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Thread: Numbers donít lie

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    Numbers donít lie


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    Operating Revenues
    DL $11.95 billion
    AA $11.56 billion
    UA $11.0 billion

    Operating Profit GAAP
    DL $1.64 billion (13.7% margin)
    UA $1.20 billion (10.9% margin)
    AA $649m (5.6% margin)

    Operating Profit excluding specials:
    DL $1.63 billion (13.6% margin)
    UA $1.22 billion (11.1% margin)
    AA $866 million (7.5% margin)

    Pre-Tax Income GAAP
    DL $1.67 billion (14.0% margin)
    UA $1.06 billion (9.6% margin)
    AA $456 million (3.9% margin)

    Pre-Tax Income excluding specials:
    DL $1.60 billion (13.4% margin)
    UA $1.06 billion (9.7% margin)
    AA $688 million (6.0% margin)

    Net Income GAAP
    DL $1.3 billion (11.0% margin)
    UA $836 million (7.6% margin)
    AA $341 million (3.0% margin)

    Net Income excluding specials:
    DL $1.24 billion (10.3% margin)
    UA $837million (7.6% margin)
    AA $523 million (4.5% margin)

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    Quote Originally Posted by Sirsnacksalot View Post
    Operating Revenues
    DL $11.95 billion
    AA $11.56 billion
    UA $11.0 billion

    Operating Profit GAAP
    DL $1.64 billion (13.7% margin)
    UA $1.20 billion (10.9% margin)
    AA $649m (5.6% margin)

    Operating Profit excluding specials:
    DL $1.63 billion (13.6% margin)
    UA $1.22 billion (11.1% margin)
    AA $866 million (7.5% margin)

    Pre-Tax Income GAAP
    DL $1.67 billion (14.0% margin)
    UA $1.06 billion (9.6% margin)
    AA $456 million (3.9% margin)

    Pre-Tax Income excluding specials:
    DL $1.60 billion (13.4% margin)
    UA $1.06 billion (9.7% margin)
    AA $688 million (6.0% margin)

    Net Income GAAP
    DL $1.3 billion (11.0% margin)
    UA $836 million (7.6% margin)
    AA $341 million (3.0% margin)

    Net Income excluding specials:
    DL $1.24 billion (10.3% margin)
    UA $837million (7.6% margin)
    AA $523 million (4.5% margin)
    .......and Delta does that with the highest compensated pilots in the business and whose employees are the best treated. As a result, they have a product AA simply can’t touch. Heck, UAL is double AA in some metrics and almost so in the others. Their stock price is almost triple and they have areas to work with.

    Again, AA has one option the others don’t to change the dynamics somewhat and that’s another “strategic” Chapter 11, but that just ensures AA’s employees descend further in the “I don’t care” philosophy and the AA product is then permanently doomed. One simply HAS to look past just the temporary profits and see the competitive big picture which these numbers show and I think they clearly show an impending disaster. The worst part IMO, is there is no comprehensive solution that solves all of AA’s issues. To address economics (at least some), namely debt, you destroy front-line employee morale further worsening an already mediocre product. To address employee morale, you jack up costs and limit competitive options (no scope) which reduces profit further and increases debt.

    Catch-22

    I think eventual fragmentation if AA is a real possibility. Then it will be many AA pilots in former TWA pilots old situation a’la an “asset acquisition with an offer of employment” and a weak seniority integration position. New management at AA won’t solve anything with these front-line employees (Pilots, F/A’s, Mechanics, Agents and FSC’s) who have been beaten down, taken advantage of and abused for too long. What a mess. The only real question left is time and timing. It could be anywhere from 1-5 years before the inevitable. Question to all who are hitched to this operation or plan to be in the future;

    What’s in YOUR wallet ?
    Last edited by Beagleboy; 11-02-2018 at 09:41 AM.

