olddominion727
Topic Author
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Will AA Fall Like TW & PA?

Tue Jan 10, 2012 2:39 am

You know, I have been in the AAdvantage program 26 years., I have been a travel agent for 21 years. There's something really spooking me about this BK filing. I remember the days of old where AA was a trail blazer and would do things nobody would do. No they're sitting back awaiting for life to pass it by. Some would argue they waited too long to replace the MD80's, and others would say their flagship service that's being proposed is barely on the scale of the likes of EK or CX. Nobody ever thought PA would go Braniff would be 86'd etc--even MX (which was ancient too) all GONE. Are we going to see a trail blazing come back with the likes of someone with new blood that only Bob CrAAndall had? What's is going to take. I wisely cashed out every frequent flyer mile I have, and my son and I are going on 3 int'l trips on other OneWorld partners. I hope my old friend stays around...
 
gizmonc
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 2:43 am

I think if you asked the majority of the former TWA employees that AA shafted they would COMMENT: HELL YES, Let AA Falter, Fail or fade away into the dust.
 
Longhornmaniac
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 2:56 am

Quoting olddominion727 (Thread starter):
flagship service that's being proposed is barely on the scale of the likes of EK or CX.

No one should ever argue that they're on the same level, because they aren't anywhere close to it, nor do they intend to be. AA's offering is still arguably the best of the US airlines, especially in the premium cabins. Particularly

Quoting olddominion727 (Thread starter):
I wisely cashed out every frequent flyer mile I have, and my son and I are going on 3 int'l trips on other OneWorld partners

Wisely? Hardly. You're entirely overreacting. It's a Chapter 11 proceeding, no different than all of the other legacy carriers who went through it. There really isn't an airline that's in a position to attempt a hostile takeover, and even if there were, your miles would be transferred. In ANY merger, American would be the surviving brand.

AA's business model is basically sound, and Ch 11 will go a long way towards fixing a lot of their major issues (labor costs etc...).

No need to be paranoid.

Cheers,
Cameron
Cheers,
Cameron
 
miaami
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 2:58 am

Quoting GizmoNC (Reply 1):
I think if you asked the majority of the former TWA employees that AA shafted they would COMMENT: HELL YES, Let AA Falter, Fail or fade away into the dust.

Wishing even more Americans to the unemployment line - NICE!!! I hope you realize that AA's work group includes former TWA employees. They too will be unemployed if AA were to "fade away"
 
mogandoCI
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 3:15 am

Quoting Longhornmaniac (Reply 2):
AA's offering is still arguably the best of the US airlines, especially in the premium cabins. Particularly

LAST among the Big-3 to offer flat-bed in business class... how is that "arguably the best" ? That F seat on 777 is okay but nothing to write home either (you rarely see people on FT writing big fat trip reports on AA F).
 
deltairlines
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 3:47 am

Quoting mogandoCI (Reply 4):
LAST among the Big-3 to offer flat-bed in business class... how is that "arguably the best" ? That F seat on 777 is okay but nothing to write home either (you rarely see people on FT writing big fat trip reports on AA F).

Bingo. Angled lie-flats is pathetic for a carrier of their size. By Memorial Day, US Airways will have lie-flats on most of their long-haul flights with the A330s being done, with those planes all having direct aisle access. Delta has true lie-flats with aisle access on all 777s and 767-400s with 767-300s and 747s being done as we speak. Continental is all true lie-flat on the 757 and 777 fleet, and United is on the 747/767 (and over half of the 777) fleet.

The AA Flagship Suite is about a decade old at this point as well; not innovative by any stretch of the imagination. If I were an AA person buying a F ticket to Europe, I'd make sure it was on the new BA First seat rather than take an outdated 777 F seat. It's acceptable if you're using an eVIP certificate from Business Class, but that's about it.
 
HKG212
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 3:58 am

Quoting DeltAirlines (Reply 5):
Bingo. Angled lie-flats is pathetic for a carrier of their size. By Memorial Day, US Airways will have lie-flats on most of their long-haul flights with the A330s being done, with those planes all having direct aisle access. Delta has true lie-flats with aisle access on all 777s and 767-400s with 767-300s and 747s being done as we speak. Continental is all true lie-flat on the 757 and 777 fleet, and United is on the 747/767 (and over half of the 777) fleet.

Unlike DL and UA, AA upgraded their J product with lightening speed; the current seat has been in place on all 777s and 767s (and some 757s) for the last 5 years, whereas UA still flies some 777s with an appalling 1990's product. DL J products are still all over the map. With AA you can at least expect consistency.

I also personally find the AA angled seats quite comfortable, especially on the 777. I sleep better on them than on some lie-flat products, including CX and LA.
 
splitterz
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 4:18 am

Quoting Longhornmaniac (Reply 2):
No one should ever argue that they're on the same level, because they aren't anywhere close to it, nor do they intend to be. AA's offering is still arguably the best of the US airlines, especially in the premium cabins. Particularly

That's a joke right? Have you not stepped foot on another legacies international F class offering?
 
ldvaviation
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 5:22 am

Quoting DeltAirlines (Reply 5):
Bingo. Angled lie-flats is pathetic for a carrier of their size. By Memorial Day, US Airways will have lie-flats on most of their long-haul flights with the A330s being done, with those planes all having direct aisle access. Delta has true lie-flats with aisle access on all 777s and 767-400s with 767-300s and 747s being done as we speak. Continental is all true lie-flat on the 757 and 777 fleet, and United is on the 747/767 (and over half of the 777) fleet.

The AA Flagship Suite is about a decade old at this point as well; not innovative by any stretch of the imagination. If I were an AA person buying a F ticket to Europe, I'd make sure it was on the new BA First seat rather than take an outdated 777 F seat. It's acceptable if you're using an eVIP certificate from Business Class, but that's about it.

Delta and United still have recliners in International J. All of AA's fleet features an angled, lie-flat seat. (That has been the case for a number of years.) For all its faults, AA's J Seat is much better than the recliners that United has on some of its 777's and DL on almost all of its 763's. (On the international side, AA's seat is also equivalent to what Lufthansa and AirFrance continue to provide on the majority of their international fleets.)

Have you flown in the AA F Suite? No matter its age, the swivel feature is still very cool and was quite innovative when it was introduced. The seat will be updated for the new 777W's. With an update to the shell, the, finishes, and the technology, plus the swivel feature, it will easily leapfrog United's new first seat.

