TVNWZ wrote:

Bricktop wrote:

SFOtoORD wrote:

Something only our banking industry would have the gall to say out loud since they're usually the ones transferring wealth out of someone else's pocket.

It's a disgustingly douchy comment to classify paying employees for their labor as "wealth transfer". His salary on the other hand, I am sure he views as merited.

From his perspective it is exactly "wealth transfer." His job is to take as much wealth as possible and distribute it to shareholders not to employees. Distributing wealth to the workers is the union's job. Not douchy. Just business.

Douchy is too kind. He just proves the essential role the financial services industry plays in destroying the American Dream. Not a political statement. It's a factual one. He doesn't even consider that global demand for pilots is actually real. It's not capitalism speaking, it's the broken banking system speaking.

AAplat4life wrote:

Suffice it to say that I stand by my comments that AA has not yet solidified its international position at LAX for many TPAC routes.

Again, I don't know what "solidified its international position" means. AA is the single largest international carrier at LAX, and that still means that it accounts, overall, for a relatively small portion (~8.5% YTD through March) of total international traffic at the airport since - obviously - LAX happens to be one of the busiest international airports in the U.S. (and the world).

AAplat4life wrote:

Many of these routes have yet to be proven that they are sufficiently profitable. I'm hearing about a lot of empty seats on PVG, HKG, SYD, and NRT lately. Of course, management is going to say that these are investments and take time, but the question is how much time? At some point AA needs to do at LAX what it does everywhere else. That is, make decisions on what is working and not working, and allocate its resources where it will generate the best returns.

Again, the definition of "sufficiently profitable" is pretty hard to nail down. And in any event, there's no question that AA needs to "make decisions on what is working and not working, and allocate its resources where it will generate the best returns." The key, though, is that AA may well be doing just that at LAX.

Similar to the debt argument that comes up every single quarter, this subject, too, resurfaces again and again. AA has clearly concluded - consistently, both before and after the merger, under Horton and then Parker - that investing in margin-dilutive transpacific flying in order to turn LAX into a major longhaul gateway is a worthwhile investment. AA has also clearly concluded that the margin dilution is still worth the cost in order to enable profit contribution elsewhere in the network in terms of capturing corporate share, bolstering global network competitiveness, etc. Is this assessment right or wrong? Also similar to the debt debate - it is inherently impossible to know the "right" answer. But I'm somewhat more inclined to trust the judgement of AA's executives than former frequent flyers who are unhappy about onboard catering.

AAplat4life wrote:

Besides, it is the onboard product that ultimately determines customer satisfaction, and this needs more consistency.

Agree. Thankfully, AA is making leaps and bounds improvements in the consistency of the longhaul premium offering with all transpacific flights now offering lie-flat, all-aisle-access seats for every premium customer, along with AVOD PTV for every customer in every seat on every flight. I continue to believe - as AA's management apparently does - that the hard product itself will continue to be among the most important elements, if not the single most important element, of the product/service for most premium customers. And AA now has a longhaul hard product that is broadly competitive against most airlines it's up against.

AA continues to rank poorly in virtually all travel and passenger surveys that I have seen. The fact that AA has a large share of the LAX market doesn't mean that many of its TPAC flights are performing well out of LAX. For example, down-gauging LAX-SYD to the 789 is a pretty good indication that AA has not garnered sufficient market share on this route. It's a smart move no doubt to keep this route and see if it performs better, but it also shows that enough paying customers are not choosing AA. And while I do recognize that there have been improvements in the hard product, so have other carriers. Whatever advantage management thinks it has here will soon vanish. We continue to see a serious of missteps and denial by management, which is undermining confidence at many levels.

AAplat4life wrote:

AA continues to rank poorly in virtually all travel and passenger surveys that I have seen.

You mean except being named Air Transport World's Airline of the Year, winning "Best Elite Program" at this year's Freddie Awards, and being named "Full Service Airline Brand of the Year" in the latest Harris EquiTrend® Rankings?

