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AA And APA Reach Agreement In Principal  
User currently offlinecatdaddy63 From United States of America, joined Apr 2007, 287 posts, RR: 0
Posted (1 year 5 months 1 week 4 days 5 hours ago) and read 1946 times:
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Looks like a deal has been made!

Copied from the APA website: http://public.alliedpilots.org/apa/default.aspx

APA INFORMATION HOTLINE

This is APA Communications Director Gregg Overman with the APA Information Hotline for Friday, Nov. 9.

APA AND AMR MANAGEMENT REACH AGREEMENT IN PRINCIPLE: This afternoon the APA Board of Directors voted to present AMR management with a comprehensive counter-proposal. Management responded by agreeing to APA’s proposal. The APA Board of Directors will proceed in compliance with policy-manual requirements and vote to send the agreement-in-principle to the membership as a tentative agreement for a ratification vote.

APA designed our comprehensive counter-proposal to provide our pilots with an industry-standard contract while enabling American Airlines to complete a successful restructuring and compete on a level playing field with its network-carrier peers. The Board’s vote on the motion to present the comprehensive counter-proposal was 13 for, two against and one absent.

We will provide details of the new agreement-in-principle shortly.

Also today, the Board received a closed-session briefing from Jack Butler, who serves as the lead counsel for the Unsecured Creditors’ Committee. In addition, Andrew Yearley of Lazard, APA’s financial adviser, addressed the Board.

As of this recording, the Board remained in session. Thanks for checking this hotline.

80 replies: All unread, showing first 25:
 
User currently offlineRevelation From United States of America, joined Feb 2005, 11929 posts, RR: 25
Reply 1, posted (1 year 5 months 1 week 4 days 5 hours ago) and read 1954 times:

Glad to hear things are moving forward for both the pilots and the airline.


Inspiration, move me brightly!
User currently offlinelucky777 From United States of America, joined Oct 2008, 534 posts, RR: 0
Reply 2, posted (1 year 5 months 1 week 4 days 5 hours ago) and read 1953 times:

How does this affect, if at all....the proposed merger with US Airways? Would AA management have more sway over the creditors committee if it can show how it has labor onboard a stand-alone or does none of this matter?

User currently offlinealuminumtubing From United States of America, joined Jul 2008, 362 posts, RR: 12
Reply 3, posted (1 year 5 months 1 week 4 days 3 hours ago) and read 1956 times:

Yes, we have a TA. It looked like things were going down hill and this afternoon the APA board voted 13-2 to send APA's last best final offer to AA. AA management accepted. We hope to hear the details later this evening.

User currently offlineFWAERJ From United States of America, joined Jun 2006, 3639 posts, RR: 2
Reply 4, posted (1 year 5 months 1 week 4 days 3 hours ago) and read 1951 times:

Quoting lucky777 (Reply 2):
How does this affect, if at all....the proposed merger with US Airways?

US hasn't even made an offer (that we know of) yet.



I don't work for FWA, their tenants, or their ad agency. But I still love FWA.
User currently offlinerj777 From United States of America, joined Dec 2000, 1753 posts, RR: 2
Reply 5, posted (1 year 5 months 1 week 3 days 23 hours ago) and read 1950 times:
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My guess is that US is waiting for the pilot crisis to be officially over.

User currently offlineDocLightning From United States of America, joined Nov 2005, 18704 posts, RR: 58
Reply 6, posted (1 year 5 months 1 week 3 days 20 hours ago) and read 1951 times:

From CNN:

http://money.cnn.com/2012/11/09/news...rlines-pilots/index.html?hpt=hp_t4

Quote:
Details of the agreement weren't immediately available, but the pilots' association said the proposal, which it submitted to AMR management, "provide[s] our pilots with an industry-standard contract while enabling American Airlines to complete a successful restructuring and compete on a level playing field with its network-carrier peers."
The pilots' association said earlier this week that the main sticking points in the talks had been pay parity with other carriers, furlough protection and rules regarding regional carriers that feed American.


User currently offlineBlueSky1976 From Poland, joined Jul 2004, 1834 posts, RR: 4
Reply 7, posted (1 year 5 months 1 week 3 days 16 hours ago) and read 1950 times:

So does this finally clear the way for AA to confirm their 787 order or not?


All Hail Mighty Triple Seven, The MURDERER of the so-called "Queen"!!!!
User currently offlinejustplanenutz From United States of America, joined Feb 2006, 492 posts, RR: 1
Reply 8, posted (1 year 5 months 1 week 3 days 12 hours ago) and read 1949 times:

Funny how, whenever something negative happens at AA, the a.net peanut gallery lights that thread up. "Unions are thugs,,,," or "Management are Robber Barons...." But when they agree on something truly positive for both, radio silence.

User currently offlineStitch From United States of America, joined Jul 2005, 29689 posts, RR: 84
Reply 9, posted (1 year 5 months 1 week 3 days 12 hours ago) and read 1948 times:
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Quoting BlueSky1976 (Reply 7):
So does this finally clear the way for AA to confirm their 787 order or not?

In theory, it should.


User currently offlineflyby519 From United States of America, joined Jul 2007, 1082 posts, RR: 0
Reply 10, posted (1 year 5 months 1 week 3 days 12 hours ago) and read 1949 times:

Quoting justplanenutz (Reply 8):
Funny how, whenever something negative happens at AA, the a.net peanut gallery lights that thread up. "Unions are thugs,,,," or "Management are Robber Barons...." But when they agree on something truly positive for both, radio silence.

Until this passes membership vote, they havent agreed on anything. Hold your champagne until then.



These postings or comments are not a company-sponsored source of communication.
User currently offlineJFKPurser From United States of America, joined Mar 2007, 478 posts, RR: 4
Reply 11, posted (1 year 5 months 1 week 3 days 10 hours ago) and read 1955 times:

Quoting lucky777 (Reply 2):
How does this affect, if at all....the proposed merger with US Airways? Would AA management have more sway over the creditors committee if it can show how it has labor onboard a stand-alone or does none of this matter?


The only "sway" AMR and Horton currently have over the UCC is the hopeless notion that their POR will give the UCC more value that what US Airways ultimately has to offer. But a pilot agreement does give the UCC what it wants to see to move the merger process forward.

With a pilot agreement on the horizon, the UCC would finally get what it wants according to the merger protocol agreed upon back in May when AMR announced it was going to entertain "potential consolidation scenarios". That essentially stipulates that no other competing PORs will be considered by the UCC until AMR presents a final POR against which all other competing PORS will be compared. Once the pilot labor costs become "fixed" for AMR with a ratified TA, the AMR POR will become the baseline for comparison with the US POR.

Since the NDA, DP and team have had ample time to flesh out their POR, which the UCC has beenwaiting almost eight months to have a look at. Most important, the stark and permanent reality that none of AMR's unions currently or ever will support the current AMR management team is something a majority of UCC members have had plenty of time to take to heart, and the pilot NO vote only drove that home to them even more. The deficiencies of AMR's standalone POR have not changed. The support for the US merge in bankruptcy among the non-bondholder group has not changed -- they are largely in favor of US Airways taking over and controlling the merge in BK, mostly due the labor unions having endorsed US Airways -- not to mention what nearly every single analyst has stated over and over again concerning the overall benefit to both AA and US as far as a merge goes.

The suspicion among UCC bondholder members has long been that any US POR will provide them with greater overall value -- for all the reasons mentioned above. But as I said earlier, they won't consider the US plan until the AMR plan is "ready", mostly because they want to be sure that US is forced to give them the highest possible return. Horton will certainly try to convince those bondholders that even though his AMR standalone doesn't give them as much immediate return, they will get it once AMR successfully emerges as a standalone so he can try to turn around and buy US AIrways on his own -- which would require them to wait much longer. And Horton's credibility as a CEO who would be able to successfully lead his disenfranchised labor groups -- especially the pilots -- in any post-merger takeover of US Airways is severely handicapped by the widespread notion among all parties involved in this that nobody who works for him is behind him, nor would they ever be in the future.

At a glance, the pilot TA doesn't seem to contain any significant additional "value" for labor as far as the UCC would be concerned. It's very possible that APA finally "got wind" of the reality that they needed to make some kind of an offer that they knew AMR would accept, otherwise this would go on in circles indefinitely, and force DP to make a hostile, which he has said he prefers not to have to do.

If the pilots ratify this agreement, all the pieces will be in place for the final showdown -- AMR's POR vs the completed US POR. And with labor support, the merger synergies, the scale of the larger network, added revenue and most important the ability to finally compete on equal terms with UA and DL as a merged carrier, it's clear who the winer will be. Nothing has changed about that since the beginning of this process.

[Edited 2012-11-10 09:42:22]

User currently offlineCubsrule From United States of America, joined May 2004, 22306 posts, RR: 20
Reply 12, posted (1 year 5 months 1 week 3 days 10 hours ago) and read 1947 times:

Quoting JFKPurser (Reply 11):
not to mention what nearly every single analyst has stated over and over again concerning the overall benefit to both AA and US as far as a merge goes.

Of course, that sentiment makes certain assumptions about costs both at US and at the combined carrier. And without seeing the pilot TA, it's tough to get a complete picture of costs.

Quoting JFKPurser (Reply 11):
And with labor support, the merger synergies, the scale of the larger network, added revenue and most important the ability to finally compete on equal terms with UA and DL as a merged carrier, it's clear who the winer will be.

It's not at all clear to me that AA needs US to "finally compete on equal terms with UA and DL." In what parts of the country is AA weak that US will help? US doesn't help on the west coast, for instance. CLT and DCA are nice to have, but at what cost? US operates at a pretty significant RASM disadvantage to AA, and for anyone who spends time flying both carriers and looking at the route maps, it's easy to see why.



I can't decide whether I miss the tulip or the bowling shoe more
User currently offlineJFKPurser From United States of America, joined Mar 2007, 478 posts, RR: 4
Reply 13, posted (1 year 5 months 1 week 3 days 9 hours ago) and read 1954 times:

Quoting Cubsrule (Reply 12):
In what parts of the country is AA weak that US will help?

