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Why Did AA Wait So Long To Replace Its Aircraft?  
User currently offlinemia305 From United States of America, joined Mar 2013, 318 posts, RR: 0
Posted (1 year 4 months 1 day 9 hours ago) and read 11008 times:

I'm just wondering why did AA wait so long to do so?
Wouldn't it have helped them now if they started replacing
their airplanes in the late 90's early 2000's?

Why didnt they order the 319's, 321's 773 eairler?

I understand about the 787 comming on line late last year & this year.
Also why didn't they get the MD90's as a longer replacement for the S80's
since they're more efficient.

29 replies: All unread, showing first 25:
 
User currently offlineSASMD82 From Netherlands, joined Mar 2007, 726 posts, RR: 0
Reply 1, posted (1 year 4 months 1 day 8 hours ago) and read 10899 times:

Good question but doesn't this apply to - let's say - UA and DL as well?
I think the main reasons are price of fuel (which was a sort of nothing by the late 90s) as well as Chapter 11 which now allows them to introduce fuel efficient planes easier.

For a much longer periode I was wondering too why the MD90 did not receive much more sales.


User currently offlineAmerican 767 From United States of America, joined May 1999, 3742 posts, RR: 12
Reply 2, posted (1 year 4 months 1 day 8 hours ago) and read 10866 times:
AIRLINERS.NET CREW
FORUM MODERATOR

Because they had one main idea in mind: reducing the number of fleet types.

9-11 is one reason I can think of. That was probably why they stopped phasing in 738s for a while, after the first batch of 75 units were delivered. A few years later they decided they would eventually ground the whole MD-80 fleet in the long run so they ordered more 738s in the late 2000s.

At that time, they had in mind phasing out the 727, the DC-10 and the MD-11.

Also, in the early 2000s (2001/2002), they were busy with the TWA merger and some of the MD-80s they got from them were still very young so there was no need to buy hundreds of new planes right away.

The 77W was still under study.

Another reason I can think of is back then American and Airbus weren't "friends" at that time. They weren't getting along well because of the crash of flight 587 in 2001. Nobody thought American would ever buy A32Xs from Airbus.

They went Airbus again a decade later, after the phase out of the A300, because they thought it would make sense to rely on two manufacturers with such a huge fleet.

They knew the 738 would be 30% more fuel efficient than the MD-80 so they chose the NG737 over the MD-90. Even after the QQ take over in 1999, they decided not to keep the 90 and after the TW take over in 2001, they decided not to keep the 717. Again, to reduce the number of fleet types.

The TWA buyout, at the time Don Carty was the CEO at American, was a mistake.

Ben Soriano



Ben Soriano
User currently offlinemia305 From United States of America, joined Mar 2013, 318 posts, RR: 0
Reply 3, posted (1 year 4 months 1 day 7 hours ago) and read 10661 times:

Quoting American 767 (Reply 2):

All valid points.

Even if AA wasn't "friends" with Airbus. They should've seen the benefits
of the 319's & 321's. If they would've done the fleet replacements sooner
they would be in a better position.


User currently offlinethegeek From Australia, joined Nov 2007, 2638 posts, RR: 0
Reply 4, posted (1 year 4 months 1 day 6 hours ago) and read 10545 times:

They had 738s on the way at the time of Sep 11,2001. These went to QF instead. So that's a small part of the answer.

User currently offlineIndependence76 From United States of America, joined Jul 2007, 238 posts, RR: 0
Reply 5, posted (1 year 4 months 1 day 6 hours ago) and read 10529 times:

Quoting American 767 (Reply 2):

As stated, yes, those were all valid points.

I personally believe that the analysts within AA regarding future fleet maintenance and fuel prices around 2005 were far too over-optimistic about the type's future. MD-80's became known as "gas guzzlers" more quickly than anticipated. In between 2008 and 2012, AMR spent $36bil. on fuel expenses alone.



"In general, pride is at the bottom of all great mistakes." - John Ruskin
User currently offlineAA737-823 From United States of America, joined Mar 2000, 5732 posts, RR: 11
Reply 6, posted (1 year 4 months 1 day 6 hours ago) and read 10412 times:

Quoting mia305 (Reply 3):
Even if AA wasn't "friends" with Airbus. They should've seen the benefits
of the 319's & 321's. If they would've done the fleet replacements sooner
they would be in a better position.

