Has AA been backed into a corner?

[FWAAA]

http://www.nytimes.com/2010/05/20/business/20air.html

Boyd the Blowhard doesn't think a quickie wedding with US or anyone else is the best idea.

High costs and unhappy employees don't make for smooth sailing.

 

[The Goose]

http://www.nytimes.com/2010/05/20/business/20air.html

Boyd the Blowhard doesn't think a quickie wedding with US or anyone else is the best idea.

High costs and unhappy employees don't make for smooth sailing.

When (mis)management squanders the chance given it by employees (2003) and continues to lie, it's rather hard to conceive of any other outcome. All one needs do to get people to follow them is not lie - these twits don't care if they are caught in a lie.

Accountants believe a balance sheet is the end-all re: logic but they don't even begin to relate one tenth of the true story. Not sure what the board is thinking or if they are at all but, if they eventually want something left to direct other than a group of idiots, they'd best pull their heads out.

AMR and American Airlines needs the leadership of a businessman, not the vision of accountants wearing blinders. It's pitifully evident that everything done is landing the so called "management" of AMR in deeper feces.

By the way - who's "Boyd the Blowhard"? No reference to this person is in the article given, either as the author or referenced people within - an imaginary friend, perhaps?

 

[AANOTOK]

http://www.nytimes.com/2010/05/20/business/20air.html

Boyd the Blowhard doesn't think a quickie wedding with US or anyone else is the best idea.

High costs and unhappy employees don't make for smooth sailing.

"Shares of AMR are down 9 percent this year, the worst performance by a major airline and well below the sector’s average gain of 13 percent. By contrast, shares of UAL, United’s parent, have gained 46 percent; Delta is up 20 percent in the same period.

Bob McAdoo, a senior airline analyst at Avondale Partners, said that American lags its peers. “Everybody else has seen improvements in recent years, and American hasn’t really done much of that,” he said"

C'mon, there are many who believe ARPEY is doing an outstanding job. Some even frequent this site. After all, HE saved us from Bankruptcy and is in the midst of strengthening some outstanding alliances. 🙂

 

[FWAAA]

By the way - who's "Boyd the Blowhard"? No reference to this person is in the article given, either as the author or referenced people within - an imaginary friend, perhaps?

From page two of the linked article:

Michael Boyd, an aviation consultant, said American had a strong domestic network and dominant routes to South America. He also praised the company’s decision to buy new fuel-efficient planes and ground less efficient ones.

“All the talk where they have to find a domestic partner, and where they have to be the biggest, does not make a lot of sense,” Mr. Boyd said. “Remember, the brontosaurus was a really big dinosaur.”

THAT Boyd the Blowhard.

 

[AANOTOK]

Michael Boyd praised the company for buying new fuel-efficient planes while grounding less efficient ones.
What kind of praise is that. That's like praising me for getting gas when I'm about to run out. :huh:

 

[The Goose]

From page two of the linked article:



THAT Boyd the Blowhard.

Ah - my mistake as I missed the second page.

A comment made by Arpey that sums up the airline's problems is also on the second page:

Mr. Arpey defends his record. “I still believe in principles in a business that will often push you to compromise your principles,” he said.

Now - unless my command of the language has totally failed me, he said there are some aspects of running a business where it's OK to compromise one's principles. Nothing could be further from the truth. That's the best way in the world to fail even though it does wonders, temporarily, for a balance sheet, the only thing of importance to an accountant.

One can not lie, lead on, or practice any deception with one's "greatest asset" without eventual consequences, even if this deception was by another entity (in this case, the TWU) by direction.

Here we have, from the CEO's mouth, the basis of the present problems at American Airlines - the compromising of business principles.

 

[The Goose]

"Shares of AMR are down 9 percent this year, the worst performance by a major airline and well below the sector’s average gain of 13 percent. By contrast, shares of UAL, United’s parent, have gained 46 percent; Delta is up 20 percent in the same period.

Bob McAdoo, a senior airline analyst at Avondale Partners, said that American lags its peers. “Everybody else has seen improvements in recent years, and American hasn’t really done much of that,” he said"

C'mon, there are many who believe ARPEY is doing an outstanding job. Some even frequent this site. After all, HE saved us from Bankruptcy and is in the midst of strengthening some outstanding alliances. 🙂

Arpey is, no doubt, doing an outstanding job, but if one were to opine as to the specific nature of that "outstanding job", one would probably be awarded a trip to the cornfield ...

 

[eolesen]

A comment made by Arpey that sums up the airline's problems is also on the second page:

Mr. Arpey defends his record. “I still believe in principles in a business that will often push you to compromise your principles,” he said.

Now - unless my command of the language has totally failed me, he said there are some aspects of running a business where it's OK to compromise one's principles. Nothing could be further from the truth. That's the best way in the world to fail even though it does wonders, temporarily, for a balance sheet, the only thing of importance to an accountant.

One can not lie, lead on, or practice any deception with one's "greatest asset" without eventual consequences, even if this deception was by another entity (in this case, the TWU) by direction.

Here we have, from the CEO's mouth, the basis of the present problems at American Airlines - the compromising of business principles.

I guess you and I read things a bit differently. Arpey doesn't say he's compromising his principles. He says the business environment will push you towards compromising them. That's a huge difference from how you've paraphrased it....


There are decisions no sane businessman would make in a perfect world, e.g. laying people off, reducing pay & benefits, etc.