The 777W (and one assumes the 787) will also get a new J seat, with direct aisle access from each seat. Based on AA's description of the seat, it looks like it is going to be the Sicma Cirrus seat. Expect AA to outfit theirs like Cathay and not Delta or US Airways.
 
mogandoCI
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 6:04 am

Quoting LDVAviation (Reply 8):
Delta and United still have recliners in International J. All of AA's fleet features an angled, lie-flat seat. (That has been the case for a number of years.) For all its faults, AA's J Seat is much better than the recliners that United has on some of its 777's and DL on almost all of its 763's.

AA way to phrase it : DL and UA has some ancient seats while all of ours are good enough against the European majors.

UA/DL way to phrase it : many of ours are flat-bed and AA has none currently in service.

And I wouldn't call AA F a "suite" in the 2012 context .... these days you need a sliding door to qualify for that coveted designation.
 
MAH4546
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 6:14 am

AA is, has been and continues to be the only major U.S. airline with a lie-flat business class product on every long-haul plane, whether it has one asile or two. End of story.

And it will begin rolling out a redesigned product in October 2012, which it will likely begin to implement at a very fast pace across its fleet, just like it did last time. Although I am told the new seats will not fit on the 763, so AA will need another product for that.
a.
 
Longhornmaniac
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 7:01 am

Quoting Splitterz (Reply 7):
Have you not stepped foot on another legacies international F class offering?

Well, seeing as there's only one other US legacy carrier with F, I think my statement stands. I haven't flown UA's F, but I've flown AA's F, and it's still leaps and bounds ahead of what either UA or DL offers in the biz/first hybrid, even being over a decade old. I've read quite a few reports on UA's F compared to AA's F, and just about every one I've read shows AA's product in a much more positive light. I'm talking about the overall experience, not just the seat (though I'd still put the Flagship Suite up against the new UA F...it won't be a contest with the new suite on rolled out on the 77W).

I'm not entirely sure what you're arguing, here? Are UA's and DL's offering better than AA J? Sure (though based on my experiences and what I've seen on reviews), AA's catering still seems to be better. But only two airlines have a true F in the United States, and so when I'm comparing premium products, it's really a two-headed fight: AA and UA. I have my preference (though I admit I'm not in a position to give a direct comparison since I've only flown one), which is why I included the word "arguably."

Anyone arguing UA or DL J is better than AA F is just being asinine.

And as others said, I know exactly what product I'm getting if I'm flying in an AA premium cabin. No other airline can say that.

Cheers,
Cameron
Cheers,
Cameron
 
HKG212
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 7:06 am

Quoting mogandoCI (Reply 9):
And I wouldn't call AA F a "suite" in the 2012 context .... these days you need a sliding door to qualify for that coveted designation.

That would rule out CX, BA, LH, and in fact I believe all but two airlines calling their F "suite".
 
SurfandSnow
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 7:44 am

I'm amazed by all these doomsday scenario threads that have popped up about AA, DFW, etc. Have people forgotten that *ALL* of AA's legacy peers have undergone this exact same bankruptcy process to become the thriving carriers they are today?!? AA isn't going anywhere. Yes they will be eliminating some aircraft, routes, and stations in the bankruptcy process - just as the other airlines did. But fear not - AA will emerge as a stronger carrier that can much more effectively compete.
Flying in the middle seat of coach is much better than not flying at all!
 
Longhornmaniac
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 9:34 am

Quoting SurfandSnow (Reply 13):

  

The truth is, anytime something this noteworthy happens, there's going to be a lot of discussion on it, naturally. A lot of what makes things like this interesting is playing the "what if" game. We're all aviation enthusiasts, and it can be fun to speculate about what would happen when two carriers merge, even though we often oversimplify it to fleets and route structures. As enthusiasts, these details interest us a lot more than the actual driving forces behind a merger/takeover.

As such, people lose sight of the fact that this process isn't likely to result in any drastic changes to the framework of commercial aviation in the United States. Barring something unforeseen, American will come out of this leaner, meaner, and more competitive in today's airline industry.

Cheers,
Cameron
Cheers,
Cameron
 
UAL777UK
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 10:07 am

Quoting Longhornmaniac (Reply 11):
Well, seeing as there's only one other US legacy carrier with F, I think my statement stands. I haven't flown UA's F, but I've flown AA's F, and it's still leaps and bounds ahead of what either UA or DL offers in the biz/first hybrid,

Huh. You have never flown UA in International first but the AA old suite is better than UA new suite. Is that what you are saying. Amazing, if true.

Quoting MAH4546 (Reply 10):
AA is, has been and continues to be the only major U.S. airline with a lie-flat business class product on every long-haul plane, whether it has one asile or two. End of story.

Oh no, not the we have a lie flat seat that doesn't lie flat seat arguement again!

All I would say on the subject is that AA is going nowhere and will be around for many years to come, its just a shame that they have gone backwards iin the last 10 years and not tried to get ahead of the pack. THere should have been lie flat seats in J installed before the current seats and the F Suite should have been changed by now. I just wonder if they would have changed any of these seats if the 77W was not coning into the fleet.....that has prompted them to hopefully get ahead of the curve.

I wish them well going forward.
 
babybus
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 10:19 am

I think AA will just wilt on the vine. It doesn't seem to be going anywhere or sorting itself out.

As an aviation enthusiast I have problems with all the US carriers. Their product seems so confused. I end up asking myself, do they provide free food on transatlantics, are the drinks free, will I have to pay for headphones etc. If I buy a J class ticket is it Y service in a big seat? So I just book BA and avoid all these complications.

AA should be at the leading edge of aviation for the USA. It needs to define its product through advertising.
and with that..cabin crew, seats for landing please.
 
sccutler
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 11:27 am

Quoting GizmoNC (Reply 1):
I think if you asked the majority of the former TWA employees that AA shafted they would COMMENT: HELL YES, Let AA Falter, Fail or fade away into the dust.

You mean, all the folks whose airline was broke and dead? AA did nothing to these people, other than try to salvage some value from the rubble.

AA/TW was not a merger. AA bought assets and, thoughtfully, hired people, too.
...three miles from BRONS, clear for the ILS one five approach...
 
jfk777
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 12:51 pm

TWA and PA sold many divisions before finally closing their doors. AA has not sold any part of its self to save the ship. AA was the buyer of many legacy airlines former operations which today are saving AA, Miami was Eastern's and LHR was from TWA. AA didn't buy any PA operations, those were sold to UA in 3 transactions and 1 to Delta.
 