From a Deutsche Bank analysis of the merge dated 28 May:

Read the full analysis via this link and pay attention to pp. 44-50 -- it's only one of many detailed analyses of the benefits of the US/AA merge for the overall network:

http://www.scribd.com/doc/95457849/D...al-Stability-Through-Consolidation

Also:

“AMR has a network disadvantage today, which has resulted in a substantial revenue disadvantage. A combined AMR-LCC eliminates the weaknesses present in each standalone airline and we project revenue synergies of $1.5 billion annually.”
– William Greene, Managing Director, Morgan Stanley (6/10/12)

“US Airways still has a strong presence on the East Coast via its Charlotte (CLT) and Philadelphia (PHL) hubs, which together represent 67% of the company's traffic…Interestingly, US Airways, although mostly a domestic carrier, flies to more European destinations out of PHL than AMR does out of JFK, further indicating AMR's weak East Coast footprint. Thus, we think combining the carriers will expand revenue since AMR will benefit from US Airways' east coast presence and US Airways will benefit from AMR's Latin American exposure in Miami and Dallas. We believe the increased East Coast presence will enable AMR to shrink its revenue gap and lower its salary costs.”
– Basili Alukos, Equity Analyst, Morningstar (6/7/12)

“LCC and AMR together would be stronger than AMR alone, we believe. We view LCC’s route structure as being very complementary to AMR’s. LCC’s substantial eastern U.S. market presence, which it efficiently manages through its Philadelphia and Charlotte hubs, have much greater connectivity than AMR’s hub at JFK. AMR has struggled to generate this kind of connecting traffic in order to compete with Delta and United out of New York. The combined company could capitalize on LCC’s strong Eastern presence and combine both companies’ sizeable international presence to compete more effectively with United and Delta.”
– Bob McAdoo, Analyst, Imperial Capital (5/29/12)

“In terms of network overlap, LCC’s network would be very complimentary [sic] to AMR’s network, in our
opinion, as a combined airline would attain greater scale and be much better suited to compete against DAL
and UAL.”
– Hunter Keay, Senior Airline Analyst, Wolfe Trahan &Co. (4/25/12)







[Edited 2012-11-10 10:36:40]

User currently offlineCubsrule From United States of America, joined May 2004, 22306 posts, RR: 20
Reply 14, posted (1 year 5 months 1 week 3 days 9 hours ago) and read 1951 times:

Quoting JFKPurser (Reply 13):
Read the full analysis via this link and pay attention to pp. 44-50 -- it's only one of many detailed analyses of the benefits of the US/AA merge for the overall network:

I have read the analyses. The trouble as I see it is revenue. CLT gives network coverage, but at what revenue costs. Many of these analyses seem to assume US costs and AA revenue to make the numbers work, and that's simply unrealistic.



I can't decide whether I miss the tulip or the bowling shoe more
User currently offlineJFKPurser From United States of America, joined Mar 2007, 478 posts, RR: 4
Reply 15, posted (1 year 5 months 1 week 3 days 9 hours ago) and read 1953 times:

Quoting Cubsrule (Reply 14):
I have read the analyses. The trouble as I see it is revenue. CLT gives network coverage, but at what revenue costs. Many of these analyses seem to assume US costs and AA revenue to make the numbers work, and that's simply unrealistic.

Well the analysts must all be wrong, then. I guess from where you sit, you have a better understanding of it. I'm not a number cruncher, so I have to put my trust into those who are -- and those who advise their investment partners on the best options which create the most value, and they all seem to agree that combining the two airlines makes the most sense for all parties involved. But that's just me. You must know something they don't. Anyway, we'll all just have to wait to see how the UCC feels about it. We should know in about six weeks.

And no matter how you feel about the numbers, Horton and AMR must agree with them as well, because they all know a merger is the only real way forward for AMR. They just want to be the ones in control of it, which would mean waiting until after they emerge. So one way or another, this will become a reality.

[Edited 2012-11-10 11:05:03]

User currently offlineCubsrule From United States of America, joined May 2004, 22306 posts, RR: 20
Reply 16, posted (1 year 5 months 1 week 3 days 9 hours ago) and read 1950 times:

Quoting JFKPurser (Reply 15):
Well the analysts must all be wrong, then.

Like I said, I don't know. I do know that the airline industry - despite lots of help from "analysts" who allegedly know a lot - has hemorrhaged money for decades. I can think of no industry with a more consistent historical record of destroying shareholder value than the airline industry. That is one of the reasons it fascinates me so.

Edited to add: in particular, I don't buy the assumptions about how well two groups of militant pilots (US/East and AA) will integrate. A couple of years of gridlock could destroy the whole enterprise regardless of how it looks on paper.

[Edited 2012-11-10 11:07:59]


I can't decide whether I miss the tulip or the bowling shoe more
User currently offlinelightsaber From United States of America, joined Jan 2005, 12421 posts, RR: 100
Reply 17, posted (1 year 5 months 1 week 3 days 9 hours ago) and read 1956 times:
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Wow. Kudos to both sides. Now maybe AA can improve their on time performance!   

Quoting FWAERJ (Reply 4):
US hasn't even made an offer (that we know of) yet.

I suspect they will.

Quoting justplanenutz (Reply 8):
But when they agree on something truly positive for both, radio silence.

Silence is typical after shock.   Seriously, the two have been feuding publicly and in ways that have scared off customers. So the bar fight is over. While the pilots think of it as management picking up the tab for all the broken furniture, the reality is they will suffer due to customers being scared off. This was the wrong economy for a bar fight. Now its over. Yea. But they still trashed the place.

I avoided AA for a few months. When things settle down and are proven in the operating numbers, I'll return. The question is, what fraction of the total customers will return?

Quoting Stitch (Reply 9):
Quoting BlueSky1976 (Reply 7):
So does this finally clear the way for AA to confirm their 787 order or not?

In theory, it should.

One hopes so.

Quoting Cubsrule (Reply 14):
Many of these analyses seem to assume US costs and AA revenue to make the numbers work, and that's simply unrealistic.

Agreed. I am not for the merger as I do not see the ROI. Most of the analysis is from banks who would make a profit facilitating the merger... not exactly neutral sources. Alas, the data otherwise is poor.

Lightsaber



I've posted how many times?!?
User currently offlineRevelation From United States of America, joined Feb 2005, 11929 posts, RR: 25
Reply 18, posted (1 year 5 months 1 week 3 days 8 hours ago) and read 1947 times:

Quoting BlueSky1976 (Reply 7):
So does this finally clear the way for AA to confirm their 787 order or not?

It's a step forward, but one would imagine that such a move would have to be approved by the bankruptcy judge.

Further, I'd imagine that it'd be part of the final reorganization plan, rather than an individual motion brought before the judge.

Of course, my imagination could be wrong....



Inspiration, move me brightly!
User currently offlinecommavia From United States of America, joined Apr 2005, 11121 posts, RR: 62
Reply 19, posted (1 year 5 months 1 week 3 days 8 hours ago) and read 1950 times:

Quoting JFKPurser (Reply 15):
Well the analysts must all be wrong, then.

Sure wouldn't be the first time.   

You're quoting some of the same analysts who for months spoke of the structural disadvantage that AMR would permanently be at because its network wasn't as large as Delta's or United's. And yet, lo and behold, AA's revenue performance for much of this year has been meeting or exceeding that of Delta and United, and AA has essentially come quite close to closing the unit revenue gap, and that's before the new union contracts have even really been implemented yet. So clearly - as Ms Glading continually harps on - the "revenue problem" that AA needed to address is now very forcefully being addressed.

As for your repeated assertion that "stark and permanent reality that none of AMR's unions currently or ever will support the current AMR management team," and that somehow undermines AA's plan, I think that's fairly irrelevant. First, AMR's unions have hated and been adversarial to essentially every single management team at AMR since Crandall, whether rational and deserved or not. Nothing changed here. I suspect the vast majority of union members, while perhaps not liking Horton, will work for whoever is at the top as long as they get paid, and if they really viscerally hate that person that much, they'll leave. And, I suspect that won't change one bit even if Parker is in charge - within a few years, the unions will hate him, too. Beyond that, I doubt the UCC could really care much about the sentiments of the unions. When it comes to labor - which the UCC views as a number, nothing more, nothing less - the UCC cares about people showing up for work and doing their jobs well. I have yet to see any evidence that AA's union employees will stop doing that. The pilot slowdown was one thing, but with a contract in place, and the justification of "uncertainty" and "lack of protection" gone, I suspect they'll show up for work, too.

And yes - I fully agree with your sentiments that we will soon, hopefully, get to see the specifics of Parker's plan. I got it that he says there are billions in revenue synergies to be had by make a combined "new AA" larger. It does beg the question: if AA is already essentially producing peer-competitive (and by "peer" I mean Delta and United) unit revenue now, how does he plan to actually leap-frog what his two largest competitors are now producing, years into their mergers? I, like everyone, will also look forward to seeing how he plans to create a company generated essentially the same revenue as Delta and United, but with thousands more on the payroll. If he does plan huge layoffs, how he plans to implement them - and, critically, which side will bear the brunt of them - will also be interesting to learn. My guess: there will be massive layoffs, mostly in the maintenance and non-union areas, and weighted most heavily towards the USAirways work groups (and I think the USAirways work groups know it, too).

To be clear: I'm not saying that the UCC has or hasn't been sold on this Parker-union P.R. show, nor am I saying that Parker's plan isn't the best one. But what I am saying is that - given what we have witnessed, in this industry and really in this country in general, in the last decade - I wouldn't be holding up the endorsement of Wall Street bankers and analysts as some great badge of honor. They will support whatever they think makes them the most money, but I think it is certainly debatable whether they really know which option that actually is. What I think is absolutely not debatable is that the Wall Street crowd whose "analysis" the unions are wrapping themselves in now couldn't possibly care any less about labor beyond needing warm bodies to actually do the work. These are the same people who mere months ago were singing from Gerard Arpey's sheet of music that AA's labor costs were too high and their unions had to accept concessions.