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    Registered User DolphinsFan's Avatar
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    Quote Originally Posted by Beagleboy View Post
    .......and Delta does that with the highest compensated pilots in the business and whose employees are the best treated. As a result, they have a product AA simply can’t touch. Heck, UAL is double AA in some metrics and almost so in the others. Their stock price is almost triple and they have areas to work with.

    Again, AA has one option the others don’t to change the dynamics somewhat and that’s another “strategic” Chapter 11, but that just ensures AA’s employees descend further in the “I don’t care” philosophy and the AA product is then permanently doomed. One simply HAS to look past just the temporary profits and see the competitive big picture which these numbers show and I think they clearly show an impending disaster. The worst part IMO, is there is no comprehensive solution that solves all of AA’s issues. To address economics (at least some), namely debt, you destroy front-line employee morale further worsening an already mediocre product. To address employee morale, you jack up costs and limit competitive options (no scope) which reduces profit further and increases debt.

    Catch-22

    I think eventual fragmentation if AA is a real possibility. Then it will be many AA pilots in former TWA pilots old situation a’la an “asset acquisition with an offer of employment” and a weak seniority integration position. New management at AA won’t solve anything with these front-line employees (Pilots, F/A’s, Mechanics, Agents and FSC’s) who have been beaten down, taken advantage of and abused for too long. What a mess. The only real question left is time and timing. It could be anywhere from 1-5 years before the inevitable. Question to all who are hitched to this operation or plan to be in the future;

    What’s in YOUR wallet ?
    Oh yeah. Caveat emptor or some other b*****t. Blah blah blah blah. Eaglefly. Flow won't work. Envoy in trouble. Blah blah blah blah. What's in your wallet besides your Life Alert and Medicare card?

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    Registered User Koojo's Avatar
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    Quote Originally Posted by Sirsnacksalot View Post
    Operating Revenues
    DL $11.95 billion
    AA $11.56 billion
    UA $11.0 billion

    Operating Profit GAAP
    DL $1.64 billion (13.7% margin)
    UA $1.20 billion (10.9% margin)
    AA $649m (5.6% margin)

    Operating Profit excluding specials:
    DL $1.63 billion (13.6% margin)
    UA $1.22 billion (11.1% margin)
    AA $866 million (7.5% margin)

    Pre-Tax Income GAAP
    DL $1.67 billion (14.0% margin)
    UA $1.06 billion (9.6% margin)
    AA $456 million (3.9% margin)

    Pre-Tax Income excluding specials:
    DL $1.60 billion (13.4% margin)
    UA $1.06 billion (9.7% margin)
    AA $688 million (6.0% margin)

    Net Income GAAP
    DL $1.3 billion (11.0% margin)
    UA $836 million (7.6% margin)
    AA $341 million (3.0% margin)

    Net Income excluding specials:
    DL $1.24 billion (10.3% margin)
    UA $837million (7.6% margin)
    AA $523 million (4.5% margin)
    There are a lot of things these numbers aren't saying either such as the new aircraft orders Delta has placed haven't even showed up on property yet and thus the reason for some of these inflated margins. As you know, AA got out in front of the aircraft order ship with the combined Airbus/Boeing order from 2011. So, when ALL of those aircraft show up in Delta colors and Delta has leveraged itself more, you will see those numbers drop. This is just an indication that AA got out in front of things and strategically placed a large order before everyone else.

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    Quote Originally Posted by DolphinsFan View Post
    Oh yeah. Caveat emptor or some other b*****t. Blah blah blah blah. Eaglefly. Flow won't work. Envoy in trouble. Blah blah blah blah. What's in your wallet besides your Life Alert and Medicare card?
    ^^^^^^^^^^^ Another demonstration of Bankruptcy of Substance. ^^^^^^^^^^^^

    AA's plan has been to get their fleet young NOW (most of the "good" debt) so as to limit fleet expenditures in the future so they can pay down their debt and have an advantage with higher fuel prices as well. Has that helped so far with AA's metrics above compared to competitors who went the other way ? Doesn't look like it to me. As long as sufficient profits roll in, they can kick the can. If sufficient profits DON'T roll in, then they have a problem. If an industry downturn hits and losses start, then they are in Chapter 11. Too much debt and too little liquidity. Again, not only do they have to service that debt in what is now a risk period (the gamble they took), but they have large pension liabilities over the next several years costing billions. That's why they are scrambling any way they can and beating the bushes to milk maximum revenue while concurrently minimizing labor expenses and thus hopefully boost profits. It's why they are pulling out of profitable flying to move limited assets to what they hope will be MORE profitable flying. Most healthy companies don't walk away from profitable situations. Then there's labor.

