AMR reports 2009 loss of $1.4 billion, excluding special items

[jimntx]

Ok. So now, both CO and WN have reported profits for the 4th quarter. In fact, the 4th quarter profit at WN put them back in the black for the entire year! At both airlines, the f/as and the m&r people are paid more than the same people at AA (don't know about the pilots). We be runnin' out of excuses for our huge loss. Could it be poor management? Naw, no way it could be that.

 

[jimntx]

If we couldn't hand them the letter in person and get their signature acknowledging receipt, then it went Fedex.

This is off-topic, but I hope that when you specify signature required to FEDEX, that you are not actually expecting them to get the designated signature. The last 3 things delivered here to my home by Fedex and UPS were signature required. I was home each time.

The doorbell rang and before I could get to the front door, the driver was back in his truck and the item was left lying on the front porch. When I called to complain both companies insisted they had a signature. "Perhaps someone else in your household signed for it." I pointed out that I can't even get my cats to answer the phone, much less walk all the way to the front door.

Both companies insisted that they had valid signature; so, I'm guessing the driver just forged it.

The days of FEDEX/UPS delivery being accountable are gone.

 

[MERV]

Ok. So now, both CO and WN have reported profits for the 4th quarter. In fact, the 4th quarter profit at WN put them back in the black for the entire year! At both airlines, the f/as and the m&r people are paid more than the same people at AA (don't know about the pilots). We be runnin' out of excuses for our huge loss. Could it be poor management? Naw, no way it could be that.

The pilots are well paid for the equipment they fly.

 

[Rogallo]

The days of FEDEX/UPS delivery being accountable are gone.

The days of anybody being held accountable for anything are gone.....

 

[JimJimmyJim]

That's great to hear prices are going up, so the the airlines can offset any new cost.

Nice Jab.

 

[Birdman]

Let AA get to CO's cost structure, and you might see a different story. And no, it's not just labor's fault.

AA's fleet accounts for a lot of the difference between AMR and CAL. MD80's suck down a lot more gas than 73NG's. CO's retired all but three of their 733's, leaving 752's as the oldest type in their fleet. I'm guessing about $100M of the AMR 4Q loss was based on fuel inefficiency.

AMR brought in $5B in revenue, CAL brought in $3.2B (64%)

AMR bought $1.4B in fuel, whereas CAL only bought $800M (57%)

CAL's spending less than AMR on MMR (maintenance, materials & repairs) because of a combination of a newer fleet and outsourcing overhaul. But they paid more for aircraft leases.

AMR spent $1.7B between MMR & aircraft, CAL spent $1.4B (82%)

I'm a little confused here. AMR spent $1,700,000,000 on mmr for 612 aircraft which equals $2,777,777 average per aircraft. Cal spends $1,400,000,000 on mmr for 338 aircraft which equals $4,142,011 average per aircraft. It appears Cal spends 50% more on average per aircraft than AMR. Is more cost per aircraft better these days? :blink:

 

[Bob Owens]

I'm a little confused here. AMR spent $1,700,000,000 on mmr for 612 aircraft which equals $2,777,777 average per aircraft. Cal spends $1,400,000,000 on mmr for 338 aircraft which equals $4,142,011 average per aircraft. It appears Cal spends 50% more on average per aircraft than AMR. Is more cost per aircraft better these days? :blink:

Birdman, dont you know that you're not supposed to reveal such things? Truthful revelations such as this do severe damage to the arguement that because we have overhaul we should be willing to work for much, much less. You sir are a troublemaker!

So if CAL has lower labor "unit costs" (despite their higher wages)but spends more per aircraft on maintenance and they outsource most of their OH what does that tell you? Maybe outsourcing OH doesnt save money?
When I asked Arpey at the stockholders meeting about whether or not doing OH in house saves the company money he claimed "The jury's still out on that". I'd say that the verdict is in, and its "yes".

"Industry Leading Contract", call your President or negotiator and tell them that since the company opened the door by demanding more concessions that we should revise our proposal to one thats "Industry Leading". (Locals 567, 564, 510 and 562 already proposed that but were shot down by the other Locals)

With the one of the lowest wage rates, oppressive work rules and a very competative MMR cost you would expect that AA would have no problem making profits. They must work hard at posting losses. What are they doing with all that money? We arent getting it.

 

[FWAAA]

I'm a little confused here. AMR spent $1,700,000,000 on mmr for 612 aircraft which equals $2,777,777 average per aircraft. Cal spends $1,400,000,000 on mmr for 338 aircraft which equals $4,142,011 average per aircraft. It appears Cal spends 50% more on average per aircraft than AMR. Is more cost per aircraft better these days? :blink:

You mixed and matched some statistics.

AMR spent $1.2 billion on MMR in 2009, which does NOT include the wages paid to the in-house TWU mechanics. MMR on the income statment includes outsourced maintenance plus parts purchased.

At CO, MMR spending was $617 million and, of course, that number, like at AA, does NOT include the wages and benefits of the in-house mechanics.

AA employs more mechanics than CO on a per-aircraft basis. AA has roughly 10,000 mechanics for its 612 planes and at 12/31/08, CO had 4,095 mechanics (on a fte basis).

 

[Birdman]

You mixed and matched some statistics.

AMR spent $1.2 billion on MMR in 2009, which does NOT include the wages paid to the in-house TWU mechanics. MMR on the income statment includes outsourced maintenance plus parts purchased.

At CO, MMR spending was $617 million and, of course, that number, like at AA, does NOT include the wages and benefits of the in-house mechanics.

AA employs more mechanics than CO on a per-aircraft basis. AA has roughly 10,000 mechanics for its 612 planes and at 12/31/08, CO had 4,095 mechanics (on a fte basis).

