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AA's Unions Both Pro- And Anti-ATI  
User currently onlineMasseyBrown From United States of America, joined Dec 2002, 5434 posts, RR: 7
Posted (5 years 3 months 2 hours ago) and read 2922 times:

http://aviationblog.dallasnews.com/

http://startelegram.typepad.com/sky_talk/

The Dallas paper reported that AA's pilots' union has applauded the Attorney General and Senator Kohl for inserting themselves into the ATI issues. The Fort Worth paper reported that the AA's TWU local has written the DOT Sec'y supporting ATI. The pilots want to preserve the status quo and their jobs, which they see threatened. The TWU folks see no threat.

Interesting times. If one ATI is rejected, will they all be? The AF/DL case could presumably be reopened and redecided based on changing circumstances.

If ATI is either not approved or approved in a very curtailed form, I wonder if that would trigger Chap 11 for AMR while they sort out labor and financial issues. Arpey has said repeatedly that ATI will improve returns and that he will not invest in new planes unless he can see a way to earn a market rate of return. (The relatively few 738's being taken up don't really count.) No new planes will produce a continually shrinking company, which we have been seeing already. It seems as if Chap 11 has to be a possible solution under serious consideration.

Such circumstances might trigger reregulation by the feds; a similar environment of huge losses and cut-throat competition caused regulation in the 1930's and the current administration looks back fondly on the 1930's.

A company does not have to be insolvent to declare Chap 11; they need only be able to foresee insolvency and AMR can easily make that case. What are the odds fo Chap 11 for AMR?

Disclosure: I like trading AMR debt and things would become very interesting in Chap 11.

[Edited 2009-06-19 09:50:13]


I love long German words like 'Freundschaftsbezeigungen'.
18 replies: All unread, jump to last
 
User currently onlineMAH4546 From Sweden, joined Jan 2001, 32777 posts, RR: 72
Reply 1, posted (5 years 3 months 1 hour ago) and read 2868 times:

AA should go into bankruptcy regardless if things get worse. Obviously they cannot arbitrarily go into bankruptcy, but if the opportunity arrises, AA needs to take it to get their costs in line with everybody else, wipe out pension obligations, etc. A nice slap in the face to AA's ungrateful unions.

Quoting MasseyBrown (Thread starter):
(The relatively few 738's being taken up don't really count.)

They have over 75 738s coming in the next three years. I would hardly call that "relatively few."



a.
User currently onlineMasseyBrown From United States of America, joined Dec 2002, 5434 posts, RR: 7
Reply 2, posted (5 years 2 months 4 weeks 1 day 23 hours ago) and read 2752 times:



Quoting MAH4546 (Reply 1):
They have over 75 738s coming in the next three years. I would hardly call that "relatively few."

Don't they need to replace about 300 MD-80's? That and their scope-limited ability to use more RJs was the basis for my "relatively few" comment.



I love long German words like 'Freundschaftsbezeigungen'.
User currently offlineSPREE34 From United States of America, joined Jun 2004, 2248 posts, RR: 9
Reply 3, posted (5 years 2 months 4 weeks 1 day 21 hours ago) and read 2665 times:



Quoting MAH4546 (Reply 1):
They have over 75 738s coming in the next three years. I would hardly call that "relatively few

With 300 MD-80s to replace, I'd call 75 relatively few.



I don't understand everything I don't know about this.
User currently onlineMasseyBrown From United States of America, joined Dec 2002, 5434 posts, RR: 7
Reply 4, posted (5 years 2 months 4 weeks 1 day 14 hours ago) and read 2557 times:



Quoting MasseyBrown (Reply 2):
Don't they need to replace about 300 MD-80's?

I checked - as of March 31, they had 271 MD-80's on the books, so some are already gone.

Quoting MAH4546 (Reply 1):
A nice slap in the face to AA's ungrateful unions.

That would no doubt be in some minds, but it's probably not the message AA wants to send in any official way. Still, if it appeared that the ATI was refused because of labor objections, that would seem to torch a bridge or two and call for a response.

I wonder if the relative size, demographics, and politics of the two unions' members would be decisive to a Democratic administration.



