AMR stock at $2.43/shr

[usa1]

If Parker's in charge they'll merger with no labor plan and the two employee groups will fight over it for the next decade.

 

[jimntx]

News is reporting no BK at this tme, more to follow


They also responded to a question of a court-supervised restructuring.

The statement from the airlines says, "Regarding rumors and speculation about a court-supervised restructuring, that is certainly not our goal or our preference. We know we need to improve our results, and we are keenly focused as we work to achieve that."

Why, we have let all of the secretaries and mail clerks at CenterPork know that if financial results don't improve in 4th quarter, we will cut their vacation days in half, if not eliminate vacations entirely for all peons.

 

[commavia]

Not buying it. Sorry. Management and its cheerleaders always used the DB pension plans as an excuse for the fact that their costs are higher than other airlines. Just one little problem with that. They aren't actually funding the pension plans with one penny more than the government requires. ALL of the db plans are underfunded to a great extent. It's really convenient to add those costs in whether or not they are actually incurred, isn't it? You know, that little accounting trick of "if we were funding the pension plan, that would be a $1 billion reduction in cash on hand. Now, we are not actually going to fund the plan, but we are going to show a $1 billion cost for it."

For the most part, the "costs" are nothing more than numbers on a page, but no money is actually going into the plans if the company can avoid it. I 'spect that in BK what's left will get dumped on the government.

There are several areas where AMR's union contracts are uncompetitive, and I would actually say that defined benefit pension plans are one of the smallest aspects of that. Nonetheless, defined benefit pensions do have a real cost.

You say that the company isn't "actually funding the pension plans with one penny more than the government requires." Well, yes, that's true. But the government requires a lot. ERISA requires the company to make up the difference with cash contributions to the pension plan when market returns aren't enough to generate required returns on plan assets. In today's market, where there are few good investments to be found, the company is contributing a lot to make up that difference.

So it's not "convenient" to add in those costs - it's just reality. That is a real cost - and often a cash cost at that - and it is directly tied to the employees on the payroll. Clear illustration of that: for every single pilot and flight attendant that Delta mainline doesn't employ because their previous flying has now been shifted to regionals, that's one less pension that needs to continue accruing benefits. For every single mechanic that United mainline no longer employs because their job has been shipped to Hong Kong, that's one less pension that needs to continue accruing benefits. That cost adds up.

As for your assertion about planned versus actual contributions to the pension plan affecting cash - you're just flat out wrong. The number AMR reports in its financial reports for cash pension plan contributions is the actual amount of cash that left AMR's proverbial bank account and went into the pension plan's trust. That's not an "accounting gimmick" - that's a real number, and in 2010 that number was $236M.

So whether you "buy it" or not, I think the clear and obvious indication that defined benefit pensions absolutely do have substantial costs are the fact that all the other legacy carriers have generally unloaded them - either through freezing or dumping them altogether.

 

[tech2101]

Doesn't look good for us in the labor unions at AA. Unfortunately we let our "leaders" at the Locals convince enough of us to vote no on the promise that we could get everything back in one swoop.

Thanks Bob, Larry, JR, Chuck, and Ken. Oh wait, maybe Gary at 565 can ride in and save us all. Oh that's right, the Int'l had this planned all along and they are the fall guys.

I think it may actually be better for you that you did not concede again but held out for more. Had you conceded, you would be fighting to keep the last concessionary offer rather than what you have now.

Either way, if they do go the way of BK, you are screwed. Polish up your resume now if you want to keep your standard of living equal to what you now enjoy. You will not have it on the other side of BK.

 

[wcs]

"There is this notion now that defined benefit plans are, by definition, bad," says Gerard Arpey, Chairman, President, and CEO of AMR Corp. and American Airlines,
“and I think that is erroneous. There is nothing inherently wrong with defined benefit plans, if they are managed properly.”

“The costs of defined benefit plans are largely a function of how good a job you do of managing the plans,” Arpey said in a January interview with PLANSPONSOR.

http://legacy.plansponsor.com/magazine_type3/?RECORD_ID=36465&page=6

 

[WorldTraveler]

There are several areas where AMR's union contracts are uncompetitive, and I would actually say that defined benefit pension plans are one of the smallest aspects of that. Nonetheless, defined benefit pensions do have a real cost.

You say that the company isn't "actually funding the pension plans with one penny more than the government requires." Well, yes, that's true. But the government requires a lot. ERISA requires the company to make up the difference with cash contributions to the pension plan when market returns aren't enough to generate required returns on plan assets. In today's market, where there are few good investments to be found, the company is contributing a lot to make up that difference.

So it's not "convenient" to add in those costs - it's just reality. That is a real cost - and often a cash cost at that - and it is directly tied to the employees on the payroll. Clear illustration of that: for every single pilot and flight attendant that Delta mainline doesn't employ because their previous flying has now been shifted to regionals, that's one less pension that needs to continue accruing benefits. For every single mechanic that United mainline no longer employs because their job has been shipped to Hong Kong, that's one less pension that needs to continue accruing benefits. That cost adds up.

