraded travel on American, American Eagle or participating airlines and unrecognized revenue from selling AAdvantage miles to other companies was $1.2 billion, representing 18,8 percent and 16. 2 percent of AMRs total current liabilies at December 31, 2003 and 2002 respectively."


Let me ask you this. If an advantage customer gets an upgrade how much does the company actually lose? Lets say that he paid $500 for the ticket, gets upgraded to a seat that the company has listed at its highest rate at $3000, does the company claim that the value of the upgrade is worth $2500 dollars? It seems that way.

But in reality all they did was give someone who spent $500 an unsold seat in first class which as soon as they close the door is worth $0 and a better meal which at the most would cost the company $5 more. So in return for this the company still got their $500 for the ticket plus $2500 write off for the upgrade.

So nearly 20% of the companys liabilties are from AAdvantage miles which in reality could cost the company absolutely nothing and attracts business.





Sect 11, pg 74 "Goodwill and Other Intangible Assetts

"The company determined that its entire goodwill balance of $1.4 billion was impaired."

When these assetts go up in value the company does not have to pay tax on them yet when they are assumed to go down in value they can be claimed. Nearly 30% of AMRs losses were from the 988 million that they claimed in goodwill. This figure should have been subtracted from the figure used to base concessions on. But the union did not do that.

These arte just two examples. As I read more I will post more. The TWU claimed to have hired all sorts of experts, we were not privy to what was said, more than likely, in private they picked up on the fact that AAs losses were overstated from an employees perspective. We would expect the company to paint a bleak picture to maximize their advantage, we would expect our union to pick it apart. The TWU had multiple motives to not only allow us to be decieved but to take an active part in that deception, such motives include but are not limited to, the $3.1 million that TWU officials recieve directly from the company, funds that the company could terminate at any time, the preservation of dues with the possibilty of increased dues revenue as a super low cost AA drives competitors out of business and AA expands to fill the void.

 

[j7915]

The Company has sent out the annual report.

It makes good reading.

After you read this you can see how the TWU failed to do their homework, they simply took the worst that the company had to say and told us as they fought to preserve their $3.1 million and keep up the dues flow.

Example F Frequent Flyer Program


"At December 31, 2003 and 2002, American estimated 9.3 million free travel awards were expected to be redeemed,,,

"The Company's total liability for future AAdvantage award redemptions for free, discounted or upgraded travel on American, American Eagle or participating airlines and unrecognized revenue from selling AAdvantage miles to other companies was $1.2 billion, representing 18,8 percent and 16. 2 percent of AMRs total current liabilies at December 31, 2003 and 2002 respectively."


Let me ask you this. If an advantage customer gets an upgrade how much does the company actually lose? Lets say that he paid $500 for the ticket, gets upgraded to a seat that the company has listed at its highest rate at $3000, does the company claim that the value of the upgrade is worth $2500 dollars? It seems that way.

But in reality all they did was give someone who spent $500 an unsold seat in first class which as soon as they close the door is worth $0 and a better meal which at the most would cost the company $5 more. So in return for this the company still got their $500 for the ticket plus $2500 write off for the upgrade.

So nearly 20% of the companys liabilties are from AAdvantage miles which in reality could cost the company absolutely nothing and attracts business.





Sect 11, pg 74 "Goodwill and Other Intangible Assetts

"The company determined that its entire goodwill balance of $1.4 billion was impaired."

When these assetts go up in value the company does not have to pay tax on them yet when they are assumed to go down in value they can be claimed. Nearly 30% of AMRs losses were from the 988 million that they claimed in goodwill. This figure should have been subtracted from the figure used to base concessions on. But the union did not do that.

These arte just two examples. As I read more I will post more. The TWU claimed to have hired all sorts of experts, we were not privy to what was said, more than likely, in private they picked up on the fact that AAs losses were overstated from an employees perspective. We would expect the company to paint a bleak picture to maximize their advantage, we would expect our union to pick it apart. The TWU had multiple motives to not only allow us to be decieved but to take an active part in that deception, such motives include but are not limited to, the $3.1 million that TWU officials recieve directly from the company, funds that the company could terminate at any time, the preservation of dues with the possibilty of increased dues revenue as a super low cost AA drives competitors out of business and AA expands to fill the void.