User currently offlineTWA85 From United States of America, joined Feb 2012, 215 posts, RR: 0
Reply 20, posted (1 year 5 months 1 week 3 days 7 hours ago) and read 1947 times:

Quoting JFKPurser (Reply 15):

What many analysts fail to realize, is that the US network is low yielding abd only profitable with the US cost structure. If AA and US merge, the US cost structure will come up to AA's cost structure which will still be than the current US structure and render much of the US network unprofitable. AA could obtain the same additional revenue by codesharing with B6 and AS that they could by merging with US and not deal with the headache of a merger. Also since AA has been leading the industry in RASM over the last several months, why does AA even need to merge with another airline, let alone an airline that does not have a very high yielding network. The argument of US and many analysts in favor of a merger is that AA needs to merge with US to obtain the revenue necessary to be competitive with UA and DL, however AA's problem has been lack of revenue, the problem has always been its cost structure of which US does not help address.

As for the AIP with the APA, AA management choosing to accept the APA counter proposal just may be a sign that AA management has realized it will be easier to compete with a happier labor force even though they won't have the lowest cost structure in the industry. A less restrictive scope clause will allow AA to utilize the right sized aircraft throughout its network which will result in higher RASM, and AA will be able to codeshare with B6 in NYC which will also result in higher RASM. Also this AIP will provide the AA pilots the industry standard contract they deserve. Win-Win for all parties involved.


User currently offlinecommavia From United States of America, joined Apr 2005, 11121 posts, RR: 62
Reply 21, posted (1 year 5 months 1 week 3 days 7 hours ago) and read 1949 times:

Quoting TWA85 (Reply 20):
What many analysts fail to realize, is that the US network is low yielding abd only profitable with the US cost structure. If AA and US merge, the US cost structure will come up to AA's cost structure which will still be than the current US structure and render much of the US network unprofitable.

I'm not sure if it's that people don't "realize it," but they have bought into Parker's P.R. - and perhaps his actual plan, too - that the higher costs can be covered by the higher revenue synergies.

Now, certainly, I think the example of United might give pause to some banking their investment on Parker's projections of revenue synergies. United, the last big U.S. legacy carrier to consummate a merger, also predicated massive revenue synergies, and yet today AA has now essentially reached parity with United in terms of unit revenue and has generally been beating United in unit revenue growth for months.

Personally, I have no doubt that a combined "new AA" would be able to incrementally drive some higher unit revenues given the overall expanded scope of the combined network and the relative bulking up of the carrier in many markets where today AA and USAirways are each, on their own, not as big but where they would be a much larger force combined. That being said - will this revenue boost be enough to cover the added cost to both airline's networks - particularly in the area of labor, where both airlines are now or soon will be operating largely under bankruptcy contracts? I'm not so sure. Again - I look forward to seeing Parker's plan. I think realistically the only way AA would be able to manage capacity at the macro-level and drive unit revenues anywhere close to high enough to support higher labor costs would be to simultaneously reduce capacity substantially (by substantially paring down the PHX hub and "right-sizing" ORD and CLT) and by becoming far more labor-efficient in terms of revenue-per-FTE. Either way, I think that would lead to a combined workforce that is perhaps higher paid, but substantially smaller, than the two work forces independently are today.

Quoting TWA85 (Reply 20):
As for the AIP with the APA, AA management choosing to accept the APA counter proposal just may be a sign that AA management has realized it will be easier to compete with a happier labor force even though they won't have the lowest cost structure in the industry. A less restrictive scope clause will allow AA to utilize the right sized aircraft throughout its network

Word elsewhere on the internet is that the APA's comprehensive proposal that AA agreed to is essentially Delta's scope clause, meaning AA came off their 79-seat demand and have agreed to the APA's 76-seat limit. Not sure what that means in terms of number of 76-seaters permitted. The company did, also, apparently get the ability to greatly expand codeshares, which was inevitable given the relatively less lax provisions Delta and United already had.


User currently onlineFURUREFA From United States of America, joined Feb 2004, 791 posts, RR: 2
Reply 22, posted (1 year 5 months 1 week 3 days 6 hours ago) and read 1947 times:

Quoting lightsaber (Reply 17):
Agreed. I am not for the merger as I do not see the ROI. Most of the analysis is from banks who would make a profit facilitating the merger... not exactly neutral sources. Alas, the data otherwise is poor.

To be fair, the Chinese wall at the various banks are very effective at avoiding conflict of interest issues when it comes to the research versus investment banking parts of a bank.

I haven't made my mind up as to whether I think the merger is the best way forward. I do believe, however, that the analysts are absolutely correct in stating that AA's network disadvantage will negatively impact future revenue growth. AA is not competing against the DL or UA of ten years ago; DL and UA today are both strong in the Pacific and in Europe, and, while certainly not as strong as AA in South America, have some sort of a South American presence.


User currently offlineBarryH From United States of America, joined Sep 2012, 71 posts, RR: 0
Reply 23, posted (1 year 5 months 1 week 3 days 6 hours ago) and read 1945 times:

Quoting JFKPurser (Reply 15):
Well the analysts must all be wrong, then. I guess from where you sit, you have a better understanding of it. I'm not a number cruncher, so I have to put my trust into those who are -- and those who advise their investment partners on the best options which create the most value, and they all seem to agree that combining the two airlines makes the most sense for all parties involved.

Your assumption is that analysts are objective. If US hired DB the results of their analysis wil skew to the pre-conceived outcome US is looking for. If AA hired DB their analysis would support AA's leanings. Same thing with specific groups of bondholders, secured creditors, and unsecured creditors. In this particular situation the only hope of an objective analysis would be if it were comissioned by the Judge. There will probably be a dozen sets of analysis presented in this case from various stakeholders all with their own biases. None of them will be wrong. A single set of numbers and variables can tell an infinite number of stories. The "winner" will be the one the Judge finds most plausible.


User currently offlinecommavia From United States of America, joined Apr 2005, 11121 posts, RR: 62
Reply 24, posted (1 year 5 months 1 week 3 days 6 hours ago) and read 1946 times:

Quoting FURUREFA (Reply 22):
I do believe, however, that the analysts are absolutely correct in stating that AA's network disadvantage will negatively impact future revenue growth.

Fair point, but it does beg the question: if AA has already now closed a substantial portion of the PRASM gap vs Delta and United, without even yet having completed the full restructuring, then why does AA need USAirways?

If the entire argument is that AA is incapable of being competitive with Delta and United because it is smaller, than does that argument get undermined somewhat by the fact that AA is, today, already generating similar PRASM numbers even despite its smaller network?

Quoting FURUREFA (Reply 22):
AA is not competing against the DL or UA of ten years ago; DL and UA today are both strong in the Pacific and in Europe, and, while certainly not as strong as AA in South America, have some sort of a South American presence.

Perhaps, although it again begs the question: why bother with USAirways then? USAirways only helps with Europe - and even then only brings a net of six new destinations, of which at least 2 (LGW and MUC) would almost certainly be cut as a result of network optimization and alliance realignment post-merger (and I could also see possibly ZRH and some of the FRA flying being cut for the same reasons). Beyond that, USAirways brings zero presence in Asia, and essentially zero presence in South America, and an added presence in the Caribbean that is tiny compared to AA.

However, that being said, I think the argument of USAirways helping fill out AA's network is far more compelling from a domestic perspective, where USAirways brings a substantially stronger presence along the east coast in several key areas (New England, Mid-Atlantic, Atlantic Southeast) where AA has little or no presence, and 2.5 hubs that are either excellent or as-good-as-anything-competitors-have in the region (PHL, DCA and CLT). That I do totally buy - the fusion of that to AA's existing domestic network, plus AA's existing global network, is certainly intriguing.


User currently offlineCubsrule From United States of America, joined May 2004, 22306 posts, RR: 20
Reply 25, posted (1 year 5 months 1 week 3 days 6 hours ago) and read 2085 times:

Quoting commavia (Reply 21):
Again - I look forward to seeing Parker's plan. I think realistically the only way AA would be able to manage capacity at the macro-level and drive unit revenues anywhere close to high enough to support higher labor costs would be to simultaneously reduce capacity substantially (by substantially paring down the PHX hub and "right sizing" ORD and CLT) and by becoming far more labor-efficient in terms of revenue-per-FTE.

I tend to agree with you that PHX, ORD and CLT would see cuts in a combined network and, from a revenue perspective, that that's probably a good thing. The trouble is that, especially at CLT, that's going to drive costs up. One of the reasons that CLT works well in terms of costs is its bulk. I am not convinced that CLT can work as a 300-350 flight/day hub; revenue goes up but I wonder whether costs go up more.

Quoting FURUREFA (Reply 22):
I do believe, however, that the analysts are absolutely correct in stating that AA's network disadvantage will negatively impact future revenue growth. AA is not competing against the DL or UA of ten years ago; DL and UA today are both strong in the Pacific and in Europe, and, while certainly not as strong as AA in South America, have some sort of a South American presence.

But what does US bring to the table in either place? In the Pacific, the answer is zero, and I'd argue that AA is better positioned in the Pacific than at any time in the past decade. There may be a route here or there to be added, but the AA network to Japan, China and Korea is more than adequate. DFW-HKG is a hole, but what else?

TATL, US adds a handful of cities, but UA and DL are both showing us pretty clearly that the way forward is with a strong, immunized partner. AA already has that; US does not. US does not bring a hub to the table that would enable service to the likes of AGP, PRG or STR.



I can't decide whether I miss the tulip or the bowling shoe more
User currently onlineRyanairGuru From Australia, joined Oct 2006, 4696 posts, RR: 4
Reply 26, posted (1 year 5 months 1 week 3 days 6 hours ago) and read 2076 times:

I've been thinking about CLT, and the fact that it is a low CASM, low RASM hub. The consensus on this thread is that AA's costs would make a lot of the US network out of CLT untenable.

I was wondering whether a merger could actually drive RASM growth at CLT, meaning that although costs would rise, the hub wouldn't be as unsustainable as some suggest.

North Carolina is a state that is unrecognizable from just 20 years ago, undergoing significant economic and demographic change. Charlotte is the second largest banking center in the country, while the Raleigh/Durham region has a major pharmaceutical industry. The state is home to major operations for global corporations such as Bank of America, Wells Fargo, GlaxoSmithKline, Pfizer, Merck, and Novartis.

These corporations need global coverage for their travel plans. So long as US is not able to connect them to the likes of HKG, PVG and BOM then they are going to struggle to tap into the revenue potential that is right on their doorstep.

It has always been said that US needs UA/DL/AA more than the larger partner needs them, but I do wonder if a global network would help US to build its own RASM.

