pilots and flight attendants BOTH sign a merger agreement!

[FWAAA]

They have to they are not a partner in any alliance. Its that or nothing.

Just to short-cut things: 700UW is going to come back and say "US is in Star Alliance."

But you're right - US isn't in any of the immunized joint ventures in which UA/CO and LH participate.

US is the only airline in the USA that must compete with its alliance "partners" for TATL business.

 

[700UW]

They are members of the Star Alliance.

And they wouldnt fly into a city unless its profitable.

And US doesnt compete with anyone in CLT, LH flies to MUC and US flies to FRA.

And I believe LH does fly into PHL, not sure about the other carriers.

 

[FA Mikey]

FWAAA, hows it feel to be almost physic!

 

[silverbird007]

Except those airlines added a part of there system needed to grow world wide. usair adds a nothing but a domestic operation. DAL and UAL added South America and a Pacific operation. usair doesn't offer either. They operate secondary hubs, and connect just more transferring domestic passengers. AA needs to grow international and to build on that adding more flights to their hubs at MIA, LAX, JFK, DFW and ORD. usair offers a single flight to GIG and no interest in the pacific.

AA has 19 777s coming this year, these are not replacment aircraft, so they must be for adding/upgrading routes, i dont think they will be flying MIA-MSY, so with the merger and the new 777s combined it just might work.

 

[silverbird007]

Sorry, dear. They don't have to buy out you and me. We'll just be furloughed. At least I can retire, and collect what there is of my frozen pension. And, I might be wrong, but I think they have f/as on furlough that are senior to us. I'll just have 11 years in January.

Finally got some responses from the US fas, all stated there are no fa's on furlough, also they have been hiring. Maybe it wont be quite as bad for us as I thought.im still hoping for a buyout.

 

[FWAAA]

FWAAA, hows it feel to be almost physic!

😀 Sometimes you can just see something coming. 😀

AA has 19 777s coming this year, these are not replacment aircraft, so they must be for adding/upgrading routes, i dont think they will be flying MIA-MSY, so with the merger and the new 777s combined it just might work.

It's not quite that many this year. Two 77Ws already delivered last month, eight more of them this year and four more next year. Five more 772s on order but I'm confident AA won't be taking delivery of any more 772s - they'll be converted to 77Ws or 787s or something else for delivery in 2014 or later.

 

[FA Mikey]

An independent AA will take delivery of a greater portion of the 787-9s and more of the 77Ws in the short term. Just waiting for Boeing to figure out all the little problems plaguing the 787.

 

[WorldTraveler]

US Airways flies to more European cities than AA.

true.... as much as some people would like to knock US' European efforts, they have done a pretty good job w/o much access to LHR.
As I have noted before, US' average fares in non-Star hub cities in Europe are higher than they are in Star hubs which says that the ATI/JV that UA has is being used AGAINST US - and why Parker realizes he has to get into one of the big 3 alliances.

Don't get me wrong - I think the merger will happen. The huge raises will go to the US pilots and FAs, which alone will wipe out most of the profits on the US side. The AA employees like you will get some more money than the bankruptcy LBFOs. Unless the synergies include a money-tree or golden-goose, I don't see how the combined airline pays all its labor costs without crying poor-mouth all over again. Unlike all the other airlines in Ch 11, AA did not slash its payrates for the expensive people, the pilots and FAs. You may not be at the industry pinnacle of pay right now, but you're far from the bottom.

robbedagain thinks that AA is headed to a repeat Ch 11 if it stays independent. All I'm saying is that a combined US-AA looks to be headed there even faster.

Note to Mr Owens: Yes, I know that mechanics' pay is at the bottom. I'm talking about the PILOTS and FAs. The ones with better unions and better negotiators.

The debt problem is on AA's side, not US'. US doesn't have the huge numbers of airplanes on order that AA has and US doesn't have pension obligations.
Whether AA files or not doesn't really depend on whether they merge or not... the only way for AA to avoid a future filing is to generate huge amounts of new revenue than they have either AA or US have now.
There is no way AA can service that kind of debt unless its revenues grow much, much faster than its debts.

BTW,
here are hourly pilot rates as of 1/1/2013 for pilots on the 320/738....