Not really. The A320 classic family isn't anything better than the 737NG. There's no point in ordering A320's when you have a fleet of 737-823's.

Additionally, you seem to be ignoring the fact that airplanes cost a LOT of money, and money is something American has struggled with for a while, as their competitors cut costs through bankruptcy protection. Sure, an A319 burns less fuel than an MD-80, but you'd have to get a LOT of life out of the 319 before the fuel burn difference paid the $60 million acquisition cost.
And the MD-80 is a reliable, rugged airplane. They aren't exactly hangar queens, like the Fokkers were.


User currently offlineus330 From United States of America, joined Aug 2000, 3868 posts, RR: 14
Reply 7, posted (1 year 4 months 1 day ago) and read 9907 times:

Quoting mia305 (Thread starter):
Wouldn't it have helped them now if they started replacing
their airplanes in the late 90's early 2000's?

I believe they wanted to skip a generation of aircraft, and were waiting for Boeing to come out with the Y1--a 737/shorthaul aircraft replacement with a brand new design, but it soon became clear that production of the Y1 within the lifetime of the MD80s was a pipedream at best.


User currently offlineN737AA From United States of America, joined Aug 2008, 270 posts, RR: 0
Reply 8, posted (1 year 4 months 1 day ago) and read 9877 times:

In short, 9/11. After that fatefull day, there was no money!

Until then there was a robust fleet plan that included 400+ 738's.

Pretty simple answer.

N737AA


User currently offlineLHCVG From United States of America, joined May 2009, 1547 posts, RR: 1
Reply 9, posted (1 year 4 months 23 hours ago) and read 9733 times:

Quoting N737AA (Reply 8):
Until then there was a robust fleet plan that included 400+ 738's.

Just to be clear, do you mean to say 400+ 738s, or 400+ 737s of mixed variants? Surely they would have gotten at least a few 73Gs even if they didn't get 739s.


User currently offlineghifty From United States of America, joined Jul 2010, 891 posts, RR: 0
Reply 10, posted (1 year 4 months 18 hours ago) and read 9119 times:

Quoting SASMD82 (Reply 1):
and DL as well?

DL has a habit of acquiring used aircraft and flying them to the scrapper. Lower up-front cost.. reduced ancillary mx costs because they own so many of them (717's coming in, etc). Heck, they recently placed a large order for 737NG's instead of the MAX. Again, the NG is cheaper up front.. DL seems to always be interested in minimizing up-front cost.

Quoting N737AA (Reply 8):

In short, 9/11. After that fatefull day, there was no money!

They had to make do. It would be interesting to see what AA's fleet makeup would be had 9/11 not happened. Would they even have placed an order for A320's?



Fly Delta Jets
User currently offlineckfred From United States of America, joined Apr 2001, 5182 posts, RR: 1
Reply 11, posted (1 year 4 months 18 hours ago) and read 8930 times:

In the late 1990s, AA and Boeing entered into an agreement to replace its entire fleet over a span of 20 years. Boeing was to be AA's exclusive aircraft supplier, but that language was dropped, in order to get EU approval of the Boeing-McDonnell Douglas merger.

As it was envisioned, the 737-808 was to replace the 727-200. The 737-700 was to replace the MD-80. The 737-600 was to replace the F100. The idea was that having over 400 737NG aircraft would cut AA's costs in terms of parts, training, and crew staffing.

Of course, it became clear that the 737-600 wasn't the plane that Boeing envisioned. It only works on longer, thin routes. It isn't a replacement for such aircrat as the 737-200/500, the F100, or similarly-sized DC-9s.

9/11 caused AA (and most everybody else) to cancel or delay deliveries of new aircraft. Cash was tight, and passenger traffic was down.

But, what caused AA to hold off on getting more 738s until 2009 was the rumor that Boeing was going to develop an all-new narrowbody. When Boeing decided to go forward with the 787 program, it touted a significant cost savings over the 767s that the 787 were to replace. Southwest told Boeing that if it developed a new narrowbody that had similar cost savings over the 737NG, it would immediately order 100 and put another 100 on option.