Bob, the frequent flyer program is not all about upgrades. That is just keeping people coming back.

The liability is the seat miles that are owed to fly period. I don't know the small print, but at some point AA is liable to give seats in exchange for frequent flier miles.

 

[FWAAA]

Once again, you completely fail to understand how AA accounts for the revenue derived from selling miles to its partners (like Citibank). From the 10-K:

At December 31, 2003 and 2002, American estimated that approximately 9.3 million free travel awards were expected to be redeemed for free travel on American and American Eagle. In making the estimate of free travel awards, American has excluded mileage in inactive accounts, mileage related to accounts that have not yet reached the lowest level of free travel award, and mileage in active accounts that have reached the lowest level of free travel award but which are not expected to ever be redeemed for free travel on American or participating airlines. The Company’s total liability for future AAdvantage award redemptions for free, discounted or upgraded travel on American, American Eagle or participating airlines and unrecognized revenue from selling AAdvantage miles to other companies was approximately $1.2 billion (and is recorded as a component of Air traffic liability in the consolidated balance sheets), representing 18.8 percent and 16.2 percent of AMR’s total current liabilities, at December 31, 2003 and 2002, respectively.

Mr. Owens, you incorrectly assume that the $1.2 billion liability figure referred solely to unclaimed AAdvantage award tickets. That assumption was facilitated by a failure to read (or comprehend) the italicized portion of the quote above.

AA does not separately disclose its assumed cost component for award tickets, but other airlines do, and they all use about the same number. Delta currently has more unclaimed awards outstanding (due to their stinginess in issuing award seats); they assume each free ticket represents a liability of $22.80.

AA's total liability for unclaimed awards is thus only $212 million. The rest of the liability ($1 billion of it) represents revenue from AAdvantage miles sold to other companies (like Citi) which is recognized over a 28 month period.

Even better, that $212 million liability does not represent real cash owed to anyone - it merely represents capacity controlled seats. And AA is the final arbiter of whether the award is issued. The printer of the currency determines in its sole discretion whether it will accept the currency as payment for a given flight. Hardly a back-breaking liability for AA.

Sure, if you're willing to pay double miles, AA will waive the capacity restriction. But AAnytime awards are rarely redeemed, and when they are, they don't really displace a paying passenger.

And $212 million in real liability pales next to AMR's $20 billion+ in total liabilities, wouldn't you say? One percent of the company's total liabilities is hardly a problem. If you feel otherwise, I'm all ears.

You do know the difference between current liabilities and total liabilities, don't you?? At 12/31, AMR's current liabilities were about $6.6 billion, while non-current liabilities were about $22 billion more on top of that.

Here's the rest of the relevant discussion of AAdvantage from the 10-K:

American established the AAdvantage frequent flyer program (AAdvantage) to develop passenger loyalty by offering awards to travelers for their continued patronage. The Company believes that the AAdvantage program is one of its competitive strengths. AAdvantage members earn mileage credits for flights on American, American Eagle and certain other participating airlines, or by using services of other program participants, including bank credit card issuers, hotels, car rental companies and phone service companies. American sells mileage credits and related services to the other companies participating in the program. American reserves the right to change the AAdvantage program at any time without notice and end the program with six months notice.

Mileage credits can be redeemed for free, discounted or upgraded travel on American, American Eagle or participating airlines, or for other travel industry awards. Once a member accrues sufficient mileage for an award, the member may book award travel on American. Most travel awards are subject to capacity controlled seating. Mileage credit does not expire, provided a customer has any type of qualifying activity at least once every 36 months.

