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American Airlines - Current Situation

Sun Sep 21, 2003 11:14 pm

What is the general thinking as to what direction American is going?If anyone can take a jab at the following I would appreciate it.

2.New aircraft delivery (what year)
4.employee morale
sorry to those if the topic is redundant but I have been away for a while.
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RE: American Airlines

Sun Sep 21, 2003 11:50 pm

1. The AMR Corp. lost $0.47 per share, or $357 million, which is alot better that Q1, when they lost over $1 billion dollars.

2. I can't help you with that, but AA operates A300, 738, 757, 767, 777, S80, and 777 Flagship Suites.

3. MIA - 8.7 million boarded in 2002
SJU - 4.0 million boarded in 2002
DFW - 17.9 million boarded in 2002
ORD - 12.8 million boarded in 2002
STL - 10.5 million boarded in 2002

More info here: http://www.amrcorp.com/facts/hubs.htm

4. I don't know if you want personal experience here, but I found AA flight attendants much friendlier that those at US Airways. I found US Airways FA's to follow the rules a bit more: no can, two tiny bags of snacks, ect. The on the 757 and I believe the 738 there are 4 attendants: 2 in First, 2 in coach. All the FAs were great. In coach, extra pretzels all around. In First, you glass cup was never empty, ect.

Hope this helped.
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RE: American Airlines

Mon Sep 22, 2003 12:01 am

As far as new aircraft delivery IMHO I think it will be atleast 3-5 years before AA takes any new deliveries. They still have several 738's on the book, but AA is more interested in paying down debt now before taking anything new on. As far as profitability, AA will likely post a loss in the 3rd and 4th Q of 2003, and a loss for all of 2003. 2004 will likely be profitable IMHO. As AA moves forward it will focus on its turn around plan. Several aspects of the turnaround plan will become more apparent next year as the "More Room Throughout Coach" disappears on 757's and A300 aircraft. AA will continue to focus on its hubs of DFW,ORD,MIA as well as focus cities such as LAX, JFK, STL.
Also IMHO the ex-TWA 757's will leave the fleet as their leases start to come due.
The TSA was created to make the post office look efficient!
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RE: American Airlines

Mon Sep 22, 2003 12:17 am

AA has to fully take advantage of the BA alliance.

I think AA will continue to grow Miami. If I'm not mistaken, they are opening a new terminal in the next couple of years that is DESIGNED to be more of a hub and spoke operation. They will be able to grow capacity there and I think they will put more into the Carribbean from MIA and de-emphasize SJU even more. When I worked for the company back in the mid 1990s, there was talk about SJU because they had a Quirky tax rule in place. You could build and develop your company in SJU if you had more than a certain amount of employees based in SJU for a reduced amount of taxes. That limit was supposed to be 10 years. After 10 years you actually paid more taxes in general than you saved before that mark. The SJU part I had heard from only a couple of different people at AA so I'm not 100% sure I have the facts straight. I do know that AA has transferred some of their ops to MIA in the last few years. Besides that, I just don't know what SJU will be able to offer for the Carribbean when that added capacity is opened at MIA.

With the BA alliance kicking in, AA will probably look to grow more towards the Far East. AA can connect to a lot of places out of LHR now and won't need to added any secondary destinations in Europe, Middle East, etc. The relationship with CX is not that strong. They'll need to increase service to Korea, China, and SE Asia to help fill in the holes. I'm only guessing about CX. I just haven't heard a lot about it. If I know AA at all, they would talk it up and brag about it if they could really rely on it.

As far as aircraft go, they have a lot of parked MD80s that need to come out of the desert before they worry about new deliveries. I do think they have talked to Boeing about the 7E7. That will probably the next order that they get involved with. They still have probably 100 options for 737s that they can exercise.

