Another US red flag?

[777 / 767 / 757 Love]

Except there really is no evidence that network airlines with 500 aircraft fleets cannot be profitable with multiple fleet types. LH and AF have done it in Europe for years. DL and UA have it now. Small fleets of less than 50 narrowbody or 20 widebody aircraft may be problems but there can be lots of commonality between aircraft even if they are not the same family. Ie UA’s 757s have two engine types as do their 777s but the airframe is still the same; DL’s 767s 744s and 330s have similar engines but different airframes. And all of those are large fleets. AA-US would not rise or fall based on fleet, esp. since it would have the exact same situation as DL and UA have.

Fair point, but you failed to address the biggest point, you would walk onto 5 planes in one day with 5 different interriros......its not just maintenance I'm pointing to, I'm pointing to the fact that many customers who pay fors premium seating want to know what they are getting, not taking a chance on 1 of multiple options, hoping they get the best one. To pay the same price for two options that are not equal in quality is a BAD way to do business.

Also, I personally don't care whether its been done before, the way you make your mark in this world is by sometimes doing it unlike anyone else. Just ask BMW and Apple......so I still believe the way AA competes is not by being teh same (cause then price is the only determining factor) but by offering something no one else does. That is what they are trying to accomplish.

Cheers,
777 / 767 / 757

 

[777 / 767 / 757 Love]

throwing another log on the fire.....

a transportation "expert" (since we all are) blasts US for focusing on short-term profit improvements at the expense of long-term investment in their airline including growing US' international network in Latin America and Asia, the fastest growing and most profitable parts of US carriers. He also says that US won't help AA.

"I'm not criticizing Doug Parker or his team," Gellman said. "But they have to live with what they've done today for many tomorrows if they don't pay attention."

http://www.thestreet...xpert-says.html

Old news, just someone finally highlighting it......Horton referred to this issue before in his "slight" of US Air last Spring when he said they were a domestic airline.

I will repeat this another 1000 times, US Air does not fix AA's issues. UA?CO & DL/NWA were successful because they combined two route structures that each were deificient in areas the other one was strong. That just simply is not the case with US/AA......the only beneift is size, but its not size AA needs to compete. AA needs more NYC and to continue to expand their Pacific Ops, and I just don't see how US helps.......B6 at least solves one of their issues, and brings with it a fleet that will match well with AA's new fleet.

Cheers,
777 / 767 / 757

 

[AAviator]

Old news, just someone finally highlighting it......Horton referred to this issue before in his "slight" of US Air last Spring when he said they were a domestic airline.

I will repeat this another 1000 times, US Air does not fix AA's issues. UA?CO & DL/NWA were successful because they combined two route structures that each were deificient in areas the other one was strong. That just simply is not the case with US/AA......the only beneift is size, but its not size AA needs to compete. AA needs more NYC and to continue to expand their Pacific Ops, and I just don't see how US helps.......B6 at least solves one of their issues, and brings with it a fleet that will match well with AA's new fleet.

Cheers,
777 / 767 / 757

Chockjockey, your thoughts?

 

[WorldTraveler]

Fair point, but you failed to address the biggest point, you would walk onto 5 planes in one day with 5 different interriros......its not just maintenance I'm pointing to, I'm pointing to the fact that many customers who pay fors premium seating want to know what they are getting, not taking a chance on 1 of multiple options, hoping they get the best one. To pay the same price for two options that are not equal in quality is a BAD way to do business.

Also, I personally don't care whether its been done before, the way you make your mark in this world is by sometimes doing it unlike anyone else. Just ask BMW and Apple......so I still believe the way AA competes is not by being teh same (cause then price is the only determining factor) but by offering something no one else does. That is what they are trying to accomplish.

Cheers,
777 / 767 / 757

I'm sorry but I have never seen any market research that shows that a purchase driver is the arrangement of the cabin. Customers DO care about the cleanliness of the cabin and functionality of the passenger space but they could care less about whether the 757 is a 6 or 8 door model or whether there are drop down LCD or CRT screen overheads. They care about having a comparable product on every fleet type which is why DL moved very quickly domestically, UA a bit slower but they are well on the way, to creating the same cabin experience on all aircraft types with the exception of IFE. DL offers Economy Comfort and UA offers (or will offer) E Plus on its entire fleet. That is why passengers care about. The cabin motif is the same. International product is not uniform across all fleet types for any carrier and AA has no plans of doing so.