I mean, seriously - all of this constant complaining and negativity aside, anyone can hand-pick statistics to support just about any argument. But, alas, the "survey" that ultimately matters most isn't any of these - but rather the survey of profitability and value creation for owners. And in that regard, AA is solidly right in the middle of the pack among major U.S. airlines. And it seems to me - and plenty of others - that in many ways, AA is moving in the right direction.

AAplat4life wrote:

The fact that AA has a large share of the LAX market doesn't mean that many of its TPAC flights are performing well out of LAX. For example, down-gauging LAX-SYD to the 789 is a pretty good indication that AA has not garnered sufficient market share on this route.

Well, yet again, it bears repeating that "performing well" and "sufficient market share" are subjective, and therefore largely meaningless, terms. AA's management has said - over and over and over - that LAX is a long-term investment in building a global network, including Asia, that is relevant and competitive for high-yielding corporate customers. AA's management has said - over and over and over - that this investment is worthwhile. I'll just repeat that I am far more inclined to trust the judgement of AA's own executives, with access to real data, as opposed to (former?) frequent flyers unhappy about catering.

AAplat4life wrote:

And while I do recognize that there have been improvements in the hard product, so have other carriers. Whatever advantage management thinks it has here will soon vanish. We continue to see a serious of missteps and denial by management, which is undermining confidence at many levels.

"Serious missteps and denial ... which is undermining confidence at many levels" is one - highly, highly biased and subjective - assessment. Other people have very different assessments.

AA's longhaul hard product offerings on the 777 and 787 are broadly competitive and - I suspect - will remain so for some time. Every seat on every AA flight to Asia now has AVOD PTVs and most also have high-speed wifi. Every premium seat on every AA flight to Asia now also has true-lie-flat seats with all-aisle-access.

Boeing778X wrote:

I'm not even convinced AA would have ordered the A350 on their own.

No I don't think so either. Tom Horton, the former CEO before the merger, never showed an interest in it. He would probably be looking at the 777-9X by now if he was still the CEO, and maybe place a top off order for a couple more 77Ws. I know Doug Parker really likes the A350.

Had US and AA not merged, I think Tom Horton would still be the CEO of AA and Doug Parker would still be the CEO of US. There would be no A320, no A330 and no A350 on order in the AA fleet, and no Embraer 190. The only Airbus planes in the fleet would be the A319 and the A321.

There would be no hourly Shuttle flight to BOS and DCA out of LGA, those routes would still be flown by US. However there would still be a JFK-BOS and a JFK-DCA mainline flight on AA's metal, but of course not hourly. DCA would still be a focus city for US with multiple daily flights to several major business centers included but not limited to BOS, LGA and CLT.

American 767 wrote:

Boeing778X wrote:

I'm not even convinced AA would have ordered the A350 on their own.

No I don't think so either. Tom Horton, the former CEO before the merger, never showed an interest in it. He would probably be looking at the 777-9X by now if he was still the CEO, and maybe place a top off order for a couple more 77Ws. I know Doug Parker really likes the A350.

Had US and AA not merged, I think Tom Horton would still be the CEO of AA and Doug Parker would still be the CEO of US. There would be no A320, no A330 and no A350 on order in the AA fleet, and no Embraer 190. The only Airbus planes in the fleet would be the A319 and the A321.

There would be no hourly Shuttle flight to BOS and DCA out of LGA, those routes would still be flown by US. However there would still be a JFK-BOS and a JFK-DCA mainline flight on AA's metal, but of course not hourly. DCA would still be a focus city for US with multiple daily flights to several major business centers included but not limited to BOS, LGA and CLT.

If AA+US hadn't happened, AA+ and US+ would have. I'm guessing at that point it'd have been AA+B6 and US+AS, as US+B6 would have done nothing for either out west. You would have had A320+E190 then....but I digress.