As I said, this is just an idle thought, and I'd be interested to hear what other people think.



Worked Hard, Flew Right
User currently offlinealuminumtubing From United States of America, joined Jul 2008, 362 posts, RR: 12
Reply 27, posted (1 year 5 months 1 week 3 days 6 hours ago) and read 2261 times:

We are still waiting for the details. My personal opinion in all of this, is that both AA and the APA received briefings from the UCC and that both sides were told to get this done ASAP, or they would proceed with plan B, which would not be attractive to either side. Just my two cents worth.

User currently offlineDrmlnr1 From United States of America, joined Jun 2011, 81 posts, RR: 0
Reply 28, posted (1 year 5 months 1 week 3 days 5 hours ago) and read 2234 times:

With this deal almost done, what is the next step for AA? Will they finally be able to emerge from bankruptcy and start making money? I hope that soon we will see these headlines: "AA emerges from bankruptcy." and "AA confirms order for 787-9." Can't wait to fly AA!


Flying is relaxing!
User currently offlineaztrainer From United States of America, joined Oct 2011, 517 posts, RR: 1
Reply 29, posted (1 year 5 months 1 week 3 days 5 hours ago) and read 2233 times:

Quoting aluminumtubing (Reply 27):
We are still waiting for the details. My personal opinion in all of this, is that both AA and the APA received briefings from the UCC and that both sides were told to get this done ASAP, or they would proceed with plan B, which would not be attractive to either side. Just my two cents worth.

I would hope so and I really hope that AA becomes a stronger company without US acquiring them.

My question about the potential profitability of AA post BK. How quickly would they get ride of their MD fleet? I know they are not very cost effective to operate, but many are owned frames. At what percentage do many airlines decide a particular airframe is too costly to operate than the cost of a new airframe?


User currently offlineCubsrule From United States of America, joined May 2004, 22306 posts, RR: 20
Reply 30, posted (1 year 5 months 1 week 3 days 5 hours ago) and read 2240 times:

Quoting RyanairGuru (Reply 26):
It has always been said that US needs UA/DL/AA more than the larger partner needs them, but I do wonder if a global network would help US to build its own RASM.

I think that's absolutely right, and I'd suggest that a similar argument might be made at DCA; PHL and CLT are great hubs for, more or less, cities within the DCA perimeter that can be served ex-DCA. ORD and DFW are nearly on the edge of the perimeter and complement what US is permitted to do from DCA really well. The AA experience at JFK is actually fairly pleasant (compared to Terminal 2/3 or the terminal change shuffle at EWR), and a combined US/AA could, I think, be a much stronger player in the WAS TATL market as well for that reason.

None of that answers the question, however, of why AA needs US.



I can't decide whether I miss the tulip or the bowling shoe more
User currently offlinelightsaber From United States of America, joined Jan 2005, 12421 posts, RR: 100
Reply 31, posted (1 year 5 months 1 week 3 days 4 hours ago) and read 2240 times:
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Quoting FURUREFA (Reply 22):
To be fair, the Chinese wall at the various banks are very effective at avoiding conflict of interest issues when it comes to the research versus investment banking parts of a bank.

Agreed, but in the words of Upton Sinclair: “It is difficult to get a man to understand something, when his salary depends on his not understanding it.”

They know that performing a merger helps their job stability. Thus, they will be inclined to ignore details that inhibit a merger. One of which:

Quoting RyanairGuru (Reply 26):
The consensus on this thread is that AA's costs would make a lot of the US network out of CLT untenable.

  

Quoting aztrainer (Reply 29):
How quickly would they get ride of their MD fleet? I know they are not very cost effective to operate, but many are owned frames.

The MD-80s are being replaced by 738s and A319s. About 150 of the MD-80s will be replaced by the CFM-56 powered A319 of which 130 A319s and A321s by 2017 with 130 A320NEO to follow. I haven't found an exact final date on the MD-80, but the delivery schedule puts it in the 2018 to 2020 time frame.

http://www.aa.com/i18n/amrcorp/newsr...p?v_locale=en_US&v_mobileUAFlag=AA


To put it in perspective:
The MD-80, according to Alaska, consumes around 1,050 gallons per hour. But the newer and bigger 737-800 burns about 850 gallons per hour.

Read more: http://www.seattlepi.com/business/ar...n-as-1277527.php#ixzz2BrlHxTqy


200 gallons per hour. I do not know AA's MD-80 utilization, but it has to be higher than Allergiant's 8.9 hours/day (a known low utilization airline) and lower than B6's ~12 hours per day with the A320 (was 13 hours/day when they flew further, but AA flighs shorter routes with the MD-80s):
http://business.library.wisc.edu/res...avajecz/10_Fall/JetBlue_Report.pdf

So let's call it 10 hours a day or 2000 gallons saved by MD-80 replaced or at the spot price of $3.13/gallon for jet fuel, about $2,285,000 per year per aircraft. $2.28M USD per year is a lot. Plus maintenance savings (in particular, on the engines).

Quote from AS on fuel savings of 738 vs. MD-80 (1050 gallons/hr to 850 with the 738):
http://www.seattlepi.com/business/ar...80-era-winding-down-as-1277527.php

So AMR should replace the MD-80s ASAP which appears to be in the 2018 to 2020 time frame.

Note: If AA is paying *top* lease rates, the A319 costs about $1 million USD more than the fuel savings. I suspect their lease rates are lower and thus they come out ahead with the maintenance cost savings.
Fall 2012 Aircraft Values And Lease Pricing (by LAXintl Nov 5 2012 in Civil Aviation)

Lightsaber

[Edited 2012-11-10 17:03:47]


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User currently offlineDocLightning From United States of America, joined Nov 2005, 18704 posts, RR: 58
Reply 32, posted (1 year 5 months 1 week 3 days 2 hours ago) and read 2229 times:

Quoting commavia (Reply 21):
I'm not sure if it's that people don't "realize it," but they have bought into Parker's P.R. - and perhaps his actual plan, too - that the higher costs can be covered by the higher revenue synergies.

You make it sound as if Mr. Parker is being deceptive here. I don't understand why he would want this deal if he thought it would bankrupt his airline.


User currently offlineflyby519 From United States of America, joined Jul 2007, 1082 posts, RR: 0
Reply 33, posted (1 year 5 months 1 week 3 days 2 hours ago) and read 2243 times:

Quoting DocLightning (Reply 32):
You make it sound as if Mr. Parker is being deceptive here. I don't understand why he would want this deal if he thought it would bankrupt his airline.

US is obsolete and headed for extinction unless they merge with someone bigger. If he doesnt make this deal happen he will be out of a job.



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User currently offlineapodino From United States of America, joined Apr 2005, 4124 posts, RR: 6
Reply 34, posted (1 year 5 months 1 week 3 days 2 hours ago) and read 2240 times:

Quoting flyby519 (Reply 33):
US is obsolete and headed for extinction unless they merge with someone bigger. If he doesnt make this deal happen he will be out of a job.

How do you figure? They have been posting record profits in recent quarters? I don't see how an airline is heading for extinction if they are posting record profits.



I want to see the details of this TA. I am particularly curious about Scope. That is the big one that will affect others as well.


User currently onlineRyanairGuru From Australia, joined Oct 2006, 4696 posts, RR: 4
Reply 35, posted (1 year 5 months 1 week 3 days 2 hours ago) and read 2248 times:

Quoting flyby519 (Reply 33):
US is obsolete and headed for extinction

A bit drastic, no?

US is good a what they do: shift people up and down the East Coast. Between the shuttle and DCA, plus two fortress hubs, there is no evidence to suggest that US can't continue plodding along and turn in a small profit.

What DP wants is to actually grow the airline, and that will be difficult/impossible without a partner.



Worked Hard, Flew Right
User currently offlinecommavia From United States of America, joined Apr 2005, 11121 posts, RR: 62
Reply 36, posted (1 year 5 months 1 week 3 days 2 hours ago) and read 2260 times:

Quoting DocLightning (Reply 32):
You make it sound as if Mr. Parker is being deceptive here.

Well if I do that is not my intent. My intent is to make it sound as if he's selling something, which he is (as are all of us). He (with the willing and active involvement of the unions) is making a sales pitch. The question is whether what he's selling is worth buying. Time will tell.

Quoting DocLightning (Reply 32):
I don't understand why he would want this deal if he thought it would bankrupt his airline.

I'm not suggesting that he plans to bankrupt his airline (although there are skeptical employees of both companies that think that is his ultimate goal for the combined company in a few years time). I personally take Mr. Parker entirely at his word that he believes the synergies from the combined entity would produce a stronger, more competitive carrier. I am just curious to see his math that led him to arrive at that conclusion.

Quoting flyby519 (Reply 33):
US is obsolete and headed for extinction unless they merge with someone bigger. If he doesnt make this deal happen he will be out of a job.

I don't know if I'd go that far, but I do generally agree that any recent profitability aside, strategically USAirways needs this merger more than AA does.

USAirways has been consistently profitable lately, but that is in large part driven by the fact that the airline's current business model is built on hubs that are generally (with the exception of PHX) dominated with little competition and, critically, bankruptcy wages that are lower than legacy peers.

From my perspective, one way or another, USAirways employees are some day going to get a massive raise that will bring them more into at-least-near-parity with their legacy counterparts, and when they do, large portions of the USAirways network (as it exists today) will be rendered unprofitable. Parker is up against this inescapable ticking time bomb of airline economics, and he knows it, which is why he is so keen to merge as soon as possible to try and unlock the synergies of a merger (both in terms of higher revenue and redundancies/layoffs) to offset this inevitable jump in costs.

Quoting apodino (Reply 34):
I want to see the details of this TA. I am particularly curious about Scope. That is the big one that will affect others as well.

Well, again, elsewhere on the net it has been stated that AA essentially accepted APA's final scope proposal as it relates to regional feed (regionals can operate only up to 76 seats, essentially Delta's scope) and AA got increased codesharing. That's obviously very non-specific, so I, too, will be interested to see what's in the language, but perhaps that's a start.