American uses the incremental cost method to account for the portion of its frequent flyer liability incurred when AAdvantage members earn mileage credits by flying on American or American Eagle. American’s frequent flyer liability is accrued each time a member accumulates sufficient mileage in his or her account to claim the lowest level of free travel award (25,000 miles) and the award is expected to be used for free travel. American includes fuel, food, and reservations/ticketing costs in the calculation of incremental cost. These estimates are generally updated based upon the Company’s 12-month historical average of such costs. American also accrues a frequent flier liability for the mileage credits that are expected to be used for travel on participating airlines.

Revenue earned from selling AAdvantage miles to other companies is recognized in two components. The first component represents the revenue for air transportation sold and is valued at current market rates. This revenue is deferred and recognized over the period the mileage is expected to be used, which is currently estimated to be 28 months. The second revenue component, representing the marketing products sold and administrative costs associated with operating the AAdvantage program, is recognized immediately.

Although AA awards lots of mileage from flight activity, AA also sells lots of miles to AAdvantage participants, like Citi.

When AA sells miles to partners like Citi, the cash shows up on the balance sheet right away, but the revenue is recognized over the previously discussed 28 month period. That the revenue is not immediately recognized is a hallmark of accrual accounting. Unlike most of us, AMR is not on the cash method.

Citibank is by far AA's largest customer, paying hundreds of millions of dollars to AA each year for AAdvantage miles. Even at Citi's favorable rate, a 25k free award seat represents about $350 in cash to AA. In fulfilling that liability, AA spends less than $25. Exactly how is that not beneficial to AA?

Same math governs the AAdvantage miles awarded directly by AA for flight activity. AAdvantage miles are no more harmful to AA than "free" toasters given to depositors by banks. AA simply improved upon the tried and true S&H Green Stamp formula; it made millions of frequent flyers loyal to AA. How, exactly, does that harm AA?

In 2003, AAdvantage awards represented 7.8% of total passengers boarded. With a systemwide load factor of 72.8% (revenue pax) in 2003, exactly how do these AAdvantage awards harm AA?? My gut feeling is that employee non-rev travel probably equals that of AAdvantage award travel.

Maybe the $212 million of real liability is a problem in your opinion. If so, we disagree.

There may be plenty of things wrong with AA, but the AAdvantage program is not one of them.

I don't follow your "writeoff" example with respect to upgrades. The company gets no "writeoff" for upgraded passengers. And since you just made it up, that explains why it isn't how AA accounts for upgrades.

As to goodwill, you are right - that doesn't represent a real cash payment right now. It involves writing off all of the goodwill that no longer has any value, so the investors won't be mislead when reading the balance sheet. AA's negative cash flow was about $5 million daily when AA demanded the concessions, and guess what?? The concessions added up to about $5 million daily. Imagine that.

So your reading of the 10-K proves to you that AA was not running out of cash? Talk to an accountant, Mr Owens. Let them laugh at your failure to understand how to read financial statements. I'm sure the little twerp in charge of AMFA will agree with your tortured reading of the financials. If you can get a CPA to agree with your twisted view of reality, I'll buy you dinner next time I'm at JFK.

Keep 'em coming, Mr. Owens. Nothing like opening your mouth (or typing on the keyboard) to remove all doubt.

 

[twuer]

Bob you are really getting pathetic. And you have yet to prove your $3.1 million accusation. All you have is the Vermont Plan which was hypothetical to begin with!!!!!

But hey, that's what you do, make up stuff and try to sell it!! We've come to expect it from you!!!!

 

[Bob Owens]

I think that you are agreeing with me, at least as far as the FF liability. Otherwise I think you came here to try and baffle us with BS.

The jist of my post is that AA was not in as bad a shape as they and the TWU made them out to be.

The fact is that the FASB and the SEC want to see the worst possble case scenario. This includes possible liabilities and possible losses to the value of assetts.

The fact is that many of those FF miles may be used for upgrades which really costs nothing, because the seat was unsold, or may never be cashed in at all.

The fact is the company wrote off $988 million in Goodwill. My 401 K account went down in value too but I cant claim that as a loss. True I dont sell stock in myself so the fact that my net value has gone down is personal and investors, since there arent any have no need to know. When the value of those same assetts go up the company does not have to pay tax on that gain now do they? In all likelyhood those assetts will go up in value way before our compensation returns to normal.