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SEPilot
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 1:28 pm

The simple fact of the matter is that the US has too many major airlines, and the cutthroat competition is keeping all of them from earning a decent profit. If AA does not fold (and I don't think it will) it definitely should merge. Since UA and DL have both recently merged it makes sense that the remaining candidate is US (yes, there is a thread about that that I have not read.) But whether or not the cultures of US and AA can merge is the big question; I don't know enough about either to venture an opinion. An aviation world that has one fewer major carrier will be healthier than the current one, and perhaps some sanity can introduce itself into the airline business in this country.
The problem with making things foolproof is that fools are so doggone ingenious...Dan Keebler
 
gen2stew
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 2:26 pm

C'mon really?! Barring something cataclysmic happening, impossible. With four something Billion in the bank, an aggressive management team as well as a decent to stong route network, new A/C coming, and a plan to exit BK, again, not really possible.
The same pot stirring speculation occured when UA, CO, US, US (again), DL, and NW filed Bk.
I don't know why blessings wear disguises. If I were a blessing, I'd run around nude!
 
micstatic
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 2:29 pm

Quoting GEN2STEW (Reply 20):
an aggressive management team

An aggressive management team? I'm just curious why you say that. I find them to be very passive. Haven't seen anything major out of them in a while.
S340,DH8,AT7,CR2/7,E135/45/170/190,319,320,717,732,733,734,735,737,738,744,752,762,763,764,772,M80,M90
 
mogandoCI
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 2:43 pm

Quoting MAH4546 (Reply 10):
AA is, has been and continues to be the only major U.S. airline with a lie-flat business class product on every long-haul plane, whether it has one asile or two. End of story.

AA is, and has been and continues to be the only major U.S. airline WITHOUT a true flat-bed business class product on ANY long-haul-plane (the 77W is not here yet). End of story.
 
gen2stew
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 2:50 pm

Quoting micstatic (Reply 21):
An aggressive management team? I'm just curious why you say that. I find them to be very passive. Haven't seen anything major out of them in a while.

Agreed, I should have said recently.
AApey and CO. were qiute passive, but the action(s) taken in the past 6 weeks are signs that they are finally waking up in Fort Worth.
I don't know why blessings wear disguises. If I were a blessing, I'd run around nude!
 
mogandoCI
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 2:58 pm

Quoting GEN2STEW (Reply 23):
AApey and CO. were qiute passive, but the action(s) taken in the past 6 weeks are signs that they are finally waking up in Fort Worth.

   THIS is the change much needed at AA. Finally a CEO that runs the company by the numbers and not by pride.

The recent "ODD"-DEL drop is a prime example. AI entering the market is just an easy excuse to exit, but given AI's reputation, I would suspect the route being struggling even before AI arrived. In the next 12 months we'll definitely see more of these "pride" routes that will finally be rightsized/downsized/dumped-on-partners (something that would've never happened under Arpey)
 
huxrules
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 3:05 pm

As someone who is flying them GIG-DFW tomorrow in Y with - get this - 30" pitch I say let them die. This bankrupt company is abusing Chapter 11 and should be put into liquidation. There is no reason that bankruptcy protection should be use to support a company that couldn't manage it's way out of a paper bag. The services they offer are very basic - no Y+ for instance- their website seems old - plus the aforementioned horrible pitch in Y - the old MD-80s - the list goes on and on. A proud carrier that is now one of the worst in America. I say let them fail. The lost capacity will go on to the other carriers.
 
Dornier328Jet
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 3:35 pm

Quoting huxrules (Reply 25):
I say let them die. This bankrupt company is abusing Chapter 11 and should be put into liquidation

Surely the 73000 American Airlines employees deserve to be out of a job because their carrier doesn't offer Y+, has a visually unimpressive website, and they fly the MD-80. What about DL? Do they deserve to fail because of flying MD-80s AND much older DC-9's? Or US with the lack of Y+? I understand hoping American improves their product with bankruptcy as DL did, but it's harsh to hope for a company to fail because it doesn't have the latest and greatest product. In all fairness none of the US airlines are on quite the same level as a lot of international carriers. Does that mean they all deserve to fail? There is very little difference between this and what DL, CO, US, UA, and NW all went through.

[Edited 2012-01-10 07:37:02]
 
commavia
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 3:58 pm

Quoting SurfandSnow (Reply 13):
I'm amazed by all these doomsday scenario threads that have popped up about AA, DFW, etc. Have people forgotten that *ALL* of AA's legacy peers have undergone this exact same bankruptcy process to become the thriving carriers they are today?!? AA isn't going anywhere. Yes they will be eliminating some aircraft, routes, and stations in the bankruptcy process - just as the other airlines did. But fear not - AA will emerge as a stronger carrier that can much more effectively compete.

Exactly.

AA is just going through the same process as has occurred at every one of their peers. No different, no better, no worse. Those other airlines had their process to go through, and came out the other end far stronger and more competitive. AA will do the same.

Quoting huxrules (Reply 25):
As someone who is flying them GIG-DFW tomorrow in Y with - get this - 30" pitch I say let them die.

It's so horrible, and yet you're still flying AA. Hmmm ...

Quoting huxrules (Reply 25):
This bankrupt company is abusing Chapter 11 and should be put into liquidation. There is no reason that bankruptcy protection should be use to support a company that couldn't manage it's way out of a paper bag.

Hey - what's good for the goose is good for the gander. I'm all for holistically discussing both the good and the bad of U.S. bankruptcy law, but the practical reality - moral hazard - of the situation is that if every one of AA's legacy peers got the benefit of "abusing" Chapter 11, AA should, too.

Quoting huxrules (Reply 25):
The services they offer are very basic - no Y+ for instance- their website seems old - plus the aforementioned horrible pitch in Y - the old MD-80s - the list goes on and on.

Y+ is coming on the new 777s, but perennial favorite Southwest has no Y+ at all and they seem to be popular. Website may seem "old," but in my experience it's one of the most stable and usable in the U.S. Some of the others look far nicer but are far less functional. Not sure about the "horrible pitch" in Y - it's basically right at about the same (31/32) as everyone else in the U.S., as far as I know. The MD80s are old, but the insides don't long particularly "older" or more dated than other U.S. carriers - including the also-ancient planes Delta is flying.

Quoting huxrules (Reply 25):
A proud carrier that is now one of the worst in America.

