Pensions!

[will fix for food]

Why because you say so? What was the reason for the shift? According to your numbers AA lost $7 million on the Eagle deal one year and $391 million the next. An additional 384 million dollar loss that was part of the $1.8 billion that we had to make up for. These funds are providing Eagle a guaranteed profit of 9%! I think thats a story of interest to every employee who gave concessions, maybe not to you but are you included in that group? If we had known that our concessions were in part being used to guarantee Eagle a 9% profit (even though historically a 5% ROI was considered respectable) I think at the very least that we could have said to knock that $1.8 billion down to $1.4 billion. I think that even a bankruptcy judge would have agreed that we shouldnt provide funds to guarantee a subsidiary of the same parent company a 9% return, thats way out of line!

[post="176805"][/post]​

A quote from a Peter Bowler President's Update:


"Eagle Second Quarter Accomplishments

As a result of your efforts, American Eagle recorded a solid quarter, earning a pre-tax margin of 9.2 percent, 1.2 points above our plan of 8 percent. This allowed us to make a positive contribution to AMR's second quarter results. During April to June, Eagle's ASMs grew 25.1 percent over the same period last year, while passengers grew 21.0 percent. Load factor is a good story, up 4.1 points to 69.7 percent as compared to 65.6 percent in the same quarter last year.

We carried 4.5 million passengers in the quarter who generated $448 million in revenue on Eagle flights. Just over 51 percent of those customers, or over 2.3 million people, went on and connected to an American flight. These connecting customers generated $352 million in revenue on American for the three-month period. All of us at Eagle can take pride in the fact that we made a strong contribution to American's Turnaround Plan in the second quarter and, as a result, improved the chances of the long-term success of American, Eagle, and AMR."

It's actually 8% Bob. Eagle made 9.2%, kept 8%, and gave American 1.2% Effectively, that is how it turned out last quarter. But you are correct, American does guarantee Eagle 8%. I don't know what the industry average FPD agreement is. Maybe FWAAA does.

BTW, Eagle's margin was above 8% for the first quarter also.

 

[FWAAA]

It's actually 8% Bob. Eagle made 9.2%, kept 8%, and gave American 1.2% Effectively, that is how it turned out last quarter. But you are correct, American does guarantee Eagle 8%. I don't know what the industry average FPD agreement is. Maybe FWAAA does.

BTW, Eagle's margin was above 8% for the first quarter also.

[post="176959"][/post]​

I don't have an industry average number, but the margins range from 8% (Eagle and AX) to 15% (ACA for UAL before breakup and DL until October). CO pays ExpressJet a margin of approximately 10%, plus reimburses for certain items like fuel. Comparing those numbers can be deceiving, however, since each contract contains different reimbursed expenses (like fuel).

Given the strong contribution Eagle (and AX) makes in delivering connecting pax to AA, I don't begrudge anyone 8%. Especially since the 8% margin paid to Eagle is really available to AMR anytime it wants.

Regional affilliate revenue is on target to hit $2 billion this year, with most of that (over 90%) going to Eagle (the rest to AX - Republic and Trans States).

 

[FWAAA]

Why because you say so? What was the reason for the shift? According to your numbers AA lost $7 million on the Eagle deal one year and $391 million the next. An additional 384 million dollar loss that was part of the $1.8 billion that we had to make up for. These funds are providing Eagle a guaranteed profit of 9%! I think thats a story of interest to every employee who gave concessions, maybe not to you but are you included in that group? If we had known that our concessions were in part being used to guarantee Eagle a 9% profit (even though historically a 5% ROI was considered respectable) I think at the very least that we could have said to knock that $1.8 billion down to $1.4 billion. I think that even a bankruptcy judge would have agreed that we shouldnt provide funds to guarantee a subsidiary of the same parent company a 9% return, thats way out of line!

[post="176805"][/post]​

Oops, my bad. My dyslexia is showing. I erred when I typed $1.159 billion in revenues. The correct number is $1.519 billion. Sorry about that.

There you go talking about a bankruptcy judge again. But I thought you weren't in favor of bankruptcy. Oh, but wait, you were in favor of rejecting the concessions (which would have caused a ch 11 filing. Whatever.

