speedport
Posts: 269
Joined: Thu Sep 27, 2001 12:08 pm

And The Winner Is...AMR

Wed Jul 02, 2003 7:21 am

All of the airlines knew they had to address the problem of overcapacity, but none seemed willing to be the first to make cuts. I've been watching this game of chicken waiting to see who would blink first. It now appears someone has.

AMR is the first to tip its hand, and has released this statement; "The reality is we will not be able to fly every nonstop route we fly today, nor will we be able to provide the same level of service in markets that cannot profitably support our current flight schedule."

I wonder who will be next?

http://www.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&guid=%7B48CE8B9B%2D0079%2D489E%2DB2B0%2D7CB14B4DFF80%7D





 
tekelberry
Posts: 1309
Joined: Tue May 13, 2003 6:37 am

RE: And The Winner Is...AMR

Wed Jul 02, 2003 7:22 am

This topic is already being discussed here.
 
mattnrsa
Posts: 361
Joined: Tue Dec 10, 2002 12:27 pm

RE: And The Winner Is...AMR

Wed Jul 02, 2003 7:24 am

Isn't AA adding seats to their planes?
 
UnitedFirst
Posts: 451
Joined: Mon Jun 11, 2001 12:16 pm

RE: And The Winner Is...AMR

Wed Jul 02, 2003 3:22 pm

Gimme a break...

AA has this incredible ability of making everything it does seem like this incredibly forward-thinking operation. Granted, certain things have been (ie, MRTC...as much as that was spurred on by UA's Economy Plus) very progressive, these concepts by Arpey is not one of them.

I wonder how long AA can elude bankrupcy court.

-Derek
 
tekelberry
Posts: 1309
Joined: Tue May 13, 2003 6:37 am

RE: And The Winner Is...AMR

Wed Jul 02, 2003 3:40 pm

I wonder how long AA can elude bankrupcy court.

They are in no immediate danger of bankrupcy currently.
 
workbench
Posts: 163
Joined: Wed Aug 11, 1999 3:22 am

RE: And The Winner Is...AMR

Wed Jul 02, 2003 10:30 pm

AA is actually in gave danger on a CH11 this fall. Remember AA lost 1B in the 1st Quarter, the 2nd will be break even at BEST, still likely a loss. AA cannot let their cash reserves fall below 1B. With the slow down in the fall/winter season ahead AA will likely be burning millions a day. IMHO this will likely force AA into CH11 by YE.
 
ord
Posts: 1356
Joined: Tue Jul 20, 1999 10:34 pm

RE: And The Winner Is...AMR

Wed Jul 02, 2003 10:42 pm

American blinking first? Have you not noticed the major cuts Delta has made since 9/11 to rightsize their ship, including a near-total dismantling of mainline at DFW? Or the cuts other big airlines have made?

American is way behind most everybody else in terms of downsizing if you ask me.
 
sptv
Posts: 143
Joined: Sun Dec 24, 2000 5:21 am

Route Cuts

Wed Jul 02, 2003 10:50 pm

Anyone have any idea which routes will be the first to go?
 
azjubilee
Posts: 3401
Joined: Sat Apr 29, 2000 5:26 am

RE: And The Winner Is...AMR

Wed Jul 02, 2003 11:03 pm

Actually, AA seems to be the last one to pull the head out of the sand and recognize that they've got serious issues!! First to make cuts? RIGHT! Northwest started recognizing the need to trim the fat in MARCH OF 2001!!!!!
They're in their 6th cost cutting round since 3/01. Now who's got the prudent and forward thinking mgmt?