AA $168
DL $204
UA $189
US $142 (west)/$125 (east)

UA is pretty close to the average of the big 3 (which APA originally asked as the basis of comparison)... at that rate, AA pilots are about 11% off UA rates and about 19% off DL rates.
US pilots are 25-35% off UA rates depending on whether they are east or west.
There are some differences in pension, but there is also a significant difference in how much profit sharing will be paid out at each carrier in the next 12-18 months.

Couple of problems - first, the source was Vaughn Cordle, whom many discredit (apparently, analysts are golden unless their views are inconsistent with labor's objectives, and then their numbers are useless). 😀

The second problem is that it's not how much US' labor costs would go up, it was how much AA would have saved if it had US' labor costs, and Cordle's number was $2.2 billion, substantially more savings than if AA had UA's or DL's labor costs. The article is here:

http://seekingalpha....olution-for-amr

Cordle was talking about mainline only and said that AA would save $440 million with UA's costs and would save $900 million if it had DL's costs. According to Cordle, if AA had Alaska's labor costs, it would save $1.9 billion.

Cordle's numbers appear a little high, based on back of the envelope calculations. In the latest rejected TA, US FAs turned down raises that would have cost Parker's US a total of $40 million a year but would not have raised US FA expense as high as AA's LBFO levels. The US pilots would need at least a couple hundred million dollars a year (and probably more than that) to get them to AA's payrates (5,000 pilots X $40k/yr). There's at least $240 million. From AA's standpoint, with 8,000 pilots, that would equal $320 million a year savings at US pilot costs. For discussion purposes, AA might save about $80 million on FAs with US' FA costs. That's a total of just $400 million, and I'm not sure that agents, mechanics and fleet would provide the difference.

AA has 19 777s coming this year, these are not replacment aircraft, so they must be for adding/upgrading routes, i dont think they will be flying MIA-MSY, so with the merger and the new 777s combined it just might work.

can we just make it very clear that new aircraft do not necessarily translate into profitable flying? AA ordered those 773s years ago... while there is no doubt they can find routes to use the new aircraft as replacements, there is no assurance they can grow their network sufficiently thru growth to be able to handle the increased capacity.

Add in that in a merger, capacity is usually rationalized. Boyd Group (another one of those analysts) says he fully expects that AA will further pull down its JFK operation if a merger occurs in favor of PHL as the primary int'l hub for AA/US in the NE.
It is also very likely that, given more widebody aircraft than they really need after a merger, AA/US will pull 757s off int'l routes and upgrade to 763s... 763s to 777s/330s.... etc... trickle up. Larger aircraft generally have lower CASM on the same route and the combined carrier should be able to push more passengers across the network....

perhaps AA can absorb the 777-300s but I can assure you they will not all be growth aircraft

When you factor in the 787s (which are suffering from far more than just a few minor issues), then AA will most definitely start retiring older aircraft.

 

[700UW]

US does have pension obligations to the IAMNPF for Mechanic and Related, Fleet Service and Maintenance Training Specialist.

Plus upgrading to larger planes means more cargo revenue also.

 

[777 / 767 / 757 Love]

perhaps AA can absorb the 777-300s but I can assure you they will not all be growth aircraft

When you factor in the 787s (which are suffering from far more than just a few minor issues), then AA will most definitely start retiring older aircraft.

The words "I can assure" probably should not be said by ANYONE on these forums, as none of know for sure, and if we did, we would be getting 7 figures as a airline consultant.

I think many of your assumptions on what AA can and cannot do, whether stand alone or merged, are just that "Assumptions"......and we all know what happens when people assume🙂

Btw, AA pulling out of JFK in favor of PHL is stupid, even for AA's management team......no chance they would do that. Even Parker I think would prefer NYC if he had a shot in hell of getting in there.....oh wait.....meanwhile as AA Headquarters,

"Knock, knock.......".

Horton, "Who the F is that?".

Management Lacky, "I will get it"......."Its Parker".

Horton, "What does he want".

Lacky, "He says he wants a Pacific and larger international presence. Said he wouldn't mind having 500 planes either."

Horton, "Yeah, so......"

Lacky, "Well, he says we can give him AA willingly or he will just manipulate everyone to give it to him".

Horton, "HAHAHA. Yeah right.....who on earth would be dumb enough to think he is an upgradfe from us."

Lack, "HAHAHAHAHA".


Cheers,
777 / 767 / 757

 

[WorldTraveler]

What month would you like to use for the basis of comparison and when would you like to measure the results?

