AMR Needs More Revenues, Funding To Meet Liquidity Needs

[Hatu]

WASHINGTON -(Dow Jones)- AMR Corp. (NYSE:AMR - News) President and Chief Executive Gerard Arpey said the company had $2 billion in cash as of Tuesday in a presentation at the Merrill Lynch Global Transportation Conference on that day.
According to a Form 8-K filed Wednesday with the Securities and Exchange Commission (News - Websites), Arpey said that AMR will need some combination of improved revenue and additional funding in the future to meet its liquidity needs.

Arpey expects the liquidity needs will be met through a combination of financings and asset sales, according to the filing.

http://biz.yahoo.com/djus/030611/1802001407_1.html

 

[Winglet]

Sale of Eagle? Then use of RJs in mainline AA? It''s all set up. The APA gave away scope along with cutting loose 25% of it''s seniority list. Those 25% may come back but only under "cost neutral" contract conditions. A management masterstroke.

 

[KCFlyer]

Sorry folks, but I can't give much sympathy. AA needs revenues, then over on the Clark Howard board is a mention of a $148 ROUND TRIP on AA from ATL-LAS. And someones pissed because they didn't get it...they were quoted a fare of $198...and they didn't book it because they've been "@#$%@# TRAINED to expect a lower fare...to them AA was screwing them for $198. You want revenues? Don't try to out AirTran AirTran. Geez...it seems that AA feels that it's easier to ask the employees to give and give than it is to get the public back in the program of paying reasonable airfares.

I'm all for "value pricing". But $148 for ATL-LAS is giving away the farm.

 

[Resman1]

The fare situation stinks, unfortunately the customers call the shots. It''s the customer who sets the price, even a growing number of business travelers shop for price.
It''s very "chic" to get something cheaply as possible, download your music free, get a cheap plane ticket, buy that used DVD for 2.00 bucks on ebay. It does stink because we all work for the airlines, however, we all do the same as consumers we shop for best prices. We should simplify the fare structure, but the cheap fares aren''t going away anytime soon.

 

[capeman]

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On 6/11/2003 8:31:55 PM Winglet wrote:

Sale of Eagle? Then use of RJs in mainline AA? It''s all set up. The APA gave away scope along with cutting loose 25% of it''s seniority list. Those 25% may come back but only under "cost neutral" contract conditions. A management masterstroke.

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AMR already owns Eagle. Shuffeling Eagle to AA certificate will not generate cash. It is like taking a quater out of your pocket that has a hole in it and putting into your other pocket with a hole. It leaves you with no money. AMR needs to generate cash now. Otherwise it is BK.

 

[AAviator]

Cutting eagle loose solves a couple of things. The 70 seaters go away. Like a Mesa scenario, AA code goes on the 50 and less jets, Mesa can do with the 70 seaters as they please. AA gets cash from the sale of eagle.

Winglet, time to move on. APA didn''t do this. The industry just isn''t supporting the jobs you think exist.

 

[KCFlyer]

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On 6/12/2003 12:36:17 AM Resman1 wrote:

The fare situation stinks, unfortunately the customers call the shots. It''s the customer who sets the price, even a growing number of business travelers shop for price.

No doubt about that. That''s why I am so adamant about "value pricing"...offer a fair price - accross the board - and you''ll increase revenues.

It''s very "chic" to get something cheaply as possible, download your music free, get a cheap plane ticket, buy that used DVD for 2.00 bucks on ebay. 

But the thing is this - if the music isn''t available on the download site, you''ll go out and buy the CD. If you really want the car and the dealer stops dropping his price, you''ll buy the car. But if a fare is $198 to fly pretty much coast to coast, the airlines have trained the consumer to wait...if they won''t offer another $148 sale, then just put in a bid on Priceline pretty close to the travel date. Chances are good you''ll get it. Y''all should bow out of Priceline and Hotwire - hard to do since they are pretty much owned by the airlines - You successfully taught the customer how to place a bid that you''ll accept...if you offered $148 before, and there are empty seats two days before the flight, you''ll most likely accept the bid. And with the cutbacks in schedules, most of those flights won''t be terribly inconvenient.


It does stink because we all work for the airlines, however, we all do the same as consumers we shop for best prices. We should simplify the fare structure, but the cheap fares aren''t going away anytime soon.

That''s too bad. Because as far as John Q Public is concerned, they still think that airline employees are overpaid and they should work for less so their company can offer the consumer the unrealistically low fares that they have come to expect. Value Pricing won''t work with the giveaway fares.

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[JS]

I don't see anything wrong with competition. If AA didn't offer the $148 fare, some of those people would have bought a ticket on AirTran or not bought a ticket at all. The $148 is money in the bank for AA.

The key is to limit the number of seats at that fare. Otherwise, you'll sell too many $148 tickets to people who were willing to pay more, and you may run out of seats for later purchases (after the sale goes away or for walk-ups).

Don't worry, AA knows what they're doing. They won't sell out the whole plane for $148 a seat.

Oh, by the way, did you harp on Southwest for matching JetBlue's $19 one way LAS-L.A. sale?

 

[KCFlyer]

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On 6/12/2003 10:58:04 AM JS wrote:

I don''t see anything wrong with competition. If AA didn''t offer the $148 fare, some of those people would have bought a ticket on AirTran or not bought a ticket at all. The $148 is money in the bank for AA.

