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- Jan 14, 2004
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LiveInAHotel said:I could careless what he/she is. We got to decide to vote yes or no. Even no we got screwed by JW, he is now gone!
I will gloat all the way to the bank because AA is not in danger of Chapet 11, unlike the Widget!
[post="185668"][/post]
Not according to this source:
BY JAMES BERNSTEIN
Newsday STAFF WRITER
September 29, 2004
With United Airlines and US Airways in bankruptcy, and Delta Air Lines threatening to file for Chapter 11 protection, American Airlines stands out. It managed to avoid that fate last year by slashing its own costs, and even eked out a small $6 million profit in its most recent quarter.
But despite American's success, analysts said yesterday they doubt that the carrier can stay above water much longer, especially as its rivals cut even deeper into their own costs. If it falters under its huge debt load, they warned, American could also find itself headed for bankruptcy.
To be sure, American's officials believe they have managed to get a step ahead of the other old-line carriers, and earlier this month, the country's largest airline let the world know it.
The Fort Worth-based airline unveiled a new advertising campaign - its first in a decade. American's "We know why you fly" spots have been running on television in New York and in other select major markets, and on cable nationally. The ads attempt to capitalize on cutbacks at other airlines, mostly by emphasizing the number of American flights - 3,800 a day - and its huge route system.
"Even though it's a rough financial time for airlines now, that works in our favor because it gives us the opportunity to say not only have we been re-working our company and making it better, but we also have this 75-year history," Tim Wagner, an American spokesman, said yesterday. "We're a little ahead of the game."
By contrast, Delta, which has repeatedly said it must cut costs sharply to remain free of bankruptcy, announced a 10 percent pay cut for executives and most employees yesterday. Delta also raised the employee cost of health-care coverage and ended a subsidy for retiree medical benefits.
But American is far from a healthy airline, analysts said, citing its $19 billion in debt. "There's no way they can avoid bankruptcy in my view," said Vaughn Cordle, chief analyst at Airline Forecasts LLC in Washington, D.C. "They can't shed debt outside of bankruptcy like they can inside bankruptcy."
American declined to respond to analysts' comments. But Wagner said American's turnaround plan has already identified $4 billion in costs the airline can eliminate, including more than $1 billion in labor costs. Wagner said American does not plan on asking employees for more cuts.
The airline employs a total of 101,000 people, including 4,800 in the New York metropolitan area, more than any other carrier.
American yesterday said that it is recalling 610 furloughed flight attendants to four "bases," including LaGuardia Airport, beginning Nov. 17. American cited an increase in international and widebody flying slated to begin in December, and a "slight uptick" in attrition levels.
But as evidence that American remains very much a struggling carrier, analysts noted that only last week, the airline's holding company, AMR Corp., said August revenue was weaker than expected after hurricanes and mounting fuel prices. American said it was reducing some flights and considering charging for on-board food.
Robert W. Mann, an independent airline analyst in Port Washington, said American has been able to wring more productivity out of its flight crews and airplanes in the last year or so, largely through better scheduling strategies.
"They are ahead of the other carriers," Mann said. "But they are far from out of the woods."
Competition from low-cost carriers such as JetBlue Airways of Forest Hills and Southwest Airlines of Dallas and higher fuel costs all combine to make life miserable for American and other big airlines.
The outlook for them remains bleak, said Alan Bender, a professor of aeronautical science at Embry-Riddle Aeronautical University in Daytona Beach, Fla.
"I think every single one of the legacy airlines is facing bankruptcy, including American," Bender said.