"One of the worst?" Seriously? I just fail to see how AA is truly that appreciably worse than most of their competitors. Depending on each individual traveler's personal priorities and value propositions, each airline has its strengths and weaknesses, but I wouldn't say that - overall - any one is dramatically better than the others.

From my perspective:

Delta has IFE/AVOD, a nicer international J seat (on some airplanes), and a far better-looking website. On the flip side, I find Delta's website largely useless, and their frequent flyer program inferior.

United has IFE/AVOD on some planes, relatively varied (but generally good) international premium cabins, and a truly exceptional network. However, I still find Mileage Plus inferior to AAdvantage.

Southwest has comfortable cabins, frequent schedules, and generally excellent service, but their network isn't the greatest, they have no IFE, and I can't stand the cattle car. Plus, I'm not a big fan of the new Rapid Rewards.

Virgin America and JetBlue - both exceptionally good airlines with great products and services, but with less extensive frequent flyer programs, and most importantly limited networks that aren't really worth much unless you're traveling to California (in the case of the former) or the Northeast/Florida/Caribbean (in the case of the latter).

AA has old planes (but getting newer) with no IFE/AVOD (but apparently it's getting better) and antiquated cabins (soon to be upgraded, apparently). They need to work on basic service delivery. However, AA has an excellent network with good hubs and generally the nicest airport terminals in those hubs, excellent partners, and AAdvantage - which is now in my view AA's single greatest brand attribute.

That's quite a defensible base upon which to build a strong, profitable growing airline for the future. Once the new fleet starts arriving with (hopefully) upgraded cabins and IFE, and they get their costs down (which will enable them to expand their network), AA should be just fine.
 
txjim
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 4:00 pm

Quoting GizmoNC (Reply 1):
I think if you asked the majority of the former TWA employees that AA shafted they would COMMENT: HELL YES, Let AA Falter, Fail or fade away into the dust.



This is one thing I don't understand about the airline business. The company I work for (we have systems in many of the aircraft you all fly) just completed more layoffs. Sometimes small companies are purchased, sometimes business lines dropped. Projects are ripped from one location and moved to another. Some managers are good, some are not. Sometimes we work too many hours, sometimes we don't have enough work.

But through all of this, I've never seen the level of spite for management or other employees that is frequently shown here. In my industry, most people who have been laid off maintain relationships with their former employers. I've been laid off a couple times myself and I've never looked back at my former companies with the spite that some do here. I may not be happy that location X is working on a plum project that my location should be handling but this does not result in the my wishing for failure. When they succeed, I succeed.

Why is is that so many people wish airlines to fail, even when they are still employed by that airline? What reasonable person thinks that a failure of AA would not impact tens of thousands (if not hundreds of thousands?)

Quoting huxrules (Reply 25):
As someone who is flying them GIG-DFW tomorrow in Y with - get this - 30" pitch I say let them die


Really?   How about flying another airline or spring for a better seat?
 
flymia
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 4:03 pm

Quoting huxrules (Reply 25):

So DL, UA, US, and former CO and NW all should be gone too right? With your logic that is what should happen to actually AA would be the only one left. They tried to not take the Chap 11 route, they failed at it but they tried longer and harder than any other air.ine in the US that has gone through this. Think or learn about the history of airlines in the US before you say something like this.
"It was just four of us on the flight deck, trying to do our job" (Captain Al Haynes)
 
ckfred
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 4:09 pm

First, AA is not going to disappear like PA, TW, and BN. Pan Am had a global route system, but little domestic feed into its primary gateways. Buying NA didn't provide enough feed for JFK, and the merger had problems. Just to make matters worse, every time a new gateway was opened under various bilatteral treaties, PA would lose to the domestic carrier which had built a hub at the gateway. For instance, I remember Pan Am wanting to service both DFW-LGW and CVG-LGW, citing its years of experience flying to the UK. PA lost to AA and DL, respectively.

TW had two problems. First was Carl Icahn. Second was having only one domestic hub at STL. Granted, STL has a great location, but as AA learned, the O&D traffic isn't great.

BN simply overexpanded, and took on too much debt to do that. Plus, its main hub was DFW. Between AA creating its largest hub at DFW, DL having a large operation at DFW, and WN having a lot of traffic within Texas at DAL, the declining finances put BN in a bad situation. Remember that when BN was in the process of filing its petition, it had pilots fly planes back to DFW, out of fear that leaving them at other airports would lead to aircraft being repossessed.

Here are the issues the contributed to AA's decline:

717 vs. F100. We all know why AA kept the F100s versus the 717s. But, people I know at AA tell me that in hindsight, AA should have kept the 717s and retired the F100s in 2002. The F100s had been troublesome in terms of maintenance from the start, and the Fokker bankruptcy made things worse. On the other hand, not having a 2-clsss, 100-seat jet made scheduling a headache and irritated customers. When AA was flying Embrears, the competition had 737s, A320s, 757s, and even DC-9s. It made retaining customers difficult.

Oil Prices: AA's cost structure, according to analyst Ray Neidl, was very workable at $50 a barrel. It doesn't work at $80 a barrel and higher.

2003 Wage Concessions: This relates to oil prices. What AA did was to avoid bankruptcy and try to solve its labor costs on its own. AA should have filed for Chapter 11, which would have meant better labor costs for the long term, as well as reduced lease rates and other costs.

Management: I've seen many companies, large and small, go out of business, because management was spending money that it didn't have. AA management saw that its cash burn was problematic and tried for several years to limit spending. Common sense say that was the prudent course of action. Obviously, the recession hasn't had the strong recovery that we've seen with past recessions. If this recovery had been more typical, increasing traffic would have allowed AA to start its major fleet renewal earlier, as well as improve its on-board product.

My grandfather used to say that you often have to spend money to make money, and the best time to spend money is when you don't even have 2 nickels. AA should have started started buying new aircraft and such in 2005-2008.

Boeing: Remember when Boeing was starting to hint that it was going to develop a new narrowbody to replace the 737NG line and the 757? That was back in 2006, IIRC. From what I understand, AA was curious as to what Boeing was planning. It didn't want to order more 738s, only to see something new and better coming out a few years later. So, AA waited, and waited, and waited. Finally, when oil zoomed past $100 a barrel, AA stopped waiting and ordered 738s for delivery starting in 2009.

