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FSDan
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Re: Updated: American Airlines Business & Finance Discussion

Fri Jul 24, 2020 11:41 pm

tphuang wrote:
FSDan wrote:
tphuang wrote:

Vasu did not say "slot swap". He said a couple of "slot moves" in JFK and LGA. JetBlue is running 90 flights today at JFK, DL 36 and AA 23. Why would it give up slots at JFK when it's going to actually be able to use over 80% of its slots by the time waiver is over?


So you're saying AA giving slots to B6 at both JFK and LGA, in return for... dropping some unprofitable flying while making sure the slots stay with a partner?

Aa is farming out a lot of it’s domestic flying to JetBlue in jfk and lga. Same with Alaska air in lax.


"Giving away" is more apt than "farming out", I think, given that AA can't help either AS or B6 decide which markets to fly, how frequently, how they are timed, etc., and won't get any of the revenue for those sectors. But I get your point about AA's position in the market, and I can see some rationale for them to turn over slots at both airports rather than giving slots away at one to get some at the other.
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Midwestindy
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Re: Updated: American Airlines Business & Finance Discussion

Fri Jul 31, 2020 6:38 pm

https://viewfromthewing.com/house-repub ... subsidies/

"House Republican Whip Tells American Airlines: We’re Open To More Subsidies"
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UPlog
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Re: Updated: American Airlines Business & Finance Discussion

Tue Aug 04, 2020 3:43 am

Another story that debt is choking the life out of AA and its contrarian strategy is not providing confidence in investors.

Bankruptcy Risks Mount for Embattled American Airlines
https://finance.yahoo.com/news/bankrupt ... 57589.html
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usflyer msp
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Re: Updated: American Airlines Business & Finance Discussion

Tue Aug 04, 2020 4:17 am

UPlog wrote:
Another story that debt is choking the life out of AA and its contrarian strategy is not providing confidence in investors.

Bankruptcy Risks Mount for Embattled American Airlines
https://finance.yahoo.com/news/bankrupt ... 57589.html


That is a terrible, misleading article. The author should be ashamed. The first problem is that he comparing apples and oranges. He tried to argue that AA's cash burn is outrageously high but he is comparing AA's average cash burn for the whole quarter vs. DL and UA's cash burn for June. Just terrible analysis. SMH.
 
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LAXintl
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Re: Updated: American Airlines Business & Finance Discussion

Thu Sep 10, 2020 9:34 pm

AA had a resale offering of 13.7mil common shares pursuant to the Treasury Department PSP Agreement

Prospectus
https://americanairlines.gcs-web.com/st ... 9565968f8a
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gwrudolph
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Doug Parker Statement About AA Never Posting Losses Again

Mon Sep 21, 2020 1:19 am

Recollecting AA Doug Parker’s statement of just three years ago “The world’s biggest airline will never lose money again – thanks to less competition from industry consolidation, better logistics and new types of fee-based products and services” in light of the current pandemic situation. Sadly, it reminds us of just how vulnerable the travel industry can be . . .”
 
DaCubbyBearBar
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Re: Doug Parker Statement About AA Never Posting Losses Again

Mon Sep 21, 2020 1:36 am

Nobody saw this changing the world of travel like it has.....at least me
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JohanTally
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Re: Doug Parker Statement About AA Never Posting Losses Again

Mon Sep 21, 2020 1:48 am

gwrudolph wrote:
Recollecting AA Doug Parker’s statement of just three years ago “The world’s biggest airline will never lose money again – thanks to less competition from industry consolidation, better logistics and new types of fee-based products and services” in light of the current pandemic situation. Sadly, it reminds us of just how vulnerable the travel industry can be . . .”


So far they've mostly just lost taxpayers money from the Cares Act...
 
RushmoreAir
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Re: Doug Parker Statement About AA Never Posting Losses Again

Mon Sep 21, 2020 2:49 am

DaCubbyBearBar wrote:
Nobody saw this changing the world of travel like it has.....at least me


I think very few people saw this particular disaster coming. However, back when Doug first made that statement, many folks (myself included) felt it was somewhat irresponsible. Because while it's hard to predict what will cause a downturn, and when it will occur, I would argue that a moderate-to-major downturn every 10-20 years is a near certainty.

As every airline states in their 10-K, this industry is particularly vulnerable to exogenous factors - travel can be severely affected by a recession, famine, war, pandemics, etc ... Furthermore, compared to other industries, airlines are capital intensive and have a huge percentage of fixed costs (aircraft ownership and labor contracts with minimum gurantees). No matter how good your balance sheet looks pre-crisis, there are going to be periods where airlines bleed money.

