Good Ole Bob

[Frank Szabo]

Follow the link all the way to the last page of "5 things"

Interesting reading. Could be an indicator as the direction AA is heading?

I got to the point of Arpey having a "moral aversion" to a bankruptcy filing and laughed my ass off.

An MBA frat brat-type with morals of any kind? That the biggest crock of #### I've heard all day.

 

[FWAAA]

I got to the point of Arpey having a "moral aversion" to a bankruptcy filing and laughed my ass off.

An MBA frat brat-type with morals of any kind? That the biggest crock of #### I've heard all day.

Funny how perspectives differ. The entire business world has been quietly laughing at Arpey behind his back for eight years because of his well-publicized (and sincere) moral opposition to bankruptcy - the predominant view is that he's a well-meaning but naiive rube from Texas who has allowed his moral aversion to Ch 11 to contribute to AA's decline, not the typical mindset of a Fortune 500 CEO. He looks more like the patriarch of a small to medium family-owned business than the typical ruthless corporate executive. There are posters here who claim that AA's delay in availing itself of the "benefits" of Ch 11 might mean that it's too late to save AA even if it filed this coming Sunday afternoon.

But here you are, apparently laughing in disbelief, convinced that he has no moral aversion to bankruptcy? It's not a common view on the outside.

 

[FWAAA]

Unlike executive compensation and pensions..how much does this cost the company?
..what about executive productivity? Tell me how is that gauged?

Have no idea. Bob Herbst hasn't updated his management comp comparisons with 2010 numbers yet but in 2009, AA management salaries were $78 million, down substantially from 2005-07 when the PUP/PSP plan paid off in spades.

Here's AA's 2002-09 numbers from Herbst:

http://www.airlinefinancials.com/uploads/2002-2009_AA_mainline.pdf

Nobody knows how that really compares to other airlines because even Herbst says there's no consistent definition of who is included in those figures as reported to BTS. Still, AA's number is significantly higher on average than the historical figures for UA, DL, US and all of their predecessors.

Bottom line: WHO cares how much management makes? You guys need to fire the incompetents who have been pretending to be negotiating on your behalf - especially given the decades of poor performance the TWU has demonstrated. When was the only decent contract? 2001? And that wasn't even ratified until after the Sept 11 terrorist attacks when it was already obvious that the gains in that contract would be rolled back. You guys need to figure out how to increase your pay and not get yourselves worked into a lather over Arpey's pay.

 

[Hopeful]

Funny how perspectives differ. The entire business world has been quietly laughing at Arpey behind his back for eight years because of his well-publicized (and sincere) moral opposition to bankruptcy - the predominant view is that he's a well-meaning but naiive rube from Texas who has allowed his moral aversion to Ch 11 to contribute to AA's decline, not the typical mindset of a Fortune 500 CEO. He looks more like the patriarch of a small to medium family-owned business than the typical ruthless corporate executive. There are posters here who claim that AA's delay in availing itself of the "benefits" of Ch 11 might mean that it's too late to save AA even if it filed this coming Sunday afternoon.

But here you are, apparently laughing in disbelief, convinced that he has no moral aversion to bankruptcy? It's not a common view on the outside.

It's all for show....Why claim bankruptcy when you have a lapdog union such as the TWU who has virtually given the company everything they want beginning with the 1983 industry leading company contract?

Just remember, a CH.11 filing will do NOTHING for morale...And as long as you have the same AArogant management, this company would still lose money even after BK.

BK will not do much good for AA's bottom line until management changes its tune as well.

 

[Frank Szabo]

Funny how perspectives differ. The entire business world has been quietly laughing at Arpey behind his back for eight years because of his well-publicized (and sincere) moral opposition to bankruptcy - the predominant view is that he's a well-meaning but naiive rube from Texas who has allowed his moral aversion to Ch 11 to contribute to AA's decline, not the typical mindset of a Fortune 500 CEO. He looks more like the patriarch of a small to medium family-owned business than the typical ruthless corporate executive. There are posters here who claim that AA's delay in availing itself of the "benefits" of Ch 11 might mean that it's too late to save AA even if it filed this coming Sunday afternoon.

But here you are, apparently laughing in disbelief, convinced that he has no moral aversion to bankruptcy? It's not a common view on the outside.

Arpey and company, much like Carty and company was, are in their positions to carry out the orders of the board of directors. You're saying Arpey hasn't filed for bankruptcy simply because of his moral aversion - I say it's simply because the (mis)management team hasn't been told to do so by AMR's board of directors. Please - spare me from the recitation of the individual board members' pedigrees.

Arpey, as the rest of the mismanagement team, can argue their cases to the BOD but have little actual say in the governance process - their function is simply to carry out the board's directives.

To put it another way - Arpey's "moral aversion" and $3 will get you a cup of coffee at Starbucks.

 

[Rogallo]

The entire business world has been quietly laughing at Arpey behind his back for eight years because of his well-publicized (and sincere) moral opposition to bankruptcy

Is it Arpeys decision and only Arpeys decision to enter bankruptcy?