User currently offlineflyby519 From United States of America, joined Jul 2007, 1082 posts, RR: 0
Reply 37, posted (1 year 5 months 1 week 3 days 2 hours ago) and read 2249 times:

Quoting apodino (Reply 34):
How do you figure? They have been posting record profits in recent quarters? I don't see how an airline is heading for extinction if they are posting record profits.

I feel that Parker has been extremely fortunate for the labor situation that has fallen into his lap and is allowing US to have super low CASM, therefore propping up a less than desirable network. The formation of mega carriers DL/NW, UA/CO are going to be a serious force to be reckoned with along the east coast and will give US a lot of pressure they havent had to face in the past. I dont think US is sustainable given the inevitabilities of increased labor costs and megacarrier competitors.

If US can merge with AA it will create a megacarrier on a similar scale as the others, but much of the ex-US network wont be financially feasible with the increased labor costs that Parker has promised to the AA labor groups.

So yes, I think US/AA will happen, but the future of AA is going to be filled with heavy cuts and reductions to the ex-US network, but I think it would be in AA's best interest to avoid a US merger and seek alternative strategies.

[Edited 2012-11-10 18:24:17]


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User currently offlinelightsaber From United States of America, joined Jan 2005, 12421 posts, RR: 100
Reply 38, posted (1 year 5 months 1 week 3 days 1 hour ago) and read 2273 times:
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Quoting apodino (Reply 34):
I want to see the details of this TA. I am particularly curious about Scope. That is the big one that will affect others as well.

I'm also curious about A319 wage rates as well as pilot productivity. There are many interesting bits to discuss (e.g., furlough protection and pilot schedule). All hints are to much broader scope that is on the lines of DL's new provisions.


Lightsaber



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User currently offlineBarryH From United States of America, joined Sep 2012, 71 posts, RR: 0
Reply 39, posted (1 year 5 months 1 week 3 days 1 hour ago) and read 2262 times:

Quoting commavia (Reply 24):
Perhaps, although it again begs the question: why bother with USAirways then?

US brings nothing to the party that a post-bankruptcy AA with a new lower cost structure and increased flexibility couldn't replicate themselves either mainline or with OW, code share, and regional partners. Part of AA retrenching previously was because they couldn't viably compete economically. A lot of routes that were dropped were probably profitable but barely. When your margin is being compared to competitors you can't afford to either lose money on flying or eke out a pencil thin margin. Because of the yields, the "cornerstone strategy" was the only viable way to drive margins with lopsided costs because of the heavy business orientation of those markets. With competitive costs, efficiency from fleet renewal, and a smaller debt load AA's view of future opportunities will most likely look different than the past. Probably the most meaningful assets US possesses (LGA and DCA slots) are going to be divested to some degree in order to get the merger approved. The biggest value in the merger probably won't be discussed overtly in the presentation(s). And that's taking more flying capacity out of the U.S. to gain better pricing control. And that won't just benefit AA/US; it'll benefit the whole industry. If this were truly just about network synergy US could dump Star and moved to OW and AA/US could seek anti-trust immunity with the OW partners. The operational gains would be similar to that of a merger with a smaller financial upside, less cost savings, but a hell of a lot less complexity and risk to both US shareholders and AA creditors. Especially since Parker’s said publically nothing would be cut if a merger was approved. There’s a lot more to this than just “my airline’s managers can beat up your airline’s managers.”


User currently offlineflyby519 From United States of America, joined Jul 2007, 1082 posts, RR: 0
Reply 40, posted (1 year 5 months 1 week 3 days 1 hour ago) and read 2260 times:

Quoting BarryH (Reply 39):

Said perfectly! I couldn't agree more



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User currently offlinealuminumtubing From United States of America, joined Jul 2008, 362 posts, RR: 12
Reply 41, posted (1 year 5 months 1 week 3 days ago) and read 2317 times:

Below is part of an email sent to us by our DFW APA board members. I guess it may be up to a week before we find out the specifics of the AIP.

[/[We also want to make sure that you are aware, in accordance with APA policy, that National Officers and committee members are prohibited from commenting on the agreement until the APA Board of Directors approves it as a Tentative Agreement to be sent to the membership for ratification. Rest assured that before your vote, we will make sure you have all the information possible to make an informed decision.[/[


User currently offlineWA707atMSP From United States of America, joined Oct 2006, 2179 posts, RR: 12
Reply 42, posted (1 year 5 months 1 week 2 days 23 hours ago) and read 2264 times:

Quoting commavia (Reply 21):
Quoting TWA85 (Reply 20):What many analysts fail to realize, is that the US network is low yielding abd only profitable with the US cost structure. If AA and US merge, the US cost structure will come up to AA's cost structure which will still be than the current US structure and render much of the US network unprofitable.
I'm not sure if it's that people don't "realize it," but they have bought into Parker's P.R. - and perhaps his actual plan, too - that the higher costs can be covered by the higher revenue synergies.

When AA bought Air Cal and Reno Air, their rationale was that the additional traffic generated by AA having a bigger presence on the West Coast, especially on transcontinental routes out of the SF Bay area, would more than offset bringing OC / QQ employees up to AA wage levels. All of us know how well that worked out.

Also, USAirways still hasn't integrated their ex-US and ex-HP pilot seniority lists. US should not even think about adding the temporarily compliant but still breathtakingly militant AA pilots to their workforce when their existing crew seniority lists haven't been integrated. I shudder at the potential for slowdowns, wildcat strikes, etc, when you put HP, US, AA, and even a few TW pilots together.

I still feel AA would be far better off merging with B6 than US. In large part B6 owes its existence to AA's decision to allow their historically strong presence in New York City and Boston to wither away (despite the purchase of Command Airways and Business Express) post-deregulation. I feel this was an even bigger mistake than the TWA acquisition, or buying OC and QQ.

Unlike USAirways, merging with B6 would almost certainly generate enough incremental high yield traffic to offset the need to bring B6 employees up to AA wage levels. Hubs in JFK and BOS are far more valuable than hubs in PHL and DCA. Conversely, not buying B6 would leave AA a weak #4 in New York City with or without a US merger, and very vulnerable to attack from DL once DL's problems with the "third world port" are fixed in a few years.



Seaholm Maples are #1!
User currently offlineRevelation From United States of America, joined Feb 2005, 11929 posts, RR: 25
Reply 43, posted (1 year 5 months 1 week 2 days 12 hours ago) and read 2205 times:

Quoting BarryH (Reply 39):
US brings nothing to the party that a post-bankruptcy AA with a new lower cost structure and increased flexibility couldn't replicate themselves either mainline or with OW, code share, and regional partners

It gets rid of a competitor, one that may end up merging with others and making AA's life rougher.



Inspiration, move me brightly!
User currently offlineflyby519 From United States of America, joined Jul 2007, 1082 posts, RR: 0
Reply 44, posted (1 year 5 months 1 week 2 days 12 hours ago) and read 2203 times:

Quoting Revelation (Reply 43):
It gets rid of a competitor, one that may end up merging with others and making AA's life rougher.

Which other airline would US merge with? DL and UA fought fiercely to avoid a US merger.



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User currently offlinecommavia From United States of America, joined Apr 2005, 11121 posts, RR: 62
Reply 45, posted (1 year 5 months 1 week 2 days 12 hours ago) and read 2244 times:

Quoting lightsaber (Reply 38):
I'm also curious about A319 wage rates as well as pilot productivity.

Well based on what was released last week, the A319 pay rate had already been agreed upon and was not one of the open items holding things up. Apparently AA agreed to put the A319 into the same pay band as the 737-800. Seeing as the A319 is over 20% smaller than the 737-800, I am curious to know how AMR now views the economics of that jet in the context of this TA, if it is to pass.

Quoting BarryH (Reply 39):
US brings nothing to the party that a post-bankruptcy AA with a new lower cost structure and increased flexibility couldn't replicate themselves either mainline or with OW, code share, and regional partners.

I disagree. USAirways brings a massive presence at DCA, which is a prize in and of itself. It brings two great hubs along the east coast that AA could never replicate - in terms of critical mass or geographical access - any other way, including with any other merger partner. Those three things - DCA, PHL and CLT - alone have huge merit. Again, though, the question is whether that merit is undermined by the cost and complexity of the merger, integration and resulting higher costs.

Quoting WA707atMSP (Reply 42):
When AA bought Air Cal and Reno Air, their rationale was that the additional traffic generated by AA having a bigger presence on the West Coast, especially on transcontinental routes out of the SF Bay area, would more than offset bringing OC / QQ employees up to AA wage levels. All of us know how well that worked out.

I generally agree. Banking on hypothetical higher revenue to cover certainly higher costs has not traditionally been a winning strategy in the airline industry for anyone who's tried it.

Quoting WA707atMSP (Reply 42):
Unlike USAirways, merging with B6 would almost certainly generate enough incremental high yield traffic to offset the need to bring B6 employees up to AA wage levels.

I'm not so sure, since much of JetBlue's network - like USAirways' - would be rendered instantly unprofitable at AA's cost levels. Now, that being said, the slots and density JetBlue would bring would give AA critical mass in a strategically important area and the opportunity to reallocate resources. But would the higher revenue be enough to offset the higher costs? Just as with USAirways, I'm not sure. One thing if for sure, though - the union integration would be far less messy, since JetBlue is very lightly unionized and its workforce is generally very junior relative to AA's.

Quoting Revelation (Reply 43):
It gets rid of a competitor, one that may end up merging with others and making AA's life rougher.

It would eliminate one more competitor, which in and of itself would be helpful - for all carriers. Nonetheless, I'm not sure how plausible it is that USAirways would somehow find somebody else to merge with absent a merger with AA and "make AA's life rougher."

That's sort of like Parker's (empty, in my view) implication that if AA and USAirways don't merge right now, it may become much more difficult if not impossible later. I find that highly unlikely. If the logic of a deal is supposedly so overwhelming, it will make sense no matter when it happens, regardless of any efficiency that can be gained by doing it in bankruptcy. And as for the threat that AA might get into a bidding war if it were to try to acquire USAirways later - that, too, I think is highly unlikely. USAirways has nobody else to merge with. It's AMR or no merger for USAirways, in my view.