But airlines are now 30+ years removed from the perfect world. It's an industry known for razor thin margins, requires huge infrastructure investments, is still highly regulated operationally, and is easily influenced by events outside their control (e.g. SARS, H1N1, volcanos, earthquakes, hurricanes....).

There's no question that all of that combined puts an extreme amount of pressure on reaching and maintaining profitability. And yes, that need to stay in the black will drive companies to CONSIDER and sometime make decisions they don't want to make.

You've made the accountant slur a few times today... I don't disagree that things are black and white on a balance sheet, but from where I sit, AMR's one of the worst at taking the accountant approach of seeking short-term gains just to stay in the black on a quarter by quarter basis. When I see them making moves to build up the balance sheet, it's usually a long term decision.

They've carried overages of flight attendants on a regular basis instead of doing short-term furloughs. They kept employees in places like MSY and PAP on payroll after events like Katrina and the earthquake, and have gone well beyond "the contract" when helping those employees recover. When AA lost the USPS business, they could have easily laid off several hundred FSC's overnight, but chose to keep them on for the six-eight weeks it took to restore the contract.

 

[The Goose]

I guess you and I read things a bit differently. Arpey doesn't say he's compromising his principles. He says the business environment will push you towards compromising them. That's a huge difference from how you've paraphrased it....


There are decisions no sane businessman would make in a perfect world, e.g. laying people off, reducing pay & benefits, etc.

But airlines are now 30+ years removed from the perfect world. It's an industry known for razor thin margins, requires huge infrastructure investments, is still highly regulated operationally, and is easily influenced by events outside their control (e.g. SARS, H1N1, volcanos, earthquakes, hurricanes....).

There's no question that all of that combined puts an extreme amount of pressure on reaching and maintaining profitability. And yes, that need to stay in the black will drive companies to CONSIDER and sometime make decisions they don't want to make.

Evidently Office English (non-committal) and Engineering Background English (precise) are not the same ...

 

[eolesen]

You expect precision in a news article?... Journalists are all about the soundbyte, not accuracy let alone precision....

If that had been said in a Jetwire or a President's Conference, I doubt there would have been any room left for interpretation.

Then again, you only quoted part of what Arpey said.

Here's the entire quote, with the journalist's edits removed....

"I still believe in principles in a business that will often push you to compromise your principles. I believe in the long run it will serve our institution and our stakeholders that we honored our commitment to our creditors, funded our pension plans and have done our very best to do everything consensually. But that remains to be seen.”

I don't see anything about short-term accountant vision there, Goose...

But I also don't see anything about employees.

Without seeing the transcript from the meeting, I'll defer judgement until I can read the question (if there was one) and answer/comment in full, and put it into the context in which it was answered.

 

[Hopeful]

You expect precision in a news article?... Journalists are all about the soundbyte, not accuracy let alone precision....

Except, of course, if the article is anti-union.....

 

[Barfbag]

AMR is right on course, expanding through One World, play your strengths, correct your weaknesses., and conserve cash in this uncertain economy.

 

[AstroLounge]

I just LOVE how the media, the analysts and general know-it-all's have suddenly cast American as the "ugly Betty" of the airline industry. AA has been the marquee airline in this country for years and is probably the most respected carrier capable of being an Official Flag Carrier of the USA. No one says they are perfect but I personally would choose American over Delta (with or without NWA in the fold), Continental or United (with or without CO). AA may eventually be relegated to Number 3 but ego, history and prestige will NOT allow The Eagle to sit on the sidelines for too long. Hopefully the labor issues that are affecting AA will be resolved to everyone's satisfaction (Mgmnt and Unions) and the Silver Bird will regain it's position at the Top. (Just the thought of United being there turns my stomach!)

 

[MCI transplant]

I just LOVE how the media, the analysts and general know-it-all's have suddenly cast American as the "ugly Betty" of the airline industry. AA has been the marquee airline in this country for years and is probably the most respected carrier capable of being an Official Flag Carrier of the USA. No one says they are perfect but I personally would choose American over Delta (with or without NWA in the fold), Continental or United (with or without CO). AA may eventually be relegated to Number 3 but ego, history and prestige will NOT allow The Eagle to sit on the sidelines for too long. Hopefully the labor issues that are affecting AA will be resolved to everyone's satisfaction (Mgmnt and Unions) and the Silver Bird will regain it's position at the Top. (Just the thought of United being there turns my stomach!)

<_< ------- What kinda funny stuff you been smoken??? 😀

 

[The Goose]

I just LOVE how the media, the analysts and general know-it-all's have suddenly cast American as the "ugly Betty" of the airline industry. AA has been the marquee airline in this country for years and is probably the most respected carrier capable of being an Official Flag Carrier of the USA. No one says they are perfect but I personally would choose American over Delta (with or without NWA in the fold), Continental or United (with or without CO). AA may eventually be relegated to Number 3 but ego, history and prestige will NOT allow The Eagle to sit on the sidelines for too long. Hopefully the labor issues that are affecting AA will be resolved to everyone's satisfaction (Mgmnt and Unions) and the Silver Bird will regain it's position at the Top. (Just the thought of United being there turns my stomach!)

Hate to break it to you, but American Airlines is "resting on its laurels", as they say. All that's left of the company's reputation is its reputation from a prior time - definitely not of late.