The key to long-term sustainability is whether or not airlines can generate adequate returns in the good years to dwarf the losses in bad years. This has not yet been the case.
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enilria
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Re: Doug Parker Statement About AA Never Posting Losses Again

Mon Sep 21, 2020 3:39 am

gwrudolph wrote:
Recollecting AA Doug Parker’s statement of just three years ago “The world’s biggest airline will never lose money again – thanks to less competition from industry consolidation, better logistics and new types of fee-based products and services” in light of the current pandemic situation. Sadly, it reminds us of just how vulnerable the travel industry can be . . .”

Keep in mind Parker needed to instill confidence in his credit risk among investors buying the immense amount of debt he has financed at AA. So think of it more as a carnival barker.
 
dredgy
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Re: Doug Parker Statement About AA Never Posting Losses Again

Mon Sep 21, 2020 3:44 am

Was a statement full of hubris at the time, and hubris is the number one way to make sure a business loses money again.
Nobody saw COVID coming, but I think everybody saw AA losing money again as an inevitability.
 
F9Animal
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Re: Doug Parker Statement About AA Never Posting Losses Again

Mon Sep 21, 2020 4:12 am

I have always admired Parker. But, I just knew that statement would come back to bite him. This industry is so up and down, I could never guarantee anything when it comes to the airlines.

On a side note, I am shocked we haven't seen several airlines close doors yet. I know we have lost a few regionals, but those were because of airline contract losses. At least the losses haven't been too bad on this side of the pond.
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afcjets
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Re: Doug Parker Statement About AA Never Posting Losses Again

Mon Sep 21, 2020 4:28 am

dredgy wrote:
Was a statement full of hubris at the time, and hubris is the number one way to make sure a business loses money again.
Nobody saw COVID coming, but I think everybody saw AA losing money again as an inevitability.


:checkmark:

AA lost money in the last quarter of 2018 flying passengers when Delta reported a $6 billion profit that same year, which was a record year for the industry. Cargo was the only thing that saved AA from posting a loss.
Last edited by afcjets on Mon Sep 21, 2020 4:30 am, edited 2 times in total.
 
LCDFlight
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Re: Doug Parker Statement About AA Never Posting Losses Again

Mon Sep 21, 2020 4:28 am

enilria wrote:
gwrudolph wrote:
Recollecting AA Doug Parker’s statement of just three years ago “The world’s biggest airline will never lose money again – thanks to less competition from industry consolidation, better logistics and new types of fee-based products and services” in light of the current pandemic situation. Sadly, it reminds us of just how vulnerable the travel industry can be . . .”

Keep in mind Parker needed to instill confidence in his credit risk among investors buying the immense amount of debt he has financed at AA. So think of it more as a carnival barker.


It did not instill confidence. Parker originally instilled confidence by turning around AWA and US Airways, which allowed his bid to take control of AA to be successful.

However, this statement suggested he had lost track of reality. That's not confidence; that's delusion.

Bob Crandall (AA CEO 30 years ago) told employees the airline industry is fundamentally un-investable for anybody except specialist investors. Crandall's statement has been durable and its insights remain relevant.
Last edited by LCDFlight on Mon Sep 21, 2020 4:34 am, edited 1 time in total.
 
jetmatt777
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Re: Doug Parker Statement About AA Never Posting Losses Again

Mon Sep 21, 2020 4:33 am

the statement was a bit extreme, but I don't think he meant it quite exactly as it reads.

It was a bit of a dramatic way of saying the AA of today (then) was not going to be like the AA of the 2000-2010 timeframe. his intention was true, outside of any major outside forces the airline was setup well to not lose money, or at least not consecutive quarters of losing money.

a bit like someone who has paid off a large sum of debt saying he will never owe money ever again. he loses his job and has to put a few things on credit for a month, much different than someone saying the same yet going out and charging up new phones, furniture, appliances, and vacations on credit. one stuck to his intention despite outside circumstances while the other failed. I think parker falls into the former. no one saw this coming. everyone is losing.
 
wenders825
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Re: Doug Parker Statement About AA Never Posting Losses Again

Mon Sep 21, 2020 4:56 am

oh look, your weekly bash AA thread
 
32andBelow
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Re: Doug Parker Statement About AA Never Posting Losses Again

Mon Sep 21, 2020 5:14 am

RushmoreAir wrote:
DaCubbyBearBar wrote:
Nobody saw this changing the world of travel like it has.....at least me


I think very few people saw this particular disaster coming. However, back when Doug first made that statement, many folks (myself included) felt it was somewhat irresponsible. Because while it's hard to predict what will cause a downturn, and when it will occur, I would argue that a moderate-to-major downturn every 10-20 years is a near certainty.