American 767 wrote:

Boeing778X wrote:

I'm not even convinced AA would have ordered the A350 on their own.

No I don't think so either. Tom Horton, the former CEO before the merger, never showed an interest in it. He would probably be looking at the 777-9X by now if he was still the CEO, and maybe place a top off order for a couple more 77Ws. I know Doug Parker really likes the A350.

Had US and AA not merged, I think Tom Horton would still be the CEO of AA and Doug Parker would still be the CEO of US. There would be no A320, no A330 and no A350 on order in the AA fleet, and no Embraer 190. The only Airbus planes in the fleet would be the A319 and the A321.

There would be no hourly Shuttle flight to BOS and DCA out of LGA, those routes would still be flown by US. However there would still be a JFK-BOS and a JFK-DCA mainline flight on AA's metal, but of course not hourly. DCA would still be a focus city for US with multiple daily flights to several major business centers included but not limited to BOS, LGA and CLT.

AA will possibly end up with 777-9s in the years ahead anyway, so I'm not so concerned about it. CEOs don't last forever. Who knows how long Doug Parker will be running things, and the fact that the A350 is deferred EVEN as he is CEO doesn't give me much confidence.

The A319s and A321s are contributing heavily to AA right now! I amazed at how well they have fit in, the A319s with Shuttle and Central/South America routes, and the A321, domestic and Transcon. The A330-200s are great too. The E190s and A333s are leaving anyway, so I think Parker doesn't have all the say in matter.

The problems with the A350, as I already reiterated, is not only would it be a whole other type into the fleet, it's size bracket is already well taken care of with the 787-9, and as far as I know, AA has options for dozens more, and as those 77Es get older, soon replacements are needed. The 787-9 is the perfect replacement. Now, I realize that having more than 3 types of widebodies in a fleet, especially one the size of AAs is not unheard of, but the A350 isn't even established yet. Heck, I hear very little news about it internally, besides the fact it keeps getting deferred. Swapping to the A330neo seems like a more prudent move for AA.

[quote="commavia"]Setting aside all of the "discussion" on the pay raises and broader philosophical questions about economic value creation for labor vs shareholders, etc., by far the most interesting comment from today's earnings call comes from Stephen Johnson, AA's EVP-Corporate Affairs, regarding LAX, and in particular the bolded portion:

"And then finally, we're in negotiations with LAWA for a long-term lease at LAX that will change the face of our facilities there. Those negotiations are confidential beyond that, so I won't say anymore, but we're hopeful that we can get those completed in the next four or five weeks."

Can't add much in terms of detail to this, but will say that the projected cost of the potential AA T-4 / T-5 project has increased to USD 1.5B. On a somewhat related note, the DL move from T-5 will result in the closure of the T-5 F.I.S. Most of that space will be gutted and converted to other uses, in, my opinion, the following fashion:
Level 1 (Arrivals) - Consolidated / linked baggage claim area.
Level 2 (Departures) - Linked ticketing lobby (west end of T-5 to east end of T-4) resulting in Delta One / Flagship Check-in relocation.
Level 3 (...as mentioned before) Consolidated SSCP and concourse connector.

delete - double post.

aaway wrote:

Can't add much in terms of detail to this, but will say that the projected cost of the potential AA T-4 / T-5 project has increased to USD 1.5B.

Quite a big bill, to be sure. What accounts for the slightly lower price tag than Delta's $1.9B T2/T3 renovation

aaway wrote:

On a somewhat related note, the DL move from T-5 will result in the closure of the T-5 F.I.S. Most of that space will be gutted and converted to other uses, in, my opinion, the following fashion:
Level 1 (Arrivals) - Consolidated / linked baggage claim area.
Level 2 (Departures) - Linked ticketing lobby (west end of T-5 to east end of T-4) resulting in Delta One / Flagship Check-in relocation.
Level 3 (...as mentioned before) Consolidated SSCP and concourse connector.

