AMR Business Plan

Broke@SFO

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Apr 21, 2003
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I think all UAL and AMR employees should be interested in this plan. For all the millions or dollars we spend for AMR executives this is the best and only business plan they could come up with. Waiting for another airline to go Chapter 7 so you can start to make money is ridiculous. I sincerely hope all the employees of UAL go the extra mile to successfully emerge from Chapter 11 soon. The current financial information indicates that UAL is doing better than many expected and will emerge successfully. I am thrilled that Don Carty is gone and my only regret is that the BOD didn''t send the rest of top management with him. AA and UAL can both succeed with the right management.

From the Chautauqua (American Connection) company news update:

Company Update for April 25, 2003

Good afternoon. The situation at AMR has taken another unpredictable turn as the carriers CEO, Don Carty was forced to resign in the aftermath “bonus-gateâ€￾. As of now the pilots and fleet workers have reaccepted their concession packages but not the flight attendants. Once again the carriers CFO is in New York at the court house steps waiting for word to file C11.

In my opinion, regardless of whether the flight attendants re-approve their deal or not, I believe it would be in AMR’s best interests to file for court protection sooner rather than later. It appears that the current plan is simply designed to reduce their daily cash burn so that they can hold out until fall in hopes that United will liquidate. Certainly if United were to fail, then bankruptcy and further employee trauma could be avoided. But that is a very big gamble with the company’s dwindling cash reserves and, if wrong, will result in the need for even more dramatic concessions and furloughs than might otherwise be required should the company begin the reorganization process immediately. To be sure, bankruptcy is no panacea and should be avoided at all costs short of leaving the company is such a weak state that the risk of liquidation is greater than the likelihood of reorganization. A very difficult call to make and I am glad we are not in a position to have to worry about such things.

Regardless of which direction AMR follows, we must continue to stay focused on doing our jobs safely and reliably. Chautauqua has managed through many crisis’s in the past 18 months and we will mange through this uncertainty as well. We have a very good people, a very good product and very good economics which I hope will continue to make us an attractive partner to most large, net work carriers. I do not feel our AMR operation is in any significant danger, but rest assured we are monitoring the situation actively and will develop contingency plans as the situation unfolds and warrants.
 

atabuy

Senior
Oct 13, 2002
419
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Right now it would be good for AMR if Ual went chapter 7 because it would reduce seat capacity and Amr could charge more for full airplanes.

It would be in Ual employees best interest to make suure this dosen''t happen.

I know that employees were owners and management screwed them, but to hurt yourself to hurt them will never make sense.

Better to keep a job and get all airline employees united in an effort to stop the legal stealing these executives do to employees and stock holders alike.

Just a thought. Good luck on the vote next week.
 
Aug 20, 2002
664
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That guy has about as much insight into AMR''s business plan as I do.

Which is none.

AMR is using Chatauqua like a Kleenex. As soon as they are done with them they will be thrown away.
 

Winglet

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Aug 20, 2002
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The sad truth is that UAL and AMR HAVE NO business plan, other than seeing the other liquidate.

Another sad truth is that there is probably NO business plan that will work for any of the major airlines. The problem is that there is at least 25% TOO MUCH CAPACITY in the national system right now. Further, reductions by individual airlines will not result in enough efficiency to allow survival assuming at least another year (probably 2) of recession. Capacity has to go WAY down and cause fares to go WAY up. That''s only going to be accomplished by a major airline shutting it''s doors.

Be interested in other''s cut on that idea.
 

trollydolly

Member
Sep 3, 2002
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That guy has about as much insight into AMR''s business plan as I do.

Which is none.

Then perhaps you should read more past articles about AMR and the money that they borrowed to pay for their employees wages and fuel just around the time UAL filed for BK. In short, they did this in hopes that UAL would liquidate so that they would have the cash on hand (3.2b) to buy UAL''s pacific routes. Thus aquiring UAL''s most profitable routes and passengers. Remember, AMR has a huge pressence at ORD. Who do you think would prosper in the collapse of UAL?
Fortunately for UAL, this did not happen. The banks put a halt on lending AMR more money, and they had to start using their own cash.
In addtion, they are 11b in debt and have a billion dollar lawsuit on their hands. The lawsuit is from the crash that took place in New York just weeks after 9/11.
It was not just AMR that petitioned against UAL. All the major airlines petitioned against UAL in Washington. Why? So that UAL would be forced into BK and possibly liquidate. Case in point. The newest $$$$''s that were given to the airlines was also petitioned against giving UAL any of it. Why give a dying carrier tax payers money? UAL''s liquidation means survival for their airlines. It is in their best interest to see UAL go under. They will do everything in their power to see it happen. Oh, and please remember who is in the oval office? Wouldn''t you want your own states carrier to survive the worst crisis in the airline industry?
 

atabuy

Senior
Oct 13, 2002
419
0
trolleydolly & winglet,
Good points from both of you.