How are YOU providing the funds for the 8% return to Eagle? Do you buy all those tickets? I thought that the customers bought most of the tickets. Don't you get travel benefits? Sure, sometimes buying a ticket is preferrable to NRSA travel, but I doubt you buy too many Eagle tickets. B)

 

[Mark Inman]

AA's revenue would hit 6 billion if we didn't have to buy our own planes,pay for our own fuel, landing fee's or insurance. Try to sell that bull to the TWU guy's FWAAA were not falling for it. Buy the way where did you think the 1.5 billion came from? AA's stock was at junk rating at the time it's not like they got a loan. That only leaves reserve cash.

 

[FWAAA]

AA's revenue would hit 6 billion if we didn't have to buy our own planes,pay for our own fuel, landing fee's or insurance. Try to sell that bull to the TWU guy's FWAAA were not falling for it. Buy the way where did you think the 1.5 billion came from? AA's stock was at junk rating at the time it's not like they got a loan. That only leaves reserve cash.

[post="177012"][/post]​

You keep repeating that often enough, maybe it will become a true statement.

Where did the $1.5 billion come from? Ticket sales throughout 2003, that's where. Same place the other $14.3 billion of pax revenue came from in 2003: ticket sales.

Same place the money has ALWAYS come from to pay the bills at Eagle: ticket sales.

You and Bob think you're on to something - that you've discovered yet another pile of hidden money? More power to you. I have little doubt that you will be able to convince several thousand of your co-workers. By the way - good luck with that AMFA drive. I'm all for you guys finally choosing a union that makes you happy to pay dues.

 

[will fix for food]

AA's revenue would hit 6 billion if we didn't have to buy our own planes,pay for our own fuel, landing fee's or insurance. Try to sell that bull to the TWU guy's FWAAA were not falling for it. Buy the way where did you think the 1.5 billion came from? AA's stock was at junk rating at the time it's not like they got a loan. That only leaves reserve cash.

[post="177012"][/post]​

You win, I quit. Your astute review of the financial data presented here in such a lucid way and backed up by cold hard numbers from the various financial reports available to all has won me over. Congratulations.

 

[Mark Inman]

FWAAA the capacity purchase agreement was signed in Jan of 03. You keep saying the ticket sales through out 03 paid for it. Read AA's report to the SEC where they were trying to sale the preferred stock to raise money shortly after the concession vote. The pilots union blasted AA for the idea and AA abandoned it. It gives the details of when AA paid the money to the regional’s. In that report AA said the 1.55 billion was paid to the regional carrier’s in Jan 03 This is a good example of why the TWU needs to be replaced. They haven't even made an effort to investigate this much grieve it. NO VOTE :angry: NO PEACE!!!!

 

[Mark Inman]

• The $1.5 billion capacity purchase deduction appears in the 2003 AA 10-K, but is nowhere to be found in the AMR 10-K.

FWAAA the AMR 10-k does mention the 1.5 billion in the Jan 04 filing look again or if you want come by Local 12 we have a printed copy of it or you can go to the SEC web sight and look it up your self. Just make a little more effort.

 

[will fix for food]

FWAAA the capacity purchase agreement was signed in Jan of 03. You keep saying the ticket sales through out 03 paid for it. Read AA's report to the SEC where they were trying to sale the preferred stock to raise money shortly after the concession vote. The pilots union blasted AA for the idea and AA abandoned it. It gives the details of when AA paid the money to the regional’s. In that report AA said the 1.55 billion was paid to the regional carrier’s in Jan 03 This is a good example of why the TWU needs to be replaced. They haven't even made an effort to investigate this much grieve it. NO VOTE :angry: NO PEACE!!!!

[post="177376"][/post]​

Just so I understand you correctly, you are saying that the entire regional payment for 2003, 1.55 billion dollars, was paid in January 2003?

 

[FWAAA]

Just so I understand you correctly, you are saying that the entire regional payment for 2003, 1.55 billion dollars, was paid in January 2003?

[post="177617"][/post]​

That's my interpretation of the allegation. I've reviewed the SEC filings for 2003 and I have not found any evidence that AA said that it pre-paid all 2003 regional expenses in January 2003.

Perhaps those with the evidence could share a link or at least a cite to the appropriate document.

 

[will fix for food]

Perhaps those with the evidence could share a link or at least a cite to the appropriate document.

[post="177626"][/post]​

I think the silence means he finally did a little research and figured out he was wrong.