The United Bankruptcy: UA's bankruptcy dragged on, and on, and on. A lot of pundits started to think that UA was never going to get a reorganization plan formulated and approved. If UA had converted its filing to Chapter 7, then UA would have been sold in pieces. That would have made AA the dominant carrier at ORD. Star Alliance would have lacked a large U.S. member. Some carriers probably would have defected to Oneworld. That would have been one less competitor on the trans-cons out of JFK/EWR.

As for AA in the long term, it will get ugly for a while. The unions aren't going to like what's coming. We're probably going to see AA shrink in the short term. But I like AA's prospects for the long term.

Quoting huxrules (Reply 25):
As someone who is flying them GIG-DFW tomorrow in Y with - get this - 30" pitch I say let them die. This bankrupt company is abusing Chapter 11 and should be put into liquidation. There is no reason that bankruptcy protection should be use to support a company that couldn't manage it's way out of a paper bag. The services they offer are very basic - no Y+ for instance- their website seems old - plus the aforementioned horrible pitch in Y - the old MD-80s - the list goes on and on. A proud carrier that is now one of the worst in America. I say let them fail. The lost capacity will go on to the other carriers.

It's not an abuse of the bankruptcy process. When debts exceed assets, and projected revenue and costs show likely large losses in the future, a Chapter 11 filing is proper. The only difference here is that AA filed early enough that it had sufficient cash to avoid debtor-in-possession financing (DIP). Even though money is very cheap, banks aren't lending money. It's better to file with a good cash balance, rather than risk having severe difficulties getting DIP.

Bankruptcy is for companies that can't manage their way out of a paper bag. I don't think UA has been well managed since Gerald Greenwald retired. CO had a string of inept CEOs and bankruptcies until Gordon Bethune took over. Considering that DL only had unionized pilots, it should have been able to avoid bankruptcy.
 
mikey72
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 4:13 pm

The paradoxical outcome of Chapter 11 provisions is for most others to suffer after AA emerges with a lower cost structure and they will also be in a much better to position to fight.

AA has stated that it will place high priority on its alliance relationships as it goes through this process, citing the great value it gains from oneworld – notably on the North Atlantic under the hard fought for antitrust immunity regime.

AA ain't going anywhere !
Flying is like sex - I've never had all I wanted but occasionally I've had all I can stand.
 
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SEPilot
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 4:26 pm

It is interesting that all but one US airline that existed before deregulation has now gone through or is now in bankruptcy, and several have disappeared for good. The exception, WN, doesn't really count as it was a very minor player during regulation; one can really consider it a startup since regulation, like JetBlue. So what is the fundamental problem? For my money it was regulation. It artificially protected the airlines from competition, and allowed them to develop business models that were not really supported by demand. Looking at the only successful airline that has existed during the entire deregulation period, WN, shows that it is possible to make money in the airline business in the US, but not the way the others have been doing it. I believe that if regulation had never been implemented the airlines would have established themselves with much lower cost structures in the 50's and 60's, and we would now have 3 or 4 major nationwide carriers, and perhaps a few regional ones, and they would be healthy. I still believe that this will happen eventually; but it may take another 20 years or so. As for WN, many people don't like them (especially on this forum) but their business model works. They offer what most people want, which is to get from A to B at the lowest possible cost, and their personnel are (at least in my experience) always friendly, helpful, and often humorous. You can argue all you want about lie-flat seats, J & F products, and other amenities, but the vast majority of the flying public cannot even dream about them. WN has chosen to ignore that market completely and try and make the bare-bones traveler as happy as they can, and they are able to make money at it because nobody else does it as well. How this applies to AA right now is beyond my insight; I think they, DL, UA, and US are all in the same boat; they all need to figure out how to coexist without cutting each other's throats all the time and at the same time competing fairly. At the same time they have to offer fares and services that will be attractive to as many people as possible.
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Trucker
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 4:27 pm

Reading through this thread one gets the feeling that the key to an American airline being sucessful is what kind of seat they have in the front of the cabin on their international flights. Somehow I don't think that's the case. AA's employees are about to lose their pensions and get their wages(salaries) chopped by a third. Wether or not AA makes it will mostly depend on wether or not these employees pull hard on the rope despite those cuts.
 
commavia
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 4:47 pm

Quoting mikey72 (Reply 31):
The paradoxical outcome of Chapter 11 provisions is for most others to suffer after AA emerges with a lower cost structure and they will also be in a much better to position to fight.

... just as how AA suffered mightily while their competitors used the bankruptcy process. AA is now following their lead.

Quoting mikey72 (Reply 31):
AA has stated that it will place high priority on its alliance relationships as it goes through this process, citing the great value it gains from oneworld – notably on the North Atlantic under the hard fought for antitrust immunity regime.

True.

Alliance partnerships will become even more important. And AA now has some great partnerships locked in - BA is a great partner across the Atlantic, JAL is fantastic across the Pacific, and LAN-TAM is likely to be moving in AA's direction.
 
The777Man
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 4:48 pm

Quoting commavia (Reply 27):

United has IFE/AVOD on some planes, relatively varied (but generally good) international premium cabins, and a truly exceptional network. However, I still find Mileage Plus inferior to AAdvantage.

UA has IFE on basically ALL its fleet (there may be a few ex-CO 738s with no audio entertainment). ALL of Pre-merger UA;s flight had video entertainement although with overhead vidoes but AA's M80s doesn't even have audio.

Even looking at the fleets ten years ago, ALL of UA' s fleet incl 72As and 732s had a at least audio entertainment while AA's M80s had no IFE at all except for the inflight magazine. At that time, AA's M80s made up a large portion of the mainline AA fleet.

Things at AA will improve but there will probably be more route cuts and the general on board product will slowly improve. Tough times ahead for AA as it was for my airline when we were in Ch11.

With no DIP financing, things are more shaky for AA than the other airlines that went thru Ch. 11 in the last ten years, imo

The777Man
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mogandoCI
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 4:55 pm

Quoting commavia (Reply 34):
Alliance partnerships will become even more important. And AA now has some great partnerships locked in - BA is a great partner across the Atlantic, JAL is fantastic across the Pacific, and LAN-TAM is likely to be moving in AA's direction.