Makes sense. Appreciate the insight - as always.

commavia wrote:

Quite a big bill, to be sure. What accounts for the slightly lower price tag than Delta's $1.9B T2/T3 renovation

The T4.5 building that aaway described above would be similar to the T2.5 building that is part of the Delta project. (Finally, some architectural continuity in the CTA as T1.5, T2.5, and the T4.5 buildings would have similar facades.)

In addition to the T2.5 building, the Delta project includes three other parts.

ldvaviation wrote:

commavia wrote:

Setting aside all of the "discussion" on the pay raises and broader philosophical questions about economic value creation for labor vs shareholders, etc., by far the most interesting comment from today's earnings call comes from Stephen Johnson, AA's EVP-Corporate Affairs, regarding LAX, and in particular the bolded portion:

"And then finally, we're in negotiations with LAWA for a long-term lease at LAX that will change the face of our facilities there. Those negotiations are confidential beyond that, so I won't say anymore, but we're hopeful that we can get those completed in the next four or five weeks."

How can this be? The AA know-it-all on FlyerTalk already knows the final terms of the deal.

There are a lot of moving parts to this one - with lease buyouts, future capital commitments, and offsets. Suffice it to say Kirby never sealed the deal.

wow how did I miss this. I can't wait to see what this is about and I might have to visit Flyertalk..

commavia wrote:

AAplat4life wrote:

AA continues to rank poorly in virtually all travel and passenger surveys that I have seen.

AA's longhaul hard product offerings on the 777 and 787 are broadly competitive and - I suspect - will remain so for some time. Every seat on every AA flight to Asia now has AVOD PTVs and most also have high-speed wifi. Every premium seat on every AA flight to Asia now also has true-lie-flat seats with all-aisle-access.

Having Flown DL and a lot of AA last year in Wide-bodies Long with Korean Airlines and Air France and I can say without doubt that AA Service is on the same level has any of these airlines that I flew last year. J class mind you, hard and soft product were comparable to the others and better in a few cases. Service was best on KE then AF/AA/DL all being close to each other.

commavia wrote:

aaway wrote:

Can't add much in terms of detail to this, but will say that the projected cost of the potential AA T-4 / T-5 project has increased to USD 1.5B.

Quite a big bill, to be sure. What accounts for the slightly lower price tag than Delta's $1.9B T2/T3 renovation

ldvaviation wrote:

commavia wrote:

In addition to the T2.5 building, the Delta project includes three other parts.

^^^ This in essence. The big ticket item (remains to be vetted) - thus still not fully accounted for - is the demolition of the satellite portion of T-3. Also, factor the cost of the TBIT work performed by DL in preparation for airline relocation(s).

The working assumption is that DL will (ultimately) receive approval from LAWA to demolish the satellite. When that happens, I wouldn't be surprised to see the DL cost push past $2.0B.

aaway wrote:

commavia wrote:

aaway wrote:

Can't add much in terms of detail to this, but will say that the projected cost of the potential AA T-4 / T-5 project has increased to USD 1.5B.

Quite a big bill, to be sure. What accounts for the slightly lower price tag than Delta's $1.9B T2/T3 renovation

ldvaviation wrote:

In addition to the T2.5 building, the Delta project includes three other parts.

^^^ This in essence. The big ticket item (remains to be vetted) - thus still not fully accounted for - is the demolition of the satellite portion of T-3. Also, factor the cost of the TBIT work performed by DL in preparation for airline relocation(s).

The working assumption is that DL will (ultimately) receive approval from LAWA to demolish the satellite. When that happens, I wouldn't be surprised to see the DL cost push past $2.0B.

Why wouldn't LAWA allow Delta to demolish the satellite? It would be much nicer if they replaced it.

atlflyer wrote:

Why wouldn't LAWA allow Delta to demolish the satellite? It would be much nicer if they replaced it.