I have no problem at all sticking my head on the line and saying that AA is not going to absorb the 50 or so 787s they have on order as well as (or just only) the more than a dozen 777-300s without reducing their existing international fleet.

If you think there is the potential for me being wrong, let me know what date you would like to check and see if I was right or not.

Since the 773s have not entered service, this would be a real good time for a snapshot.

larger planes means the POTENTIAL to carry more cargo revenue but it doesn't at all mean that it will be obtained. I can cite a number of direct cases where AA uses 777s and other carriers use smaller aircraft on very similar routes and the other carrier carries more cargo per flight on smaller aircraft.

Pension obligations under the IAM's plans do not affect US' balance sheet. US pays the cost but the liability remains w/ the IAM.

 

[silverbird007]

😀 Sometimes you can just see something coming. 😀



It's not quite that many this year. Two 77Ws already delivered last month, eight more of them this year and four more next year. Five more 772s on order but I'm confident AA won't be taking delivery of any more 772s - they'll be converted to 77Ws or 787s or something else for delivery in 2014 or later.

the fleet info on wikipedia is usually correct, Im sure they are not just making up #s, ive been checking wikipedia for years and its usually right , at least on the fleet info. its updated pretty quickly, as soon as AA recieved the first 777-3 it was in there, now shows AA has 2, the point is we are getting alot of 777s I dont care about the exact numbers. The point is we are adding flying! Im not a VP or management insider at AA, so I dont know anything for sure! Geeez!

 

[700UW]

http://www.airfleets.net/flottecie/American%20Airlines.htm

 

[777 / 767 / 757 Love]

As much as you (collectively) may hate to admit it, DL has done mergers and acquisitions better than any other airline in an industry where M&As normally (not as an exception, but the norm) lead to labor discord over integration issues and a distinct difference between the promises that were made prior to the merger and what has actually occurred.
The reason why I continue to bring DL into this conversation is because DL’s merger is finished – settled – and because it is settled and DL is reaping the benefits of the merger including the revenue synergies that are promised in every merger, DL is now focusing its competitive attention on growing its network.
Remember that the promise of ALL airline mergers is that being as big as or bigger than one’s competitors is what is necessary in order to succeed… because there is no evidence of long term successful “niche” airlines and size does matter in the airline industry.
DL’s efforts are now focused on defending its own presence in the SE as well as expanding in other regions of the country, including in LAX. I have said for years that DL’s competitive efforts would shift to the western US once the slot swap was finally settled and that is exactly what is happening.
Competitively, DL knew full well that the AA-US merger was a possibility and DL is going to do everything possible to ensure that AA-US gains no competitive advantage in markets that matter to DL as a result of this merger. Some here seem to think I am personally threatened but in fact DL is doing what any good company is doing in strengthening their position relative to their competitors, regardless of what their competitors do, and growing their revenue – and they don’t really care where that revenue growth comes from.
DL is just as interested in reducing the competitive value UA is gaining from its still very unfinished merger as well as regain territory in NYC that B6 took a decade ago and which DL wants back.
Because the airline business creates benefits because of size, DL is simply trying to grow its presence in key markets throughout the world including the US; many of those key markets are flown by competitors. DL does not need to eliminate every competitor (and it won’t) but it does intend to have a presence in every market that matters at a size that is large enough to gain a meaningful share of the business in those markets. And DL intends to grow its network faster than other carriers and become the closest thing to the one-stop shop that many clients want in an airline – just as they would want from an office supply company or an in-flight caterer.
That type of strategic thinking is what well-run companies do and it isn’t personal that I continue to mention the gap between where AA and US are today and where they need to be.

But forget Delta Air Lines if it bothers you to include them in the conversation.

