AMR trims 2011 capacity increases in wake of fuel price hikes

[FWAAA]

AA and Eagle scaling back planned capacity increases for 2011 in the wake of much higher jet fuel prices in first two months of year.

AA estimated that severe winter storms, causing about 8,000 flight cancellations, cost AA about $50 million in revenue so far this quarter.

http://www.bloomberg.com/news/2011-03-01/american-parent-amr-trims-2011-capacity-as-fuel-prices-rise-1-.html?cmpid=yhoo

 

[eolesen]

Been expecting this one. Also expect a few more carriers to follow suit. Since growth helps mask increasing costs, there might be a few who are reluctant to do so...

Guess its also a good thing AA hasn't been buying up all those incremental growth aircraft that the foamers think they need to serve tourist hotspots like CAI and TLV?...

 

[FWAAA]

Last month, AA exercised an option on a third 777-300ER for delivery in 2012-13 - mentioned in the slides for the JP Morgan investor conference and filed in an 8-K today.

It is too bad that AA hasn't ordered a few copies of a dozen different airplane models so that it could match the optimal weight to each route.

 

[eolesen]

Yes, and by leveraging the synergies of the strategic alliances, you could not only completely transform AA's revenue dynamics, but also start to build a new framework for fuel efficient best practices... It would also be quite a paradigm shift. Bleeding edge to move the goalposts like that, but a real win-win.

 

[Bob Owens]

“In light of the current environment, in particular recent fuel price trends, we are trimming back our capacity plan for 2011,” said Andy Backover, an American spokesman.

Dont be suprised if growth plans remain curtailed even after the crisis in Libya settles down. Over 54% of AA/mcehs are over 50 years of age (2010)and licensing by the FAA is at an all time low. AA cant find mechanics, I imagine the pool of pilots is depleted as well. I think in the coming years the biggest challenge to growth will be staffing pilots and mechanics.

From what I've been hearing pretty much everyone is hiring mechanics. I contacted the HS in New York we discussed on another thread and was told Cesna Corp and Pratt & Whitney were offering High School graduates from the school, with no experience, a starting hourly rate of $23 per/hr, with a full benefit package, plus a college reimbursement program (with 100% reimbursement) for individuals who wish to further their education in a Bachelor degree program of their choice. Thats way more than double what AA is offering. Add to that AA and most airlines can only offer working nights, weekends and Holidays with one week of vacation and the airlines appear to be clueless.

The longer they drag things out the worse it will be for them. With 54% over 50 (2010 figures) we will likely see a huge surge of retirements once this is settled, the longer it takes the bigger the surge because many are waiting because they dont want to lose the Retro, which they may not get if they arent on the clock. In the meantime competing industries will suck up what comes out of the schools and with the bad repuation airlines have earned as far as being employers they will have a very difficult time finding people with the skillsets they need that will be willing to work nights, weekends and holidays for mediocre pay and substandard benifits. Right now we are looking at a three year period of deferred retirements, so good or bad the company will see a surge once the contract is settled, if its bad, in addition to that they will see an exodus of the few younger guys they have and guys my age will just show up till they hit 55 and bail. Unless we see substantial increases I'll be out of here in five years. Even at 55 I'm confident I can start over and do better than what AA has been offering, and I'll need to in order to get my kids through college.

 

[700UW]

Been expecting this one. Also expect a few more carriers to follow suit. Since growth helps mask increasing costs, there might be a few who are reluctant to do so...

Guess its also a good thing AA hasn't been buying up all those incremental growth aircraft that the foamers think they need to serve tourist hotspots like CAI and TLV?...

PHL-TLV is one of US Airways' best routes and they are probably going to add a second daily round trip.

DL operates a 747 out of JFK, a 777 out of ATL, and CO operates a 777 out of EWR and talk is they will upgrade it to a 747. Besides EL AL serving JFK and EWR.

 

[Mach85ER]

Been expecting this one. Also expect a few more carriers to follow suit. Since growth helps mask increasing costs, there might be a few who are reluctant to do so...

Guess its also a good thing AA hasn't been buying up all those incremental growth aircraft that the foamers think they need to serve tourist hotspots like CAI and TLV?...

You just don't possess the vision for success, (I'll send you a link to order some uplifting posters for your workspace), who are you to tell someone their idea for an Islamabad-Mumbai hourly shuttle is anything but a money printing machine when it's right-sized throughout the day with A319, A320, A321 along with a few sections of free F100 airframes out of the desert?

 

[FWAAA]

Dont be suprised if growth plans remain curtailed even after the crisis in Libya settles down. Over 54% of AA/mcehs are over 50 years of age (2010) and licensing by the FAA is at an all time low. AA cant find mechanics, I imagine the pool of pilots is depleted as well. I think in the coming years the biggest challenge to growth will be staffing pilots and mechanics.

So AA will be forced to curtail growth because it can't find any qualified mechanics? That doesn't sound realistic. Not in the least.

As for pilots, AA has about 8,700 active and 1,900 on furlough. That furlough list is large enough to replace 22% of the current active pilots. They might not all return if recalled, but a bunch of them are currently flying CR7s at Eagle and would return to the mainline in a second. I doubt a shortage of pilots will hold AA back, ever.

From what I've been hearing pretty much everyone is hiring mechanics. I contacted the HS in New York we discussed on another thread and was told Cesna Corp and Pratt & Whitney were offering High School graduates from the school, with no experience, a starting hourly rate of $23 per/hr, with a full benefit package, plus a college reimbursement program (with 100% reimbursement) for individuals who wish to further their education in a Bachelor degree program of their choice. Thats way more than double what AA is offering. Add to that AA and most airlines can only offer working nights, weekends and Holidays with one week of vacation and the airlines appear to be clueless.