    Ugh.

    Absolutely NO money there and so serious can kicking. With tens of thousands of mid-management job losses in progress, do they give front-line labor industry leading (or even industry standard) contracts and gamble it will improve the product and thus produce more profits then expenditures or simply do what they've done in the past ? Again, no easy answers and ALL dependent on no industry down turn. If a downturn hits (minimal profits or losses), I say no more than 2 quarters and Chapter 11. I consider this situation a high-risk one for current or future AA pilots, especially those ultra-junior.
    Last edited by Beagleboy; 11-02-2018 at 01:57 PM.

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    Quote Originally Posted by Koojo View Post
    There are a lot of things these numbers aren't saying either such as the new aircraft orders Delta has placed haven't even showed up on property yet and thus the reason for some of these inflated margins. As you know, AA got out in front of the aircraft order ship with the combined Airbus/Boeing order from 2011. So, when ALL of those aircraft show up in Delta colors and Delta has leveraged itself more, you will see those numbers drop. This is just an indication that AA got out in front of things and strategically placed a large order before everyone else.
    Aside from you mixing apples and oranges with debt vs. OPERATING metrics, there's a flip-side to that coin; Timing.

    If bad timing hits before AA can generate enough profits over long enough period to pay down debt (including billions for pensions), game over. Delta and UAL ride it out and AA doesn't. But again, it would provide AA the opportunity to dump bad debt (pensions) and change the industry by blowing up scope. MIGHT be good for AA in one area (economics), but disasterous for AA morale and thus product. One certain casualty would be your beloved flow-thru as there would be no hiring at AA for years as a significant portion of their Group II fleet was transferred to Envoy or others in the form of NextGen small jets like the E-190E2 and AA melts due to retirement attrition over the several years it would take to make that transition.

    Look.........these are CLEAR questions;

    IS AA turning in improved profits over the previous quarter with this fuel-efficient renewed fleet and the best economy in decades ?

    No. The trend is downward while others are UPWARD.

    Does AA have better financials with these OPERATING metrics then their competitors considering their supposed advantage of this young, fuel-efficient fleet ?

    No. Their operating metrics are significantly inferior.

    The others are producing "inflated" margins ? Sorry, there IS a problem here and it's AA.
    Last edited by Beagleboy; 11-02-2018 at 01:59 PM.

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    Registered User NoOtPilot's Avatar
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    Quote Originally Posted by Koojo View Post
    There are a lot of things these numbers aren't saying either such as the new aircraft orders Delta has placed haven't even showed up on property yet and thus the reason for some of these inflated margins. As you know, AA got out in front of the aircraft order ship with the combined Airbus/Boeing order from 2011. So, when ALL of those aircraft show up in Delta colors and Delta has leveraged itself more, you will see those numbers drop. This is just an indication that AA got out in front of things and strategically placed a large order before everyone else.
    You forget one minor detail, that the original order was placed before BK, and then modified during BK.

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    Quote Originally Posted by NoOtPilot View Post
    You forget one minor detail, that the original order was placed before BK, and then modified during BK.
    If debt becomes too much and threatens liquidity, what options do they have to pare down debt without Chapter 11 ?

    Could certain assets be trimmed at some future point providing a relief valve ?

    We both know that answer.

    Of course, I think the track record of airlines who shrank to profitability is very poor. :-)
    Last edited by Beagleboy; 11-02-2018 at 02:00 PM.

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