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American Airlines Order Turns To Dismay

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The fanfare was loud and generated the desired attention, but now that the euphoria has subsided it is apparent that AMR Group’s deals with Airbus and Boeing to overhaul American Airlines’ narrowbody fleet are more wishful thinking than concrete achievement. For one thing, there is no firm order for 460 aircraft. Under American’s labor contracts—notably its agreement with the Allied Pilots Association—the carrier cannot add a new aircraft type, even a different variant, until a pay scale has… (www.aviationweek.com) Ещё...

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aa757lga
Scott Wallace 1
This article is horse manure.
s2v8377
s2v8377 0
Interesting article. Thanks for posting.
bmustin
Brandon Mustin 0
With the name AMERICAN AIRLINES you would think that boeing would be the more logical choice.
preacher1
preacher1 0
Well, it's all about price and delivery and keeping vendors honest. Before Airbus, they were split between Boeing and MD. With Boeing buying MD, that is the only way AA is 100% Boeing right now. They have had Airbus before and only by having Eagle as a separate company now can they say they are all Boeing now, what with all of Eagle's RJ's and ATR's
bmustin
Brandon Mustin 0
Very true, but as a proud American i could only hope they live by their name. i have no issue with airbus, i just wish companys could be loyal and proud, and stand by the name they create....... but hey, i can dream right
preacher1
preacher1 0
Brandon, myself and a bunch of others agree with you 100%, but as long as Arpey and the other hogs are feeding at the head of the trough at the expense of everyone else there, it will be about the almighty $ and the attitude of "I got mine". They are the only legacy carrier that didn't bounce back last year with at least a small profit and you really can't, as much as we might want to, blame the unions. The money is coming in but as with any hog farm, those at the head of the trough are going to get their's first. Sad part is, it is a damn good Airline but if something don't happen to get rid of that bunch, it won't be.
preacher1
preacher1 0
chalet
chalet 0
Lots of hoopla, lots of noise, perhaps lots of (French) champagne too but in the end, lots of BS. Several bloggers have expressed surprise over these orders since AA's finances are not as solid as they should be to support the acquisiton of 460 planes. So spare your anger over Airbus making a comeback to AA, lets see how this plays out.
mduell
Mark Duell 0
chalet, the way these deals work AA isn't buying any - they're 100% leased. Of course with AA's dismal financials (debt load, labor costs) they can't get third party financing, so the leasing is all from the manufacturers.
preacher1
preacher1 0
One notable thing in the article are labor restrictions on aircraft type. Like Chalet says, it will be interesting to watch.
chalet
chalet 0
@ mduell usually a mix of lease and outright purchase is done at the same time and it appears that this is the case. In the totally improbable event that AA wuld be receiving all 460 planes on lease only be terribly detrimental to AA's finances as the lease rates are very expensive and contrary to the lessor's geniuses who swarm around airlines claiming that leases are off balance and hence don't have to be stated in the P&L balance sheets, leases for all practical purposes are liabilities i.e. DEBTS that have to paid and therefore should be part of the balance sheet. In doubt ask the creditors and former employees of ENRON.
mduell
Mark Duell 0
The entire firm order is leased: American also will benefit from approximately $13 billion of committed financing provided by the manufacturers through lease transactions that will help maximize balance sheet flexibility and reduce risk. The financing fully covers the first 230 deliveries. [http://www.aa.com/intl/in/newsAndPr/pr_aircraftOrder.jsp?v_locale=en_US&v_mobileUAFlag=AA]
preacher1
preacher1 0
There is pro and con on leases but with the Arpey hog and his cronies at the trough, they won't hit the P&L through some creative accounting and they'll probably get a big bonus out of the deal someway.
chalet
chalet 0
@ mduell this statement was extracted from AA's web page "American also will benefit from approximately $13 billion of committed financing from the manufacturers through lease transactions that will help maximize balance sheet flexibility and reduce risk. The financing fully covers the first 230 deliveries." So AA still has to scramble to find financing to acquire the remaining 50% which for the moment are just "reserved planes" or whatever.
Cactus732
Cactus732 0
American have really backed themselves into a corner with this deal. The running costs of their current fleet being as high as they are they really had very little choice but to come pu with a split deal such as this becasue neither Boeing nor Airbus could fulfill the deal on their own as they are more concerned with carriers in the Middle East/East Asia who are their biggest customers for new aircraft in the current climate
preacher1
preacher1 0
Well, them in the Middle East got cash money.lol
jlemon
Jeff Lemon 0
It's all about money, as usual, and Airbus obviously made AA one heck of a deal concerning the A320 family aircraft. And besides being a previous A300-600R operator, AA has also operated Fokker 100 and BAC One-Eleven aircraft in the past. Sure, it would be nice if they continued to operate an all Boeing fleet; however, given the current economic reality, they will buy the type of airplane that gives them the bigggest bang for the buck. One thing is clear, though: AA management and the AA pilots have a long way to go before they can even approach anything like a harmonious business relationship.
s2v8377
s2v8377 0
I personally feel AA should have just replaced their fleet of MD80's with B738's for now. If Boeing goes forward with the re-engined B738 than simple convert the order to that variant. I see absolutely no benefit in replacing the B752's with A321's. They don't have the range and flexibility of the B752's. Plus the oldest of AA's B752's are from 1990, which is not that old. Not to mention all of the money AA has invested into their B752 fleet in the last 5 years. The B752's have at least another 10 years of life in them. This would probably get you to the point were Boeing will hopefully have their new narrow body aircraft to replace the B737 on the market.