AZJ
 
ual777contrail
Posts: 2914
Joined: Sun Feb 17, 2002 11:33 am

RE: And The Winner Is...AMR

Thu Jul 03, 2003 12:42 am

ORD,
you hit it right on the head, i couldnt agree with you more.


ual 777 contrail
 
Tango-Bravo
Posts: 2887
Joined: Sun Jun 17, 2001 1:04 am

RE: And The Winner Is...AMR

Thu Jul 03, 2003 1:51 am

The "Winner" is AMR????? How so? As other replies have already noted, AA isn't exactly on the cutting edge of capacity reduction at this point in time. And since when does reducing capacity cure what ails an airline? Many fixed costs remain with fewer available seat miles over which to spread those costs, meaning unit costs increase. When airlines slashed capacity by around 20% immediately after 9/11/01, their overall costs typically went down by only 7-9%

From the article linked in the starter thread, it sounds as though AA smugly assumes that the world of U.S. air travelers is cowering in fear and trepidation at their announcement that more flights will have to be dropped; as though we should be fearful that we won't be able to fly unless we are willing to acquiesce to extortionary fares and rules. (a "public be damned" attitude IMO)

When one sees through the spin, AA's announcement is nothing more, IMO, than 1) gaming for more handout$$$ from public agencies that they hope to hoodwink into subsidizing their failed business model and, 2) a further attempt at market manipulation.

As for 2) above, as long as the market remains free from artificial constraints, AA's attempts at market manipulation (in concert with their would-be cartel comrades) are handing even more opportunities to the LCCs they try to blame for their malaise. Even though AA remains no more than one step from the brink of BK, they still don't get it. This makes them "the winner"?????????????



 
luv2fly
Posts: 11056
Joined: Tue May 13, 2003 2:57 am

RE: And The Winner Is...AMR

Thu Jul 03, 2003 1:55 am

Tango-Bravo

I always enjoy reading your posts. I do agree with you. AA is just now following what other carriers have already done. To little to late.
You can cut the irony with a knife
 
UnitedFirst
Posts: 451
Joined: Mon Jun 11, 2001 12:16 pm

RE: And The Winner Is...AMR

Thu Jul 03, 2003 2:00 am

ORD, AZJubilee, Tango-Bravo...I couldn't agree more!

As far as I'm concerned, if AA wants to falter, they better do it before the Bush administration leaves the White House – do you think the Texan would let this Texas-based airline fall apart?

I think not.

-Derek
 
Tan Flyr
Posts: 1576
Joined: Sat Aug 19, 2000 11:07 pm

RE: And The Winner Is...AMR

Thu Jul 03, 2003 2:21 am

and the winner is...Hmm...who really is the winner...no one!

Even though I am a loyal AA customer, I see a lot of changes that should have been/still can be made to increase revenue and make gains to profitability.
The number one item is VALUE PRICING....I just don't understand why they do not grab the bull by the horns and DO IT..get all the free publicity..even get Crandall to go do TV commercials/interviews (like he did in 92?)...whatever it takes to get the public to know that they can always get a faire price at AA.

Costs have to be broughtcloser to SW, JB, etc...we all know that...a tought road..not only the wages, but work rules, etc.

Hopefully some OPEC members cheat enough to bring petrol down some also.( ya know, the caribou in ANWR are more important than peoples jobs in the lower 48....yeah, right!)
Fuel is a bit of a wild card for all of them.

I'm sorry a lot more are being laid off...best of luck to you...the travel economy had changes forced on it by 9/11...who would have guessed the changes would be this severe.

 
tcttx
Posts: 215
Joined: Fri Dec 10, 1999 11:40 am

RE: And The Winner Is...AMR

Thu Jul 03, 2003 2:30 am

-------------------------
The number one item is VALUE PRICING....I just don't understand why they do not grab the bull by the horns and DO IT..get all the free publicity
-------------------------

AA tried that once before in the early 90s to much fanfare. Only problem is, as they say, you're only as smart as your dumbest competitor, and in that case it turned out to be NW.
 
speedport
Posts: 269
Joined: Thu Sep 27, 2001 12:08 pm

RE: And The Winner Is...AMR

Thu Jul 03, 2003 12:00 pm

Is AAL a winner, no. I was being facetious.

...cuts Delta has made since 9/11 to rightsize their ship

Every major carrier made cuts in capacity following 9/11.

RIGHT! Northwest started recognizing the need to trim the fat in MARCH OF 2001!!!!!

