American Airlines Group Inc (AAL)

[Lunatic]

It's amazing how the uninformed can and will pull things from the air and turn them into fact.

The reality is simple. Today, more than ever, we live in a world of branding and a well known household brand is worth more than anything.

While this is true, it does not mean that a company is not too big to fail.

Anybody can talk about balance sheets, cash-flow statements and all of the other quantitative components of "how a business should be analyzed". But what may fail to realize that most rules are design to fit most of the businesses but not all of the businesses.

Anyone can talk about facts and yet they dont get listened too or read. Just because a company is "too large to fail" does not mean they should not be allowed to fail. GM is/was the perfect example.

So all of those here trying to "parrot" what they were taught in "business school" are flawed right at the base.

This is amusing as most on here are trying to pretend they are something they are not.

You have businesses and then you have American Airlines, Coca Cola, Mc Donalds, etc. Those brands are so strong that even in their grave they are worth more than 1000 businesses alive.

The so called "too big to fail" group.

Get my point? Good!!-

I fully understand your point of view be it flawed or not.

Because now I am going to start lecturing those "know it alls" trying to scare off some of the young investors here.

Ohh someone trying to educate others on how to do things. So kind of you.

Have you ever heard about "strategy"? I hope you have because that is exactly what AMR is doing: Strategizing to get rid of all of all of these unions demands.

What is amusing here are these so called strategics that management is trying with these unions. Calling out bankruptcy because they dont want to give into a demand or finalize a 5 year argument over contracts. It is not the Union demands or the Union that is killing AA.

I do recall that AA unionized members took a two billion dollar pay cut in 03 then the 24 VP's at AA; the CFO, CEO, along with countless high level managers got huge pay and cash bonuses whilst the company suffered financially.

But again I digress....

Think about it. If the union contracts or talks would have been productive do you think AA would ve filed? Of course not.

yes they would have. Pilot costs are 6% of expenditures. Compare that across the industry.

Pilot wage/salary % of Operating Revenue
Southwest -- 10%
Alaska -- 8%
Jetblue -- 7%
AirTran -- 7%
Delta. -- 7%
United/Continental -- 6%
US Air -- 6%
AA -- 6%

Source: http://airlinefinancials.com/

Better yet you should investigate

1. How much did AMR agree to pay JAL to stay in the OneWorld Alliance?
2. How much revenue from trans Atlantic operations goes to the Joint Business agreement with BA and Iberia?
3. How is the Corner post strategy, which focuses most of AA flights out of four cities, different from the hub system of the 90s? The Avondale group does an analysis of a few of AMR's routes which show that, for example, one can fly from LA to London for $1000 (as an arbitrary figure), or fly from LA to ORD to LHR for $800. This in effect pays the passenger $200 to connect, and removes a $600 dollar seat from the LA to ORD domestic leg. The outcome is that AA is shuttling passengers all over the system so they can enjoy a reduced fare. One should know from past experience that extraneous connections require doubling the effort to sell a reduced fare ticket. The exigencies multiply with weather, delays, lost bags, limited excess capacity to accommodate the misconnects and accommodations which result on the last flights of the day.

4. AMR management has vowed for years to reduce capacity to drive prices up. However, the Cornerpost plan actually increases capacity in some of the most competitive markets on the planet while removing service from traditionally revenue rich markets (like Boston, San Juan and San Francisco).


Did you know that AA does not break down expenses from Eagle?

However all the data points to the fact that AMERICAN EAGLE HAS DRIVEN AMR TO FILE CH11.

You know...the little jets that haven't made a penny ever..ever.

ALSO who used 2 billion PER YEAR in concessions from 2003 to flood the market with more Eagle Jets?????....wait for it....

The same idiots who fleeced the company for half a billion dollars in executive bonuses during that period...

Not the Union.

But the pesky union knowing how much the avoidance of BK was a pride of its CEO abused from its power.

It is the Unions fault isn't it?! Sheesh

In finance you have "default" and "strategic default". AA is the later one. The stock will recover and the intention of AA's BK was not to get rid of "equity" but rather the inflexibility of the union and some other contracts. At the end of the day, the union will loose and the shareholders will gain as they will see the stock rise to much higher levels as a more lean company. Now next time before I lecture you make sure you bring the apples. Class dismissed!!

Thank god I never went to college and can only hope you're not a teaching economics/finance or anything of the like.

Goodpost about Name Brands.

I lived through such one of those big name Brand demise, Eastern Air Lines. A definite Union busting move that felt after 80n years of buisness, they felt it wasn't too big to disapear.
But that was at the beginning of merger mania.

Whats left?
AA
UsAir
Jet Blue
South West
Air trans
Alaskan Air??? Playing field is getting thin. Only two make sence.

First and foremost the union had little to do with the issues at Eastern. While it was a Union Busting move it was not the reason for the BK. Does the name Frank Lorenzo mean anything. It should he raped Eastern by transferring it's assets to Continental (which he also owned) illegally. Then he raided all the pension plans. I do recall that he was found guilty and forced during Continental's bankruptcy to make amends.

But alas I digress.


BTW: I hate unions always have and always will. BUT what I hate more is how people care to place blame on something without fully understanding what is going on.