As every airline states in their 10-K, this industry is particularly vulnerable to exogenous factors - travel can be severely affected by a recession, famine, war, pandemics, etc ... Furthermore, compared to other industries, airlines are capital intensive and have a huge percentage of fixed costs (aircraft ownership and labor contracts with minimum gurantees). No matter how good your balance sheet looks pre-crisis, there are going to be periods where airlines bleed money.

The key to long-term sustainability is whether or not airlines can generate adequate returns in the good years to dwarf the losses in bad years. This has not yet been the case.

Point was you can adjust capacity to a 10-30% downturn which would be huge. 90% downturn not so much.
 
11C
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Re: Doug Parker Statement About AA Never Posting Losses Again

Mon Sep 21, 2020 12:37 pm

wenders825 wrote:
oh look, your weekly bash AA thread

I don’t think it matters which airline Parker worked for when he made that statement, it was just the statement itself. So, no, not really a bash fest of AA, at least I don’t see it that way.
 
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southwest1675
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Re: Doug Parker Statement About AA Never Posting Losses Again

Mon Sep 21, 2020 12:58 pm

I miss Crandall.
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IADCA
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Re: Doug Parker Statement About AA Never Posting Losses Again

Mon Sep 21, 2020 1:22 pm

jetmatt777 wrote:
the statement was a bit extreme, but I don't think he meant it quite exactly as it reads.

It was a bit of a dramatic way of saying the AA of today (then) was not going to be like the AA of the 2000-2010 timeframe. his intention was true, outside of any major outside forces the airline was setup well to not lose money, or at least not consecutive quarters of losing money.

a bit like someone who has paid off a large sum of debt saying he will never owe money ever again. he loses his job and has to put a few things on credit for a month, much different than someone saying the same yet going out and charging up new phones, furniture, appliances, and vacations on credit. one stuck to his intention despite outside circumstances while the other failed. I think parker falls into the former. no one saw this coming. everyone is losing.


Perhaps he should have said what you claim he meant, then. The word "never" is not one that you can duck or explain your way out of with unstated assumptions, especially one as massive as "assuming conditions remain approximately as they are today."

Your hypothetical guy who pays off his debt is saying something equally stupid for the same reason: shit happens; shit happens frequently; shit happening that decimates revenue when you have large recurring costs means you're going to lose money quite quickly.
 
IFlyVeryLittle
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Re: Doug Parker Statement About AA Never Posting Losses Again

Mon Sep 21, 2020 1:24 pm

A statement along the lines of "Read my lips, No New Taxes.'' Certainly the prudent way forward is to run a business such that when the unplanned happens, the business is ready for it and can react. That, my friends, won't look so good when everyone else is screaming along making money in the short term with little regard for the unplanned. That gets CEOs fired, even if it's the wiser long-term move.
 
D L X
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Re: Doug Parker Statement About AA Never Posting Losses Again

Mon Sep 21, 2020 1:33 pm

afcjets wrote:
dredgy wrote:
Was a statement full of hubris at the time, and hubris is the number one way to make sure a business loses money again.
Nobody saw COVID coming, but I think everybody saw AA losing money again as an inevitability.


:checkmark:

AA lost money in the last quarter of 2018 flying passengers when Delta reported a $6 billion profit that same year, which was a record year for the industry. Cargo was the only thing that saved AA from posting a loss.


You know that's BS, right?

AA lost money "flying passengers" then comparing to Delta as a whole?

Did AA make a profit that quarter? Yes they did.
 
Ziyulu
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Re: Doug Parker Statement About AA Never Posting Losses Again

Mon Sep 21, 2020 1:42 pm

Anytime, you are proud of something, the bad will come. Remember how SQ boasted about their accident free history. Then SQ6 came.
 
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Moose135
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Re: Doug Parker Statement About AA Never Posting Losses Again

Mon Sep 21, 2020 2:00 pm

afcjets wrote:
AA lost money in the last quarter of 2018 flying passengers when Delta reported a $6 billion profit that same year, which was a record year for the industry. Cargo was the only thing that saved AA from posting a loss.

So you are saying AA posted a profit that quarter?
KC-135 - Passing gas and taking names!
 
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Boeing757100
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Re: Doug Parker Statement About AA Never Posting Losses Again

Mon Sep 21, 2020 2:02 pm

And anyways AA has a higher debt load than either UA or DL
 
swacle
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Re: Doug Parker Statement About AA Never Posting Losses Again

Mon Sep 21, 2020 2:06 pm

JohanTally wrote:

So far they've mostly just lost taxpayers money from the Cares Act...