Every major carrier made cuts in response to the Iraq war and SARS.

Now, these events are behind us. Most analysts see the beginnings of a recovery ahead for the industry. And American's response to this is what?

"we will not be able to fly every nonstop route we fly today..."

Why is this different compared to 9/11, Iraq and SARS? Because American has looked into the abyss, as United has, and their response has been to cut back while United has been maintaining, and even reinstating, parts of its schedule.

It doesn't need any explanation that American and United are in fierce head to head competition with each other. Neither has wanted to be the first to cut back on capacity for fear of losing market share to the other.

How does this affect the larger context of national capacity?

I anticipated the DL/NW/CO alliance to start cutting capacity on overlapping routes, and still do, while American held on to its routes.

When United filed for bankruptcy many on this board predicted that, if they survived, it would be a much smaller airline. United, however, operating through bankruptcy, has been able to hold on to its routes while American appears ready to abandon some of theirs.

Yes, I would say American blinked.
 
UA744Flagship
Posts: 1433
Joined: Tue Jul 13, 1999 1:55 pm

RE: And The Winner Is...AMR

Fri Jul 04, 2003 12:39 am

Poor AA has been left alone on the dance floor.

Sure, she thought she was going to rely her critical mass to combat UA/US and DL/CO/NW, but it looks like she'll have to diet now. No longer is the title of "World's Largest" something that instills pride and invokes awe and envy. In that respect, AA's like the prom queen no one wanted to take home and bang.
no wire hangers!
 
DL WIDGET HEAD
Posts: 1469
Joined: Wed Apr 12, 2000 8:18 am

RE: And The Winner Is...AMR

Fri Jul 04, 2003 12:57 am

This is hardly a revelation...airlines have been paring excess capacity and poor performing flights even pre 9/11--just good business really. They're certainly not the first and won't be the last.
 
luv2fly
Posts: 11056
Joined: Tue May 13, 2003 2:57 am

RE: And The Winner Is...AMR

Fri Jul 04, 2003 1:04 am

UA744Flagship
If you are ever in the CLE area please stop by and clean off my computer screen as the coffee I was drinking is now all over it, thank to your post. The analogy is 110% correct.
You can cut the irony with a knife
 
SESGDL
Posts: 2615
Joined: Sat Jan 13, 2001 6:25 am

RE: And The Winner Is...AMR

Fri Jul 04, 2003 6:11 am

AA management has finally started to get some sense. Other carriers were chopping routes and cutting capacity while AA was doing things like this just weeks ago:

AMERICAN LAUNCHES ADDITIONAL SERVICE IN MORE THAN 50 CITIES STARTING SATURDAY

As if AA needed to add service to 50 additional cities when there's already 20% too much capacity in the industry. Also, with the war on Iraq AA cut the least. UA cut overall capacity 12%, Delta 12%, NW 10%, CO 10-12%(not sure), while AA cut international service 6% and didn't cut domestic capacity.

Jeremy
 
ual777contrail
Posts: 2914
Joined: Sun Feb 17, 2002 11:33 am

RE: And The Winner Is...AMR

Fri Jul 04, 2003 3:56 pm

AA Was waiting for UAL to DIE!!! And we aren't dead, we are still alive. We may be sedated at times, and wish we had died, but the fact remains AA has made some horrible decisions lately and they are ALL coming back to bite them in the rear.

I can understand the pride one feels for an airline but when UAL made the choices they made, cutting flights, countless layoffs and wage concessions, everybody said it will be a matter of time. But UNITED got what it needed and the bleeding may not have stopped but damnit hopefully it is starting to clot. Hopefully we will make it through this alive, and who really cares if you are the worlds biggest airline, I just want a paycheck and flight bennies.


ual 777 contrail
 
SESGDL
Posts: 2615
Joined: Sat Jan 13, 2001 6:25 am

RE: And The Winner Is...AMR

Sat Jul 05, 2003 1:11 am

I agree 110% Ual777contrail. Good points. Hopefully AA can get themselves out of their problems.

Jeremy