Let's out-source all long-haul flying to BA/JL/LA and outsource all short-haul flying to low-cost regionals, then we don't even need that cost-center overhead known as "mainline"

How would AA stay competitive if they ask you to do 2-stops (Origin -> AA hub -> OW hub -> Destination) on a lot of flights that UA/DL offers 1-stop ?
 
olddominion727
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 5:07 pm

Quoting GEN2STEW (Reply 20):

Yes, and of those carriers, CO is gone (first quarter 2012), NW, US & HP are all gone. The US name is still here but that's because HP bought them and kept the name. But both HP and US were having a hard time making a go of it on their own. Now US is going back to the same boat and level of vulnerability. Ever since I have been in the aviation industry (21 years), US has always been trying to evolve. Purchase of Allegheny, PSA, Piedmont, attempted merger with DL, merged with much smaller HP, now possibly merging with AA. C'mon, that's not very healthy.
 
miaami
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 5:07 pm

Quoting mogandoCI (Reply 36):
Let's out-source all long-haul flying to BA/JL/LA and outsource all short-haul flying to low-cost regionals, then we don't even need that cost-center overhead known as "mainline"

I little dramatic wouldn't you say? AA drops 2 routes and now the sky is falling!?
 
commavia
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 5:20 pm

Quoting SEPilot (Reply 32):
So what is the fundamental problem? For my money it was regulation. It artificially protected the airlines from competition, and allowed them to develop business models that were not really supported by demand.

Well of course that's the challenge. It's understandable.

The business models upon which AA, Continental, Delta, Northwest, United and USAirways or their forerunners (or for that matter Braniff, Pan Am, TWA, etc.) were built were never originally designed for deregulation. Before 1978, airlines were basically public utilities: competition was restricted, some "reasonable" profit margin was guaranteed, and competitive differentiation took place more based on service than on price.

Post-deregulation, all of that was turned upside down. Competition was free and open, air travel became largely a commodity with competition based on price and often price alone, and profit was most definitely never guaranteed. New entrants not saddled with the legacy costs of the regulation era came in and exploited to the hilt the cost differential versus the pre-deregulation giants.

That is obviously a hard transition for any business to make. Nonetheless, the legacy carriers largely did it. The going was very painful and rough, and took pretty much the entire decade of the 1980s plus much of the 1990s, but they did transform themselves dramatically. Nonetheless, the extra "push" of 9/11 and the events that followed is what ultimately forced all the airlines to take that final step and, ultimately, that meant bankruptcy and mergers. Restructuring and consolidation what was required to largely complete the process of evolving their business models and casting off the legacy costs that caused them to be so uncompetitive with the lower cost start-ups they were increasingly facing.

Now, that process is largely complete. The cost differential gap between the legacy carriers and the "low fare" carriers is dramatically smaller than it was 10-15 years ago. The largest "low fare" carrier in the U.S. now has among the industry's highest labor costs, and is facing its own competitive headwinds. The lower-cost competitors are evolving their own business models to try and, in selective ways, actually emulate the network airlines, and in so doing are adding to their own cost structures.

Quoting SEPilot (Reply 32):
I believe that if regulation had never been implemented the airlines would have established themselves with much lower cost structures in the 50's and 60's, and we would now have 3 or 4 major nationwide carriers, and perhaps a few regional ones, and they would be healthy.

That's pretty much where we are - and are headed - right now anyway.

In the U.S. today, there are basically four huge nationwide airlines (AA, Delta, United and Southwest), plus USAirways, JetBlue, and a bunch of smaller and/or niche competitors (Virgin, Spirit, Allegiant). And, with the exception of AA, most are stable and profitable. There is probably still some consolidation and rationalization yet to happen, but by and large I think the U.S. airline industry today is actually at its most stable, sustainable, and economically rationale since deregulation. It has taken decades to get to this point, plus a new breed of smarter airline leaders, and a more realistic regulatory regime, but the U.S. is now pretty much "there" as far as I can see.

Quoting SEPilot (Reply 32):
Looking at the only successful airline that has existed during the entire deregulation period, WN, shows that it is possible to make money in the airline business in the US, but not the way the others have been doing it.
Quoting SEPilot (Reply 32):
As for WN, many people don't like them (especially on this forum) but their business model works. They offer what most people want, which is to get from A to B at the lowest possible cost, and their personnel are (at least in my experience) always friendly, helpful, and often humorous. You can argue all you want about lie-flat seats, J & F products, and other amenities, but the vast majority of the flying public cannot even dream about them. WN has chosen to ignore that market completely and try and make the bare-bones traveler as happy as they can, and they are able to make money at it because nobody else does it as well.

Southwest has its own issues to deal with. Southwest itself has undergone dramatic transformation in the last ten years - the business model that was so astoundingly successful for the first thirty years of their existence is now in many ways gone. Southwest today is operating multiple fleet types (at least for now), is operating hubs, is flying into higher-yielding but far higher-cost and more congested close-in airports, is using GDSs, is working towards codesharing and international, and on and on.

They have been forced to change the way they do business because they have been squeezed from both sides: the network airlines Southwest used to easily make mincemeat of because of their higher costs and lower efficiency are now far nimbler and more competitive, and new upstarts have entered the market with lower costs and a generally better product that Southwest as well.

And, as Gary Kelly's memo alluded to, there is more changing that will need to be done at Southwest.

Quoting The777Man (Reply 35):
UA has IFE on basically ALL its fleet (there may be a few ex-CO 738s with no audio entertainment). ALL of Pre-merger UA;s flight had video entertainement although with overhead vidoes but AA's M80s doesn't even have audio.

Even looking at the fleets ten years ago, ALL of UA' s fleet incl 72As and 732s had a at least audio entertainment while AA's M80s had no IFE at all except for the inflight magazine. At that time, AA's M80s made up a large portion of the mainline AA fleet.

Well, AA's fleet has powerports on just about every plane, and wifi on many jets, which helps. Also, the typical AA criticism of their old and allegedly-awful MD80s will soon be coming to an end.

Quoting The777Man (Reply 35):
With no DIP financing, things are more shaky for AA than the other airlines that went thru Ch. 11 in the last ten years, imo

A lack of DIP financing is likely a positive, stabilizing force, not the other way around. AA has less time pressure, and doesn't have one more huge creditor to worry about.

Quoting mogandoCI (Reply 36):
Let's out-source all long-haul flying to BA/JL/LA and outsource all short-haul flying to low-cost regionals, then we don't even need that cost-center overhead known as "mainline"

Who suggested anything even remotely like that?
 
tommy767
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 5:23 pm

Quoting LDVAviation (Reply 8):

Delta and United still have recliners in International J. All of AA's fleet features an angled, lie-flat seat.