Before the 787 and 747-8 started developing all of their problems, supposedly, Boeing was looking to see if it could start work on a new narrowbody, and what sizes would make sense. (Not only were airlines wanting to replace Classic 737s, MD-80s, and older A320 series, but there were plenty of 757s getting up there in years.)

My understanding is that AA didn't want to commit to a large order of 738s, only to see Boeing come out with a new narrowbody as deliveries started. So, AA waited and waited. It appeared that no new narrowbody was going to be announced, and the price oil started its march towards $140, IIRC. That's when AA put in the 738 order that started deliveries in March or April of 2009.

As for the 787s, AA used the order as a stick to get its pilots to agree to a new contract. AA wouldn't confirm its order, until a new contract was ratified. In fact, the order wasn't confirmed until late last year.


User currently offlineairbazar From United States of America, joined Sep 2003, 8238 posts, RR: 10
Reply 12, posted (1 year 4 months 17 hours ago) and read 8665 times:

Quoting SASMD82 (Reply 1):
Good question but doesn't this apply to - let's say - UA and DL as well?

It applies to everyone. Few airlines have the luxury to be able to replace their fleet every 5-10 years. LH, arguably the most successful airline of our time to date, still operates 733's, 735's and A343's. Even EK which could become the most successful airline of all time still has A343's and A345's in their fleet, and it's not like they can't afford to replace them.
In AA's case, with a huge fleet of MD-80's, 737's and 757's, they didn't need to replace them with A319's and A321's. The 773 isn't a replacement as much as an expansion.


User currently offlineN737AA From United States of America, joined Aug 2008, 270 posts, RR: 0
Reply 13, posted (1 year 4 months 17 hours ago) and read 8460 times:

Quoting ckfred (Reply 11):
As it was envisioned, the 737-808 was to replace the 727-200. The 737-700 was to replace the MD-80. The 737-600 was to replace the F100. The idea was that having over 400 737NG aircraft would cut AA's costs in terms of parts, training, and crew staffing.

Not really, the plan was only for the -800 variant, I was involved in it from day 1 and took delivery of the first 77 that came into the fleet until defements started. I am sure that over the course of a 20 year deal for over 400 aircraft that there may have been the opportunity to talk about the -700/900 for MD80/757 replacements, but 9/11 came way before any of that planning had even begun. The 77 aircraft plus the young MD80s from TWA were more than enough given the reduction in flying that has taken place since that time until the second order was announced and we began receiving them in early 2009.

Quoting ckfred (Reply 11):
But, what caused AA to hold off on getting more 738s until 2009 was the rumor that Boeing was going to develop an all-new narrowbody.
Quoting ckfred (Reply 11):
My understanding is that AA didn't want to commit to a large order of 738s, only to see Boeing come out with a new narrowbody as deliveries started. So, AA waited and waited.

This is true, and this is also what lead to the A319/321 order as well, BOE couldn't produce enough a/c to meet the demands needed in the next few years......ala...A319/321 order.

N737AA


User currently offlineikramerica From United States of America, joined May 2005, 21478 posts, RR: 60
Reply 14, posted (1 year 4 months 16 hours ago) and read 7815 times:

Pilot contracts...

AA has been trying to right size their fleet, modernize, but also work out pay scales and work rules that make sense to them. For the longest time, the pilot union has been the most militant against management, forcing out some in 2003 only to foster the same distain for the group they hand picked to run the airline. It boiled over when AA had to cancel some LR route plans because of pilot refusal.

It took bankruptcy and finally a pilot contract for AA to announce their major fleet orders. I'm sure that many at AA wish they had just succumbed to pressure in 2003 and filed bankruptcy at that time. The fleet might look very different already had they done so. A330s? 788 launch customer? 739ERs already in the fleet replacing 757s?



Of all the things to worry about... the Wookie has no pants.
User currently offlinedirtyfrankd From United States of America, joined Apr 2011, 189 posts, RR: 0
Reply 15, posted (1 year 4 months 16 hours ago) and read 7620 times:

All good points. From a pure MD-80 replacement perspective, AA was also waiting for the longest time for a the new clean sheet replacement for the 737 (Boeing Y1?) rather than ordering more 737NG, etc.