Which was PAYROLL money, not operating money. The people that Cares paid would have been filing unemployment otherwise. Guess who funds unemployment.....yep, the taxpayer....
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ethernal
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Re: Doug Parker Statement About AA Never Posting Losses Again

Mon Sep 21, 2020 2:40 pm

swacle wrote:
JohanTally wrote:

So far they've mostly just lost taxpayers money from the Cares Act...


Which was PAYROLL money, not operating money. The people that Cares paid would have been filing unemployment otherwise. Guess who funds unemployment.....yep, the taxpayer....


Technically unemployment insurance is funded out of state's unemployment fund which is almost universally funded out of payroll taxes paid by the employer. These payroll taxes vary by company and industry based on risk of unemployment (which is why "lay off" vs "for cause" is a contested item.. every "lay off" / "not for cause" termination raises payroll taxes for the employer). Obviously there are augmented unemployment programs today as part of the CARES act and many states are having to augment their unemployment funds from general funds so there are asterisks there.

Now, that said, at the end of the day it is all taxes and that is ultimately borne by individuals (either through higher prices, less wages, or direct tax) and it is just a question of the distribution of how those taxes are felt/realized.

Also, airlines have lost a lot of money beyond what the CARES act has covered. CARES act has provided partial payroll support. Airlines still have to pay for their planes, their fuel, their facilities, their technology costs, etc. The big airlines are losing $30-40M in cash per day - and that is *after* the CARES subsidies. And that is just cash - accrual-based losses are worse as airlines are optimizing for cash preservation, not profit (while typically correlated, these are not always the same thing).
Last edited by ethernal on Mon Sep 21, 2020 2:42 pm, edited 1 time in total.
 
visual8L
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Re: Doug Parker Statement About AA Never Posting Losses Again

Mon Sep 21, 2020 2:41 pm

It was irresponsible then and would only ring true to like minded people. As far as nobody seeing this current turn of events, that's a common response from people that don't like to feel intimidated or challenged by a usually smaller group with knowledge and especially experience and foresight. If you're concerned ahead of time you're an alarmist. If your concern comes to fruition, that same group of people say 'nobody saw it coming' . Common cultural/political response lately.
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JAMBOJET
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Re: Doug Parker Statement About AA Never Posting Losses Again

Mon Sep 21, 2020 3:13 pm

It's worth noting that, perhaps, no other airline CEO was as explicit as Doug Parker was in comments about profitability (or rather, no other airline ceo made a quote so easily turned into an a.net soundbite), but every other investor day and wall street presentation by any airline CEO was selling the stock in a similar fashion of "we've created a sustainable business model that makes profits always"... just look at Delta's ~80 pages of their last investor day. It's an entire presentation about sustainable businesses and growing margins.

https://d18rn0p25nwr6d.cloudfront.net/C ... 7046cf.pdf

On page 8, Delta directly addresses Wall Street concerns with a quote around the macro cycle of the industry (not just Delta) then on the next slide attempts to show why it's not true any longer.
On page 9, Delta is selling the airline industry as "consistent profitability" and it's definitely not the first time Delta or any other airline tried to sell the industry as consistently profitable (the industry; not delta as consistently profitable).
And those slides were in Ed Bastian's portion of the investor day.

Doug Parker was more explicit but he was hardly the only airline CEO trying to get wall street to think the airlines were finally sustainably profitable businesses.
Last edited by JAMBOJET on Mon Sep 21, 2020 3:25 pm, edited 2 times in total.
 
ckfred
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Re: Doug Parker Statement About AA Never Posting Losses Again

Mon Sep 21, 2020 5:07 pm

Hindsight is always 20:20. I think the point Parker was trying to make is that the airline industry was no longer chasing market share by charging low fares, and it was no longer flying large aircraft and dropping fares to fill them. The industry was really mindful of the cost of getting an aircraft from A to B, mindful of how many passengers want to fly from A to B at sustainable fares, scheduling aircraft that would fill up without crazy amounts of discounting, and offering a mix of fares that were attractive to both leisure flyers and business flyers.

The era where a leisure flyer could book coast-to-coast travel for $99 R/T, while someone who needed to book Monday for a Tuesday morning departure, returning Friday afternoon, would pay several thousand dollars (i.e., no Saturday night stayover) is long gone.

I think Parker was also making the point that during a recession, when all travel might dip up to 10%, airlines would still be able to make money, so that they could still make capital investments and not have to make large lay-offs of front-line and corporate staff.