I love long German words like 'Freundschaftsbezeigungen'.
User currently offlinePellegrine From United States of America, joined Mar 2007, 2443 posts, RR: 8
Reply 5, posted (5 years 2 months 4 weeks 1 day 14 hours ago) and read 2534 times:

Protectionism in the face of an economic sh!tstorm and poor job market! Wonderful!

Unions which think they can run companies! Wonderful!

Quoting MAH4546 (Reply 1):
AA should go into bankruptcy regardless if things get worse. Obviously they cannot arbitrarily go into bankruptcy, but if the opportunity arrises, AA needs to take it to get their costs in line with everybody else, wipe out pension obligations, etc. A nice slap in the face to AA's ungrateful unions.

Even though this seems to be way on the back burner and AA "wants to stay out of bankruptcy", as time goes on and on this seems to be the only option and it is inevitable for survival. Not a good time to be an AMR shareholder.



oh boy!!!
User currently offlineVV701 From United Kingdom, joined Aug 2005, 7531 posts, RR: 17
Reply 6, posted (5 years 2 months 4 weeks 1 day 6 hours ago) and read 2459 times:



Quoting MasseyBrown (Thread starter):
If one ATI is rejected, will they all be?

Of course trans-Atlantic ATI has two ends, the USA and the EU. And the EU is currently investigating not only the oneworld ATI application but whether the existing ATI agreements work in the public intererst or are anti-competitive.

So my own bet is that MasseyBrown has hit the nail right on the head. If oneworld does not get ATI then both Star and Sky Team will likely loose it. If oneworld gets ATI then Star and Sky Team should be safe unless the investigation determines that one or the other has gone beyond the boundaries of what is allowed in their existing immunity.

This is probably the reason why the only airline really fighting the oneworld application is VS. They have nothing to loose.


User currently offlinePar13del From Bahamas, joined Dec 2005, 7193 posts, RR: 8
Reply 7, posted (5 years 2 months 4 weeks 1 day 5 hours ago) and read 2437 times:



Quoting Pellegrine (Reply 5):
Even though this seems to be way on the back burner and AA "wants to stay out of bankruptcy", as time goes on and on this seems to be the only option and it is inevitable for survival. Not a good time to be an AMR shareholder.

Ford motor company was able to get its cost inline without Chpt. 11, for the most part so did GM and Chrysler, they did go Chpt.11 but there were a lot of other factors more important than their labour cost.

We are not privy to the full negotiations presently taking place, we get the pot shots from both sides. AA seems to think that they have a lot of time on their hands before serious negotiations, ultimately the wall is Chpt.11 or major consessions. On the plus side, no one seems to commend AA pilots union for not increasing the number of RJ's flying around cluttering up the air space, that has to be a plus right?

On the Anti-Trust initiative, what exactly is in that for AA? Based on the number of post on this site, most folks on international flights would much prefer BA metal over AA for the onboard service, so I can clearly see BA pushing for this as the number of joint pax they carry will go up, is the financial split from that more profitable to AA than actually carrying pax on their a/c? BA already has direct flights into most major cities within the US, so the number of pax they would be looking to offload to AA is minimal at best, the reverse for AA is huge in terms of BA onward connections from LHR to countries that AA do not serve.


User currently offlineCommavia From United States of America, joined Apr 2005, 11605 posts, RR: 61
Reply 8, posted (5 years 2 months 4 weeks 1 day 4 hours ago) and read 2403 times:

From my perspective, the actions of AA's pilots union can no longer be taken at face value or as representative of what the pilots really want.

Many of the pilots I talk to no longer have confidence that their union leadership is actually looking at for their best interests by picking petty fights with management, making ridiculous demands that are continuing to erode whatever public goodwill and P.R. advantage the pilots once had, and now actively campaigning against things that will actually help their employer and them.

The stupidity of the APA's argument - on ATI and other issues - is now bordering on the tragic.

ATI will be a boon to American, funneling hundreds of millions in new revenue to AA every year, just as it has at the competitors that already have it. Their unions (thought admittedly not all of them) see it, but for some reason the idiots at APA still can't.

Quoting Par13del (Reply 7):
On the plus side, no one seems to commend AA pilots union for not increasing the number of RJ's flying around cluttering up the air space, that has to be a plus right?

Well, that's debatable.