These two figures alone inflated AA difficulties, and it was based on these and other figures that AA claimed they were losing $5 million a day. A sizable portion of that $5 million was made up of exaggerations like these.

Was AA running out of money? Probably, but the fact is they had control over how the money was going out and where it went. In this industry it pays to lose money if by doing so you get long term labor concessions and that is what AA got. AA still is recieving new aircraft, going ahead will large Capital improvements, new overhead bins, buying all sorts of new equipement etc.

I'm not an accountant but I've been in this industry for 24 years and seen this show before. There is no penalty from the government for showing your investors the worst poossible case scenario, in fact they prefer it however venders and employees should never base their contracts on what the company is claiming at the moment.



TWUER;

So did you see the Vermont Plan? So it was hypothetical? Which numbers were hypothetical, all of them or just the value for Company paid UB? Do you mean to tell me that we gave real concessions based upon hypothetical numbers?

By the way I have more than that but I'll not give it to you. I gave you enough, the DOL has already informed me that they see a definite Taft-Hartley violation with the information I sent them.

Can you explain why Bobby Gless is not on the TWUs LM-2? Could it be because he was on Company payroll as a full time International officer?

 

[FWAAA]

I think that you are agreeing with me, at least as far as the FF liability. Otherwise I think you came here to try and baffle us with BS.

The jist of my post is that AA was not in as bad a shape as they and the TWU made them out to be.

The fact is that the FASB and the SEC want to see the worst possble case scenario. This includes possible liabilities and possible losses to the value of assetts.

The fact is that many of those FF miles may be used for upgrades which really costs nothing, because the seat was unsold, or may never be cashed in at all.

The fact is the company wrote off $988 million in Goodwill. My 401 K account went down in value too but I cant claim that as a loss. True I dont sell stock in myself so the fact that my net value has gone down is personal and investors, since there arent any have no need to know. When the value of those same assetts go up the company does not have to pay tax on that gain now do they? In all likelyhood those assetts will go up in value way before our compensation returns to normal.

These two figures alone inflated AA difficulties, and it was based on these and other figures that AA claimed they were losing $5 million a day. A sizable portion of that $5 million was made up of exaggerations like these.

Was AA running out of money? Probably, but the fact is they had control over how the money was going out and where it went. In this industry it pays to lose money if by doing so you get long term labor concessions and that is what AA got. AA still is recieving new aircraft, going ahead will large Capital improvements, new overhead bins, buying all sorts of new equipement etc.

I'm not an accountant but I've been in this industry for 24 years and seen this show before. There is no penalty from the government for showing your investors the worst poossible case scenario, in fact they prefer it however venders and employees should never base their contracts on what the company is claiming at the moment.

Agree with you? Hardly.

Baffle you with BS? Not intentionally. Nope, just an accurate discussion that refutes your rantings about how you were mislead by AA. Baffled? I tried to limit my use of big words and I left out as much jargon as I could.

Did AA and the TWU tell you in 2002 and early 2003 that the AAdvantage program was killing AA and that's why concessions were necessary? I doubt it.

Goodwill on a balance sheet never increases in value, Mr Owens. It only declines in value. Sometimes, faster than anticipated.

AA's negative cash flow for 2002 was over $8 million per day. And that doesn't count your flawed analysis of the AAdvantage program or your ignorant rantings about goodwill.

You were told that AA demanded about $5 million per day in cost savings from the employees or it would file for CH 11. In plenty of other threads you claim that gambling in CH 11 would have been preferable. Then go buy some more lottery tickets. Plenty of other employees prefered not to gamble with their livelihoods.

Whine all you want about how you were mislead by AA. If the pilots are so much smarter than the TWU, then how come they allowed themselves to be similarly mislead? And what about the FAs? Granted, their position requires no education beyond high school (unlike mechanics and pilots) but some of them do have college degrees. Why did they allow themselves to be so mislead?