To be clear, it's really just a formality at this point. DL/LAWA both desire completion of the current project schedule before embarking on a satellite demo. Also, the satellite demo will have an added level of complexity since asbestos abatement will be required.

aaway wrote:

atlflyer wrote:

Why wouldn't LAWA allow Delta to demolish the satellite? It would be much nicer if they replaced it.

To be clear, it's really just a formality at this point. DL/LAWA both desire completion of the current project schedule before embarking on a satellite demo. Also, the satellite demo will have an added level of complexity since asbestos abatement will be required.

Glad to hear it's in the works. It always seemed strange in the renderings that they were keeping that part but demoing the rest of the terminal.

As I have shouted before, AA and UA DO NOT want the A350 and are deferring as much as they can. DL is still trying to defer the second half or so of their order. The markets in Asia are too soft right now to support the routes they wanted.

BobPatterson wrote:

commavia wrote:

On a related note, AAL is down big in pre-market trading, despite beating consensus estimates for Q1, after JP Morgan analyst Jamie Baker strongly criticized the company for a "wealth transfer of nearly $1 billion to its labor groups," and the "worrying precedent [for] both for American and the industry."

Wow! Imagine That!

A banker/investor analyst decries money going to employees rather the members of his class.

How unfair!

So this analyst dumps on the company and investors lose share value.

This is the exact reason why the airline industry in the US is where its at. The "real" product the airline management is selling is the company stock, and that is where their focus is, not the passengers, suppliers or employees, their aim is to keep the Wall St. analysts happy above all. And Wall St being Wall St, nothing is ever good enough for them and each quarter want more and more squeezed out in terms of revenues, margins and profits, which leads to the a near perpetually near sighted vision by airline management with short term focus. Nothing that can change this, just the way things are in this day and age.

The 1Q 2017 "State of the Airline" meeting clips on AA employee websites really do little to make a case for the A350 order, and it's coming straight from Parker.

He states that the A350s were being deferred once again to keep in line with older aircraft retirements, but he didn't sound like the airline was committed to it.

It will be interesting to watch. A captain I spoke to even said that selling the slots to DL was on the table, but of course, he couldn't confirm that.

DL has already deferred some of their orders, and are rumored to want to defer more, so I can't see DL being the interested party.

Skyguy wrote:

BobPatterson wrote:

commavia wrote:

On a related note, AAL is down big in pre-market trading, despite beating consensus estimates for Q1, after JP Morgan analyst Jamie Baker strongly criticized the company for a "wealth transfer of nearly $1 billion to its labor groups," and the "worrying precedent [for] both for American and the industry."

Wow! Imagine That!

A banker/investor analyst decries money going to employees rather the members of his class.

How unfair!

So this analyst dumps on the company and investors lose share value.

This is the exact reason why the airline industry in the US is where its at. The "real" product the airline management is selling is the company stock, and that is where their focus is, not the passengers, suppliers or employees, their aim is to keep the Wall St. analysts happy above all. And Wall St being Wall St, nothing is ever good enough for them and each quarter want more and more squeezed out in terms of revenues, margins and profits, which leads to the a near perpetually near sighted vision by airline management with short term focus. Nothing that can change this, just the way things are in this day and age.

First, its not like everything they do is pro-Wall Street, just look at the Street's reaction to the raises in the not-in-amendment period contracts of pilots and FAs. Unfortunately, when outside of something new like Public Benefit Corporations and a few other newer forms of incorporation, management has a legal duty to its shareholders to run the business in their interest, before that of any other stakeholder. Now you can argue whether that is right (I'd personally say legal reform on where corporate duty belongs needs reformed) but you can't argue that is top managements duty, it is absolutely not managements duty to put customers or employees first beyond what makes sense to create the product and service that customers are willing to buy. Obviously, they don't always get it correct, airlines seem to either vastly underpay or overpay their workgroups relative to the financial situation, and they can overly devalue a product to where customers don't want it or can create a better product without the appropriate ROI (I think the Y class pitch issue falls into that perfectly, AA may very well be going to far in the devaluation with 29" seats, but grossly overvalued and failed in the ROI part in the past when they had their more room product.) In the end, it all relates back to who a publicly traded corporation has its legal duties to.