The APA has, in a way, negotiated their members out of hundreds if not thousands of jobs. By continuing to demand ever-more-uncompetitive compensation from the company - when they are already pretty much the highest-paid passenger airline pilots in the country - has meant that AA has shifted more and more flying away from mainline and towards lower-cost Eagle, which pays still-above-market regional wages (which are still way below AA mainline wages).

And this is made even worse by the fact that we all know and that has been discussed extensively here on A.net: AA is having a very hard time staying competitive with almost 200 50-seat or less RJs and 200+ 140-seat MD80s, and only 25 CRJ700s in between. Now I know, I know, they shouldn't have ditched the Fokkers or 717s, whatever. Either way, those two small and expensive fleets were non-standard, and are gone now, and AA is left to make due with small, 1-class RJs or big mainline jets when other airlines are downsizing to maintain markets and capture more traffic flows with the rapidly-growing 70-90 seat segment. AA is missing the boat, and the pilots contract is a big part of the reason why.

So - one has to ask - what would have been the APA's better strategy?

Would it, for example, have been better for them to cut their losses, accept reality, and agree to fly 70- and/or 90-seaters at halfway-competitive rates, and thus keep that flying for themselves, rather than force AA to move more and more flying to ALPA-flown Eagle RJs? Better to keep more pilots on the union rolls, and keep more of that flying mainline, no?

Quoting Par13del (Reply 7):
On the Anti-Trust initiative, what exactly is in that for AA?

Vastly more revenue, more flexibility to coordinate fares and schedules with immunize alliance partners, co-locating facilities and harmonizing products and services, joint procurement and contracting to lower costs, and on and on.

Quoting Par13del (Reply 7):
Based on the number of post on this site, most folks on international flights would much prefer BA metal over AA for the onboard service, so I can clearly see BA pushing for this as the number of joint pax they carry will go up, is the financial split from that more profitable to AA than actually carrying pax on their a/c?

The beauty of the Joint Business Agreement (JBA) between AA, BA and Iberia as it is structured is that it creates a phenomenon called "revenue neutrality." This is the hallmark of airline antitrust immunized alliances, and it basically makes it so that, unlike without immunity, where even partners are still - basically - competing with each other, under ATI, partners effectivley function as one airline.

In other words, AA could sell a seat on an AA flight JFK-LHR or a BA flight JFK-LHR and, regardless of which airline is doing the flying, the costs and benefits to AA are pretty much the same. This makes it so that airlines no longer have an incentive to keep a passenger on their plane, but rather creates a situation where the focus is on capturing the passenger somewhere on the alliance - regardless of which actual airline is doing the transportation.

Quoting Par13del (Reply 7):
BA already has direct flights into most major cities within the US, so the number of pax they would be looking to offload to AA is minimal at best

Not true at all. There are plenty of huge U.S. markets with no BA service. Austin, San Antonio, San Diego, Portland, San Jose/Silicon Valley, Charlotte, Fort Lauderdale, Pittsburgh, Memphis, Nashville, New Orleans, St. Louis, Kansas City, Indianapolis, Columbus, Cleveland, Detroit and Orange County all come to mind.

BA literally connects thousands of people each week onto AA flights at gateways all around the U.S., and that number is bound to only increase if ATI gets approved. And, as you said, the same is definitely true in reverse for AA dropping people onto BA flights at Heathrow: that number is also massive and has nowhere to go but up.


User currently offlineJfk777 From United States of America, joined Aug 2006, 8371 posts, RR: 7
Reply 9, posted (5 years 2 months 4 weeks 1 day 4 hours ago) and read 2394 times:
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IF ATI get approved I doubt you will see either airline give up service from any gateway. BA will still fly to DFW and AA will still fly from Boston, Miami and LAX to LHR.

User currently offlineCommavia From United States of America, joined Apr 2005, 11605 posts, RR: 61
Reply 10, posted (5 years 2 months 4 weeks 1 day 4 hours ago) and read 2383 times:



Quoting Jfk777 (Reply 9):
IF ATI get approved I doubt you will see either airline give up service from any gateway. BA will still fly to DFW and AA will still fly from Boston, Miami and LAX to LHR.

I'm not so sure.