No one saw this pandemic coming, and it has spared very few industries. Tech, tech retailing, grocery and drug stores, food processors, and pharmaceuticals are about the only businesses that have seen their financials hold up.
 
gwrudolph
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Re: Doug Parker Statement About AA Never Posting Losses Again

Mon Sep 21, 2020 5:12 pm

jetmatt777 wrote:
the statement was a bit extreme, but I don't think he meant it quite exactly as it reads.

It was a bit of a dramatic way of saying the AA of today (then) was not going to be like the AA of the 2000-2010 timeframe. his intention was true, outside of any major outside forces the airline was setup well to not lose money, or at least not consecutive quarters of losing money.

a bit like someone who has paid off a large sum of debt saying he will never owe money ever again. he loses his job and has to put a few things on credit for a month, much different than someone saying the same yet going out and charging up new phones, furniture, appliances, and vacations on credit. one stuck to his intention despite outside circumstances while the other failed. I think parker falls into the former. no one saw this coming. everyone is losing.


Fair point!
 
gwrudolph
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Re: Doug Parker Statement About AA Never Posting Losses Again

Mon Sep 21, 2020 5:14 pm

wenders825 wrote:
oh look, your weekly bash AA thread


My weekly bash AA thread?!?!? Have I ever bashed AA before, much less with frequency?!?!?!
 
Lootess
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Re: Doug Parker Statement About AA Never Posting Losses Again

Mon Sep 21, 2020 9:09 pm

southwest1675 wrote:
I miss Crandall.


Eh, he'd suffer the same fate probably worse. I remember Gary Kelly downplaying the virus back in February like it was no big deal to his profits. No one could have seen how devastating this was going to be. Absent virus, Doug would have been right, they were printing money.

I've grown to like Doug Parker more over the years. In the face of so much adversary in the industry it's not everyday you can be the de-facto, emerging CEO of three airlines-in-a-row in your lifetime.

Doug also groomed the current CEO of United. There is that too. Crendall didn't deliver this much.
 
jersey777
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Re: Doug Parker Statement About AA Never Posting Losses Again

Mon Sep 21, 2020 9:19 pm

For the second time, if the moderators don’t delete this, can you please let this go!
 
Moosefire
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Re: Doug Parker Statement About AA Never Posting Losses Again

Mon Sep 21, 2020 10:01 pm

What new information (or arguably valuable conversation) is this bringing to the forum?
MD-11F/C-17A Pilot
 
afcjets
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Re: Doug Parker Statement About AA Never Posting Losses Again

Mon Sep 21, 2020 10:25 pm

Moose135 wrote:
afcjets wrote:
AA lost money in the last quarter of 2018 flying passengers when Delta reported a $6 billion profit that same year, which was a record year for the industry. Cargo was the only thing that saved AA from posting a loss.

So you are saying AA posted a profit that quarter?


Yes, did you really think what you quoted meant they randomly broke even?
 
afcjets
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Re: Doug Parker Statement About AA Never Posting Losses Again

Mon Sep 21, 2020 10:31 pm

D L X wrote:
afcjets wrote:
dredgy wrote:
Was a statement full of hubris at the time, and hubris is the number one way to make sure a business loses money again.
Nobody saw COVID coming, but I think everybody saw AA losing money again as an inevitability.


:checkmark:

AA lost money in the last quarter of 2018 flying passengers when Delta reported a $6 billion profit that same year, which was a record year for the industry. Cargo was the only thing that saved AA from posting a loss.


You know that's BS, right?

AA lost money "flying passengers" then comparing to Delta as a whole?

Did AA make a profit that quarter? Yes they did.


It's totally accurate. The point is during an unprecedentedly profitable year in the airline industry that would have been almost unimaginable in years and decades past, American Airlines lost money in the last quarter from their core business of flying passengers. Their CEO said the year before they will never lose money ever again and while he maybe couldn't have predicted covid, he could have easily foreseen a year where the industry doesn't shatter records and yet where only cargo prevented AA from posting a quarterly loss.
 
dstblj52
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Re: Doug Parker Statement About AA Never Posting Losses Again

Mon Sep 21, 2020 11:36 pm

afcjets wrote:
D L X wrote:
afcjets wrote:

:checkmark:

AA lost money in the last quarter of 2018 flying passengers when Delta reported a $6 billion profit that same year, which was a record year for the industry. Cargo was the only thing that saved AA from posting a loss.


You know that's BS, right?

AA lost money "flying passengers" then comparing to Delta as a whole?

Did AA make a profit that quarter? Yes they did.