The key questions about this merger which remain unanswered from labor’s standpoint are not specific to DL – IF WE LOOK AT THE WORLD AS IT EXISTS TODAY. (of course, the world won’t stand still and neither will other competitors including DL. Too many people on here have assumed that AA-US as the last merger will be free to accomplish its objectives while other competitors sit passively on the side line and cheer AA-US on…. It doesn’t work that way).
Given that AA has lost over $1.5B in the last year and it was only asking for about $1B in labor concessions, where are the profits that are necessary to make AA viable long term? AA needs to generate profits of $1B or more per year whether as a standalone or as their share of a merged AA-US and they are nowhere near that amount and won’t be even with the cost cuts they should gain in BK.
US should report very good financials for 2012 but they aren’t going to report profits large enough to offset the lack of profits at AA – a much larger company than US – or on par with other carriers in the industry who are reporting much higher profit margins.
Even if US took every dollar in profits it is making and gave it to its employees in pay raises, US employees are still well below average in compensation compared to other airline employees.
AA unions think that the result of this merger is going to be a return to compensation than what they would have received under the BK contracts, but where is the money coming from to pay for all these EXPECTED raises from labor – and note than neither AA or US mgmt or AMR creditors have ever said that it is their intention to raise pay rates at a combined airline to a level even close to average for the result of the industry.
Even if you assume that AA/US really can get all of the promised revenue synergies they are promising – which again has rarely happened in US airline mergers – AA/US is still billions of dollars short of having enough money to offer significant pay raises. Those kinds of revenue synergies MIGHT generate profitability on par with other carriers but to think that they will reduce that newfound profitability to hand out pay raises once they have the merger in the bag is more than a bit naïve. Pay raises will be handed out when AA/US are as profitable or more profitable than other carriers on a sustained basis – and after the airline is sufficiently merged, a process that will take years.
And don’t forget that there will have to be capacity cut which means further layoffs – and the combined AA/US today already has at least 10,000 more employees than DL or UA which should generate comparable revenue, even accounting for in-house maintenance and in-house subsidiaries like Eagle etc.

I have absolutely no problem w/ seeing AA/US successfully merge and would love to see their people succeed because of this merger…..
What is far more likely to happen is that AA will give away a lot of the benefits it has gained in BK to make a merger with US happen and by growing into the leagues of DL, UA, and even into WN territory, will force competitive responses from all of them that not only will result in AA/US missing the revenue synergies that will be promised as part of the merger, but also result in a weaker AA/US than either carrier would have been had they stayed independent.
And most importantly, employees will face further layoffs and will not see the pay raises they expected – even if they actually are promised by management. So AA and US employees will jump thru hurdles thinking they will be better off, only to work for a company that is under greater competitive attack than they would have been had they remained independent and employees will fare far worse than if AA and US had not merged.

I am not the villain for telling you the Cold Hard Truth which is going to happen whether I say it or not. My intention is that the readers of this forum be aware of the situation they face. In the hype about this merger – and I can’t recall a merger in any industry that was as hyped as this one has been – a lot of basic logic and analysis is getting lost or ignored.

I don't always agree with WT (I think he can point to more than one post of mine when I express my displeasure) but he has hit the nail right on the head. hate it or love it, Delta has done what few have ever done in this industry: conducted a successful "large" merger. Ask UA if you don't believe how much of an accomplishment that is.....

Bottom line, I see plenty of US employees championing the idea of a merger, with AA employees staying much less vocal.......I suspect because they are thinking the same that WT is thinking. We have contracts that are good, how is US going to better those contracts without huge revenue increases that won't come for years, if ever. US employees want this because they know it only happens if APA and other unions say ok, and that means they get brough up to the current AA pay rates. Anyway you slice it, this is the best case scenario for US employees, it may or may not be for AA employees.

Hence why, its mostly US employees, even in the AA threads, that continue to champion the ideas of why the merger will work, despite many facts pointing to the contrary.

My gut is the AA board and UCC will see this, and most likely pass or will see that the week MOUs signed by the labor groups won't address teh real issue of APA saying NO to any US guy pushing an AA captain to the right seat or pushing ANY APA guy down in aircraft type. I think if the UCC sees this being worth something, they will choose to wait, and then see if they can buy B6 or US, that way, they can staple other unions to the bottom, and sell off / fire who they want. Takeover easier than a merger.......

Cheers,
777 / 767 / 757

 

[700UW]

First of all its not all honky dorey at dl, ask Kevin.

Two, no one at AA or US think they have good CBAs, everyone at AA is on a chapter 11 CBA, as well as the pilots, agents, and flight attendants at US and AA. Only the Mechanic and Related and Fleet at US are on post chapter 11 CBA. Currently all the IAM groups and CSA who are CWA are in Section 6 negotiations.

And this merger looks like it is going to happen, the UCC is a party to the negotiations that transpired between the pilots, and flight attendants at AA and US.

And as far as stapling another carrier, guess you dont know about McCaskill-Bond Law.