Certain gateways, yes, will almost certainly retain service by both airlines. Chicago, JFK, LAX and Miami would definitely be on that list.

But as for DFW and Boston - I'm not sure. I can definitely see them making a case for letting AA handle DFW and letting BA take care of Boston.

In general, I tend to agree with you, yes, that both airlines will probably retain flights to both cities - DFW and Boston - but I'm not so sure that we may not end up with one airline each in each market.


User currently offlineSTT757 From United States of America, joined Mar 2000, 16865 posts, RR: 51
Reply 11, posted (5 years 2 months 4 weeks 1 day 4 hours ago) and read 2353 times:



Quoting Jfk777 (Reply 9):
IF ATI get approved I doubt you will see either airline give up service from any gateway. BA will still fly to DFW and AA will still fly from Boston, Miami and LAX to LHR.

I don't know, DL gave up flying JFK-CDG. I could see BA taking over JFK-LHR, especially with those A380s BA has on order. AA could then use those LHR slots for..

BDL-LHR 757
PIT-LHR 757
STL-LHR?
DTW-LHR 757
SAN-LHR 767-300
etc..



Eastern Air lines flt # 701, EWR-MCO Boeing 757
User currently offlinePar13del From Bahamas, joined Dec 2005, 7193 posts, RR: 8
Reply 12, posted (5 years 2 months 4 weeks 1 day 3 hours ago) and read 2329 times:



Quoting Commavia (Reply 8):
There are plenty of huge U.S. markets with no BA service. Austin, San Antonio, San Diego, Portland, San Jose/Silicon Valley, Charlotte, Fort Lauderdale, Pittsburgh, Memphis, Nashville, New Orleans, St. Louis, Kansas City, Indianapolis, Columbus, Cleveland, Detroit and Orange County all come to mind.

Not saying that no traffic exist but the number of domestic markets on the US side would be compared to long haul international flights on BA Europe side, would have the makings of turning AA into a primarily domestic carrier. In market terms, there are LCC who are doing a better job of that than AA with lower cost.

Quoting Commavia (Reply 10):
Certain gateways, yes, will almost certainly retain service by both airlines. Chicago, JFK, LAX and Miami would definitely be on that list.

If the number grows, would this not be a concern for AA in the long run?

Quoting Commavia (Reply 8):
The beauty of the Joint Business Agreement (JBA) between AA, BA and Iberia as it is structured is that it creates a phenomenon called "revenue neutrality." This is the hallmark of airline antitrust immunized alliances, and it basically makes it so that, unlike without immunity, where even partners are still - basically - competing with each other, under ATI, partners effectivley function as one airline.

In other words, AA could sell a seat on an AA flight JFK-LHR or a BA flight JFK-LHR and, regardless of which airline is doing the flying, the costs and benefits to AA are pretty much the same. This makes it so that airlines no longer have an incentive to keep a passenger on their plane, but rather creates a situation where the focus is on capturing the passenger somewhere on the alliance - regardless of which actual airline is doing the transportation.

Ultimately, if one carrier gets the majority of the prestigious routes in terms of metal, the other will eventually be marginalized to the point of somewhere down the road being of no use to the alliance.

Short term this could be a great money winner for AA, but it could also relegate AA to a primary domestic carrier. May also allow AA to offer better service on domestic flights for the same price as the LCC because they are subsidized by the additional revenue from the ATI. If that were the case or driving force behind this push, expect legal challenges before during and after.

On a nostalgic point, in todays environment where airlines are owned by those seeking profits and not those seeking profits by owning and operating an airline, if the end result is no airline but a service company for airlines they could care less, as long as the money is made, for airline fans its a bummer.


User currently offlineAirNZ From , joined Dec 1969, posts, RR:
Reply 13, posted (5 years 2 months 4 weeks 1 day 3 hours ago) and read 2329 times:



Quoting Commavia (Reply 8):
Vastly more revenue, more flexibility to coordinate fares and schedules with immunize alliance partners

In other words, legalised price-fixing. And my opinion is exactly the same on any ATI between any companies (nothing to do with AA or BA)


User currently onlineMasseyBrown From United States of America, joined Dec 2002, 5434 posts, RR: 7
Reply 14, posted (5 years 2 months 4 weeks 22 hours ago) and read 2244 times:



Quoting VV701 (Reply 6):
And the EU is currently investigating not only the oneworld ATI application but whether the existing ATI agreements work in the public intererst or are anti-competitive.