User currently onlineSTT757 From United States of America, joined Mar 2000, 16828 posts, RR: 51
Reply 16, posted (1 year 4 months 16 hours ago) and read 7319 times:

AA did some belt tightening during the 2002-2006 period that in retrospect were really short sighted and caused more long term headaches.

1.) Deferring 738 deliveries
2.) Eliminating most Eagle flying from JFK
3.) Scaling back the JFK terminal project, it's half complete.



Eastern Air lines flt # 701, EWR-MCO Boeing 757
User currently offlineORDTLV2414 From United States of America, joined Mar 2013, 300 posts, RR: 0
Reply 17, posted (1 year 4 months 15 hours ago) and read 6915 times:
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I ask myself the same question all the time, about AA and LY.

User currently offlineikramerica From United States of America, joined May 2005, 21478 posts, RR: 60
Reply 18, posted (1 year 4 months 14 hours ago) and read 6476 times:

Quoting ikramerica (Reply 14):
AA has been trying to right size their fleet, modernize, but also work out pay scales and work rules that make sense to them.

What I mean here, is that the management thought what they were asking for made sense. The pilots didn't even come close to agreeing. It's not a judgment thing, just a statement of fact. Not taking the AA management side, as I don't think they have been well managed during this period (ultimately ending up in BK anyway).



Of all the things to worry about... the Wookie has no pants.
User currently offlinebobloblaw From United States of America, joined Jan 2012, 1648 posts, RR: 1
Reply 19, posted (1 year 4 months 14 hours ago) and read 5896 times:
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After 9-11, they didn't have any money. Also in the late 1990s the F100s were less than 10 years old. While their CASM was high, it wasnt too bad. There was no mission for the airbus narrow body in 2000, at AA.

User currently onlinejfk777 From United States of America, joined Aug 2006, 8291 posts, RR: 7
Reply 20, posted (1 year 4 months 13 hours ago) and read 5366 times:
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9/11 is what killed the AA re fleeting plan, they has about 75 737-800's when they sold some later deliveries to Qantas and cancelled the rest. Mad Dogs were less fuel efficient but were also more depreciated then new 738's. Yes they stayed longer then we would like but what was AA supposed to do ? AA had to fly the fleet it had not the one which not be paid for.

User currently offlineTrijetsRMissed From United States of America, joined Oct 2006, 2331 posts, RR: 7
Reply 21, posted (1 year 4 months 10 hours ago) and read 4117 times:

Some valid points made in this thread.

In short, here is a timeline as it relates to the MD-80 retirement - the oldest fleet type:

- Q4 1991 - AA cancels remaining MD-80 options, citing decreases in revenue following the 1990/91 recession. Firm orders to be completed with remaining MD-83 deliveries through 1992.

- Q3 1993 - AA cancels remaining MD-11 options. The MD-90 is no longer considered and the relationship with MDC terminates.

- Q4 1996 - AA sign "gentleman's agreement" with Boeing for all future mainline aircraft purchases for the next 20 years. Immediate 738 order follows.

- Q1 1997 - AA officially announce replacement plan for the MD-80, with retirements and phaseout to occur between 2000-2010.

- Q1 2001 - AA complete the acquisition of TW. This includes the addition of 104 MD-80 aircraft. Phaseout timeline for the 350+ MD-80 fleet is revised.

- Q3 2001 - 9/11 and aftermath lead to an indefinite hold on the MD-80 replacement plan. Additionally, fuel costs are not yet a concern and most legacy aircraft are paid off and owned outright.

- 2004-2008 - AA retire older ex-TW MD-82s and oddball ex-QQ frames. Fleet remains at ~300. Replacement orders delayed to hold off Ch.11 bankruptcy and see what Boeing develops for Y1.

- Q3 2008 - AA places firm 738 to resume MD-80 replacements, in response to increased oil costs.

- Q3 2011 - With Y1 now out of the question, AA places landmark A/B order to complete the phaseout. Phaseout estimated to occur in 2017.

Quoting AA737-823 (Reply 6):
And the MD-80 is a reliable, rugged airplane. They aren't exactly hangar queens, like the Fokkers were.

   Or the A300's, for that matter.



There's nothing quite like a tri-jet.
User currently offlinejfklganyc From United States of America, joined Jan 2004, 3392 posts, RR: 5
Reply 22, posted (1 year 4 months ago) and read 3203 times:

Post 9/11 was not like the bankruptcies that followed...