 

[odie01]

. To put it another way - Arpey's "moral aversion" and $3 will get you a cup of coffee at Starbucks.

Or one share of AMR stock, either way they both end up in the toilet.

 

[wrencher]

Is it Arpeys decision and only Arpeys decision to enter bankruptcy?

Laughing not really, because if AA files bankruptcy they will be working from the post 2003 pay rates vs the pre 2003 pay rates just that much more in the bank for AA. The twu sold us out, read the Vermont agreement and that's what AA got for our contract now they can go for a second round.

 

[Hackman]

Bottom line: WHO cares how much management makes? You guys need to fire the incompetents who have been pretending to be negotiating on your behalf - especially given the decades of poor performance the TWU has demonstrated. When was the only decent contract? 2001? And that wasn't even ratified until after the Sept 11 terrorist attacks when it was already obvious that the gains in that contract would be rolled back. You guys need to figure out how to increase your pay and not get yourselves worked into a lather over Arpey's pay.

Here's the "Bottom Line" FWAAA. I never cared before 2003, but now I really care, very much. I think all AMR "Bricks" should care. I am very concerned how much the failed Centerpork top 1000 PUP boys and girls earn when they keep losing piles of money, constantly stating labor costs too high, continuously blaming the Bricks for the losses in the press releases, and not leading by example. This, when the Bricks gave them $1.6 Billion to squander as they have. Currently, their running up the corporate credit card it like a drunken politician buying prostitutes at the Bunny Ranch.

It has been stated here several times in the past by myself and others in regards to dumping the worthless Twu, you must not have read it or choose to ignore the answer to your question.

Here it is again....for the last time.

Sufficient cards were filed in 2005 with the NMB to hold a representation election in the attempt to dump the worthless Twu "incompetents" and replace them with AMFA. However, in order to achieve a representational election, craft and class numbers have to be reported to the NMB to prove sufficient interest of the membership. AMR management, in collusion with their favorite Company Union the Twu, artificially inflated the craft and class numbers with; non-union management, the dead, fleet service, fuelers, retirees, the terminated, the resigned, and more. This was done to in order to stop any representation election from occurring. It succeeded as planned.

The craft and class numbers were protested vigorously to the NMB by AMFA. The "persons" AMR included in the craft and class of Maintenance and Related were shown to be false, or so it was thought. Unbelievably, the NMB accepted the false numbers that AMR and their Company Union submitted, therefore the representational election between the Twu and AMFA was halted. All the efforts, monies, and hopes of change of a great many Twu victims to finally be rid of the Twu parasite were dashed.

There you have it.....again.

As a favor, since you seem to have all the answers on nearly every AA subject here.

Ask your corporate friends at Centerpork why they interfered in the 2005 representation election, and why they just cannot survive without the Twu Company Union at their feet.

Let us know what you find out.

 

[Bob Owens]

AMR isn't "taking on" any new or additional debt - that $2B is already on AMR's books today. All that AMR is doing is choosing not to send that $2B debt out the door with Eagle, as a way of trying to offload Eagle as quickly and painlessly as possible. All else being equal, I think that's a fair decision - it's probably what's best for AA in the long-run.

Either way, in terms of CASM, the only impact this would have would be if it increased mainline's interest expense - that's the only cost impact of debt from an accounting standpoint that I can think of. I'm not sure how that cost is allocated across AMR subsidiaries today.

I never said it said AMR was taking on $2 Billion in debt, I said it said American Airlines was taking on $2 billion in debt.
Interest expense plus paying off the principle plus depreciation. That $2 billion in debt guaranteed by AMR Corporation the parent of American and AMR Eagle but paid by American Airlines Inc. American Airlines is to see a $300 million loss on the deal right off the top. So the sale of an assett by AMR is going to show up as a loss of $300 million by American Airlines. So even if we were to make a quarter of a Billion dollar profit through our operations the books would still show that AA lost money.

The figure includes more than aircraft but ground equipment and "other assetts". So American Airlines will have the costs of servicing that debt, both the Interest and principle, added to its costs, along with depreciation which will drive up its CASMs, but those costs will never be producing any ASMs for American Airlines, much like when we do 3P work. Sure they may produce revenues from leases etc but the numbers will be used against us, just as we get no credit for the revenue that 3P work generates, it gives the talking heads more fodder to say to us that AAs costs, through their CASMS, are not competative.

 

[Bob Owens]

Funny how perspectives differ. The entire business world has been quietly laughing at Arpey behind his back for eight years because of his well-publicized (and sincere) moral opposition to bankruptcy - the predominant view is that he's a well-meaning but naiive rube from Texas who has allowed his moral aversion to Ch 11 to contribute to AA's decline, not the typical mindset of a Fortune 500 CEO.

Really?
So are all these guys "well meaning but naive rube(s) from Texas"?