Another point to look at is jet blues order of 65 more new planes and there one model plane. They made money this last quarter because they are a new airline with less entrenched costs than companies that have been in business 50 or more years.

They have a young workforce, not much vacation liability, no extra expense for pilots training to move to a new aircraft, not much brick and mortar, just rental overhead.
They also have a team spirit without being top heavy in management.

This is Ual''s plan to become like them without reducing managements perks or manpower. That is why they want to have a lcc within the airline so they do not have to reduce themselves.

The unions and management will never make the right sacrifices to become competitive, IMO.

All wages must be tied to revenue. The disparity between the 2 will never allow that to happen untill stockholders force it.
 

novaqt

Senior
Aug 20, 2002
488
0
Winglet:

You are full of ***p. You know nothing about UAL. FYI, UAL is going to successfully emerge from bankruptcy. The planes are running full. Believe it or not, UAL has alot of very loyal customers who believe in the airline and that it will be around for many years to come.

Its in your best interst to stop focusing on the negative. AMR will file for bankruptcy protection. If you haven''t noticed, but they seem to be following the same script as US Airways spun in the media, UAL followed the same script in the media before filing and now AMR is using the same script. The verbage appearing in the media and to the employees is almost identical before the file. Unless their venders are willing to negotiate new leases and contracts out of court, AMR will file Chap 11 to force restructuring of leases and contracts, etc.
 

atabuy

Senior
Oct 13, 2002
419
0
----------------
On 4/27/2003 9:56:05 AM novaqt wrote:

Winglet:

You are full of ***p. You know nothing about UAL. FYI, UAL is going to successfully emerge from bankruptcy. The planes are running full. Believe it or not, UAL has alot of very loyal customers who believe in the airline and that it will be around for many years to come.

Its in your best interst to stop focusing on the negative. AMR will file for bankruptcy protection. If you haven''t noticed, but they seem to be following the same script as US Airways spun in the media, UAL followed the same script in the media before filing and now AMR is using the same script. The verbage appearing in the media and to the employees is almost identical before the file. Unless their venders are willing to negotiate new leases and contracts out of court, AMR will file Chap 11 to force restructuring of leases and contracts, etc.

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novaqt,
Would you agree with me that full airplanes do not gaurantee profits, if costs are higher than the fares?
We can be as busy as we want but must make a profit to survive.

I think that winglet was saying fares will not go up until demand for seats is greater than the capacity.
Every thing works on the supply and demand principle, unless you are talking about the gov. lol.

He was saying if Ual or Amr liquidated, it would reduce seat capacity and raise fares to a level of profitability.
Good luck!
 

novaqt

Senior
Aug 20, 2002
488
0
atabuy:

"novaqt,
Would you agree with me that full airplanes do not gaurantee profits, if costs are higher than the fares?
We can be as busy as we want but must make a profit to survive.

I think that winglet was saying fares will not go up until demand for seats is greater than the capacity."

Agreed, if the costs are higher than the fares. However, in today''s environment, if *** number of people are no longer traveling for whatever reason, you reduce seat capacity and lower operating expenses through wage and manpower concessions, reworking vender contracts, and renegotiating leases and loans to accommodate today''s environments. With the cost of fuel coming down, the airlines that have gotton their costs under control will either break even and/or begin turning a profit to meet the demand. No question, every thing works on the supply and demand principle.

You may not be noticing that the sale fares that are being offered out there are a tad higher than a few months ago. Planes are running full, except to Asia market and as soon as the Sars scare is under control, the Asia market will pick up pretty quickly.

Agreed?
 

Winglet

Veteran
Aug 20, 2002
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Even with the draconian cuts in employees and employee compensation, the majors will not be able to make a profit with the current business models. Fares simply have to go up a lot . . . . . not a "tad." The CASM at UAL and AA, as well as the rest are way too high to support 70% and lower load factors. There is simply too much capacity in the system.

Will UAL file chapter 7? I don''t know. I wouldn''t take the bet ''cause I say the odds are about even and the finger gets pointed at Mr. Goodwin. A slightly better Asian market isn''t going to help UAL that much, especially since they still have airplanes like the 747-400s.

As far as who would benefit in Chicago from UAL departure. I''d argue that JetBlue would move in as quick as they could get aircraft and kick the daylights out of AA on high density routes.

Will AA file Chapter 11? Almost certainly. Will CAL, NWA, and DAL? Almost certainly. The economy is still terrible and will probably stay that way for at least another 18 months to 2 years. And now you have a public that is conditioned to ultra cheap airfares and thinks, if JB and SWA can have cheap fares all the time why is AA, UAL, et al gouging me? Even with the draconian paycuts and massive furloughes, the major''s cost structure is still much too high for the current and foreseeable future ticket prices. All the majors cutting 25% of their capacity isn''t going to result in the kind of efficiency that will drop the CASM to competitive levels. Couple that with managements are myopic, stodgy, and are really devoid of new ideas, and you have a pretty bleak picture.