AMR vs. other airlines, 4th quarter and the year

jimntx

Veteran
Jun 28, 2003
11,161
3,285
Dallas, TX
(If I get any of this wrong, just remember I was an English major and I'm a flight attendant. I'm paid to be cute, not smart.)

I think it worthy of discussion to compare our financial performance with the other airlines. At some point it seems to me that the AMR Board of Directors is going to have to take Arpey and company to task for the company's dismal performance. How many other excuses can they come up with before it comes down to poor management?

For instance:

4th quarter performance
:
WN - $119 million profit
CO - $85 million profit
DAL - $25 million loss
UAL - $176 million loss
AMR- $415 million loss

2009 annual performance:
WN - $99 million profit
CO - $299 million loss
DAL - $1.2 billion loss
UAL - $1.1 billion loss
AMR - $1.5 billion loss

My comments:

WN- Well, is anyone really surprised about the little airline that could? Even after losses in the first 3 quarters (granted, miniscule compared to the rest of us), the 4th quarter performance lifted them to an annual profit. Just about everyone at WN is paid better than their counterparts at AMR (with the exception of the executives), yet they can show a profit.

CO - Their flight attendants and mechanics make more than ours. They still serve meals in coach. Yet, they made a profit for the quarter and improved their performance over last year.

DAL - Now much bigger than us, but smaller loss. Performance quarter over quarter and year over year improved. If not for special charges related to fuel hedge losses, they would have shown a profit. The fuel hedge losses were something like $1.4 billion.

UAL - The airline we all thought would be gone by now improved quarter over quarter and year over year. They increased their cash on hand balance by over $1 billion.

AMR - Need I say more? The only bright spot was we also increased cash on hand and investments by over $1 billion, but not much more than UAL.

Again, I ask. When do Arpey and company have to step up and take responsibility for our performance?

I got my information from:
Delta financials
Continental and Southwest financials
United financials
AMR Financials
 
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You quoted UAL's results excluding special items (correctly, in my view) but your other airline numbers include the special items (incorrectly, in my view) in some of the numbers and the ex-special items in other numbers. Correcting the numbers doesn't affect your main point, but the comparisons are better if consistent numbers are used.

Here are the ex-special item results (4th quarter/full year):

DL: $225 million/$1.1 billion losses

CO: $4 million profit/$295 million loss

AA: $415 million/$1.4 billion losses

WN: $74 million/$143 million net incomes

The problem is in your sources, relying on journalists who also hold degrees in English (or journalism) instead of finance. Here are the press releases from the companies themselves:

WN: http://phx.corporate-ir.net/phoenix.zhtml?...&highlight=

DL: http://news.delta.com/index.php?s=43&item=872

CO: http://phx.corporate-ir.net/phoenix.zhtml?...&highlight=

UA: http://finance.yahoo.com/news/UAL-Corporat...ml?x=0&.v=1

AA: http://aa.mediaroom.com/index.php?s=43&item=2833

Yes, the AA results are ugly. And AA's results are much worse than last year. But in talking about DL and UA year over year improvement, you were taken in by the journalists. Both UA and DL took huge multi-billion dollar writeoffs last year that distorted their results. Excluding special items, both companies had worse years in 2009 than they did in 2008. All three giant legacies lost $1.1 billion or more (AA lost $1.4 billion).

By relative size, DL's loss was not as terrible as AA's, but UA's loss was much larger than AA's, and neither DL nor UA showed any year over year full year improvements (contrary to the journalists' claims).

When will the board hold Arpey accountable? Probably when DL, UA and CO are minting large profits if AA is still showing huge losses. Until then, he's treading water almost as well as Richard Anderson and better than Tilton. Hard to blame Arpey for September, 2001, the ensuing wars, oil much more expensive than anyone imagined and the Great Recession we're currently mired in.

CO? They had very few international premium seats, so they had a lot less to lose when demand for those seats dried up in late 2008. No surprise that CO hasn't suffered losses as large as AA or UA.

Southwest? That airline makes money year in and year out, regardless of the profits or losses of the legacy network airlines. High pay and low costs (high productivity) and simple operations tend to equal consistent net income.
 
jimntx said:
Again, I ask. When do Arpey and company have to step up and take responsibility for our performance?


Now Jim, you know that responsibility is only applicable to AMR's workforce.Management is above reproach for their actions. :rolleyes:

We won't mention management shrieking like little girls and running in the face of competition,replacing mainline service with Eagle at every turn and basically running the place as a Petri dish for MBA whiz kids to try their theories in.

We can't figure out how to compete other than laying off,cutting flights and surrendering market share, but we sure as heck enjoy patting ourselves on the back for our diversity, tolerance and other useless awards.

Those awards are great, too bad the analysts on the earnings call aren't impressed by them.

The Tom & Gerry show won't have to worry about those annoying passengers soon, they'll all be flying on other airlines.
 
