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Thread: Frank Lorenzo School of Business

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    Registered User NoOtPilot's Avatar
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    Frank Lorenzo School of Business


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    “Any resemblance to actual persons, living or dead, or actual events is purely coincidental.“

    He is most famous for his takeover of Eastern Airines, and his leadership. He acquired a number of major U.S. airlines including Continental, Eastern Air Lines...

    As an airline manager, he gained a reputation of union busting, stemming from his leadership during the bankruptcy of Continental that enabled the company to void its union contracts. During the strike and bankruptcy of Eastern Airlines he led to a permanent shutdown in 1991.

    “His tactics obviously didn’t work when he took over Eastern.”

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    Quote Originally Posted by NoOtPilot View Post
    “Any resemblance to actual persons, living or dead, or actual events is purely coincidental.“

    He is most famous for his takeover of Eastern Airines, and his leadership. He acquired a number of major U.S. airlines including Continental, Eastern Air Lines...

    As an airline manager, he gained a reputation of union busting, stemming from his leadership during the bankruptcy of Continental that enabled the company to void its union contracts. During the strike and bankruptcy of Eastern Airlines he led to a permanent shutdown in 1991.

    “His tactics obviously didn’t work when he took over Eastern.”
    What's the point of this post?

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    I think he’s implying that DP resembles the second coming of Lorenzo in his opinion.

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    Registered User NoOtPilot's Avatar
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    Quote Originally Posted by Sirsnacksalot View Post
    I think he’s implying that DP resembles the second coming of Lorenzo in his opinion.
    Jan 25, 2018
    “Ultimately, all of this work will produce a company built for the long term.”

    Feb 20, 2018
    “As an airline, we will always operate in a just-in-time environment, however, we recognize we must lead for the long term,” Parker says.

    March 23, 2018
    American Airlines CEO Doug Parker highlights their strategic objective to think long-term.

    June 19, 2018
    "As a result of the integration work required, American has more director and above leaders than we require for the long term," said a note seen by CNBC to employees signed by CEO Doug Parker.

    1989
    “We are long-term players in the industry.”

    ~Frank Lorenzo~
    Last edited by NoOtPilot; 08-06-2018 at 10:35 AM.

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    Quote Originally Posted by NoOtPilot View Post
    Jan 25, 2018
    “Ultimately, all of this work will produce a company built for the long term.”

    Feb 20, 2018
    “As an airline, we will always operate in a just-in-time environment, however, we recognize we must lead for the long term,” Parker says.

    March 23, 2018
    American Airlines CEO Doug Parker highlights their strategic objective to think long-term.

    June 19, 2018
    "As a result of the integration work required, American has more director and above leaders than we require for the long term," said a note seen by CNBC to employees signed by CEO Doug Parker.

    1989
    “We are long-term players in the industry.”

    ~Frank Lorenzo~
    Holy Ottendorf cipher, NoOTPilot - that is some next level Nicholas Cage National Treasure deduction right there! You connected the fact that Lorenzo said they are a long term player in a quote with something DP said...wow, if according to the Silence Dogood letters are correct - almost 30 years later!

    Wait a hot second, On July 26th 2018 Parker revealed lower target numbers due to fuel prices. July has 4 letters in it, and 26 is actually 2+6=8. 8+4 is 12 minus 1 because AA is of course the number 1 largest airline is 11! 11 guys! We are going in to Ch 11 bankruptcy again!

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    Lorenzo was a Corporate raider and purchased and used weaker companies to prop up stronger ones. Once the weaker one was gutted of assets and worth, it was discarded. Parker is simply a CEO attempting to maximize profit for shareholders and executives. Lorenzo overtly and covertly used labor as a chess piece, whereas Parker uses it as a tool. But, Parker is human and has a model he believes is the best future for shareholders and executives and one component of that requires bare minimum required cost for that tool that is labor.

    We enter 2018 with strong momentum. Demand for Americans reliable, friendly service remains strong, and our network is expanding and the products we are bringing to the market are resonating with customers.” AAG press release 1/25/2018

    This industry IS a SERVICE industry. As such, some questions should be considered as to where the AA product really is and where is it likely headed in the future. Some are; How does the AA product compare to others in the industry ? What environment do the service providers of the AA product exist in compared to others in the industry ? How are the service providers of the AA product compensated compared to others in the industry ? Is the AA product changing from what it was in the past ?