It's totally accurate. The point is during an unprecedentedly profitable year in the airline industry that would have been almost unimaginable in years and decades past, American Airlines lost money in the last quarter from their core business of flying passengers. Their CEO said the year before they will never lose money ever again and while he maybe couldn't have predicted covid, he could have easily foreseen a year where the industry doesn't shatter records and yet where only cargo prevented AA from posting a quarterly loss.

You forgot AA advantage which also made a profit and has also a huge part of their profit
 
Boof02671
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Re: Doug Parker Statement About AA Never Posting Losses Again

Tue Sep 22, 2020 12:12 am

swacle wrote:
JohanTally wrote:

So far they've mostly just lost taxpayers money from the Cares Act...


Which was PAYROLL money, not operating money. The people that Cares paid would have been filing unemployment otherwise. Guess who funds unemployment.....yep, the taxpayer....

Unemployment is funded by companies being taxed

Unemployment insurance programs are run as federal-state partnerships financed through payroll taxes. ... State unemployment insurance taxes are paid by employers and remitted to the federal UI trust fund, where each state has a separate account for covering normal unemployment insurance benefits.

https://www.taxpolicycenter.org/briefin ... t-financed
 
afcjets
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Re: Doug Parker Statement About AA Never Posting Losses Again

Tue Sep 22, 2020 12:44 am

dstblj52 wrote:
You forgot AA advantage which also made a profit and has also a huge part of their profit


:checkmark:
 
MohawkWeekend
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Re: Doug Parker Statement About AA Never Posting Losses Again

Tue Sep 22, 2020 12:59 am

This does bring up a question that doesn't just pertain to AA. Are the credit card companies seeing a decline in the applications for (and use) of cards where the reward is in travel? I would think that would be the case but was wondering if anyone has seen any evidence.
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    SwissCanuck
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    Re: Doug Parker Statement About AA Never Posting Losses Again

    Tue Sep 22, 2020 12:50 pm

    MohawkWeekend wrote:
    This does bring up a question that doesn't just pertain to AA. Are the credit card companies seeing a decline in the applications for (and use) of cards where the reward is in travel? I would think that would be the case but was wondering if anyone has seen any evidence.


    Not a question for this Civil Aviation forum either - I believe there are others where you can discuss this kind of topic.
     
    JAMBOJET
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    Re: Doug Parker Statement About AA Never Posting Losses Again

    Tue Sep 22, 2020 12:51 pm

    afcjets wrote:
    D L X wrote:
    afcjets wrote:

    :checkmark:

    AA lost money in the last quarter of 2018 flying passengers when Delta reported a $6 billion profit that same year, which was a record year for the industry. Cargo was the only thing that saved AA from posting a loss.


    You know that's BS, right?

    AA lost money "flying passengers" then comparing to Delta as a whole?

    Did AA make a profit that quarter? Yes they did.


    It's totally accurate. The point is during an unprecedentedly profitable year in the airline industry that would have been almost unimaginable in years and decades past, American Airlines lost money in the last quarter from their core business of flying passengers. Their CEO said the year before they will never lose money ever again and while he maybe couldn't have predicted covid, he could have easily foreseen a year where the industry doesn't shatter records and yet where only cargo prevented AA from posting a quarterly loss.

    Under this flawed logic of selectively picking line items to make an inaccurate point, it’s also accurate to note delta had $9,647 in passenger revenue in 4Q18 but $9,652 in operating expense: lost money doing their core business.

    https://d18rn0p25nwr6d.cloudfront.net/C ... 89752a.pdf

    But stats can be manipulated easily just as you’ve done to try to make it look like AA lost money in 2018, which it didn’t.

    Assigning all 4Q cost (and none to cargo) to passenger revenue to come up with a “AA lost money in 4Q18 but delta made money in 2018” comment is just flawed logic.
     
    afcjets
    Posts: 3519
    Joined: Thu Jan 01, 2015 6:20 pm

    Re: Doug Parker Statement About AA Never Posting Losses Again

    Tue Sep 22, 2020 2:33 pm

    JAMBOJET wrote:
    Under this flawed logic of selectively picking line items to make an inaccurate point, it’s also accurate to note delta had $9,647 in passenger revenue in 4Q18 but $9,652 in operating expense: lost money doing their core business.

    https://d18rn0p25nwr6d.cloudfront.net/C ... 89752a.pdf

    But stats can be manipulated easily just as you’ve done to try to make it look like AA lost money in 2018, which it didn’t.

    Assigning all 4Q cost (and none to cargo) to passenger revenue to come up with a “AA lost money in 4Q18 but delta made money in 2018” comment is just flawed logic.