The immediate aftermath was just trying to stay in business. They were burning the deck chairs for warmth.

What AA did, which was its biggest mistake, was avoid BK while all its rivals did not. If even some of the carriers did what AA did, costs would have been higher all around and AA would have likely been ok. If US was allowed to go under (they were about a month away several years ago) AA's no BK plan likely would have worked.

However, in the end, capacity wasn't reduced quick enough...along with AAs higher costs...and the company was a sinking ship for most of the 2000s. It is hard to order 400 new aircraft in that environment.

Quoting STT757 (Reply 16):
AA did some belt tightening during the 2002-2006 period that in retrospect were really short sighted and caused more long term headaches.

1.) Deferring 738 deliveries
2.) Eliminating most Eagle flying from JFK
3.) Scaling back the JFK terminal project, it's half complete.

BOS, getting rid of the F100s and not replacing them with a large RJ, TWA 757s to Delta (may favorite stupid move), A300s with no replacement, RJ city at ORD against 2 class aircraft at ORD...

There were so many bad moves. It wasn't even in retrospect...we were calling them bad moves as they were going on.

They esentially allowed B6 to open full hubs in JFK, BOS, and SJU...and now they may pay a lot of money just to buy that back. Ridiculous


User currently onlineSTT757 From United States of America, joined Mar 2000, 16828 posts, RR: 51
Reply 23, posted (1 year 4 months ago) and read 3157 times:

Quoting jfklganyc (Reply 22):
TWA 757s to Delta (may favorite stupid move),

That's a good one, excellent example of short sightedness. Allow them to go to a competitor at JFK, smooth move.

Quoting jfklganyc (Reply 22):
getting rid of the F100s and not replacing them with a large RJ,

While not as cut and dry as the boneheaded 757s to DL move, the 717s could have been useful to AA. Even in their small numbers dedicating them to ORD would have been an opportunity for AA. Later on they could have been supplanted by larger RJs, but it would have been a good interim solution.

Quoting jfklganyc (Reply 22):
A300s with no replacement,

The 757-200 really wasn't the answer, and the 763s needed to stay on longer International segments. While SJU probably was on the way out at some point no matter what aircraft they were flying. AA, and DL who later got them from NWA, missed the boat with the 753. While it has no where near the cargo capability of the A300, it was the lowest cost equipment available to move 220 passengers from one point to another. MIA-Caribbean, Colombia, Lima, Caracas, JFK-Dominican Republic, DFW-LAS, LAX-HNL etc..



Eastern Air lines flt # 701, EWR-MCO Boeing 757
User currently offlineckfred From United States of America, joined Apr 2001, 5182 posts, RR: 1
Reply 24, posted (1 year 3 months 4 weeks 1 day 22 hours ago) and read 2986 times:

Quoting ikramerica (Reply 14):
It took bankruptcy and finally a pilot contract for AA to announce their major fleet orders. I'm sure that many at AA wish they had just succumbed to pressure in 2003 and filed bankruptcy at that time. The fleet might look very different already had they done so. A330s? 788 launch customer? 739ERs already in the fleet replacing 757s?

I've talked to some pilots, before the Chapter 11 filing, and they agree. Everyone agrees that trying to reorganize outside of bankruptcy is cheaper, faster, and leaves employees and vendors in better shape. Management is still in control, as opposed to creditors, the bankruptcy trustee, and the judge, who may have different agendas. When AA's main competitors (UA, NW, and DL) all went through Chapter 11, it was clear that the reorg. of 2003 didn't go far enough.

Quoting STT757 (Reply 16):
AA did some belt tightening during the 2002-2006 period that in retrospect were really short sighted and caused more long term headaches.

1.) Deferring 738 deliveries
2.) Eliminating most Eagle flying from JFK
3.) Scaling back the JFK terminal project, it's half complete.

Again, that goes back to trying to do a reorganization, without the benefit of a bankruptcy, especially when major competitors are getting the benefits of a bankruptcy reorg.

Quoting STT757 (Reply 23):
While not as cut and dry as the boneheaded 757s to DL move, the 717s could have been useful to AA. Even in their small numbers dedicating them to ORD would have been an opportunity for AA. Later on they could have been supplanted by larger RJs, but it would have been a good interim solution.