EVERY employee related expense costs money... the only reason you keep trying to harp on them is because of some perceived notion that other carriers have dumped them. Problem w/ your argument is that it isn't true not everyone has dumped them.
.
AA's health care benefits are very costly - perhaps even more so than pension costs... vacation time? Surely more costly than pension benefits.... and you could go on and on.
.
The bottom line is that AA mgmt was scared by the runup in oil prices in the 2005 period, stopped their restructuring plan, and when they woke up several years later, the rest of the industry had restructured - and most of the benefit those carriers obtained in BK was productivity improvement... because as has been noted, AA employees do not make more on average than other network carrier employees. AA employees are less productive because the company did not grow the company into the size of the employee workforce they chose to retain post 9/11 and post 2003 cuts.
.
Further, there is no honor in arguing that AA managed to stay out of BK if they didn't manage to turn the company around. It will likely be shown that AA's future and that of its employees would have been better if they had filed for BK years ago, restructured successfully, and been on the same footing as their competitors.
Either way, AA's future is very cloudy because it is at such a disadvantage to its peers in terms of financial health.
Arguing that AA execs did the right thing is meaningless now that AA will end up being at a significant disadvantage to its peers and might end up in BK anyway.
A good airline management team should have known what it would have taken to survive in the current environment and done what was necessary to prepare AA to succeed.
Hoping that other airlines would fail and save AA from having to make difficult cuts and more recently expecting other airline costs to reduce in order to avoid dealing w/ the labor cost problem at AA will both prove to be some of the most fatal assumptions that any airline management team has ever made.
No one gets credit for how well you run the first part of the race if you fail before you get to the finish line.
No one ever succeeds solely because of someone else's bad fortune... either you are prepared to succeed on your own and you take advantage of opportunities that arise or you are carried along by the events that shape everyone else. No one sits unmoved by the world around them.

...
while we are talking about employee costs, it is worth noting that due to the competitive environment, AA is selling round-trip tickets for +/- $200 in at least 5 of AA's top revenue markets - DFWLAX, DFWSFO, ORDLAX, ORDDFW, and ORDBOS with ORDSFO and the JFK transcons not much higher.
It takes very few tickets at these prices to ruin a carrier's revenue performance and there is no level of employee cost cuts that can sustain fares at that level.
While AA historically does a good job of revenue management, if it takes fares this low for AA to maintain its market share from competitors who are anxious to get a piece of AA's revenue, then there is nothing in comparison that the employees can be expected to do to help defend the company's markets.

 

[737823]

EVERY employee related expense costs money... the only reason you keep trying to harp on them is because of some perceived notion that other carriers have dumped them. Problem w/ your argument is that it isn't true not everyone has dumped them.
.
AA's health care benefits are very costly - perhaps even more so than pension costs... vacation time? Surely more costly than pension benefits.... and you could go on and on.
.
The bottom line is that AA mgmt was scared by the runup in oil prices in the 2005 period, stopped their restructuring plan, and when they woke up several years later, the rest of the industry had restructured - and most of the benefit those carriers obtained in BK was productivity improvement... because as has been noted, AA employees do not make more on average than other network carrier employees. AA employees are less productive because the company did not grow the company into the size of the employee workforce they chose to retain post 9/11 and post 2003 cuts.
.
Further, there is no honor in arguing that AA managed to stay out of BK if they didn't manage to turn the company around. It will likely be shown that AA's future and that of its employees would have been better if they had filed for BK years ago, restructured successfully, and been on the same footing as their competitors.
Either way, AA's future is very cloudy because it is at such a disadvantage to its peers in terms of financial health.
Arguing that AA execs did the right thing is meaningless now that AA will end up being at a significant disadvantage to its peers and might end up in BK anyway.
A good airline management team should have known what it would have taken to survive in the current environment and done what was necessary to prepare AA to succeed.
Hoping that other airlines would fail and save AA from having to make difficult cuts and more recently expecting other airline costs to reduce in order to avoid dealing w/ the labor cost problem at AA will both prove to be some of the most fatal assumptions that any airline management team has ever made.
No one gets credit for how well you run the first part of the race if you fail before you get to the finish line.
No one ever succeeds solely because of someone else's bad fortune... either you are prepared to succeed on your own and you take advantage of opportunities that arise or you are carried along by the events that shape everyone else. No one sits unmoved by the world around them.

...
while we are talking about employee costs, it is worth noting that due to the competitive environment, AA is selling round-trip tickets for +/- $200 in at least 5 of AA's top revenue markets - DFWLAX, DFWSFO, ORDLAX, ORDDFW, and ORDBOS with ORDSFO and the JFK transcons not much higher.
It takes very few tickets at these prices to ruin a carrier's revenue performance and there is no level of employee cost cuts that can sustain fares at that level.
While AA historically does a good job of revenue management, if it takes fares this low for AA to maintain its market share from competitors who are anxious to get a piece of AA's revenue, then there is nothing in comparison that the employees can be expected to do to help defend the company's markets.