Ok, I used Erics figures to calculate mmr cost per aircraft. You provide more detailed information and I'll do calculations on yours. My aim is get to the bottom of the airline to airline cost comparisons that dictate just who actually leads and lags the industry and who or what actually contributes more to the loss any given airline reports quarterly.

 

[Bob Owens]

You mixed and matched some statistics.

AMR spent $1.2 billion on MMR in 2009, which does NOT include the wages paid to the in-house TWU mechanics. MMR on the income statment includes outsourced maintenance plus parts purchased.

At CO, MMR spending was $617 million and, of course, that number, like at AA, does NOT include the wages and benefits of the in-house mechanics.

AA employs more mechanics than CO on a per-aircraft basis. AA has roughly 10,000 mechanics for its 612 planes and at 12/31/08, CO had 4,095 mechanics (on a fte basis).

Well its actually 9574. By years end its likely to drop below 9000. So according to your numbers we have just under 16 mechanics per airplane while they have just over 12. Less than 4 mechanics per airplane difference. Not much of a difference when you consider that we do most of our OH while they send out most of theirs and OH accounts for the majority of heads. I suspect that if you took out OH and just compared just the two line maint operations they would probably have more mechanics per airplane than we do. I believe our Line maint number is 3600. Less than 6 mechanics per airplane.

From what I hear from the guys at CAL they've been working tons of OT, (which also keeps their mechanics per airplane ratio down)factor that in along with their higher wages and better benifits and I would say that AA still comes out ahead with their in house maintenance.

You have to remember that when you outsource the vendor has an incentive to sell you parts that you would repair when doing in house, this drives the costs up, eats up a lot of the savings that they offer with their low labor rates. A big portion of any repair stations revenue in any industry, even the corner gas station, is the markup on parts. Another factor to consider is that AA has an older fleet and at the same time decided to do costly, one time mods over the last couple of years. I believe some of those Mods were done in MCI, which as you know is shutting down this year. So AAs costs and mechanics per airplane are likely to continue its downward trend.

 

[MCI transplant]

<_<

Well its actually 9574. By years end its likely to drop below 9000. So according to your numbers we have just under 16 mechanics per airplane while they have just over 12. Less than 4 mechanics per airplane difference. Not much of a difference when you consider that we do most of our OH while they send out most of theirs and OH accounts for the majority of heads. I suspect that if you took out OH and just compared just the two line maint operations they would probably have more mechanics per airplane than we do. I believe our Line maint number is 3600. Less than 6 mechanics per airplane.

From what I hear from the guys at CAL they've been working tons of OT, (which also keeps their mechanics per airplane ratio down)factor that in along with their higher wages and better benifits and I would say that AA still comes out ahead with their in house maintenance.

You have to remember that when you outsource the vendor has an incentive to sell you parts that you would repair when doing in house, this drives the costs up, eats up a lot of the savings that they offer with their low labor rates. A big portion of any repair stations revenue in any industry, even the corner gas station, is the markup on parts. Another factor to consider is that AA has an older fleet and at the same time decided to do costly, one time mods over the last couple of years. I believe some of those Mods were done in MCI, which as you know is shutting down this year. So AAs costs and mechanics per airplane are likely to continue its downward trend.

<_< ------ That's right Bob! That majority of the 574 positions you referred to, at the beginning of your statement, will more than likely be coming from MCI!!! :rant:

 

[Bob Owens]

<_<
<_< ------ That's right Bob! That majority of the 574 positions you referred to, at the beginning of your statement, will more than likely be coming from MCI!!! :rant:

MCIE, STL, DTW, SFO and a few others along with regular attrition. We had 5 retire this past month and expect another 10 before April just in NY1. You also shouldnt forget all the guys who have been using their downtime to get online degrees, Figure it takes a lot longer but we are approaching seven years, so many are close to their batchelors, an E-Board member from the last time I was in office left the industry and became a lawyer.

 

[MCI transplant]

<_< ----- Eventually this has got to factor into the negotiations. The exodus out of the Industry has already begone! More and more qualified people are voting with their feet. And it looks like AA is loosing it all around! Our-Pay has resorted to threats with the pending JAL debacle, and shrinking the Airline into profitability doesn't seem to be working! The fleet is one of the oldest in the Industry, and the Company still hasn't come to terms with it's Unions! But not to worry!------- The big boys will still get their Bonuses!!!---- Hey!!! Almost sounds like some of our old TWA management types!!! How little has changed!!!
http://www.funstufftosee.com/goodbye.html

 

[eolesen]

Ok, I used Erics figures to calculate mmr cost per aircraft. You provide more detailed information and I'll do calculations on yours. My aim is get to the bottom of the airline to airline cost comparisons that dictate just who actually leads and lags the industry and who or what actually contributes more to the loss any given airline reports quarterly.

I combined MMR & aircraft lease/rent to negate some of the halo effect from new aircraft.

As I said earlier, there's not a good 1:1 comparison to AA in the industry, so good luck with that comparison. If you just want to look at a macro level, you're better off reading the analysis from the Gary Chase's of the world who make a living out of crunching the quarterlies and coming up with stage length adjustments for comparison purposes. Or you can subscribe to PlaneBusiness...

 

[Birdman]

As I said earlier, there's not a good 1:1 comparison to AA in the industry, so good luck with that comparison.

You certainly hit the nail on the head with that one. No other airline can match AA mechanics less than median pay along with the loss of a full weeks pay at Christmas base shutdown (unless vacation is used), 5 less holidays, a week less vacation, no double time, half pay on holidays, and OverhaulShopMechanics making far less than mechanics. I refuse to believe that the "jury is still out" on the advantages AA has over the rest of the industry and wonder why they just can't make money.