While dated, those are still arguably, more comfortable than AA's J seat. I'm sorry, but that thing is a piece of crap. It's not comfortable, they have those stupid bulky personal video units that they distribute only on international flights, and I seriously couldn't stay in one position going from LAX-DFW. The thing that bugs me the most are those personal video units. That had to be the cheapest thing they've ever done for J pax.

Quoting MAH4546 (Reply 10):
AA is, has been and continues to be the only major U.S. airline with a lie-flat business class product on every long-haul plane, whether it has one asile or two. End of story.

They technically ARE NOT lie flat -- we knew that 5 years ago.

Quoting olddominion727 (Thread starter):
You know, I have been in the AAdvantage program 26 years., I have been a travel agent for 21 years. There's

Hey times change. Don't like AA? Try UA mileage plus or DL skymiles. In my experience, Mileage plus is just as good if not better than AAdvantage.
"KEEP CLIMBING" -- DELTA
 
777STL
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 6:09 pm

Quoting GizmoNC (Reply 1):
I think if you asked the majority of the former TWA employees that AA shafted they would COMMENT: HELL YES, Let AA Falter, Fail or fade away into the dust.

Not the ones that are still receiving benefits, obviously.

Quoting SurfandSnow (Reply 13):
I'm amazed by all these doomsday scenario threads that have popped up about AA, DFW, etc. Have people forgotten that *ALL* of AA's legacy peers have undergone this exact same bankruptcy process to become the thriving carriers they are today?!? AA isn't going anywhere. Yes they will be eliminating some aircraft, routes, and stations in the bankruptcy process - just as the other airlines did. But fear not - AA will emerge as a stronger carrier that can much more effectively compete.

While I mostly agree with you, AA missed the boat by not declaring BK years ago when all of its competitors did. The rest of the legacies save the former CO went through the process, gained a competitive advantage, and are now stronger than ever.

Quoting TOMMY767 (Reply 40):
They technically ARE NOT lie flat -- we knew that 5 years ago.

Uhh, technically, yes it is, it's just angled. The seat folds flat to a full 180 degrees.

Quoting TOMMY767 (Reply 40):
Try UA mileage plus or DL skymiles.

Skymiles, yeah, that's an excellent suggestion. Here's a tip, they don't call it SkyPesos for nothing.
PHX based
 
LAXdude1023
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 6:14 pm

Quoting TOMMY767 (Reply 40):
Try UA mileage plus or DL skymiles.



Having been a Medallion on SkyMiles and a Primier on UA, SkyMiles is not even in the same boat as AAdvantage or MilagePlus. The program is next to worthless for elite fliers.
It is what it is...
 
tommy767
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 6:14 pm

Quoting 777STL (Reply 41):
Uhh, technically, yes it is, it's just angled. The seat folds flat to a full 180 degrees.

'Angled' cannot mean 180 degrees.

Quoting 777STL (Reply 41):
Skymiles, yeah, that's an excellent suggestion. Here's a tip, they don't call it SkyPesos for nothing.

I was really suggesting mileage plus which is extremely comparable to AAdvantage. Skypecos is OK -- it all depends on how one uses them. I have the AMEX card so I can use pecos to shave off $100 of my ticket price. Try doing that with AA.
"KEEP CLIMBING" -- DELTA
 
mogandoCI
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 7:05 pm

Quoting TOMMY767 (Reply 43):
Quoting 777STL (Reply 41):
Uhh, technically, yes it is, it's just angled. The seat folds flat to a full 180 degrees.

'Angled' cannot mean 180 degrees.

I think it means it's 180 deg from head to toe, but not 180 against the horizon

Those seats are horrible because they're designed to make you continuously slide downwards and have a very awkward sleep ... at least in a bucket recliner (the old UA 777 ridiculed by fAAnbois) I know gravity won't be pushing me around
 
splitterz
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 7:07 pm

Quoting ual777uk (Reply 15):
Well, seeing as there's only one other US legacy carrier with F, I think my statement stands. I haven't flown UA's F, but I've flown AA's F, and it's still leaps and bounds ahead of what either UA or DL offers in the biz/first hybrid,

Huh. You have never flown UA in International first but the AA old suite is better than UA new suite. Is that what you are saying. Amazing, if true.

No kidding. I find it hard to believe as well that AA's premium class offering is any better than DL or UAs. I think having a reclining seat is an incredibly nice feature.
 
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lightsaber
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 8:00 pm

Wow... much animosity both ways. The reality is AA has to cut the cash burn and quickly. Faster than I'm seeing them currently cut.

Quoting Longhornmaniac (Reply 2):
AA's business model is basically sound, and Ch 11 will go a long way towards fixing a lot of their major issues (labor costs etc...).

AA will help, but only if the cash burn drops.

Quoting GEN2STEW (Reply 20):
Barring something cataclysmic happening, impossible. With four something Billion in the bank,

Enough to survive 12 to 18 months. That's it. AAemployees had better understand that. Note: AA needs to cut 'overhead' too.

Quoting huxrules (Reply 25):
A proud carrier that is now one of the worst in America.

I must admit, I stopped flying AA after the third flight where the F/A chose to ignore passengers (not just me). Something has to change in the work rules to improve the customer service and rid AA of poor customer service personel. But with the unions, how?

Quoting Trucker (Reply 33):
Wether or not AA makes it will mostly depend on wether or not these employees pull hard on the rope despite those cuts.

   AA could come out of Ch. 11 as a prizefighter. Or... It could find it needs to 'double dip' in bankrupcy as other airlines have... Sans DIP financing, I do not see them emerging from a double dip chapter 11.

Quoting commavia (Reply 34):
... just as how AA suffered mightily while their competitors used the bankruptcy process. AA is now following their lead.

First, you made many good points. I agree that AA suffered via Ch. 11 and now will use the process to become leaner. The issue for AA is going into Ch. 11 so highly levered...

Quoting commavia (Reply 34):
Alliance partnerships will become even more important. And AA now has some great partnerships locked in - BA is a great partner across the Atlantic, JAL is fantastic across the Pacific, and LAN-TAM is likely to be moving in AA's direction.

Now this I agree with 100%. I'm a huge fan of the 'two hubs to 99% of the world's population' concept of alliances. IMHO, OneWorld has been re-energized with the JAL issues of a few years ago.

Quoting commavia (Reply 39):
Well, AA's fleet has powerports on just about every plane, and wifi on many jets, which helps. Also, the typical AA criticism of their old and allegedly-awful MD80s will soon be coming to an end.