I think the EU members, if not the EU itself, are more comfortable with cartel arrangements than the US is; I believe the ocean shipping conferences (near-equivalent of an ATI) were a European invention. In the US, despite our mistrust of cartels, the present regulatory environment seems to moving closer that which produced the Shipping Act of 1916. This act granted but heavily regulated ATI for water transportation and additionally provided for a government owned and operated merchant marine - a short-lived disaster which nevertheless served urgent wartime purposes. If Washington sees a number of new airline bankruptcies, I think regulation to include ATI will return.

Do you have any feeling for how the EU investigation may come out?



I love long German words like 'Freundschaftsbezeigungen'.
User currently offlineJfk777 From United States of America, joined Aug 2006, 8371 posts, RR: 7
Reply 15, posted (5 years 2 months 4 weeks 21 hours ago) and read 2223 times:
Support Airliners.net - become a First Class Member!



Quoting STT757 (Reply 11):
I don't know, DL gave up flying JFK-CDG. I could see BA taking over JFK-LHR, especially with those A380s BA has on order. AA could then use those LHR slots for..

BDL-LHR 757
PIT-LHR 757
STL-LHR?
DTW-LHR 757
SAN-LHR 767-300
etc..

The day AA gives up its 777 from JFK to LHR a nuclear bomb would have had to go off. NOT going to happen.

BA will operate 2 or 3 A380 from JFK to LHR but wil need 777, 744'a or 787 for other flights to JFK. BA will operate its A380 to 744 heavy destinations like Tokyo, Sydney, JNB, Hong Kong, LAX and SFO.


User currently offlinePRAirbus From Puerto Rico, joined Apr 2005, 1139 posts, RR: 1
Reply 16, posted (5 years 2 months 4 weeks 19 hours ago) and read 2175 times:

AA unions are too radical and borderline ignorant. Don't they realize all major airlines are allied with other carriers?

User currently offlineCommavia From United States of America, joined Apr 2005, 11605 posts, RR: 61
Reply 17, posted (5 years 2 months 4 weeks 15 hours ago) and read 2125 times:



Quoting Par13del (Reply 12):
If the number grows, would this not be a concern for AA in the long run?

Why?

AA will still be splitting the revenue 50/50, so if BA collects the revenue and splits it 50/50 with AA, what is the difference versus AA collecting the revenue and splitting it 50/50 with BA?

Quoting Par13del (Reply 12):
Ultimately, if one carrier gets the majority of the prestigious routes in terms of metal

"Prestigious routes" and "metal" would become meaningless. Again - in terms of finances - there won't be one airline's metal or another. For all accounting purposes, they will basically be functioning as one airline, so it won't matter whose "metal" is actually doing the flying.

Quoting Par13del (Reply 12):
the other will eventually be marginalized to the point of somewhere down the road being of no use to the alliance.

AA will never be "marginalized" in the bilateral alliance with BA or the oneworld global alliance overall. The reason is simple: AA is one of the largest airlines (and the alliance's only airline) in the world's largest single aviation market. AA provides its alliance partners - including BA - with access to thousands of markets that would not be reachable, on an in-network interline basis, without them.


User currently offlineFURUREFA From United States of America, joined Feb 2004, 802 posts, RR: 2
Reply 18, posted (5 years 2 months 3 weeks 6 days 19 hours ago) and read 2023 times:



Quoting Commavia (Reply 10):
But as for DFW and Boston - I'm not sure. I can definitely see them making a case for letting AA handle DFW and letting BA take care of Boston.

I can only comment on BOS, but this has been quite a touchy subject for everyone here. Many, many people automatically assumed that American would take over BOS-LHR for BA, but those people have been unpleasantly surprised by the increasing signals from AA that it would let BA do the flying, while handling on the ground.

I would love to see AA take over, but BA has the ability to put a 3-cabin (or "4-cabin" I guess) aircraft on the route. I highly doubt BOS will see 772 service again (they closed the pilot base, etc.), and BOS-LHR needs an F cabin.

Matt


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