    ” With annual CAPEX of more than $4 billion and pension contributions increasing, the company will have little or no cash available for debt reduction between now and 2020. This situation will leave American Airlines extremely vulnerable during the next industry downturn.” Motley Fool 3/12/2018

    “ By contrast Delta Air Lines has produced stronger margin performance than American since 2016 while holding its debt below $10 billion.” Motley Fool 3/12/2018


    Considering American’s labor costs are substantially cheaper (the second largest cost behind fuel), this is very revealing. Considering American’s situation, there is little likelihood for pilots to see any meaningful improvements unless they are willing to essentially give as much or more then they get, namely in Scope changes and work rule relaxations for modest pay rate increases. AA’s mechanics are stalled at the table (especially over Scope) and word is that the operation is suffering. The other tools......er, I mean components of the service provider “team” will soon join them, namely the pilots and IMO, that and logistical clumsiness like IT issues and staffing shortages are likely to drag the product even further during the next several years.

    American Airlines Stock performance - Current = $38.22
    1-year target = $52
    52 week avg. = $59.08/35.64

    Delta Air Lines Stock performance - Current = $54.13
    1-year target = $65
    52 week avg. = $60.79/$44.59

    Clearly, Delta is on much better financial footing (and with higher compensated and arguably better treated service providers) and the stock is performing better with much tighter stability and a higher average ratio. I think American’s issues are clearly not just the fact their employees are marginalized compared to Delta’s, but also due to the choices of the management in financial decisions, including expenditures and debt. As we can see, the beliefs and claims of January are just that and can change on a dime in this industry. What appears so today can be completely different tomorrow. The most recent American (AAG) 10-k shows how fast realities must be acknowledged.

    Remember the lessons of the past. Pilots are just tools and are last in consideration when rainy days arrive in this industry and it’s sobering that AA is in this much potential risk, especially for their pilots who have been existing under a bankruptcy contract during a time when the high cycle produced massive profits which if timing turns out to be bad will have been squandered by overconfidence and erroneous assumption. Because, they will have seen virtually none of it. Even if timing doesn’t appear for years, it seems little financial advancement for AA pilots is likely and they will remain relegated to that of an average LCC.

    Delta IS and will be the industry model and all accomplished with motivated and well compensated labor, especially the precious dwindling commodity of pilots, which poses another question and that is, if the next downturn hits and AA pilots lose even more, will this improve the AA product or further weaken it ? It would seem AAG really has no additional financial resources for pilots (or mechanics) NOW, let alone the next rainy day.

    Decisions, choices and timing. Hopefully, this will help some understand MY bearish outlook for AA and especially its pilots moving forward and although it isn’t a byproduct of a Lorenzo mentality, those components can easily lead to the exact same destination and as such, again I think it wise considering the situation to honestly assess the value (and risk) of being at the bottom of this 15,000 pilot seniority list let alone holding out for only that upwards of 6 years.

    Don’t let the decisions and choices of others be your due diligence and don’t assume timing will always favor you. Just my .02......
    Last edited by Beagleboy; 08-06-2018 at 05:34 PM.

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    Gee, you're correct, we are going into bankruptcy again, or should I say aa is and we get dragged into it too.

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    August 3, 2018
    United Airlines was busy shattering records in July. Very busy.

    As the Chicago-based carrier races to expand its route network both domestically and internationally, the carrier posted major records in July.

    “It’s great to be growing again, and this is just one more proof point that the plans are working," Kirby said. "As long as we keep focusing on improving the customer experience and remaining efficient in how we spend money as we grow, the sky’s the limit for United.”

    6 Aug, 2018
    United Airlines set a record in July for most traffic ever in a single month. Now Delta Air Lines says it did, too.

    19 June 2018
    American Airlines is preparing for some management-level layoffs.
    Last edited by NoOtPilot; 08-06-2018 at 09:12 PM.

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    when J.P Morgan's Jamie Baker goes after aag management and says your stock is a sell and blast them for basic incompetence, then as a corporation you are in trouble.
    Sir, can I have another.

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    Stock down at $36.76
    And DP silence continues.🤔🤫🤔

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