Place your bets!

[FWAAA]

While I certainly agree that the higher cost of ownership of a new plane (or car) often makes little sense vs. the old gas guzzler, as FWAAA has mentioned numerous times Alaska decided to accelerate retiring their MD80s for 738s. And that decision was made back when oil was about half what it is now, though I also realize that AS had the added benefit of realizing an all 737 fleet. Maybe in hindsight AS would rather have not taken delivery of any new metal and shrunk their operation slightly, but they always seemed to be ranked "#2" behind WN in the "who's not going out of business" lists.

How is Alaska's cost-benefit analysis for fleet planning different than NW's and AA's?

I take credit for no skilled analysis here - just reading the Alaska press releases. B)

Alaska claimed that its eventual annual savings would be about $115 million on an investment of $750 million for the new planes, including the penalties for early lease terminations on its MD-80s:

http://www.alaskasworld.com/Newsroom/ASNew...0313_045635.asp

My wild ass guess is that Alaska's savings are relatively larger than AA's because it moves AS to a single fleet type, magnifying the savings in maintenance, spare parts, training, etc.

AA will save on maintenance for a while with its 738s plus the fuel savings, but it will still have a large MD-80 fleet for years to come (unless Ch 11 provides an opportunity to dump the rest of them).

 

[AMFAMAN]

Alaska claimed that its eventual annual savings would be about $115 million on an investment of $750 million for the new planes, including the penalties for early lease terminations on its MD-80s:

Considering that March 2006 press release was written when jet fuel was half the cost, one would have to guess that the projected annual savings would now be much higher.

 

[FWAAA]

Considering that March 2006 press release was written when jet fuel was half the cost, one would have to guess that the projected annual savings would now be much higher.

I'd agree. Should be a pretty short payback now, as long as jet fuel stays at or above $4/gal.

In my woulda, shoulda, coulda department, I really wish that Arpey had accelerated the 738 deliveries two years earlier than AA did. Three dozen 738s delivered in 2006 and 2007 (in addition to the six dozen coming in the next two years) would have given AA a huge headstart on this problem and the fuel savings would have helped to pay a lot of the lease payments on new 738s.

Want an example of what I consider lackluster leadership from present management? Waiting too long to bring six dozen new 738s on line. If I get bored later today waiting at the LAX FL, I'll try to estimate how much extra fuel expense that two year delay cost AA. Sometimes leadership has to make informed bets, and betting on higher and higher fuel prices would have worked out (with my 20/20 hindsight, of course).

 

[FURP3]

http://money.aol.com/investing/bankruptcy-...5140x1200172036

I hope AA lets us know when they are going to file, so I can drive them to the courts.......FURP

 

[TIME FOR CHANGE]

but the real challenge has been finding ways to do so within the confines of workrules and contractual clauses that are 20 and 30 years old.

They got rid of 80 percent of the contractual clauses and workrules 5 years ago.
Its just to bad the inept management still cant figure it out.

😉

Maybe they should take lessons from Southwest after all they still have the same contractual clauses and workrules they had 20 or 30 yrs ago and still manage to be profitable

 

[Boomer]

Technicality... Deregulation was in 1979 -- I don't think the average age of Americans is 29 just yet... nor do I think the average age of the flying public is under 30.

But the rest of your comments are spot on. A lot of the people here bemoaning how bad it also never worked for an airline during the CAB days.

I have no doubt that the legacies know how they'd like to compete, but the real challenge has been finding ways to do so within the confines of workrules and contractual clauses that are 20 and 30 years old.

It took the industry 15 years to eliminate paper tickets, so perhaps there's hope for workrule reform... I'm just not holding out much hope for it at the legacies.

Since the 2003 AA home invasion of my home:
1) we have consistently exposed what AA is allowed versus what they have done with respect to the contract;
2) we have provided hundreds of millions of dollars in cost reductions;
3) we have provided hundreds of millions of dollars in revenue.

M&E/TWU is not the f'ing problem. Give us the same percentage bonus with respect to Senior Management or shut it down. Both FWAA and eolesen initially decried any outrage against the KERP/SERP/FURP program as insignificant.

During the '03 fiasco, we asked the TWU to look at a proposal for integration of AE into AA with all of the MD-80 fleet and that portion of all AA employees' moving down into the top AE tier for the job code and all bonuses and stock options being directed only towards that group: to this day, the TWU refuses to acknowledge their failure on the forward look. Today we are faced with a "negative hedge" against fuel prices in the sense that we must recieve the difference between the mortgaged value of a monthly payment on the fleet versus gross revenue generated from flight operations for that fleet.

During the Pension Debacle, we questioned the state of funding for AMR DBP Pensions: only to be told that those were not in question, only to learn that not only were they in question but were Federally Protected from questioning. After FWAA and eolesen initally discounted the problems within the system, they adopted the mantra of a DBP being less expensive than a DCP. Still lacking is the wedge between what AMR regards as a funding level and what the PBGC regards as a funding level. To date the TWU and AMR have refused to request such an audit by the PBGC of the funding status of the Defined Benefit Plans for ANY GROUP TO WHICH AMR IS OBLIGATED.

During the Discussion of Contractual Negotiations for TWU M&E, we posited that any contractual language be secured by BK proof EETCs against aircraft delivered during the period covered by the contract and subject to abatement over the period of the value of contractual terms versus the value of the aircraft as delivered.

We are where we are: It Is What It Is.

Some 60 737-800 are being delivered during 2008 and 2009.

The Majority of Aircraft on the property have notes due in 2010.

Given the current fuel prices and cash draw, some expect that AMR will file in 2009 for protection in bankruptcy.

Refuse any CBA that fails to specifically cite the finacial circumstances for the company and the promises to the union based upon those circumstances.

 

[Bob Owens]

That'll show management....

To Bob's comment, concessions might never prevent bankruptcy, but it sure did delay it -- five years and counting beyond the point where all the other airline management teams said "screw the employees, we're filing."

Thats assuming that AA would have filed. Just b ecause management says they would have doesnt mean anything since management has a tendancy to lie.

Instead, they kept pensions intact, and got the plans funded to as close to 100% as they've ever been.

Are they? What do you mean by 100%? 100% of what the PBGC says will be needed to cover what they are promising or 100% of what is required as per the new lowered minimums the governmnet slipped in at AAs behest a few years ago? The guys at those carriers have had 401K matching for the last 5 years, AA has only averaged around $1200 a year towards my pension for the last 5 years.

Filing anytime now or in the future will definitely suck. But, it won't suck nearly as much as it will for the guys at DL, NW, US, or UA who've been thru bankruptcy already. They already lost the easy stuff that can be taken away.

Like the stuff the TWU gave away without BK.