User currently offlineflyby519 From United States of America, joined Jul 2007, 1082 posts, RR: 0
Reply 46, posted (1 year 5 months 1 week 2 days 11 hours ago) and read 2207 times:

Quoting commavia (Reply 45):
I'm not so sure, since much of JetBlue's network - like USAirways' - would be rendered instantly unprofitable at AA's cost levels. Now, that being said, the slots and density JetBlue would bring would give AA critical mass in a strategically important area and the opportunity to reallocate resources. But would the higher revenue be enough to offset the higher costs?

It would definitely turn into the ultimate heavyweight bout between AA and DL for JFK, but if AA wants to be a heavyweight player then this is a fight then need to win.



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User currently offlineWA707atMSP From United States of America, joined Oct 2006, 2179 posts, RR: 12
Reply 47, posted (1 year 5 months 1 week 2 days 11 hours ago) and read 2207 times:

Quoting RyanairGuru (Reply 26):
It has always been said that US needs UA/DL/AA more than the larger partner needs them

I agree 100%.

I think it's really interesting that the USAirways fans on ANet are strongly in favor of a US/AA merger. The AA fans are generally anti-merger, even though the combined airline would almost certainly be called "American Airlines" and headquartered in DFW. This is a pretty clear indicator of which airline needs a US / AA merger more.

Conversely, the AA fans are in favor of an AA / B6 merger, the thought of which horrifies the pro-B6 faction of ANet. Once again, this shows that AA needs B6 more than B6 needs AA.



Seaholm Maples are #1!
User currently offlinelightsaber From United States of America, joined Jan 2005, 12421 posts, RR: 100
Reply 48, posted (1 year 5 months 1 week 2 days 10 hours ago) and read 2200 times:
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Everyone: If you want to discuss the possible US/AA merger, please start a new thread.

Quoting commavia (Reply 45):
Apparently AA agreed to put the A319 into the same pay band as the 737-800. Seeing as the A319 is over 20% smaller than the 737-800, I am curious to know how AMR now views the economics of that jet in the context of this TA, if it is to pass.

Is it the same pay band or is it the pay by MTOW that AMR used to do? I believe the wording leaves enough 'wiggle room' that I remain curious to see what the final decision on A319 pay rates will be. I do not believe it was a 'sticking point,' I just am not sure of the final rates.

Lightsaber



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User currently offlinecommavia From United States of America, joined Apr 2005, 11121 posts, RR: 62
Reply 49, posted (1 year 5 months 1 week 2 days 10 hours ago) and read 2222 times:

Quoting lightsaber (Reply 48):
Is it the same pay band or is it the pay by MTOW that AMR used to do? I believe the wording leaves enough 'wiggle room' that I remain curious to see what the final decision on A319 pay rates will be.

My understanding is no. If this latest TA is like the earlier TA, and the April term sheet, there will be no more determination of pay for each individual aircraft based on MTOW. All aircraft that fit within a certain band, either as explicitly identified and enumerated in the contract or based on their FAA-max seat configuration, will be paid the same rates. AA's original term sheet had the A319 in a separate, lower, pay band from the 737-800. Now it appears AA has agreed to combine both into the same pay band.


User currently offlinelightsaber From United States of America, joined Jan 2005, 12421 posts, RR: 100
Reply 50, posted (1 year 5 months 1 week 2 days 10 hours ago) and read 2224 times:
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Quoting commavia (Reply 49):
AA's original term sheet had the A319 in a separate, lower, pay band from the 737-800. Now it appears AA has agreed to combine both into the same pay band.

Interesting. Quite an increase in pay for A319 pilots. It looks like the union did well for their members this negotiation.

Lightsaber



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User currently offlinenorcal From United States of America, joined Mar 2005, 2459 posts, RR: 5
Reply 51, posted (1 year 5 months 1 week 2 days 7 hours ago) and read 2205 times:

Quoting commavia (Reply 45):
Well based on what was released last week, the A319 pay rate had already been agreed upon and was not one of the open items holding things up. Apparently AA agreed to put the A319 into the same pay band as the 737-800. Seeing as the A319 is over 20% smaller than the 737-800, I am curious to know how AMR now views the economics of that jet in the context of this TA, if it is to pass.

Pilot costs won't make or break this aircraft. The A319 is going to burn 850 gallons of gas an hour, that's over $2,600 every hour. Paying the pilots $10-15 more an hour ($20-30 heck even $50 total) won't make or break the operation.

Virgin America, Spirit, Frontier, US Airways, United, and Delta all have one rate for narrow body families. There is simply no need for American to try and force a B scale on the A319.


User currently offlineckfred From United States of America, joined Apr 2001, 5067 posts, RR: 1
Reply 52, posted (1 year 5 months 1 week 2 days 6 hours ago) and read 2337 times:

For those of you in the APA who can't wait to merge with US, ask yourself these questions:

1. Do you want to deal with the problems of merging two carriers together? UA is still having computer issues, even though the systems were merged back in March. US had all sorts of problems merging with HP. Remember the baggage fiasco at PHL during the holidays several years ago?

2. Do you want to deal with US's labor problems? They still haven't merged the HP and US seniority lists. Considering the problems that AA had with QQ and TW, do you want to get into the middle of that. At some point, the combined AA/US will have to downsize PHX, because having a hub between the DFW and LAX cornerstones makes no sense. Have fun flying with a US pilot who has a bad commute thanks to losing his crew base.

3. Have you seen the Zagat list? US is no. 5 from the bottom, stuck with the likes of Sprirt, EasyJet, and Ryan Air. For all of the issues that AA has, it's not on the list of worst 10 carriers. But, Parker will probably drag AA down to US's level, rather than raise US to AA's level.

4. Doug Parker got his start at AA. A friend of mine who used to teach college business will tell you that studies show the first corporate culture has far more influence on how a manager/executive handles his or her responsibilities than the cultures at subsequent employers. The CEOs (Carty, Arpy, and Horton) turned out by the culture that Bob Crandall created haven't been very good. Why have another graduate of the Bob Crandall School of Management as AMR/AA CEO?

You would be better served to take your 13.5% of the new AMR, along with the interests of the APFA and TWU and find some other sympathetic shareholders who aren't fans of Horton and look for a new CEO and senior management team.

Think outside the box and look to other sectors of the travel industry, such as hotels and cruise lines. Or, look to a successful airline (other other business that has to deal with organized labor) and see if any senior executive feels that he may not have a chance to become CEO. Allen Mullaley left Boeing for Ford Motor, because he was passed over after Phil Condit and Harry Stonecipher were each forced out. He's done a pretty good job at FoMoCo.


User currently offlineCubsrule From United States of America, joined May 2004, 22306 posts, RR: 20
Reply 53, posted (1 year 5 months 1 week 2 days 2 hours ago) and read 2300 times:

Quoting ckfred (Reply 52):
US had all sorts of problems merging with HP. Remember the baggage fiasco at PHL during the holidays several years ago?

I am not a fan of the US/AA potential merger and I agree with much of what you wrote, but this point is revisionist history. Compared to UA/CO or even DL/NW, US/HP was smooth. The reservation systems merged smoothly, cross-fleeting went pretty much without a hitch, and the cutover to SHARES was rough for a matter of weeks, not months or years. The SHARES conversion occurred in late February or early March, 2007, and by Easter, most everyone seemed to have it down.



I can't decide whether I miss the tulip or the bowling shoe more
User currently offlineapodino From United States of America, joined Apr 2005, 4124 posts, RR: 6
Reply 54, posted (1 year 5 months 1 week 1 day 8 hours ago) and read 2220 times:

Quoting commavia (Reply 36):

USAirways has been consistently profitable lately, but that is in large part driven by the fact that the airline's current business model is built on hubs that are generally (with the exception of PHX) dominated with little competition and, critically, bankruptcy wages that are lower than legacy peers.

I will buy the wage argument, but the no competition argument, aside from CLT, holds very little water with me. WN is the second largest carrier in PHL, and they have provided some competition, but granted they had to take a loss to do so, so they are scaling back. PHL is also a very high yielding market as well. DCA is a market where there is plenty of competition as well and is also a very high yielding market. So this notion of no competition doesn't fly with me.

Wages are a different story though.


User currently offlineincitatus From Brazil, joined Feb 2005, 3964 posts, RR: 13
Reply 55, posted (1 year 5 months 1 week 13 hours ago) and read 2180 times:

Quoting norcal (Reply 51):
Pilot costs won't make or break this aircraft. The A319 is going to burn 850 gallons of gas an hour, that's over $2,600 every hour. Paying the pilots $10-15 more an hour ($20-30 heck even $50 total) won't make or break the operation.

A319s have poor cost per ASM and are often unsuitable to very competitive markets, like most domestic USA. Moving the pilot hourly rate up just makes it even less attractive: It is just one of those lose-lose propositions. Hourly rate goes up and the routes the A319s could fly go to regionals.


User currently offlineaacun From Mexico, joined Jan 2004, 507 posts, RR: 1
Reply 56, posted (1 year 5 months 1 week 13 hours ago) and read 2198 times:
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I think the 19 A319's AA will be getting have a special purpoise. i think they will fly very thin international routes out of Miami where no other plane can make the route work.

User currently offlinerj777 From United States of America, joined Dec 2000, 1753 posts, RR: 2
Reply 57, posted (1 year 5 months 1 week 13 hours ago) and read 2162 times:
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When is the vote scheduled for?

User currently offlinejfklganyc From United States of America, joined Jan 2004, 3176 posts, RR: 5
Reply 58, posted (1 year 5 months 1 week 12 hours ago) and read 2188 times:

Quoting incitatus (Reply 55):
A319s have poor cost per ASM and are often unsuitable to very competitive markets, like most domestic USA. Moving the pilot hourly rate up just makes it even less attractive: It is just one of those lose-lose propositions. Hourly rate goes up and the routes the A319s could fly go to regionals.

The 319 has a higher seat mile than the 320 as it is the same plane shortened...but the 319 is very economical and is widely used on domestic routes in the US by DL, US, F9, Spirit, UA.

The aircraft is very sustainable for the types of operations AA will use it for.


User currently offlinegegarrenton From United States of America, joined Aug 2012, 211 posts, RR: 0
Reply 59, posted (1 year 5 months 1 week 12 hours ago) and read 2154 times:

Quoting ckfred (Reply 52):
Allen Mullaley left Boeing for Ford Motor, because he was passed over after Phil Condit and Harry Stonecipher were each forced out. He's done a pretty good job at FoMoCo.