The funniest part is that the rank and file constantly accuse management of being completely inept and stupid. If they are as stupid as claimed, then how come management was able to screw more than 50,000 union employees in the 2003 concessions? Are the 50,000 union employees even MORE STUPID than management? They must be, or they wouldn't have been so easily suckered into giving back over 50 years (or is it over 100 years??) of union gains in one concessionary contract.

I thought AA's employees were brighter than that. The ones I encounter certainly are.

 

[Decision 2004]

Bob you are really getting pathetic. And you have yet to prove your $3.1 million accusation. All you have is the Vermont Plan which was hypothetical to begin with!!!!!

For a "hypothetical", twuer's sure place alot of emphasis on it when defending Jim "without further ratification" Little.

 

[Buck]

FWAAA:

You seem to have a grasp of the situation. Maybe you can enlighten me on an issue I do not understand?

Why does American continue to offer amenities like Power Port in Coach class, without charging a premium on top of the fare?

We add more labor to the cost of the heavy maintenance visit by having them removed and replace each time.

 

[Decision 2004]

I have another question for the financial wizard.

If AMR was really going Bankrupt, then why are there 170 RJ's on order, taking delvery of three per month, and how did AMR bid $310 Million on the USAir East Coast Shuttle? All happening within 15 months of the "lawyers are the steps" saga.

 

[TIME FOR CHANGE]

fwaaa wrote


The funniest part is that the rank and file constantly accuse management of being completely inept and stupid. If they are as stupid as claimed, then how come management was able to screw more than 50,000 union employees in the 2003 concessions? Are the 50,000 union employees even MORE STUPID than management? They must be, or they wouldn't have been so easily suckered into giving back over 50 years (or is it over 100 years??) of union gains in one concessionary contract.

What your simple mind does not comprehend is that AA management couldn't manage a grocery store.
The people who are running this airline should have started the change in AA by following the southwest business model or that of Jet Blue.
Instead the inept and stupid AA corporate mentality is spend spend spend and let the rank and file pay for the losses.
The boys and girls of today are too scared to let the judge decide.
They would rather work for a dollar than fight for two.
I thought you knew it wasn't management that suckered us into the concessions it was the inept twu. It was management who was laughing all the way to the bank.
Actually you sound like the management type but if your pro twu whats the difference.
Stand up for your profession and fight for what your worth.

 

[Bob Owens]

Agree with you? Hardly.

Baffle you with BS? Not intentionally.

So you admit it was BS.

Nope, just an accurate discussion that refutes your rantings about how you were mislead by AA.

Make up your mind, was it unintentional BS or not?

Baffled? I tried to limit my use of big words and I left out as much jargon as I could.

Its not the words, its the thought process. Feel free to use what ever words you like, I have a Dictionary also.

Did AA and the TWU tell you in 2002 and early 2003 that the AAdvantage program was killing AA and that's why concessions were necessary? I doubt it.

Did I say it was? I just cited it as an example of where some of the $3.5 Billion went or came from. Like the $988 million in "Goodwill".


Goodwill on a balance sheet never increases in value, Mr Owens. It only declines in value. Sometimes, faster than anticipated.

Exactly. And management also has the option of writing down that lost value at different rates just like other assets too dont they?

AA's negative cash flow for 2002 was over $8 million per day. And that doesn't count your flawed analysis of the AAdvantage program or your ignorant rantings about goodwill.

So? Who is whining now?

You forget that I work there. I saw that the company was doing nothing that I could see in their day to day operation to reduce waste or cut down on their losses. We used to just look at each other at work and wait for management to come down and say "look we are losing money, shut down those APUs, dont start engines till you are cleared to the gate, close the hangar doors, turn off the lights etc, instead we saw nothing except a new roof on the hangar, new terminal, painting the hangar doors, employee parking lot repaved, new vehicles, new equipement, tools like the Tiger lift, new aircraft, $150,000 First class seats that Carty admitted we could not afford, more room in coach, new overhead bins, etc. AA continued with the $7 billion upgrade that they had taken ads out in several newspapers bragging about as if nothing was wrong.