It all goes back to the fact that the lease rates for the 717s were very high, because of TWA's bad credit, and the fact that AA and Boeing couldn't agree on lease rates that were in line with AA's credit rating in 2001-02, which was much higher. In retrospect, a lot of AA people believe that AA would have been better off keeping the 717s they had, and probably taking some of the remaining deliveries, with the best deal that Boeing offered.

By the same token, the F100s were owned outright, and the fact that Fokker had gone out of business wasn't the issue in 2001 and 2002 that it became just a year later. AA was fabricating its own parts, since spares were hard to find, and that was becoming a cost issue.

The 757 issue was a little harder to call boneheaded. Remember that if the UA/US merger had gone through, AA would have swapped the TWA 757s for the US fleet.

At the time, AA was trying to reduce the number of aircraft types, and having a subfleet of P&W powered 757s didn't make sense. Further, the FAA limited AA to 5 variations of the 757/767. Before the TWA purchase, AA had the 762, 762ER, 763ER, 757, and 757 used for extended overwater flying. The TWA 757s represented a 6th type, since it was P&W powered and had cockpit switches that threw in the opposite direction for AA 757s.

A friend of mine had been a 757/767 F/O from 1994 to 2008, and he was never trained on the TWA 757, and most of the pilots who flew the TWA 757s were former TWA pilots.

I'm not saying that sending the TWA fleet to DL wasn't boneheaded, but keeping them would have presented some issues. The costs and headaches of keeping the TWA 757s apparently outweighed the problems of getting rid of them.


User currently offlineDeltal1011man From United States of America, joined Sep 2005, 9297 posts, RR: 14
Reply 25, posted (1 year 3 months 4 weeks 1 day 22 hours ago) and read 3053 times:

Quoting mia305 (Reply 3):

Even if AA wasn't "friends" with Airbus. They should've seen the benefits
of the 319's & 321's. If they would've done the fleet replacements sooner
they would be in a better position.

uh...

Delta has one(the?) of the oldest fleets in the US yet they are making money hand over fist.... The ATL hub is mostly M88s and 757s(the airplanes AA is targeting to replace) yet it is one of the most profitable hubs in the country.

This is just another excuse from American's sorry management. The fleet isn't the problem. Its just a short term cover up.



yep.
User currently offlineWesternA318 From United States of America, joined Oct 2004, 5647 posts, RR: 24
Reply 26, posted (1 year 3 months 4 weeks 1 day 22 hours ago) and read 3062 times:

Quoting STT757 (Reply 23):
While it has no where near the cargo capability of the A300, it was the lowest cost equipment available to move 220 passengers from one point to another.

This is EXACTLY why AA chose the AB6 over the 763 for the Caribbean operations. AA hauls a TON of cargo on those routes, and they wanted a plane that could fit two containers side by side in the bay. The 763 did not allow that.



Next trip: SLC-LAX-JFK-LAX-SLC on AA, gotta say goodbye to my beloved 762!
User currently offlineckfred From United States of America, joined Apr 2001, 5182 posts, RR: 1
Reply 27, posted (1 year 3 months 4 weeks 1 day 21 hours ago) and read 3007 times:

Quoting Deltal1011man (Reply 25):
Delta has one(the?) of the oldest fleets in the US yet they are making money hand over fist.... The ATL hub is mostly M88s and 757s(the airplanes AA is targeting to replace) yet it is one of the most profitable hubs in the country.

This is just another excuse from American's sorry management. The fleet isn't the problem. Its just a short term cover up.

Remember that DL (and NW) have had the benefit of Chaper 11. As honorable as AA management was for trying to avoid Chapter 11 for so long, it should have filed for Chapter 11 back in 2003.

Clearly, anyone can make money with old airplanes, if their costs of doing business are low enough. By the same token, if AA had ordered more 737NGs for delivery in 2006 to 2009, they probably would still have had issues, because of the cost structure versus the cost structures of the competitors that went through Chapter 11.

By the way, isn't DL going to start retiring some of the 757s in favor of 737-900s?