No to undermine your argument, but Mullaly was Ford to Boeing then Ford again.


User currently offlineckfred From United States of America, joined Apr 2001, 5067 posts, RR: 1
Reply 60, posted (1 year 5 months 1 week 11 hours ago) and read 2144 times:

Quoting gegarrenton (Reply 59):
No to undermine your argument, but Mullaly was Ford to Boeing then Ford again.

I just looked at Wikipedia. Boeing hired Mullaly straight out of college at the University of Kansas, in 1969, after he received his M.S. in aeronautical engineering. He was a "lifer" at Boeing, until Ford hired him.

But, my point is that AA shouldn't just look at other airline executives for a new CEO. Some of United's best years in terms of profits and operations were under Gerald Greenwald, who had spent much of his career at Chrysler. Granted, there is a lot of difference between automobile manufacturing and the airline business. But, both businesses are heavily unionized, and both require pleasing individual consumers.


User currently offlinealuminumtubing From United States of America, joined Jul 2008, 362 posts, RR: 12
Reply 61, posted (1 year 5 months 1 week 11 hours ago) and read 2175 times:

Quoting rj777 (Reply 57):
When is the vote scheduled for?

The APA board is supposed to vote on Friday I believe on whether or not to send the AIP out for membership ratification. It think they will vote to send it to the members, but I am not sure it will pass the membership.


User currently offlineckfred From United States of America, joined Apr 2001, 5067 posts, RR: 1
Reply 62, posted (1 year 5 months 1 week 11 hours ago) and read 2157 times:

Quoting aluminumtubing (Reply 61):
The APA board is supposed to vote on Friday I believe on whether or not to send the AIP out for membership ratification. It think they will vote to send it to the members, but I am not sure it will pass the membership.

This is sounding like what has happened with US's F/As. The union negotiated a T/A, and it failed by a healthy margin. The leadership of the union resigned, and the new leadership, perceived as being more militant, undertook negotiations.

The new leadership negotiated a T/A that was somewhat improved from the last T/A, but not a dramatic improvement. It failed, but by a much smaller margin. From what I read, the leadership was surprised that it didn't pass.

I think there is a "now what do we do?" mentality on the part of both union leaership and management, particlarly with a potential bid for AA looming.


User currently offlineincitatus From Brazil, joined Feb 2005, 3964 posts, RR: 13
Reply 63, posted (1 year 5 months 1 week 11 hours ago) and read 2167 times:

Quoting jfklganyc (Reply 58):
The 319 has a higher seat mile than the 320 as it is the same plane shortened...but the 319 is very economical and is widely used on domestic routes in the US by DL, US, F9, Spirit, UA.

The aircraft is very sustainable for the types of operations AA will use it for.

If the A319 was economical other US carriers would be purchasing more of them. They are the financial equivalent of metal ballast.

Northwest's original order was for 50 + 50 options + 50 rollover options. Delta has 57 now.

United has not added to the A319 fleet for almost ten years.

AA can probably use well about 10 A319s.


User currently offlinejustplanenutz From United States of America, joined Feb 2006, 492 posts, RR: 1
Reply 64, posted (1 year 5 months 1 week 4 hours ago) and read 2155 times:

Finally, details:

http://blogs.star-telegram.com/sky_t...rinciple-for-americans-pilots.html

Good day for R. Standifer!


User currently offlineapodino From United States of America, joined Apr 2005, 4124 posts, RR: 6
Reply 65, posted (1 year 5 months 6 days 5 hours ago) and read 2104 times:

I read the TA...based on the current narrowbody fleet and the scope language....in 2014 you are looking at a 76 seat limit of around 200 airplanes. There are limits on 50 seats as well but economics will keep aa from too many of those. I think its a good deal for the pilots and I would ratify it...which will leave us out to dry. Unless they are going to merge after this deal and the company waits for a better deal post merger.

User currently offlineAAR90 From United States of America, joined Jan 2000, 3451 posts, RR: 47
Reply 66, posted (1 year 5 months 5 days 23 hours ago) and read 2058 times:

Quoting WA707atMSP (Reply 42):
When AA bought Air Cal and Reno Air, their rationale was that the additional traffic generated by AA having a bigger presence on the West Coast, especially on transcontinental routes out of the SF Bay area, would more than offset bringing OC / QQ employees up to AA wage levels. All of us know how well that worked out.

The AA purchase of OC was due to OC placing themselves up for sale. AA did NOT want the "additional traffic" from a bigger west coast presence. AA wanted the "halo effect" from AAdvantage miles given to pax flying JET routes on the west coast. At the time, that meant either AirCal or PSA (there were no other JET competitors in the California markets). PSA went up for sale first but was overpriced (and over mortgaged). AirCal went up for sale soon after and Crandall somewhat reluctantly "outbid" Continental for AirCal. Crandall repeatedly said his primary reason for buying AirCal was the SNA slots... the revenue from which paid the $250M purchase price in less than 6 months.

QQ purchase was caused by QQ putting themselves up for sale and Carty --NOT Crandall-- wanted to keep the QQ AAdvantage members at "any cost." The AMR BOD decided to go ahead with Carty's plan (purchase QQ) instead of Crandall's plan (find another west coast "halo effect" airline).

Quoting ckfred (Reply 52):
The CEOs (Carty, Arpy, and Horton) turned out by the culture that Bob Crandall created haven't been very good.

Carty never learned Crandall's way of doing business. That is why when Crandall retired, he retired from EVERYTHING at AA/AMR (normal CEO/CBOD retirement is to keep the Chairman of BOD position for 1-3 years). Crandall did NOT want Carty to be CEO, but was (again) overruled by the majority of BOD. Arpey worked his entire career under Carty. Wherever Carty went within AA/AMR, he took Arpey with him. Arpey learned Carty's culture. He would have done much better if he had actually learned Crandall's more aggressive and authoritarian style (fire managers who can't/won't perform). Horton spent virtually his entire AA/AMR career in Finance/Planning (even after Carty/Arpey moved to Operations). He has never been given a chance to show what culture his style is as the unions were against him from before "day-one." My guess (and it is a guess) is that he is a bit less Carty than Arpey was, but nowhere near Crandall (in style/culture that is). Only time will tell -- but only IF the unions will allow it to be seen (highly unlikely).



*NO CARRIER* -- A Naval Aviator's worst nightmare!
User currently offlinelightsaber From United States of America, joined Jan 2005, 12421 posts, RR: 100
Reply 67, posted (1 year 5 months 5 days 22 hours ago) and read 2056 times:
Support Airliners.net - become a First Class Member!

Quoting justplanenutz (Reply 64):
Finally, details:

Thank you. The Allowed RJ expansion is more than I expected... 40% of the fleet in 2016. Now I know what AMR benefited from in the deal!

I also see that the A319 is indeed grouped with the 738. Kudos to the union for pulling off that change. A surprise... so Kudos to the union for doing their job. (I might be a capitalist bastard, but I support the right to unionize and it looks like the APA did a good faith job this time.)

Quoting justplanenutz (Reply 64):
Good day for R. Standifer!

How the heck was he picked as the lowest seniority pilot who couldn't be furloughed? Now where is he on the pilot seniority list?!? I hope he is amused with suddenly becoming famous!

I feel for the pilot one less in seniority than R. Standifer. I hope R. Standifer buys him all he can drink in a night.

Lightsaber



I've posted how many times?!?
User currently offlinelucky777 From United States of America, joined Oct 2008, 534 posts, RR: 0
Reply 68, posted (1 year 5 months 5 days 22 hours ago) and read 2048 times:

Quoting Cubsrule (Reply 53):
Compared to UA/CO or even DL/NW, US/HP was smooth.

Please tell me that was an attempt at humor when you said the US/HP merger was smoother than DAL/NWA??? Nothing could be further from the truth.


User currently offlineCubsrule From United States of America, joined May 2004, 22306 posts, RR: 20
Reply 69, posted (1 year 5 months 5 days 14 hours ago) and read 2044 times:

Quoting lucky777 (Reply 68):
Please tell me that was an attempt at humor when you said the US/HP merger was smoother than DAL/NWA???

I lived through both as a CLT resident during the former and a NW elite during the latter. NW/DL was smoother from a labor relations perspective, but as far as the customer experience vis a vis merging reservation systems, cross-fleeting, etc., US was far better. Remember that for a while, it was be impossible to book certain itineraries on PMDL metal on delta.com and vice versa. I remember, for instance, a STL-JAX trip in March, 2009 where I flew STL-ATL-JAX on a NW itinerary and JAX-MEM-STL on a DL itinerary because neither carrier could sell me all four flights.



I can't decide whether I miss the tulip or the bowling shoe more
User currently offlinepar13del From Bahamas, joined Dec 2005, 6729 posts, RR: 8
Reply 70, posted (1 year 5 months 5 days 14 hours ago) and read 2038 times:

Quoting ckfred (Reply 62):
The new leadership negotiated a T/A that was somewhat improved from the last T/A, but not a dramatic improvement. It failed, but by a much smaller margin. From what I read, the leadership was surprised that it didn't pass.

How could it be leadership when either A. They did not have the pulse of its members or B. They decided to do what they wanted or felt was in their best interest not the membership, among other reasons.

Illustrates where a number of non-union supporters fail to understand or try to understand what unions are about, ultimately, it is about the membership and their vote, not the leaders and or the talking heads. Union members like normal citizens and their politicians have at times been abandoned for the benefits to leadership versus the well being of the members.

If current APA leadership does have the pulse of its members they have addressed the membership concerns as best as possible, what we do not know is what they promised the membership that they would get. The vote when it occurs may be for things other than what is actually in the agreement, time will tell.


User currently offlineckfred From United States of America, joined Apr 2001, 5067 posts, RR: 1
Reply 71, posted (1 year 5 months 5 days 11 hours ago) and read 2040 times:

Quoting AAR90 (Reply 66):
Carty never learned Crandall's way of doing business. That is why when Crandall retired, he retired from EVERYTHING at AA/AMR (normal CEO/CBOD retirement is to keep the Chairman of BOD position for 1-3 years).

There was an interview of Crandall in the Chicago Tribune not too long after he retired. He was asked why he didn't stay on as Chairman.