If the ORD expansion does go through, them and UA will suffer for the time that the expansion is happening. I believe this will keep them humble for a while and they will really have to control costs in order to break even each year.
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RE: American Airlines

Mon Sep 22, 2003 12:21 am


AA also operates the F100.
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RE: American Airlines

Mon Sep 22, 2003 12:29 am

To any who see AA turning a profit in 2004... What changes do you forsee that will turn a 2003 loss of more than $1 billion, perhaps 2 billion, into a profit within one year??? Especially troublesome are the (presumably) 2Q loss of $357 million and an anticipated 3Q loss... These are historically the strongest Qs for airlines and AA, along with the rest of the U.S. airlines, reported record high load factors during this time period. And these results include the savings resulting from draconian pay cuts shoved down the throats of AA's labor groups.

How will AA turn an annual loss of over $1 billion into a profit in one year's time? How much better can it get to make a ten-figure turnaround?

Or has the situation for the likes of AA and UA become so over-the-edge that when losses are measured in 100s of millions of $$$ rather than billion(s) it's now called profit in airline-speak?
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RE: American Airlines - Current Situation

Mon Sep 22, 2003 1:00 am

This past year AA received 9 new 763's and 2 777's.
There will no new aircraft deliveries until 2006. The next delivery will be 12 738's in 2006.
AA has a number of former TW MD-80's parked, and half of the 767-200 fleet in storage. The F-100's are being gradually retired with a total phase-out in 2004. Some TW 757's will be returned as their leases begin to expire next year.
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RE: American Airlines - Current Situation

Mon Sep 22, 2003 1:23 am

I don't know where you guys are getting $357 million of 2Q loss, that should be the uncorrected net loss. Add in the TSA payments and so on and the correct 2Q loss was a certainly less-substantial $75 million USD. And yes, while that is a loss, it is significantly lower than previous quarters. To Tango-Bravo: growing consumer sentiment, if it continues to grow. Everybody seems to think that we're still in some horrible recession but that ended nearly 2 years ago... Arpey seems to have stuff under control, just wait and see what happens...
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RE: American Airlines - Current Situation

Mon Sep 22, 2003 1:54 am

When you talk earnings for an airline, you have to look at what they did on their own. The government hand out line will close shortly and they have to either stand on their own or ride off into the sunset.
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RE: American Airlines - Current Situation

Mon Sep 22, 2003 2:11 am


At JFK they are slowing their new terminal construction in order to preserve cash, the new completion date for the terminal is 2008 (it was "supposed to be complete in '06). However the mid-field concourse (concourse C) will open late '04-'05.

The project is being scalled back, it was originally going to be a 55 gate terminal. The new terminal will now have only 39, those 16 gates that will not be built were to be for American Eagle. Eagle's operation at JFK is a far cry compared to just 4 years ago when the project was started, Eagle now only flies to DCA, BOS, YUL from JFK.

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RE: American Airlines - Current Situation

Mon Sep 22, 2003 3:15 am

Knowing as many AA employees as i do i think Employee moral should be at the very top of there list for things to work on. If the employees arent happy then the airline will go to shit. I dont think AA will go to shit but it will be much harder for the airline to turn around if you dont have people working for you and not against you.
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RE: American Airlines - Current Situation

Mon Sep 22, 2003 3:31 am

I think the morale issue is one that is often over looked with any company. I have read on this board about the turn around in morale with the United employees now that they are in chapter 11. It should not take a chapter 11 filing to change attitude.
You can cut the irony with a knife
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RE: American Airlines - Current Situation

Mon Sep 22, 2003 11:42 am

American has some very expensive terminal projects underway. I have heard the figure that the JFK cost per enplaned pax will be close to $20 which is probably why AA Eagle just doesn't work there.
MIA is also a very expensive terminal and will cost alot to operate. When you consider that US, CO, and DL are all taking chunks of AA's traditional Caribbean and Latin business, AA does have some major work ahead to defend their core international markets.

AA is a well run company and will bounce back from the TWA fiasco. I have to agree w/ those AA'ers who think Carty did more harm than good. His legacy will be more about failures than successes but he is gone so the future should certainly improve.

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