The order may look good on paper in a press release however I think the reality of the situation isn't practical or feasible to implement in the time proposed.
s2v8377
s2v8377 0
Another point that AA should consider is while all of this is going on with the narrow body fleet as the article stated the wide-body long hall fleet future has not yet been resolved.

AA needs to get the B787-923 and B777-323ER orders settled as well.

That's a lot of maybes to have on the table at one time. Perhaps if the senior management worked better with labor they could resolve some of these issues!!!
preacher1
preacher1 0
I personally doubt if management is going to work any better with labor in the near future because that would take slop out of the trough they're feeding at. Seems to me, regardless of how you feel about unions, that the employess have given about all they can give and all this hype about new equipment will just make it harder for anybody to do anything from either side. Just sayin'
Confid1
Rick Daly 0
American is one of the few legacy carriers to avoid bankruptcy. Arpey & Horton deserve most of the credit. Hog or not, expect Arpey to resolve the impending labor contracts, grow the airline organically & expand AA's customer base.
th3182
th3182 0
One of the reasons that they have not "bounced back" is that they are a legacy carrier with all the legacy contracts. Unlike United, Delta, Continental (multiple times), they have not declared bankruptcy, which seems to be the new plan that all the other "legacy" airlines have adopted. I'm thinking their bounce back had something to do with this new business plan.
Confid1
Rick Daly 0
Once AA signs new labor contracts, they'll "bounce back". They currently have just under 6 billion in cash; plenty to sustain them in a worse case scenario. Plan on AA adopting the same C scale as new Southwest hires which will greatly reduce labor costs.
preacher1
preacher1 0
Well, regarding Arpey and Horton, when you are at the top, you will either get the crap or the glory, whichever comes, and regardless of fault. It will be interesting to see how it all plays out.
Confid1
Rick Daly 0
preacher1
preacher1 0
The only real bad part on the AA deal is the Eagle spinoff or sale.Viable little Airline but everybody is jumpy right now that they may go the way of ComAir. Of course ComAir shot themselves in the foot and thumbed their nose at helping out laid off DAL pilots, and as things came back, ASA expanded, with ComAir now only a shadow of what it once was. Not the same situation but the prospect of finding a new dance partner has everybody edgy.
Confid1
Rick Daly 0
AA will gain from an Eagle spinoff plus Garton knows his stuff.
preacher1
preacher1 0
Rick: you know that and I know that but any kind of change will bring uneasiness til a clear path gets charted. Surely there will be capacity agreements on the feeder routes and all that OPS will stay pretty much normal. It will probably be a good thing for both in the long run but as I said, change will bring an uneasiness until it all settles.
Confid1
Rick Daly 0
Without change, we're stagnant. It's necessary & a good thing.
th3182
th3182 0
AA cannot keep doing the same things and expect different results. They must change.
Confid1
Rick Daly 0
preacher1
preacher1 0
I guess I'm just too close to it, yet not close enough. Got some good friends down there that keep me current in their RJ's plus if they get in a bind, I can slip over and pull their tail out of a crack on one of the big ones. It will be interesting to see how it all shakes out, but th3182, and Rick, you are both very correct, something has to change
blink999
Bill Youngpeter 0
Last great American industry being put to rest by unions, too bad. They will soon be basing these repair facilities just over the borders of Canada and Mexico, maybe off shore on a tiny island.
s2v8377
s2v8377 0
When in doubt everyone always blames labor. An airline is nothing without its employees. Apparently you're okay with substandard wages for safety sensitive work with insane hours.

There's an old saying happy employees are good employees. It's hard to be happy when the bosses in the offices are getting bonuses and you’re busting your rear on the 4th flight of the day on an MD80. I guess it’s already been forgotten the major concessions the unions made back in 2003 to help AA stay out of bankruptcy.

I care about American probably more than most of the people that actually work for them, and the last thing I want to see is them having such financial issues.

However as I've already stated I personally feel this fleet renewal plan is impossible and impractical operationally no matter how it looks on paper. Perhaps labor may just end up saving the airline again???

th3182
th3182 0
That change that I'm talking about includes labor and management. And AA must have a plan to move forward with fleet upgrades. The thing that's going to save AA is for everybody to move forward in a new way. What's that way ? I don't know, but I do know that things must change or AA will adopt the standard airline business plan used by Delta, United, and Continental. That would not be good for shareholders, management, or labor. That's a no win for everybody.
Iskra
Iskra 0
Can you say leverage that will come from the threat of a Chap 11 filing and then an 1113 filing if the pilots don't capitulate ...
preacher1
preacher1 0
cwdenton1
clarence denton 0
As an AA retiree, and 50 plus years in the aviation business, I believe AA has made a bad management decision to buy the Airbus 320 airplanes.Maybe they forgot what a problem getting parts for these airplanes were when AA had an Airbus fleet.Add crew training and fleet compatability to the mix and you have a recipe for losing more money.
Maybe we should learn from Southwest who prior to the Air Tran merger flew all B737 airplanes and one would have to admit,they arent doing so bad.

Bill Denton
[email protected]
www.dentonaviation.com
Cell 918-809-5509

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