User currently offlineDeltal1011man From United States of America, joined Sep 2005, 9297 posts, RR: 14
Reply 28, posted (1 year 3 months 4 weeks 1 day 20 hours ago) and read 2899 times:

Quoting ckfred (Reply 27):
By the way, isn't DL going to start retiring some of the 757s in favor of 737-900s?

Delta is mostly parking 57s because they are hitting the cycle limits.
Also replacing a good chunk of the A320 fleet.

Funny, they just green lights cockpit upgrades to the 88 fleet. Odd how they can keep them flying for ~10-15 more years but AA has to dump them to make money.

Quoting ckfred (Reply 27):
Remember that DL (and NW) have had the benefit of Chaper 11.

and yet even with that being said they didn't go out and load but the books with airplanes.
Of course they have been worried about paying of debt not new jets and screwing employees.

Quoting ckfred (Reply 27):
As honorable as AA management was for trying to avoid Chapter 11 for so long, it should have filed for Chapter 11 back in 2003.

Ah something tells me your one of those who weren't lucky enough to benefit from AA going into BK.
fairly easy to say when your not the employee/shareholder getting completely screwed.

Quoting ckfred (Reply 27):
Clearly, anyone can make money with old airplanes, if their costs of doing business are low enough

and Delta is quickly growing its employee cost.....you know the thing that has been dragging AA down. Amazingly still making money hand over fits. (and thats with 3 Billion + going to upgrades and spending a ton on paying of debt.)

now if that 5th week would just come back.......      

Quoting ckfred (Reply 27):
if AA had ordered more 737NGs for delivery in 2006 to 2009, they probably would still have had issues,

agreed. Fleet isn't the problem. Its much deeper than that. Almost sad when I think AA has a better chance to make money(make money, not depend on having the worst employee quality of life in the industry) with Parker than anyone that is anywhere near Fort Worth currently.

[Edited 2013-04-03 09:54:07]


yep.
User currently offlineckfred From United States of America, joined Apr 2001, 5182 posts, RR: 1
Reply 29, posted (1 year 3 months 3 weeks 3 days 20 hours ago) and read 2294 times:

Quoting Deltal1011man (Reply 28):
agreed. Fleet isn't the problem. Its much deeper than that. Almost sad when I think AA has a better chance to make money(make money, not depend on having the worst employee quality of life in the industry) with Parker than anyone that is anywhere near Fort Worth currently.

I was reading a recent Fortune magazine, and it doesn't paint a rosey picture for the merger. The opinion was that with the AA bondholders believing that the stand-alone plan being very workable, Horton was able to drive a much more favorable deal for AA creditors.

Every creditor is going to be paid 100%

Even the shareholders are going to get some cash. So much for everyone at AA getting screwed. I think Delta creditors got less than 100%, and the shareholders were wiped out.

But, here comes the problems.

To get the deal done, Parker had to drop US ownership in the new company from just over 50% down to around 30%. He also had to put $1.5 billion into the deal. And then there is the contracts with AA employees. The belief is that Parker, in order to avoid what happened when he tried to buy Delta, offered way to much to AA's unions.

Parker believes that the management lay offs and the potential for increase revenue will more than make up for the higher pay rates and reduced labor lay offs. Fortune thinks that Parker is being way too optimistic.

Here's another point. The track record of people who got their start at AA in the Crandall era isn't that great. Carty was fine, until 9-11 came along. Arpey kept cutting costs trying to keep the proverbial ship afloat. So, why is Parker going to be any better, since he used to sit several cubicles away from Horton at HQ, back in the 1980s?

I'll be honest. I don't always have a lot of sympathy for labor. My father worked in labor relations for a Fortune 50 company for 7 years. I got a very jaded view of labor. That, despite the fact that for the first 12 years with the company, my father carried a union card.

His belief was that when the company is doing poorly, everyone has to suffer, regardless whether the problems were due to being too generous with employee compensation, management incompetance, or simply a very bad economy.

Frankly, if the revenue projections of Parker don't pan out, he will be looking for concessions. The AA employees will be livid. All of a sudden, Horton will look like a genius.

Personally, if I were an AA employee, I would have preferred to stay away from US and either give Horton 2 years to prove his worth, or looked to hire someone from outside the airline sector, but within the travel sector (say hotels or cruise lines), since they seem to remember that taking care of customers is still important. And not a finance guy. They just look at numbers.


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