And it still doesn't change that AA is adding complexity to its own fleet by having Airbus, Boeing, and McD Douglas products - not much different from what DL is doing at least domestically and more complex than UA.

If you have market research to show that galley position and number of doors is a purchase driver, please let us know.

You are correct strategically regarding the fact that US does not provide enough strategic gain to likely justify all of the problems that will come with the merger - and no one should believe they won't be there. You are also missing the fact that B6 is predominantly a JFK-based airline in NYC and does virtually nothing for AA at LGA which is the preferred short haul/domestic airport in NYC, followed by EWR. Further, B6's costs are so much lower than AA's that many of the routes will not work even at AA's expected post BK cost structure.

Further, UA is a long ways from being an effective competitor as a result of their merger because they have underdelivered on so much of the integration. AA's revenue gains this year have been heavily driven by UA's merger-related problems. AA has pulled alot of corporate travel over from UA but UA still has not lost its revenue advantage where it had it prior to the merger - such as on the west coast, Asia, and in Chicago

 

[signals]

it is lawyers who are making money off of malpractice, not CEOs.

to AA, employees could have bought the company shortly before it went into BK for less than $10K per employee. There would still have to have been cuts but you wouldn't be watching hundreds of millions of employee cost cuts be used to fund executive bonuses for getting the company thru BK.
And BTW, most analysts believe AA has done a fairly good job so far of navigating the company thru BK....

Whether you agree or not, that is the opinion of the people who will help make the decisions about the viability or not of AA post BK

AA is navigating thanks to the roadmaps set forth by the other BKs. I won't deny that it will hurt the employees in some way, but AA's BK was well calculated. Heck, if your one of us that have been through it before, you knew good ole Parker would talk merger or take-over!

sad really

 

[WorldTraveler]

precisely.... just as DL and NW learned from UA and US and they learned from CO etc before them.

but the common theme is that employee wages are the easiest way to cut costs and in the absence of growing revenues sufficiently to cover all of the costs, the employees will bear the highest part of the cuts.... and as AA showed, that was done outside of BK as well.

What AA could not do was cut non-employee costs outside of BK. They are doing that plus cutting employee costs low enough so that they can be assured they have a fighting chance of surviving economically regardless of whether the revenue they claim they will generate arrives or not.

 

[john john]

http://www.thestreet...xpert-says.html

" I think, if they were to be able to merge with AA, they would gain a lot globally, but at the same time they would have real problems with (integrating) management," he said. "I'm not sure what benefit would flow to AA from such a merger."

Seen it all before like rats running of a sinking ship people bailing on the situation like rats do when the ship sinks. Management jockeying for there individual personal cause

 

[WorldTraveler]

" I think, if they were to be able to merge with AA, they would gain a lot globally, but at the same time they would have real problems with (integrating) management," he said. "I'm not sure what benefit would flow to AA from such a merger."

Seen it all before like rats running of a sinking ship people bailing on the situation like rats do when the ship sinks. Management jockeying for there individual personal cause

completely aside from the issue of mgmt looking out for itself, mergers are always messy and even more so in the airline industry, in large part because of the labor difficulties that are part of what AA and US are facing RIGHT NOW. There is no reasonable expectation that the problems of each airline with respect to labor are going away just because they merge. The airline industry shows that the only way to obtain labor peace is to buy it - and AA is in BK right now because they believe they have to cut labor costs further in order to survive..... and as has been shown many times before, US would be very unprofitable if it had to pay labor rates comparable to what other carriers pay.
There is no way that the promised revenue synergies from a merger can come close to bringing pay up to the levels necessary to bring peace or bring a stable operation.

Add in that the merger process takes years during which the competition will continue to grow.

An AA/US merger would yield very limited strategic gains for either side compared with what they could gain by existing as standalone companies but it would insert huge amounts of risk and downsizing that would result in further job cuts to AA and US employees.

A successful AA/US merger as advertised by Parker would be akin to believing in Santa Claus. (hope no under 6s are reading).

 

[john john]

His quote is about real problems with (integrating) management not labor

Please address that if you can

 

[jimntx]

Why should any of us care about the management integration problems? The DP's of the world save all the current yes-men jobs that they can, and the TH's of the world do same--unless one or the other gets a MAJOR payoff to leave (then the DPs and the THs could not care less what happens to the management types left behind).

Cynical? Moi?

 

[WorldTraveler]

precisely... I don't think anyone really doubts that mgmt will figure out a solution for themselves.

Let's see you take the large bag of money and I stay hoping to collect even more or should it be the other way around?