 

[Bob Owens]

FWAAA the capacity purchase agreement was signed in Jan of 03. You keep saying the ticket sales through out 03 paid for it. Read AA's report to the SEC where they were trying to sale the preferred stock to raise money shortly after the concession vote. The pilots union blasted AA for the idea and AA abandoned it. It gives the details of when AA paid the money to the regional’s. In that report AA said the 1.55 billion was paid to the regional carrier’s in Jan 03 This is a good example of why the TWU needs to be replaced. They haven't even made an effort to investigate this much grieve it. NO VOTE :angry: NO PEACE!!!!

[post="177376"][/post]​

So in other words in January of 2003 the company made an agreement to guarantee a 9% profit to another subsidiary of AMR, several weeks later they were claiming that they were about to go Bankrupt? Hmmm, looks like a shell game to me. AMR still gets their money but AA gets to make it look like they are worse off than they actually are in order to slash labor costs. Lets say we did go bankrupt, dont you think that the judge might find it a little strange that just weeks before they agreed to a deal that would guarantee a profit margin that was rarely, even in the best of times, achieved by a regional carrier? We know that the TWU would not have said anything, they represent Eagle, thanks to voluntary recognition by AMR, but I'm sure that the APA and APFA would have balked.

 

[will fix for food]

FWAAA the AMR 10-k does mention the 1.5 billion in the Jan 04 filing look again or if you want come by Local 12 we have a printed copy of it or you can go to the SEC web sight and look it up your self. Just make a little more effort.

[post="177386"][/post]​

It may mention it but it doesn't list it as an expense or revenue. The American 10K does. The reasons for this should be obvious.

Interestingly enough AMR's 2/27/04 10K lists fuel expenses as 2.772 billion while A/A's 2/27/04 10K lists fuel expenses as 2.586 billion. Why the discrepancy? If American was buying all of the fuel for Eagle wouldn't those numbers be the same?

 

[will fix for food]

So in other words in January of 2003 the company made an agreement to guarantee a 9% profit to another subsidiary of AMR, several weeks later they were claiming that they were about to go Bankrupt?

Actually 8%.


Hmmm, looks like a shell game to me.


Sure it is. That's exactly what it is. There is no material difference to AMR's bottom line, it is just a different accounting scheme.

Back when they were evaluating the FPD agreement (mid 2002 IIRC) Bowler came out and said that initially they were just going to cover Eagle's costs and not build in any margin at all until they could get a handle on what a "good" margin would be.
Just guessing here, but it looks to me like they arrived at the 8% number because Eagle's revenues have been recently annually averaging about it's costs + 8%. Therefore, American's bottom line would not be negatively affected while at the same time Eagle would have gone to the industry standard FPD agreement to better suit it for a possible spin-off.


AMR still gets their money but AA gets to make it look like they are worse off than they actually are in order to slash labor costs.


Again you have to balance the payments American is making to the revenues it is gaining. The net gain/loss numbers here are really relatively small and probably within the margin that the accountants could not accurately predict. Think about it, if they wanted to deplete American's books they could have very easily increased the margin to the 10-15% range like the other SJ providers were getting and said they were "Just paying industry standard."



Lets say we did go bankrupt, dont you think that the judge might find it a little strange that just weeks before they agreed to a deal that would guarantee a profit margin that was rarely, even in the best of times, achieved by a regional carrier?


I can't really predict what a judge would say about that as it is an industry standard agreement with a slightly lower than industry standard margin.


We know that the TWU would not have said anything, they represent Eagle, thanks to voluntary recognition by AMR, but I'm sure that the APA and APFA would have balked.

Actually the TWU was voted in. But of course there was no one else on the ballot. It was TWU or no union. I was there and voted for the TWU. In retrospect, that may not have been such a great idea. <_<

[post="178063"][/post]​

 

[Bob Owens]

Actually the TWU was voted in. But of course there was no one else on the ballot. It was TWU or no union. I was there and voted for the TWU. In retrospect, that may not have been such a great idea

[post="178083"][/post]​

Yes but at the time when you voted wasnt "Eagle" made up of several independant companies? Maybe your company voted on it but others may not have. The guys in New York said they never voted on it. They said all of a sudden they got a slight increase and were told they were TWU.

Why arent you guys going for AMFA? The sooner we all get into one union, a real one, the better.