You were told that AA demanded about $5 million per day in cost savings from the employees or it would file for CH 11. In plenty of other threads you claim that gambling in CH 11 would have been preferable. Then go buy some more lottery tickets. Plenty of other employees prefered not to gamble with their livelihoods.

And what guarantees did we get with all the concessions we gave? Nothing. Nothing but we are locked into these concessions for six years. Are we at lesss risk simply because we work for less? So according to your philosophy workers making minimum wage are the most secure since they make the least. Thats BS! The fact is that there will always be risk, the trick is to make as much as possible and put some money away so if the company should fail you will survive till you get a new job. What you are saying is that we should instead in effect give our money to those who run this company so they gan give it to those who invest in this company.

Whine all you want about how you were mislead by AA. If the pilots are so much smarter than the TWU, then how come they allowed themselves to be similarly mislead?

Did they? Pilots are still making good money and they got out from under the fine, just won another $23 million in arbitration and just got back over 9%. Still they did give concessions but who knows maybe their union is on the company payroll like the TWU. Besides I'm not so much concerned that the company misled us, they have no obligation to us, we just work here, my beef is that the union failed us, they misled us, they even went as far as to say that if we did not agree to the concessions that the company might go straight into liquidation.

And what about the FAs? Granted, their position requires no education beyond high school (unlike mechanics and pilots) but some of them do have college degrees. Why did they allow themselves to be so mislead?

Big deal, some of our guys got degrees also. What do you think that a College degree automatically makes you worldly?

The funniest part is that the rank and file constantly accuse management of being completely inept and stupid. If they are as stupid as claimed, then how come management was able to screw more than 50,000 union employees in the 2003 concessions?

Because they were smart enough to buy off the unions.


Are the 50,000 union employees even MORE STUPID than management? They must be, or they wouldn't have been so easily suckered into giving back over 50 years (or is it over 100 years??) of union gains in one concessionary contract.

As Abe Lincoln said "You can fool some of the people all of the time, and all of the people some of the time, but you cant fool all of the people all of the time. Thats why we wanted the revote, and thats why the TWU did not, and thats why the TWU does not want a representation vote between them and AMFA.

I thought AA's employees were brighter than that. The ones I encounter certainly are.

Well Thank You.

 

[j7915]

Agree with you? Hardly.

Baffle you with BS? Not intentionally.

So you admit it was BS.

Nope, just an accurate discussion that refutes your rantings about how you were mislead by AA.

Make up your mind, was it unintentional BS or not?

Baffled? I tried to limit my use of big words and I left out as much jargon as I could.

Its not the words, its the thought process. Feel free to use what ever words you like, I have a Dictionary also.

Did AA and the TWU tell you in 2002 and early 2003 that the AAdvantage program was killing AA and that's why concessions were necessary? I doubt it.

Did I say it was? I just cited it as an example of where some of the $3.5 Billion went or came from. Like the $988 million in "Goodwill".


Goodwill on a balance sheet never increases in value, Mr Owens. It only declines in value. Sometimes, faster than anticipated.

Exactly. And management also has the option of writing down that lost value at different rates just like other assets too dont they?

AA's negative cash flow for 2002 was over $8 million per day. And that doesn't count your flawed analysis of the AAdvantage program or your ignorant rantings about goodwill.

So? Who is whining now?

You forget that I work there. I saw that the company was doing nothing that I could see in their day to day operation to reduce waste or cut down on their losses. We used to just look at each other at work and wait for management to come down and say "look we are losing money, shut down those APUs, dont start engines till you are cleared to the gate, close the hangar doors, turn off the lights etc, instead we saw nothing except a new roof on the hangar, new terminal, painting the hangar doors, employee parking lot repaved, new vehicles, new equipement, tools like the Tiger lift, new aircraft, $150,000 First class seats that Carty admitted we could not afford, more room in coach, new overhead bins, etc. AA continued with the $7 billion upgrade that they had taken ads out in several newspapers bragging about as if nothing was wrong.


