mci likely to close regardless

AAmech

Veteran
Aug 22, 2002
766
1
Nope, If anything goes it''ll be AFW. MCI is dirt cheap and they''re good at producing planes on time. Not to mention AFW is a really nice facility that can be SOLD. Unfortunatly MCI is kinda shabby.
 

TOOLS

Member
Aug 19, 2002
31
0
Sorry to be the bearer of negitive pronostication. MCIE will not be here this time next year I fear. Any comments?
 

TOOLS

Member
Aug 19, 2002
31
0
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On 4/16/2003 8:27:10 PM AAmech wrote:

Nope, If anything goes it'll be AFW. MCI is dirt cheap and they're good at producing planes on time. Not to mention AFW is a really nice facility that can be SOLD. Unfortunatly MCI is kinda shabby.

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How can you sell what you don't own? Both AFW and MCIE are leased not owned by American. AFW is the premier Wide body overhaul facility in the US and
TAESEL is the largest and best RR Trent overhaul facility in north America.
MCIE is an old base that has been striped of most of its previous capabilities and just is not that important any more.
 
If I had to guess which would close first, my money would also be on AFW.

Given the years it has been in use, terminating the MCIE lease would probably require an environmental cleanup of superfund magnitude...

TAESL was created while Carty was still head of finance, no? If so, he's probably just as much behind its creation, and knows its value.
 

Boomer

Veteran
Aug 20, 2002
1,143
72
eolesen,
Tell us about Canadian Airlines International, how much did it cost us to get tied into the fiasco and how much more did it cost us to get out?

In the same vein, why did AA want the APA to ELIMINATE the restriction against Foreign Ownership of AA? Does it have anything to do with cAArtys'' push for an end to the Chicago Treaty?
 

Boomer

Veteran
Aug 20, 2002
1,143
72
Tools,
TAESEL is a Joint Venture between AMR & Rolls, when the money is right; expect Carty to sell a moneymaker created before he was in charge.

As for the cost difference between AFW & MCIE, the rates related to the leases are far different with one state offering bonds to make one more financially competitive.

Care to guess which one? Clue: A bird in the hand is worth two in the bush.
 

Boomer

Veteran
Aug 20, 2002
1,143
72
so the answer from you, eolesen, the self-avowed representative of management on this board is that the investment in Canadian Airlines International was actually a Winner?
 
B

bagsmasher

Guest
AA''s lease with the City of Kansas City will expire at the end of the year. There is also $180 million in bond money earmarked for improvements to the facility. So who knows? Operating 2 overhaul facilities instead of 3 would have to be less expensive. If AA does with TWA, what it did with Reno Air, it will probably close MCIE, shut down STL as a hub, and sell or park all the TWA metal. I hear RNO is closing Friday as a TWU station. So what did AA gain from that purchase other than a lot of animosity with our pilot''s?
 
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On 4/16/2003 9:46:13 PM Boomer wrote:

In the same vein, why did AA want the APA to ELIMINATE the restriction against Foreign Ownership of AA? Does it have anything to do with cAArtys'' push for an end to the Chicago Treaty?

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Don''t know where it stands with cabotage, if that''s what you''re inferring, but it certainly has something to do with the fact that both BA and QF are quite profitable right now, are charter members of oneworld, and in the case of QF, have expressed an interest in taking an equity stake in AMR.

Under US law, there''s nothing preventing such an investment, provided it remains under the 49% equity/25% voting stock requirements.

Given the option of a disinterested third party such as Citibank or RSA investing in AMR, or an airline who we have ties with, can you blame Carty for wanting friendly money vs. a bank?
 
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On 4/16/2003 9:46:13 PM Boomer wrote:

Tell us about Canadian Airlines International, how much did it cost us to get tied into the fiasco and how much more did it cost us to get out?

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Great question.

We invested CA$241M (US$177M) in 1994. In 1996, we wrote down $251M associated with the investment. In 1999, we recouped $40M by selling the preferred shares to Air Canada and another $67M tax benefit from losses related to the initial investment. In 2000, we got a $41M break-up fee from Air Canada.

We paid out $177M, wrote off $251M, but later recouped around $148M. Net loss of around $30M to $100M depending on whose fuzzy math you use, right?

Wrong.

We also earned between $50M and $100M per year in fees from Canadian. Most of that was for technology services provided by Sabre (still owned by AMR at the time), but also for other services performed by AA, such as accounting, revenue management, weight and balance planning, and ground handling at stations in the US. Most of the work done by AA employees for CP was pretty much incremental, meaning we didn't necessarily go out and hire people to do the work, but instead used people who were already on payroll, and we simply made better use of their time.

That came out to around $500M during the lifetime of the agreement with CP, and doesn't include incremental revenue from codesharing where CP customers flew on AA metal, or where CP customers bought tickets on AA so they could get mileage in CP's ff program. Far more CP people flew on AA than the other way around, so it was revenue positive for AA.

So, was that really a failure? If you look at just the raw dollars invested, probably. If you consider all of the other "fluff" that we were able to get in the deal, it was brilliant.
 

mike7867

Member
Nov 7, 2002
31
0
what i have been hearing about which base could be close is afw for two reasons. it cost 38 million a year for afw to mci 1 million. and mci has a plating shop that the cant get at afw. but these are all rumors so dont hold me to any of it. also heard that the mangers at afw were told to put there houses on the market and to start looking for homes in kansas city. again just rumors make of them of what you want.
 

Boomer

Veteran
Aug 20, 2002
1,143
72
eolesen,

cAArty said that if AMR went into BK, they would need $500 MILLION more in concessions. The WSJ, on Friday, reported that cAArty said despite Union Concessions, AMR may likely have to declare bankruptcy.

cAArty is also on record as saying that if the Unions grant the concessions required, bankruptcy could be avoided.

When was cAArty telling the truth?

Since you are the self-acknowledged spokesman for AMR Management, what is true? Is this the last round of concessions approved by a demonstrably flawed process or is it the first round of concessions approved with a compAAny that has no "intent" to respect all Union Contracts with resepct to wages, hours of work and working conditions?
 

Bob Owens

Veteran
Sep 9, 2002
14,274
6,112
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On 4/16/2003 10:40:08 PM eolesen wrote:

What do you call it when one company invests $177M in another, and simultaneously bill it $500M for services rendered?

I call it a pretty good return on investment.

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So if I pay AA $35,000 to work here and then get paid $70,000 is that a good deal? Not unless the service I performed was only worth $30,000. If the service that I performed was worth $70,000 then I lost $30,000. There are costs associated with performing services. Would those services that were rendered to Canadien be worth $323Million or $500 Million? Assuming that AA was charging the same rate that they would anyone else, a rate they considered a fair market value, they still lost $177 milion.

Are you still driving miles out of your way to save pennies on a gallon of gas?