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CO? They had very few international premium seats, so they had a lot less to lose when demand for those seats dried up in late 2008. No surprise that CO hasn't suffered losses as large as AA or UA.
Are you saying that if we reduce premium seats we could "lose less?" Funny, the management that you love to make excuses for is increasing the number of premium seats. On the 757, they are taking away one of the F/C closets to add 2 more seats. Of course, we, the flight attendants, will still be expected to find a place for additional F/C coats with less closet space than ever.
 
Are you saying that if we reduce premium seats we could "lose less?"

I think FWAAA was talking about international premium seats (TA & TP), which is where the drop in traffic showed up first and is showing some signs it miight recover slower than domestic. I'm guessing that CO has the 2nd smallest TA/TP presence, hence was less affected than AA/UA/DL.

Jim
 
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When will the board hold Arpey accountable? Probably when DL, UA and CO are minting large profits if AA is still showing huge losses. Until then, he's treading water almost as well as Richard Anderson and better than Tilton. Hard to blame Arpey for September, 2001, the ensuing wars, oil much more expensive than anyone imagined and the Great Recession we're currently mired in.

Well, I guess it was just our bad luck that 9/11, et al, only happened to AMR corporation. WN really dodged a bullet when they had no financial fallout from those at all, didn't they?

FWAAA, I know all about all those things. I was furloughed for 17.5 months because of 9/11. But, it is now 2010. That ship has sailed as an excuse.

And, every single airline had to pay the same increased prices for oil. Granted, some of them (think WN) were more adept at handling that issue, but here again, it was a failure of AMR management to handle the situation correctly. It is my understanding of the world of business that managers are not guaranteed a stable financial environment, and one of their most important duties is to manage crises and unexpected events--particularly when it comes to fuel prices.

In case you don't remember, I spent over 20 years in the oil business before coming to work at American. For the past 30 years, anyone who plans more than a year in advance based upon constant fuel prices could be said to be 2 tacos shy of an Acapulco platter.

I would like to say again that the little bonus shell game that the BOD and Arpey&Co cooked up is still bogus. The stockholders of AMR should not be enduring diluted stock values (see, I know they don't get
"bonussed" in cash, it's all just stock, right?) simply because other airlines aren't doing much better. Management should receive bonusses because the company profits exceeded expectations, not because the losses "weren't as bad as they could have been." Or, at least it shouldn't happen for so many continuous years. The CEO of American Express got fired for asking for a bonus on the basis that he "held the losses to only $100 million." Like 9/11, that ship has sailed.
 
Out of top 6 major carrier only 2 (AA&WN) are without restructuring. The rest have renegotiate many contracts, leases and loans. The rest also shed many of their obligations, so that lower their operating cost. In DL's case is different because they chose the right partner for their ops. It looks so far so good but you never know what might happen. The rest have been losing money on a yearly bases expect for WN. It hasn't changed that much in past few years. Competition eats way good revenue but its good for the customer.
 
The idea that AMR is somehow disadvantaged by not making disingenuous use of the bankruptcy process to reduce costs is incredible to me.

Only in the airline industry is meeting your obligations and not shirking ones obligations to stakeholders, pensioners,employees and other entities considered a bad thing.
 
The idea that AMR is somehow disadvantaged by not making disingenuous use of the bankruptcy process to reduce costs is incredible to me.

Only in the airline industry is meeting your obligations and not shirking ones obligations to stakeholders, pensioners,employees and other entities considered a bad thing.
I agree with you but hurts us because the industry around us just took a pay cut and many other cuts. They're in a better or worst position depending how they come out of bankruptcy. Bankruptcy is a way out for many bad decisions by upper management. Bad decision by our management should not be taken out on the employees, investors, contractors and many others. I guess went its not your company or money people don't really care. If investor don't voice their objections at how the company is being run that's their fault. I guess that why AA has seen bankruptcy court. Someone(s) are looking after their investment. Only when bankruptcy law changes to the extreme. Supposedly when obama was being elected one of his many promises was change bankruptcy law to protect labor contracts but we will see.
 
amr has been waiting for others to drop out of the game hoping they run through their cash first. this kind of innovation is intolerable when talent is the order of the day.
 
OK, here's an interesting comparison that probably makes the picture a little clearer -- operating margins...

From worst to best....


Code:
American	  -7.7%  
Continental	0  
Delta		 -0.7%  
United		+0.1%  
US Airways	 0.54%  
Airtran		4.4%  
Southwest	  6.16%  
Alaska		 6.24%  
JetBlue		7.69%  
Allegiant	 13.4%
 
OK, here's an interesting comparison that probably makes the picture a little clearer -- operating margins...

From worst to best....

In that light, based on the horrific fourth quarter operating margins at AA, there's only one thing to say:

Off With Their Heads!!

The AA executive team must go.

:D

On the other hand, UA lost $1.1 billion and DL lost $1.2 billion last year, and AMR lost $1.4 billion, all excluding special items. Based on that comparison, Tilton, Anderson and Arpey should all be fired. US lost half a billion (substantial given how much smaller US is), so Parker should join their unemployed foursome.
 

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