John Bachmann 228 Relationships -- Edward D. Jones & Co., L.P. 72
Michael Miles 52 Relationships -- AMR Corporation 69
Roger Staubach 90 Relationships -- Hall of Fame Racing 69
Armando Codina 104 Relationships -- Codina Partners 64
Ann Korologos 182 Relationships -- Harman International Industries Inc. 69
Judith Rodin Ph.D. 178 Relationships -- Rockefeller Foundation, The 66
Philip Purcell III 91 Relationships -- Continental Investors LLC 68
Matt Rose 77 Relationships -- Berkshire Hathaway Inc. 51
Ray Robinson 82 Relationships -- Citizens Bancshares Corporation 63
Alberto Ibargüen 221 Relationships -- John S. & James L. Knight Foundation 67
Stephen Bennett

So the Institutions that own the majority of AA stock, the ones who put these guys together, none of them know what they are doing?

 

[Bob Owens]

I obviously have no idea how AA arrived at that $800M labor cost disadvantage number, since the company has never quantified it publicly - and for understandable reason, since I'm sure they don't ever want to get into a public discussion about highly proprietary cost figures and don't want the labor groups to be able to poke holes in it.

And, of course, I'm sure that the company used the most pessimistic possible ground rules and assumptions in generating that $800M figure.

I think John Donnelly gave them the numbers.

 

[commavia]

I never said it said AMR was taking on $2 Billion in debt, I said it said American Airlines was taking on $2 billion in debt.
Interest expense plus paying off the principle plus depreciation. That $2 billion in debt guaranteed by AMR Corporation the parent of American and AMR Eagle but paid by American Airlines Inc. American Airlines is to see a $300 million loss on the deal right off the top. So the sale of an assett by AMR is going to show up as a loss of $300 million by American Airlines. So even if we were to make a quarter of a Billion dollar profit through our operations the books would still show that AA lost money.

The figure includes more than aircraft but ground equipment and "other assetts". So American Airlines will have the costs of servicing that debt, both the Interest and principle, added to its costs, along with depreciation which will drive up its CASMs, but those costs will never be producing any ASMs for American Airlines, much like when we do 3P work. Sure they may produce revenues from leases etc but the numbers will be used against us, just as we get no credit for the revenue that 3P work generates, it gives the talking heads more fodder to say to us that AAs costs, through their CASMS, are not competative.

Fair - as I said, I don't know how that debt burden was allocated across AMR's subsidiaries prior to this spin-off. I don't know if 100% of the debt service cost of Eagle's jets was allocated to Eagle's books, or if some form of that debt servicing cost has been allocated to AA mainline even before this debt reshuffle.

Either way, consolidated CASM at AA - which will be higher because other network carriers have shifted more of their system ASM mix to regionals - will still reflect the same cost as before (in the interest expense and depreciation income statement lines).

 

[FWAAA]

I never said it said AMR was taking on $2 Billion in debt, I said it said American Airlines was taking on $2 billion in debt.
Interest expense plus paying off the principle plus depreciation. That $2 billion in debt guaranteed by AMR Corporation the parent of American and AMR Eagle but paid by American Airlines Inc. American Airlines is to see a $300 million loss on the deal right off the top. So the sale of an assett by AMR is going to show up as a loss of $300 million by American Airlines. So even if we were to make a quarter of a Billion dollar profit through our operations the books would still show that AA lost money.

Nope. AA's mainline CASM won't change as a result of acquiring the Eagle aircraft and assuming the related debt. Nor will this transaction alter the consolidated (mainline plus commuter) CASM - those numbers are already netted in the quarterly and annual losses.

As an aside, once the spinoff occurs, what businesses will AMR be in besides AA? None that I know of, so AA and AMR numbers will be one and the same. Like all airlines, however, AA will still report mainline numbers and consolidated numbers, just like it currently does.

The figure includes more than aircraft but ground equipment and "other assetts". So American Airlines will have the costs of servicing that debt, both the Interest and principle, added to its costs, along with depreciation which will drive up its CASMs, but those costs will never be producing any ASMs for American Airlines, much like when we do 3P work. Sure they may produce revenues from leases etc but the numbers will be used against us, just as we get no credit for the revenue that 3P work generates, it gives the talking heads more fodder to say to us that AAs costs, through their CASMS, are not competative.

Who cares what the "talking heads" say about AA's revenues and expenses? You fix airplanes just like the A&P license holders at UPS, FedEx and WN. You deserve comparable pay and benefits. The AMTs at those three companies have hired negotiators that have been successful in attaining those wage and benefit levels - so it's time you guys do the same.

No, the interest on that debt and the depreciation on the airplanes is already included in the quarterly and annual profit or loss numbers reported. The mainline CASM won't change as a result of AA owning these planes and paying the debt - those costs won't be included in computing the mainline numbers, just like the regional revenues and expenses are not included in mainline CASM figures at DL, UA or US. Currently, the subsidiaries of AMR (AA and Eagle) add their revenues and expenses together and the resulting net loss is reported every 90-95 days. This spinoff doesn't change any of that.

 

[Overspeed]

Hmm, if we had raises that went by productivity they would have to double our wages.

How do you rate productivity? AA has more mechanics per departure than any other airline, more mechanics per aircraft than any other airline, and more OTS aircraft than anyone else. Yes we deserve more money.