It''s Time for New Leadership at American

FrugalFlyer

Senior
Aug 20, 2002
254
0
MrMarky,
Good post / topic - here's my $0.02:

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On 1/24/2003 12:34:32 AM MrMarky wrote:
1) Labor turmoil and the resulting exacerbation of AA's problems. AA's militant unions are going to refuse give-backs.
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Tough to say what the unions will do. They're dammed if they voluntarily give concessions and dammed if it goes to the judge. I think the FA and pilot union will resist givebacks, whereas the TWU may cave-in. Once one of the unions caves, then the rest may as well. I think that's how Crandall got the b scale implemented.

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2) Carty out by summer. How long will the BOD continue to support a CEO presiding over billions in losses and labor unrest, regardless of the circumstances.
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Although he is not Crandall, do not underestimate Carty. IMHO he is one of the better airline CEOs out there. Unless somebody is ready to come in with a plan and a capable management team, AA doesn't have the luxury of searching/waiting for a new management team.

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3) BK by the 3rd quarter. AA will not foolishly put it off and continue to burn much-needed cash into the 4th quarter like UAL did.
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Possible. Depends on how the negotiations with the unions turn out, whatever happens to US/UA (chpt. 7?) etc. The mid-east conflict(s) don't help either.

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4) Desperation code-share deals..........
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If anything AA should be pursuing more codeshares with 1world airlines (and Swiss). Domestically I think they are fine.

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Downsizing also means closing stations and reducing facilities. What happens to the STL hub? Remember the early 90's and AA's last economic austerity measures. BNA, RDU and SJC hubs were ALL shut down. And that downturn was mild compared to this one. I wouldn't be surpised to see the MCI MX facility go on the chopping block -- don't forget, Carty is looking for $4 billion/year in cost savings.
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AA may well shut down MCI MX, and dismantle or significantly downsize STL. Quite possible if the bleeding of red ink doesn't decrease in 2003. Right now AA probably doesn't need STL.
(But, I'm sure there will be posters who will insist that STL is the most profitable / important aspect of AA.)


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6) AA will come to reget their anti-ATSB loan posture. The door they helped slam in United's face is now closed to them as well.
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IMHO lobbying against ATSB loans for US and UA was smart on AA's part. At that time UA and US were not having too much success raising $$$ in the capital markets. Why? Probably because people saw a flawed business plan, and eventually the ATSB said the same thing to UA. The lobbying by AA and the other airlines against ATSB loans to UA probably forced the ATSB to scrutinize UA even more.

Sure now UA is in Chpt. 11 and cuts are being imposed by the judge. But, what do you think the morale is among UAL workers right now? Boy, that must be a good company to work for! And, if/when UA and US emerge from Chpt. 11 do you think those employees will not be screeming for industry leading wages in a few years? Can you say summer 2000 part II? Also, if you look at the US situation, their emergence from Chpt. 11 is far from certain. Likewise for UAL, that $1.5 billion DIP money has some harsh conditions attached. It is quite possible that there will be some asset selling at UAL, and the new UAL that emerges from bk protection may not be all that mighty.

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It is interesting to note that while AA and the others vigorously pursue cheap fares these days, they spend all of their energy on cost cutting measures by taking it out of the hides of their customers. Hard to even get fed in first class. Pay for this and pay for that--baggage fees, paper ticket fees, change of itinerary fees, blah, blah, blah. What idiots. How is it that AA and friends differentiate their product from low-fare carriers?? Getting pretty hard to tell these days.
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Hard to teach an old dog new tricks.

I would hope that if AA has some success with its limited value pricing plan the the 20 or so markets it is experimenting with right now, that it will be applied to the entire route network.

Actually, with AA still being the largest airline, I don't understand why they don't institute a value pricing version 2. So what if NWA doesn't go along with it? Screw them!

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I don't want to hear excuses, I don't want to hear about the economy, and I don't want to hear about 9/11 and security hassle issues.
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The '9/11' and 'security hassle' excuses are getting old and worn out.
Iraq is the keyword these days - or to paraphrase MilliVanilli (or whoever it was singing) "Blame it on Hussein"

Or, like in the South Park movie, they can "Blame Canada"
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