    Once again it's totally accurate that American lost money flying passengers in 4Q18 during a year Delta made over $6 billion and I never made it look like American lost money for the full year. Even more accurate is the point dstblj52 makes and I was wrong, Cargo did not make AA profitable 4Q18:

    "On 68.3 billion seat miles for the quarter that suggests a loss flying passengers of $423 million. Add back though the $264 million earned from cargo during the quarter and flying planes appears to have lost $159 million. (An accounting rules change adopted for 2018 causes American to recognize more money for award travel, making this figure look better than it would have without required ASC 606 changes.)

    At the airline’s Media and Investor Day in September 2017 CEO Doug Parker declared that the airline would never lose money again and strictly speaking American Airlines Group didn’t lose money, but what many people think of as their core business of flying passengers did.

    During that same event Parker promised that the airline would always earn between $3 billion and $7 billion per year. They barely managed it in 2017, the year it was promised, and they failed to hit that target in 2018 (even excluding ‘net special items’ they were only able to crawl up to $2.8 billion). That’s in what’s largely the best of times, before the world economic growth starts slowing in advance of possible recession."

    https://viewfromthewing.com/earnings-re ... t-quarter/
     
    JAMBOJET
    Posts: 293
    Joined: Tue Dec 11, 2018 6:23 pm

    Re: Doug Parker Statement About AA Never Posting Losses Again

    Tue Sep 22, 2020 2:57 pm

    afcjets wrote:
    JAMBOJET wrote:
    Under this flawed logic of selectively picking line items to make an inaccurate point, it’s also accurate to note delta had $9,647 in passenger revenue in 4Q18 but $9,652 in operating expense: lost money doing their core business.

    https://d18rn0p25nwr6d.cloudfront.net/C ... 89752a.pdf

    But stats can be manipulated easily just as you’ve done to try to make it look like AA lost money in 2018, which it didn’t.

    Assigning all 4Q cost (and none to cargo) to passenger revenue to come up with a “AA lost money in 4Q18 but delta made money in 2018” comment is just flawed logic.


    Once again it's totally accurate that American lost money flying passengers in 4Q18 during a year Delta made over $6 billion and I never made it look like American lost money for the full year. Even more accurate is the point dstblj52 makes and I was wrong, Cargo did not make AA profitable 4Q18:

    "On 68.3 billion seat miles for the quarter that suggests a loss flying passengers of $423 million. Add back though the $264 million earned from cargo during the quarter and flying planes appears to have lost $159 million. (An accounting rules change adopted for 2018 causes American to recognize more money for award travel, making this figure look better than it would have without required ASC 606 changes.)

    At the airline’s Media and Investor Day in September 2017 CEO Doug Parker declared that the airline would never lose money again and strictly speaking American Airlines Group didn’t lose money, but what many people think of as their core business of flying passengers did.

    During that same event Parker promised that the airline would always earn between $3 billion and $7 billion per year. They barely managed it in 2017, the year it was promised, and they failed to hit that target in 2018 (even excluding ‘net special items’ they were only able to crawl up to $2.8 billion). That’s in what’s largely the best of times, before the world economic growth starts slowing in advance of possible recession."

    https://viewfromthewing.com/earnings-re ... t-quarter/

    And in December, 2019, Ed Bastian declared the entire airline industry "consistently profitable" making a much bigger leap than Doug Parker did who was only talking about American's profitability. So what? Both CEOs were wrong in their assessments. What's your point? That neither CEO predicted a global pandemic?
    It's amusing this thread about Doug Parker even exists after Ed Bastian was out selling the entire industry as consistently profitable to investors only 10 months ago.

    Under your logic, Delta and American both lost money flying passengers in 4Q18 but both were profitable in that quarter despite that. They were both still profitable in 2018 to the tune of billions of dollars for each. I think everyone knows Delta made more profit that year but that's a whole other topic for "why". You've changed your tune from trying to claim American was unprofitable in 4Q18 (which both Delta and AA were by your methodology) and now you're switching to not making profit expectations.
    Delta proudly proclaimed $7B in AMEX revenue by 2023. https://seekingalpha.com/news/3447716-a ... rough-2029

    Are we to assume that Delta is going to be massively unprofitable flying passengers in 2023 if they make anything less than $7B profit? Or, like a normal person, should we assume CEOs promise the world and are often wrong when circumstances change?
     