The key is to limit the number of seats at that fare. Otherwise, you''ll sell too many $148 tickets to people who were willing to pay more, and you may run out of seats for later purchases (after the sale goes away or for walk-ups).

Don''t worry, AA knows what they''re doing. They won''t sell out the whole plane for $148 a seat.

Apparently they don''t know what they are doing. Almost every flight I''ve been on (AA, UAL, and DL) has been completely full. Yet they are losing money.

Oh, by the way, did you harp on Southwest for matching JetBlue''s $19 one way LAS-L.A. sale?

No, I didn''t. And guess who cut back flights out of LAS and OAK...here''s a hint...it wasn''t Southwest.

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[FWAAA]

AA, UAL and DL combined fly over 6000 flights a day. How many of those have you been on?

It''s been posted on every aviation/airline related bulletin board like a million times, but here it is once more:

Full flights don''t equate to profits.

The problem for the last 30 months or so hasn''t been the lack of pax, it''s that they no longer want to pay as much (that plus an accute shortage of Full First, Business and Y pax).

Why is that so difficult for everyone to understand?

 

[KCFlyer]

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On 6/12/2003 12:22:28 PM FWAAA wrote:

AA, UAL and DL combined fly over 6000 flights a day. How many of those have you been on?

It''s been posted on every aviation/airline related bulletin board like a million times, but here it is once more:

Full flights don''t equate to profits.

That was my point FWAAA - JS indicates that EVERY fare at the individual level is profitable - I disagree.

The problem for the last 30 months or so hasn''t been the lack of pax, it''s that they no longer want to pay as much (that plus an accute shortage of Full First, Business and Y pax).

That''s right. What I am trying to say is that the airlines are doing a fabulous job of keeping passengers from taking the big leap to pay a fare that will help the airline attain a profit. 21 day advance not low enough? Wait a few days - they''ll lower it. And the good old airlines are doing just that. It paid the customer to wait. And the airlines are even giving the customer an incentive to delay the purchase until really close to flight time....the airlines like the plan so much that they bought the companies that provide this service and named them Priceline and Hotwire. With all the fluctuating fares, if the $148 Las Vegas trip isn''t offered, the customer now knows how low they were willing to go...wait until a couple of days before they wanted to go, and put in a bid for that $148. And the airlines are giving it to them. Priceline and Hotwire are a boon to the folks who want a quick weekend getaway. Has anybody noticed that the airlines that don''t participate in Hotwire and Priceline are also showing profits? I''ll betcha that some businesses even use that service to meet their last minute travel needs.

Why is that so difficult for everyone to understand?

I dunno.

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[N305AS]

The sad fact is, that when it comes to pricing, it's a "monkey-see, monkey-do" industry. Or as one CEO bluntly put it:

"We're only as smart as our dumbest competitor."


The only way to have the entire industry change their pricing models would essentially require collusion; the carriers would have to get together and collectively agree to start a whole new way of pricing their product.

Of course, they'd also have to collectively agree to not mess with it for a certain timeframe. Otherwise, it would last MAYBE one day before someone realized they were losing revenue relative to their competitors, and lowered prices to stimulate demand.

It could work, but of course the government would quickly put a stop to the practice and consumer groups would cry foul since they couldn't get their precious $99.00 coast-to-coast roundtrips anymore.

 

[JS]

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On 6/12/2003 3:22:15 PM N305AS wrote:

The sad fact is, that when it comes to pricing, it''s a "monkey-see, monkey-do" industry. Or as one CEO bluntly put it:

"We''re only as smart as our dumbest competitor."


The only way to have the entire industry change their pricing models would essentially require collusion; the carriers would have to get together and collectively agree to start a whole new way of pricing their product.

Of course, they''d also have to collectively agree to not mess with it for a certain timeframe. Otherwise, it would last MAYBE one day before someone realized they were losing revenue relative to their competitors, and lowered prices to stimulate demand.

It could work, but of course the government would quickly put a stop to the practice and consumer groups would cry foul since they couldn''t get their precious $99.00 coast-to-coast roundtrips anymore.

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So I take it you like OPEC? That''s exactly what they do. They set the price, and off the record the members sell a little more than they had agreed to, but it''s still a pretty good cartel.

 

[KCFlyer]

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On 6/12/2003 353 PM JS wrote:


If the airlines didn''t match competitor''s fares, there would be more empty seats, and they would be losing MORE money.

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Reminds me of the story of a guy who was selling silver dollars for fifty cents. When someone asked him how he intended to make a profit, he said "VOLUME VOLUME VOLUME".

 

[JS]

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On 6/12/2003 325 PM KCFlyer wrote:

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On 6/12/2003 353 PM JS wrote:


If the airlines didn''t match competitor''s fares, there would be more empty seats, and they would be losing MORE money.

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Reminds me of the story of a guy who was selling silver dollars for fifty cents.  When someone asked him how he intended to make a profit, he said "VOLUME VOLUME VOLUME". 

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What''s the marginal profit on one of those 50-cent silver dollars? It''s negative 50 cents! It is not comparable to airlines selling tickets at low fares that are profitable at the margin.