Can you provide attribution to the routes you claim are AAs "top revenue markets"?

Josh

 

[WorldTraveler]

Can you provide attribution to the routes you claim are AAs "top revenue markets"?

Josh

There is no secret about AA's top markets... the top markets for each carrier are generally well known....
AA's top markets are not surprisingly connections between its cornerstone markets of LAX, DFW, ORD, LGA/JFK, and MIA.
Despite UA's larger size in ORD, AA is the top revenue carrier in ORD-LGA, BOS, DFW, and LAX among others.
DFW is the US' second largest hub... every major market from DFW ranks among AA's top markets including LAX and SFO.
.
If you have any doubt, you need only look at the amount of capacity that a carrier has in each market and the chances are pretty high that the highest revenue markets coincide with the largest capacity markets.

Here are the top domestic markets in the US for all carriers based on DOT data.... note how many are key markets for AA and, if you know the industry, you also know that nearly all of these markets have all seen dramatic increases in low fare competitors over the past 5 years and the increase in low fare incursion is increasing.

JFK LAX
JFK SFO
LGA ORD
BOS SFO
IAD LAX
ATL LGA
DFW LGA
HNL LAX
IAD SFO
LAX ORD
FLL LGA
EWR SFO
JFK LAS
JFK SJU
EWR LAX
BOS LAX
ORD SFO
LAX SFO
DFW ORD
MSP PHX
FLL JFK
ATL LAX
EWR MCO
ATL DFW
EWR FLL
DFW LAX

 

[Buck]

There is no secret about AA's top markets... the top markets for each carrier are generally well known....
AA's top markets are not surprisingly connections between its cornerstone markets of LAX, DFW, ORD, LGA/JFK, and MIA.
Despite UA's larger size in ORD, AA is the top revenue carrier in ORD-LGA, BOS, DFW, and LAX among others.
DFW is the US' second largest hub... every major market from DFW ranks among AA's top markets including LAX and SFO.
.
If you have any doubt, you need only look at the amount of capacity that a carrier has in each market and the chances are pretty high that the highest revenue markets coincide with the largest capacity markets.

Here are the top domestic markets in the US for all carriers based on DOT data.... note how many are key markets for AA and, if you know the industry, you also know that nearly all of these markets have all seen dramatic increases in low fare competitors over the past 5 years and the increase in low fare incursion is increasing.

JFK LAX
JFK SFO
LGA ORD
BOS SFO
IAD LAX
ATL LGA
DFW LGA
HNL LAX
IAD SFO
LAX ORD
FLL LGA
EWR SFO
JFK LAS
JFK SJU
EWR LAX
BOS LAX
ORD SFO
LAX SFO
DFW ORD
MSP PHX
FLL JFK
ATL LAX
EWR MCO
ATL DFW
EWR FLL
DFW LAX

TUL to DFW and on to AFW must be very expensive routes?

 

[TIME FOR CHANGE]

Just heard a rumor 850 pilots put in their papers for retirement :blink:

 

[TIME FOR CHANGE]

Sad but true. Unfortunately the wake up call will be at the chop shops they so despise if they stay in the industry.

They can always blame Don, Gless, Little but the fact remains, the fantastic five (Bob, Larry, JR, Chuck, and Ken) got what they wanted. They got the members to vote no and want to get release to strike a near BK company. Great plan!

Sure beats bending over again and taking it in the... well you know where

 

[Hackman]

Sure beats bending over again and taking it in the... well you know where

You'll have a hard time explaining that concept to a bootlicking Twu YES voter. This the infamous Twu fear that the company union has used for the past 20+ years to keep the concessions flowing and cowardice in the hearts of it's true wanna believers.

 

[chris perry]

If it was any other company stock Trading at $2.00 I might be worried..At this point it's a relief change? HA HA, It's all been bad for labor so nothing will change... Just more of the same....

 

[Overspeed]

You'll have a hard time explaining that concept to a bootlicking Twu YES voter. This the infamous Twu fear that the company union has used for the past 20+ years to keep the concessions flowing and cowardice in the hearts of it's true wanna believers.

Great! We can join the former union NWA, UAL, US Airways, and Alaska Airlines mechanics that now work proudly for $25 and hour at TIMCO, AAR, and ATS! Better yet, maybe we could get a killer job with Plane Techs working three month contracts all other the country! My wife and kids will understand.

 

[Buck]

Great! We can join the former union NWA, UAL, US Airways, and Alaska Airlines mechanics that now work proudly for $25 and hour at TIMCO, AAR, and ATS! Better yet, maybe we could get a killer job with Plane Techs working three month contracts all other the country! My wife and kids will understand.

I thought the Alaska Airlines mechanics were unionized?

Also you really should not bring the family into these discussions.....