    MohawkWeekend
    Posts: 271
    Joined: Tue Jan 08, 2019 2:06 pm

    Re: Doug Parker Statement About AA Never Posting Losses Again

    Tue Sep 22, 2020 3:16 pm

    SwissCanuck wrote:
    MohawkWeekend wrote:
    This does bring up a question that doesn't just pertain to AA. Are the credit card companies seeing a decline in the applications for (and use) of cards where the reward is in travel? I would think that would be the case but was wondering if anyone has seen any evidence.


    Not a question for this Civil Aviation forum either - I believe there are others where you can discuss this kind of topic.



    I offer the following - All the airlines have borrowed against their FF plans to secure the loans that are keeping the lights on. In fact, that may be their only asset worth anything near par value (who wants a 777?). If that asset isn't worth as much today as the banks thought it was, then the airlines are in more trouble. And since AA had the most debt, they would be impacted the most, no?
      300 319 320 321 707 717 720 727 72S 737 73S 734 735 73G 738 739 747 757 762 ARJ B11 C212 CRJ CR2 CR7 CR9 CV5 D8S DC9 D9S D94 D95 D10 DH8 DTO EMB EM2 E135 E145 E190 FH7 F28 F100 FTRIMTR HRN L10 L15 M80 M90 SF3 SWM YS11
       
      TYWoolman
      Posts: 617
      Joined: Sat Jun 24, 2017 8:24 pm

      Re: Doug Parker Statement About AA Never Posting Losses Again

      Tue Sep 22, 2020 4:57 pm

      Kind of like AMTRAK boasting how efficient their Northeast corridor itinerary is due to track and signal upgrades only for an Earthquake to mess it all up the very next day and every day thereafter from February 2020 and into the foreseeable future. Cut Parker some slack, people. Perhaps the AA board should vote in Gandalf amongst them.
       
      afcjets
      Posts: 3519
      Joined: Thu Jan 01, 2015 6:20 pm

      Re: Doug Parker Statement About AA Never Posting Losses Again

      Tue Sep 22, 2020 6:20 pm

      JAMBOJET wrote:
      And in December, 2019, Ed Bastian declared the entire airline industry "consistently profitable" making a much bigger leap than Doug Parker did who was only talking about American's profitability. So what?
      Both CEOs were wrong in their assessments.

      What's your point? That neither CEO predicted a global pandemic?


      Actually, I made the point that he couldn't have predicted that in my first post.


      JAMBOJET wrote:
      It's amusing this thread about Doug Parker even exists after Ed Bastian was out selling the entire industry as consistently profitable to investors only 10 months ago. Under your logic, Delta and American both lost money flying passengers in 4Q18 but both were profitable in that quarter despite that. They were both still profitable in 2018 to the tune of billions of dollars for each. I think everyone knows Delta made more profit that year but that's a whole other topic for "why".

      You've changed your tune from trying to claim American was unprofitable in 4Q18 (which both Delta and AA were by your methodology) and now you're switching to not making profit expectations.


      As pointed out in my last post and compared to your link, only American was unprofitable flying airplanes in 4Q18, not Delta. The only thing I've changed on is their frequent flyer program made American profitable that quarter, not Cargo. Not sure why you're shocked that articles would be written and posts would exist about Doug making the bold claim that his airline will never lose money again, especially when they were the least profitable, and why you think Ed saying the industry was consistently profitable before the pandemic was the least bit controversial.
       
      User avatar
      UPlog
      Posts: 573
      Joined: Sat Jan 27, 2018 5:45 am

      Re: Updated: American Airlines Business & Finance Discussion

      Fri Sep 25, 2020 11:49 pm

      American picks up $5bil government loan with a potential of $2 billion more in October.

      https://www.reuters.com/article/us-heal ... SKCN26G34P

      September 30th is the deadline for airlines to decide whether to take the U.S. Treasury loans authorized under the CARES Act.
      I fly your boxes
       
      User avatar
      LAXintl
      Topic Author
      Posts: 24712
      Joined: Wed May 24, 2000 12:12 pm

      Re: Updated: American Airlines Business & Finance Discussion

      Sun Sep 27, 2020 11:55 pm

      AA taking the CARES Act loan probably a sign of how bad things are at AA.
      As comparison, both DL and WN already said they won't be signing up for government loan, instead happy with commercial market options for liquidity.

      AA CFO Derek Kerr painted a picture for analyst a couple of weeks back as to why they likely would opt for the loan. He said market loan rates AA could get was somewhere in the 7% to 9% range, while CARES Act loan was near 4%.(LIBOR +350 point)
      Yes AA had to pledge assets including portions of its AAdvantage program as collateral to Uncle Sam to get the $4.75 billion loan, but obviously, they did not have much choice without having to pay significantly higher interest.
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