You were told that AA demanded about $5 million per day in cost savings from the employees or it would file for CH 11. In plenty of other threads you claim that gambling in CH 11 would have been preferable. Then go buy some more lottery tickets. Plenty of other employees prefered not to gamble with their livelihoods.

And what guarantees did we get with all the concessions we gave? Nothing. Nothing but we are locked into these concessions for six years. Are we at lesss risk simply because we work for less? So according to your philosophy workers making minimum wage are the most secure since they make the least. Thats BS! The fact is that there will always be risk, the trick is to make as much as possible and put some money away so if the company should fail you will survive till you get a new job. What you are saying is that we should instead in effect give our money to those who run this company so they gan give it to those who invest in this company.

Whine all you want about how you were mislead by AA. If the pilots are so much smarter than the TWU, then how come they allowed themselves to be similarly mislead?

Did they? Pilots are still making good money and they got out from under the fine, just won another $23 million in arbitration and just got back over 9%. Still they did give concessions but who knows maybe their union is on the company payroll like the TWU. Besides I'm not so much concerned that the company misled us, they have no obligation to us, we just work here, my beef is that the union failed us, they misled us, they even went as far as to say that if we did not agree to the concessions that the company might go straight into liquidation.

And what about the FAs? Granted, their position requires no education beyond high school (unlike mechanics and pilots) but some of them do have college degrees. Why did they allow themselves to be so mislead?

Big deal, some of our guys got degrees also. What do you think that a College degree automatically makes you worldly?

The funniest part is that the rank and file constantly accuse management of being completely inept and stupid. If they are as stupid as claimed, then how come management was able to screw more than 50,000 union employees in the 2003 concessions?

Because they were smart enough to buy off the unions.


Are the 50,000 union employees even MORE STUPID than management? They must be, or they wouldn't have been so easily suckered into giving back over 50 years (or is it over 100 years??) of union gains in one concessionary contract.

As Abe Lincoln said "You can fool some of the people all of the time, and all of the people some of the time, but you cant fool all of the people all of the time. Thats why we wanted the revote, and thats why the TWU did not, and thats why the TWU does not want a representation vote between them and AMFA.

I thought AA's employees were brighter than that. The ones I encounter certainly are.

Well Thank You.

Bob you have just explained why AA is as it is.

NO ONE tells you to turn off the lights, shut down the APU, (did you need it anyway or was it a convenience becasue of the weather?),and so forth, SO YOU DON'T DO IT.

You my friend are part of the problem and the union you belong to won't make a difference. The union brothers are not supposed to tell you what to do, and management is either inept, or not looking over your shoulder giving you detailed intructions. And if your boss does look over your shoulder, you get upset because "he does not trust me or is bird dogging ".

Like your complaint regarding the MELs cleared at international stations: it is easier and safer just to placard, the other fellow said that most of the items are small stuff that any meachanic should and can clear. Experience should tell that if the item gets cleared fine, if not no harm done and the overnight will then get it anyway.

 

[FWAAA]

I have another question for the financial wizard.

If AMR was really going Bankrupt, then why are there 170 RJ's on order, taking delvery of three per month, and how did AMR bid $310 Million on the USAir East Coast Shuttle? All happening within 15 months of the "lawyers are the steps" saga.

AA was not near bankruptcy simply because it owes billions of dollars and is on the hook for billions of dollars of aircraft orders; AA nearly filed for bankruptcy last year because at March 31, the unrestricted cash balance was just above $1 billion. AA's loan covenants provided that it would be in default if that cash balance fell below $1 billion. That would trigger defaults in most all of AA's debt - which might have been cured with a bankruptcy filing, and might not have been.