He said that the practice of keeping a CEO on as Chairman, after he retires, is not a good practice. If the CEO proposes something new, it's natural for the Board to then turn to the Chariman and asks what he thinks.

The last thing a CEO needs is the past CEO (who probably was his boss), offering his opinion on proposals for operations, new products, and so on.

My wife worked for a company in which the former CEO stayed on the board after retirement. When the new CEO (who had been with the company about 10 years prior to becoming CEO and was groomed for the job) started missing quarterly projections, the former CEO "offered" to return to executive status as Chairman and "help" the CEO. The CEO promptly resign, not wanting his old boss to be his new boss.

Things got very ugly, as just about every initiative of the "fired" CEO was undone and former executives were brought out of retirement.

Quoting AAR90 (Reply 66):
Carty never learned Crandall's way of doing business.

That's an interesting perspective. I say that, because I know some AA pilots who feel that Carty was no different than Crandall, but for two exceptions. First, Carty was very affable and cordial, while Crandall was usually pretty brusque. Second, Crandall had an incredible memory for detail, whether it was financial numbers or discussions at meetings.

However, if Carty and Arpey didn't learn Crandall's way of doing business, that's still an indictment of Crandall's culture. A longtime, successful CEO should create a culture that everyone buys into. Granted, a successor as CEO has to do things his way, but if he came up within the organization, he should still understand the culture.

I know several executives at various businesses who got their start at GE, when Jack Welch was CEO. None of them have Welch's personality (which is probably a good thing), but they all bought into the GE management style, and they have been very successful at other companies.

Further, if Crandall didn't want Carty to suceed him, then why did Crandall allow Carty to become President and COO of AMR/AA? You don't need a Harvard, Wharton, or Kellogg MBA to know that putting someone in as President and COO will give that person the inside tract to CEO and Chairman.


User currently offlineAAR90 From United States of America, joined Jan 2000, 3451 posts, RR: 47
Reply 72, posted (1 year 5 months 5 days 10 hours ago) and read 2028 times:

Quoting ckfred (Reply 71):
There was an interview of Crandall in the Chicago Tribune not too long after he retired. He was asked why he didn't stay on as Chairman.

He said that the practice of keeping a CEO on as Chairman, after he retires, is not a good practice. If the CEO proposes something new, it's natural for the Board to then turn to the Chariman and asks what he thinks.

The last thing a CEO needs is the past CEO (who probably was his boss), offering his opinion on proposals for operations, new products, and so on.

Agree completely with Crandall's public comments. Crandall did not have the majority of BOD support for a different person to be CEO long before his retirement. Just made his decision to retire from everything AA/AMR that much easier. For a man who dedicated almost 30 years of his life to AA/AMR, that is saying a lot!

Quoting ckfred (Reply 71):
That's an interesting perspective. I say that, because I know some AA pilots who feel that Carty was no different than Crandall, but for two exceptions. First, Carty was very affable and cordial, while Crandall was usually pretty brusque. Second, Crandall had an incredible memory for detail, whether it was financial numbers or discussions at meetings.

The biggest difference between the two: Crandall managed AA/AMR for what was best for AA/AMR; Carty managed AA/AMR for what was best for Carty. i.e. Crandall's only stock buybacks (over 17 years) were very small ($2B total) and designed to increase Carty's stock options (no stock ever reissued). There are dozens of similar examples available. One may disagree with a Crandall decision, but it is very hard to argue the decision was made for his personal benefit only. The same can not be said about (most of) Carty's "decisions."

Carty's reputation within the BOD being that of a "consensus builder" and boards like consensus. Unfortunately, CEO's are supposed to be decision makers and in a business where 4% margins are considered outstanding returns, there is little time for building consensus within the CEO's office. Once Carty was CEO, his lack of leadership and decisive decision making became obvious even to the most supportive BOD members. The movement to remove him as CEO began long before his well publicized handling of industry common executive retention bonus' and retirement programs --they were just the "last straw" for a once supportive BOD.



*NO CARRIER* -- A Naval Aviator's worst nightmare!
User currently offlinegegarrenton From United States of America, joined Aug 2012, 211 posts, RR: 0
Reply 73, posted (1 year 5 months 5 days 10 hours ago) and read 2022 times:

Quoting ckfred (Reply 60):
I just looked at Wikipedia. Boeing hired Mullaly straight out of college at the University of Kansas, in 1969, after he received his M.S. in aeronautical engineering. He was a "lifer" at Boeing, until Ford hired him.

Sorry, I should have been more clear. He went to Ford, and learned all about their Taurus program and how it was developed, and used it as a case study in how to do things at Boeing.

Not a small factor in why he brought the Taurus back to the Ford lineup


User currently offlineLDVAviation From United States of America, joined Dec 2008, 975 posts, RR: 5
Reply 74, posted (1 year 5 months 5 days 9 hours ago) and read 2022 times:

Quoting AAR90 (Reply 66):
Crandall did NOT want Carty to be CEO, but was (again) overruled by the majority of BOD.

Are you sure? I followed the transition quite closely and everything I read indicated that Carty was Crandall's handpicked successor.

If I remember correctly, Carty left AMR for a while. Think he went to Canadian Pacific. Yet, Crandall brought him back.

If what you are saying is true, why would Crandall have agreed to bring him back? If the BOD had let him (Carty) go once, why would Crandall seek him out on his own?

As I said, all the reports I read in Aviation Week and other publications, including interviews with Crandall, indicated that Carty was his man.


User currently offlineapodino From United States of America, joined Apr 2005, 4124 posts, RR: 6
Reply 75, posted (1 year 5 months 5 days 9 hours ago) and read 2038 times:

Quoting lightsaber (Reply 67):

Thank you. The Allowed RJ expansion is more than I expected... 40% of the fleet in 2016. Now I know what AMR benefited from in the deal!

It isn't as good for AA as it looks on the surface. The language in the contract is 40 percent of the narrowbody fleet. The contract also defines narrow body fleet as MD 80's, 737's, A320 series, and 757's. What you do to determine the cap is add the total number of airframes in those families, then take 40 percent of that. By the math I have done, that comes out to just under 200 Large RJ's permitted, and this is based on about 450 mainline airplanes currently flying that fit that definition. Now if AA's mainline fleet grows, then the cap grows. What this means in the long run is that in the 70 seat area, there will always be more than double the planes at mainline than there are 70 seaters. The 50 seaters are less restrictive, as they are capped at 65 percent under this deal, which works out to roughly 275 50 seaters or so. There is no way AA is going to fly that many post bankruptcy. So based on this deal, I would say you are looking at a regional fleet for AA probably in the 350 airframe range, which means that there will still be more domestic planes at Mainline than at the regionals, with probably slightly more departures at the regionals since those planes being shorter range will have more cycles than most of the the mainline planes.

This deal is probably in line with Delta, though I believe the Scope is a hard number, rather than a proportion at Delta. Now if the AA ratifies this deal, I am curious to see what happens with the UA/CO deal, which based on what I have read, is clearly the worst of the three deals.


User currently offlineAAR90 From United States of America, joined Jan 2000, 3451 posts, RR: 47
Reply 76, posted (1 year 5 months 5 days 6 hours ago) and read 2019 times:

Quoting LDVAviation (Reply 74):
Are you sure?

AFAIK, Bob Crandall has never lied to me. It often took me months to truly understand what he was saying, but he has never told me something he knew to be untrue.

Quoting LDVAviation (Reply 74):
I followed the transition quite closely and everything I read indicated that Carty was Crandall's handpicked successor.

Public comments are most often what the organization or person wants you to hear. Perhaps speaking with Mr. Crandall in a more private setting would "indicate" his true feelings. He provided me invaluable personal advise as I learned how to become a successful entrepreneur [owner/operator of a $1.5M/yr business]. That he would "waste" the time honestly impressed me. He was/is a man who truly loves all things "business."

Quoting LDVAviation (Reply 74):
If I remember correctly, Carty left AMR for a while. Think he went to Canadian Pacific. Yet, Crandall brought him back.

Carty left AMR to become CEO of CP Air. The inside rumor was the BOD wanted him to get CEO experience and Crandall was happy to let him go. The BOD brought him back over Crandall's objections [no other executive ever "returned" under Crandall's company or department during his entire career... just not Bob Crandall's style].

Quoting LDVAviation (Reply 74):
If what you are saying is true, why would Crandall have agreed to bring him back? If the BOD had let him (Carty) go once, why would Crandall seek him out on his own?

Bob Crandall did not "seek him out" [Carty's accomplishments at CP Air = nothing]. The BOD brought him back. Those who continue to believe the CEO "owns" a BOD simply do not understand how public corporations work. The CEO works for the BOD, not the other way around. There are numerous instances where Crandall's preferred course of action was overruled by AMR's BOD. As CEO, he then followed the BOD's directives as best he could.



*NO CARRIER* -- A Naval Aviator's worst nightmare!
User currently offlinealuminumtubing From United States of America, joined Jul 2008, 362 posts, RR: 12
Reply 77, posted (1 year 5 months 4 days 10 hours ago) and read 2002 times:

The APA board just voted 12-4 to send the TA to the membership for a vote. I believe the results will be available December 7. Interesting date?!?!  

User currently offlinegegarrenton From United States of America, joined Aug 2012, 211 posts, RR: 0
Reply 78, posted (1 year 5 months 4 days 10 hours ago) and read 2000 times:

Quoting aluminumtubing (Reply 77):
The APA board just voted 12-4 to send the TA to the membership for a vote. I believe the results will be available December 7. Interesting date?!?!

Hopefully JAL doesn't go for a surprise hostile takeover bid that day....


User currently offlinealuminumtubing From United States of America, joined Jul 2008, 362 posts, RR: 12
Reply 79, posted (1 year 5 months 4 days 9 hours ago) and read 1990 times:

Quoting gegarrenton (Reply 78):

OUCH! Not very politically correct, but pretty damn funny!


User currently offlinegegarrenton From United States of America, joined Aug 2012, 211 posts, RR: 0
Reply 80, posted (1 year 5 months 4 days 9 hours ago) and read 1991 times:

I know, I know...

Absolutely no offense to my Japanese friends and any a.netters, but it was low hanging fruit!  


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