Nice touches on the powerports. The issue with AA is that they never should have stopped early renewals on their fleet. AA used to be known as a 'young fleet' airline. I see the disadvantage of the MD80 fuel burn/maintenance going away. The question is will AA improve their other inefficiencies enough?

The bankrupcy process needs to start moving faster or AA will eat through too much cash. I want AA to survive. I used to be very loyal to AA. Now it is B6, WN, and UA. (In that order.) Since so many of the FF plans only benefit the ubber traveler.

Lightsaber
"They did not know it was impossible, so they did it!" - Mark Twain
 
olddominion727
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 9:26 pm

Quoting GEN2STEW (Reply 20):

I am sure all of the other defunct "major US carriers" thought the same. PanAm was a household name. TWA was too for that matter. AA keeps going to EU/India and pulling out. Over the past 20 years they've pulled from GLA, NCL, STN, BHX, NCE, LYS, HAM, DUS, TXL, MUC, GVA, SVO, ARN & DEL--It's very curious when a "worldwide airline" can fly to one of the most populous nations in the world that need air travel to the U.S. not be able to make the route work. hmmm Domestically, downsized ORD, closed RDU, BNA, SJC & STL Hubs and all of the routes that go with it. In the last 10 years bought and liquidated QQ and TW. Other carriers are picking up the slack. WN stepped in almost all of CA, BNA, RDU, STL. AS & HA are making money going to HI... legendary routes like SFOHNL GONE! I think they're cutting into the meat of the airline. They have a panzy for a CEO with no vision. Their costs are too high and they may've waited to long to regroup. I hope AA stays around, don't get me wrong. But by them time they get back up to par of the 90's, passengers will have other loyalties.
 
realsim
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RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 10:17 pm

Quoting micstatic (Reply 21):
An aggressive management team? I'm just curious why you say that. I find them to be very passive. Haven't seen anything major out of them in a while.

I think management should be more agressive in network expansion, as well as in recruitment of new OneWorld partners. However, you should not forget that AA has taken delivery of 113 new aircraft in less than 3 years, which is more than any other legacy (91 738 and 22 CR7)-. This year (2012) they should get 30 new aircraft, 57 in 2013, 55 in 2014, 50 in 2015, and 315 more between 2016 and 2022. And this does not include the 787 and 772ER orders. That means that more than 550 aircraft are expected. And, as fore sure the 772 and around half of the 738 will be around for a long time, AA could grow by around 150 aircraft in the next ten years without exercising any option (they have hundreds of them), what should put them ahead of both DL and UA. In my opinion, this is being agressive. And I'm 100% sure that, when the new orders were negotiated for the new 200 Boeings and 260 Airbus some months ago, the CH11 filling was envisaged as a real option, so the orders shouldn't be altered. In fact, we could think that management signed the contracts with CH11 in their minds.

Another key factor that nobody mentions is scope. A year or two ago, I posted some info about AA's fleet composition vs. the other legacies. Here are the key tables of that post:

US Legacies Fleet Composition Table 3


US Legacies Fleet Composition Table 1


US Legacies Fleet Composition Table 4


Now that UA and CO are merged, AA is:

1) The airline that outsources less regional traffic by a huge margin, which makes their regional flying uncompetitive.
2) The airline with less 51-100 seats aircraft by a wide margin, the reason why a lot of medium markets can't be flown with a profit, either because they use the old S80 instead of an E195, or because they use lots of E145 which are uncompetitive because they can't be outsourced.
3) The airline with less regional flying of all the legacies. Out of all the aircraft that fly for AA, 70% are mainline aircraft, compared to 52-54% of its competitors.If AA had the same % of regional aircraft than the others, they should have right now around 475 regional aircraft flying for them, which means 200 more than today.
4) And, in addition, they are in disadvantage because of their own cost structure problem.

In my opinion, AA is in the right way. First, their fleet renewal is planned and will turn their fleet into the youngest of the USA (besides, not only they have thought about the 762 and S80 renewal, but also about the second-round replacement with the NEO and MAX orders). Second, scope must be relaxed during CH11 process. Third, their cost problem will also be solved. After that, all the other things will be easier: in flight product, awarding regional flying to different 3rd parties, opening new routes that are unprofitable right now, rebranding, etc.

My only concern about AA's expansion (because they have to expand in Europe and Asia to survive long term), is the lack of slots at JFK and the terminal space at LAX. The other cornerstones are already prepared to house a bigger AA.

[Edited 2012-01-10 14:23:03]
 
ckfred
Posts: 4763
Joined: Wed Apr 25, 2001 12:50 pm

RE: Will AA Fall Like TW & PA?

Tue Jan 10, 2012 10:24 pm

Quoting olddominion727 (Reply 47):
--Domestically, downsized ORD, closed RDU, BNA, SJC & STL Hubs and all of the routes that go with it. In the last 10 years bought and liquidated QQ and TW.

There were three problems with RDU and BNA. First, neither city had a sufficient amount of O&D traffic. Airlines thought they could put a hub anywhere and run connecting traffic through it. It turns out that a hub must have a fair amount of people who aren't connecting to be profitable.

Second, AA was the new guy in the Southeast. DL had ATL, which existed as a hub long before deregulation, as well as CVG. Piedmont had been a Southeast carrier before creating the CLT hub, as well as the BWI hub. While the BWI hub disappeared after the merger with US, CLT has been very strong.

Simply put, southerners never warmed up to AA, since they had DL and Piedmont/US long before AA moved into the region.

Third, MIA. After AA bought the Eastern hub at MIA, it discovered that if could fly people into MIA and then connect them for other points in Florida. That meant AA had 3 hubs that were feeding traffic into Florida, and that was 2 too many.

SJC's first disappearance was due to Southwest deciding to move into California. DL scaled back the Western route structure along the West Coast. US got rid of PSA's north-south flying. UA was the only carrier that decided to stick it out and keep the SFO hub for north-south flying.

The second disappearance of SJC, after buying QQ, was due to the dot.com collapse. According to a friend of mine, dot.com executives were regularly booking first class tickets to meet customers, often a day or two before departure. When the stock market collapsed in April of 2000, the IPO money started to dry up. The tech firms also got hurt, which led to reduced travel budgets.

As for STL, it made sense before 9/11, because the summer of 2000 at ORD had been miserable, with frequent severe weather wreaking havoc with schedules. After 9/11, with reduced demand and the low O&D traffic at STL, service was gradually reduced.

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