As to the RJs on order? They were ordered years ago, and your numbers appear larger than the actual number of orders:

As of December 31, 2002, the Company had commitments to acquire the following aircraft: two Boeing 777-200 ERs, nine Boeing 767-300ERs, 22 Embraer regional jets and 10 Bombardier CRJ-700s in 2003; an aggregate of 74 Embraer regional jets and seven Bombardier CRJ-700s in 2004 through 2006; and an aggregate of 47 Boeing 737-800s and nine Boeing 777-200ERs in 2006 through 2010. Future payments for all aircraft, including the estimated amounts for price escalation, will approximate $1.0 billion in 2003, $753 million in 2004, $694 million in 2005 and an aggregate of approximately $2.6 billion in 2006 through 2010. These commitments and cash flows reflect agreements the Company entered into with Boeing in November 2002 to defer 34 of its 2003 through 2005 deliveries to 2007 and beyond. In addition to these deferrals, Boeing Capital Corporation has agreed to provide backstop financing for all Boeing aircraft deliveries in 2003. In return, American has agreed to grant Boeing a security interest in certain advance payments previously made and in certain rights under the aircraft purchase agreement between American and Boeing. In addition, the Company has pre-arranged financing or backstop financing for all of its 2003 Embraer and Bombardier aircraft deliveries and a portion of its post 2003 deliveries. As a result, substantially all of the aircraft spending in 2003 is supported by committed financing.

http://www.amrcorp.com/investor/amr10K02.pdf (page 35 of 10-K, page 37 of PDF)

Since the RJ manufacturers have agreed to finance most of the RJ purchases, their purchase does not require that AA pay cash. In fact, the only lenders willing to lend to AA last year were the airplane makers.

As to the shuttle bid? As I predicted over a year ago, the concessions allowed AA to borrow more money; AA borrowed over $2 billion last year. The concessions have helped AA turn cash flow positive and allowed AA some breathing room. Are you against the bid for USAir's gates and slots?

Are you against new airplane deliveries? Prefer to shrink your way to profitability? Not too many successful examples of that ever happening.

 

[FWAAA]

FWAAA:

You seem to have a grasp of the situation. Maybe you can enlighten me on an issue I do not understand?

Why does American continue to offer amenities like Power Port in Coach class, without charging a premium on top of the fare?

We add more labor to the cost of the heavy maintenance visit by having them removed and replace each time.

Good question. I know why the company is installing them (loud, constant customer demands for them) but who knows whether they will pay off?

With competition like JetBlue featuring 25 channels of TV at every seat, it's apparent that AA has to do something concerning IFE. Since many frequent travelers bring their own laptops or DVD players (like I do, and have for over 10 years), powerports are nice to have, especially on long flights.

Not so sure they are all that necessary on MD-80s. After all, very few (if any) MD-80 flights exceed 4 hours gate to gate. Subtract all the time that pax can't use their electronic devices, and 3 hours of allowed usage is probably the max. If your batteries can't do 3 hours, get a new one. The same is probably true of the 738s, although a westbound transcon can outlast my laptop's battery.

I doubt that passengers realize the increased maintenance expenses caused by options like powerports.

I'm all in favor of ala carte pricing, but charging for inseat power might be more bother than it's worth. Like the old $5 movie charge. JetBlue originally planned to charge something like $5 to watch TV, but that quickly disappeared.

I was in favor of ala carte pricing for more room - something like UAL's E+, for an extra ticket charge. And I'd pay extra for a larger F or J meal on long flights. But more for a power port?

Don't know the answer - but good question.

 

[The Dissident]

Its has been a proven fact that labor concessions do not save the company. For example Eastern Pan Am TWA and most recently Us Air. And yes I do think it is underhanded that AA would bid on the shuttle after labor gave massive concessions that were cramed down their throat by their useless union. While management hid the fact of their protected pensions until after the contract was ratified and purposly delayed filing of the approiate paperwork util after the contract was passed.Concessions do not save an airline. Instead of concentrating on making AA the longest train on the track management should be concentrating on making it the fastest train on the track and if that means shrinking it to profitability then by all means do it.
It has come to the point where the union has sacrificed my seniority and wages to protect someone with less seniority therby making my time with the company virtually worthless. They even lited the job protection provision of the contract therby in essence stealing 12500 dollars from me during the layoff.Their excuse was it would have cost the company too much money. I no longer go the extra mile for the company and am actively seeking employment elsewhere. Management treats employees more of a liability than an asset. Remember this with no front line employees there would be no airline!!!!!!!