So are they lying (as you implied the other day) or is it indeed possible for new-hire A&P ticket-holders to make starting wages of $18/hr to $25/hr (the numbers you scoffed at the other day)? If it's accurate, that is very good news for you. As I've posted for years, it's much better to have a shortage in your chosen line of work than to drown in a market awash in surplus workers.

The longer they drag things out the worse it will be for them. With 54% over 50 (2010 figures) we will likely see a huge surge of retirements once this is settled, the longer it takes the bigger the surge because many are waiting because they dont want to lose the Retro, which they may not get if they arent on the clock. In the meantime competing industries will suck up what comes out of the schools and with the bad repuation airlines have earned as far as being employers they will have a very difficult time finding people with the skillsets they need that will be willing to work nights, weekends and holidays for mediocre pay and substandard benifits. Right now we are looking at a three year period of deferred retirements, so good or bad the company will see a surge once the contract is settled, if its bad, in addition to that they will see an exodus of the few younger guys they have and guys my age will just show up till they hit 55 and bail. Unless we see substantial increases I'll be out of here in five years. Even at 55 I'm confident I can start over and do better than what AA has been offering, and I'll need to in order to get my kids through college.

So you're saying that even with a nationwide shortage of mechanics, you and your fellow TWU negotiators will likely be unable to negotiate a "good" contract on behalf of your members?

And mechanics who didn't bail in 2003 when large concessions were imposed will bail in 2016 (to use you as an example) if they don't see large wage gains? I don't see that happening.

 

[Bob Owens]

We have 35% less mechanics and zero recalls. That's a mass exodus. You also have to factor in that we are an older workforce

 

[737823]

When will AA take MD-80s off long routes? I was recently on both STL-LAX and DFW-LGA, both uncomfortably long for an MD even in F. I'm sure AA has its reasons for staging AC but why should BOS-ORD (867 miles) be 738 while DFW-LGA (1389 miles) or STL-LAX (1592 miles) remain MD? It seems to me a longer flight duration is necessary for the fuel savings to be realized with otherwise higher operating costs (depreciation, financing costs, etc)

PHL-TLV is one of US Airways' best routes and they are probably going to add a second daily round trip.

DL operates a 747 out of JFK, a 777 out of ATL, and CO operates a 777 out of EWR and talk is they will upgrade it to a 747. Besides EL AL serving JFK and EWR.

I've only heard good things about US Envoy Suite A330 to TLV and I'd like to try it sometime soon. US Airways overall is another story, but aparently the service on this route is quite good. A second flight would be nice. Somehow AA has missed the boat on this route-all of their US legacy competitors are operating at TLV profitably yet AA is unable.

Josh

 

[JimJimmyJim]

When will AA take MD-80s off long routes? I was recently on both STL-LAX and DFW-LGA, both uncomfortably long for an MD even in F. I'm sure AA has its reasons for staging AC but why should BOS-ORD (867 miles) be 738 while DFW-LGA (1389 miles) or STL-LAX (1592 miles) remain MD? It seems to me a longer flight duration is necessary for the fuel savings to be realized with otherwise higher operating costs (depreciation, financing costs, etc)



I've only heard good things about US Envoy Suite A330 to TLV and I'd like to try it sometime soon. US Airways overall is another story, but aparently the service on this route is quite good. A second flight would be nice. Somehow AA has missed the boat on this route-all of their US legacy competitors are operating at TLV profitably yet AA is unable.

Josh

Has this horse been beat enough.

 

[upsilon]

Has this horse been beat enough.

Jim, is it necessary to quote the entire post of the trolls you are feeding? Some of us have them on our Ignore List; but we are thwarted by those who feed them.

 

[eolesen]

Once again proving that these forums are all about the mechanics....

[Oil increase] -> [capacity decrease] -> [nobody wants to be a mechanic]


Frankly, I could really care less about service to TLV. They don't serve any of my ancestral homelands (even though several other US airlines do), and you don't see me complaining about that incessantly....

But I digress....

PlaneBuzz just reported that Jet A closed at $3.22 today....

 

[737823]

Once again proving that these forums are all about the mechanics....

[Oil increase] -> [capacity decrease] -> [nobody wants to be a mechanic]


Frankly, I could really care less about service to TLV. They don't serve any of my ancestral homelands (even though several other US airlines do), and you don't see me complaining about that incessantly....

But I digress....

PlaneBuzz just reported that Jet A closed at $3.22 today....

I wasn't the one who brought up the topic as it has been exhausted. Anyway, when do you think 738s will replace MDs on longer midcons specifically STL-LAX and DFW-LGA/PHL? STL-LAX on an MD was awful to say the least.

Josh

 

[will fix for food]

In the meantime competing industries will suck up what comes out of the schools and with the bad repuation airlines have earned as far as being employers they will have a very difficult time finding people with the skillsets they need that will be willing to work nights, weekends and holidays for mediocre pay and substandard benifits.

It's no secret at Eagle that American is hiring. You can expect that a lot of your slots will be filled by Eagle mechanics who still see American's post concession wage structure as a significant improvement over what they are making now.

What I find interesting is that Eagle is always touted as the "high cost" regional operator. If erverybody at Eagle is willing to jump ship to American over wages what is it like at Skywest, Republic, and the other smaller players? I can't imagine United and Delta aren't in the same aging work group boat American is in. I'm guessing the Legacys might be sucking all the regionals dry of their workforces in the next few years.

Edit: It seems management has put out a letter to the pilots that there are crew shortages. From what I understand Eagle isn't very far into the pilot flow thru arbitration award so it will only get worse from here.

Interesting times.