Skyguy wrote:

This is the exact reason why the airline industry in the US is where its at. The "real" product the airline management is selling is the company stock, and that is where their focus is, not the passengers, suppliers or employees, their aim is to keep the Wall St. analysts happy above all. And Wall St being Wall St, nothing is ever good enough for them and each quarter want more and more squeezed out in terms of revenues, margins and profits, which leads to the a near perpetually near sighted vision by airline management with short term focus. Nothing that can change this, just the way things are in this day and age.

The irony, though, is that the above is a precise description of what didn't happen, arguably, in this instance. AA's CEO spent over an hour on the Q1 earnings call repeatedly answering skeptical analyst's questions about why he believed that raises for employees was ultimately a worthwhile long-term "investment" of shareholders' capital. I wholeheartedly agree that many companies today are run with a myopic obsession on near-term stock performance at the expense of long-term vision, viability and value creation. But if anything, in this case, I think many could reasonably say that Parker was not being driven by a "perpetually near sighted vision, and in fact provided a spirited defense of the long-term value of better paid employees.

commavia wrote:

Skyguy wrote:

This is the exact reason why the airline industry in the US is where its at. The "real" product the airline management is selling is the company stock, and that is where their focus is, not the passengers, suppliers or employees, their aim is to keep the Wall St. analysts happy above all. And Wall St being Wall St, nothing is ever good enough for them and each quarter want more and more squeezed out in terms of revenues, margins and profits, which leads to the a near perpetually near sighted vision by airline management with short term focus. Nothing that can change this, just the way things are in this day and age.

The irony, though, is that the above is a precise description of what didn't happen, arguably, in this instance. AA's CEO spent over an hour on the Q1 earnings call repeatedly answering skeptical analyst's questions about why he believed that raises for employees was ultimately a worthwhile long-term "investment" of shareholders' capital. I wholeheartedly agree that many companies today are run with a myopic obsession on near-term stock performance at the expense of long-term vision, viability and value creation. But if anything, in this case, I think many could reasonably say that Parker was not being driven by a "perpetually near sighted vision, and in fact provided a spirited defense of the long-term value of better paid employees.

I concede your point, well taken. Parker indeed did defend the raise but knowing how airline managements work, there was likely some intrigue and reasons that will not be discussed or apparent that drove this decision to be taken, it just so works out that it an be argued that in the long run it is in fact good for AA, but also perhaps staves off bitter disputes with Unions in the future and weakens their hands in any pay negotiations. About Parker, he is wily, and also uncredible, when asked about the merits of the AA-US merger when he was announced as the new CEO, he said, disingenuously, that now having only 3 big US players will bring "more" competition. Years later, I wonder how that has worked out for thr flying public.

commavia wrote:

Setting aside all of the "discussion" on the pay raises and broader philosophical questions about economic value creation for labor vs shareholders, etc., by far the most interesting comment from today's earnings call comes from Stephen Johnson, AA's EVP-Corporate Affairs, regarding LAX, and in particular the bolded portion:

"And then finally, we're in negotiations with LAWA for a long-term lease at LAX that will change the face of our facilities there. Those negotiations are confidential beyond that, so I won't say anymore, but we're hopeful that we can get those completed in the next four or five weeks."

Perhaps apropos of nothing, but on a related note, AA did announce today that it has naned a new SVP-LAX, Suzanne Boda:

“As we look to expand in Los Angeles, Suzanne’s experience and her ability to connect team members across our operational, sales, marketing and corporate affairs groups to achieve shared objectives make her the right choice for this important role,” said Kerry Philipovitch, Senior Vice President – Customer Experience. “As Suzanne transitions to her new position, we have talented leaders ready to take on new responsibilities to continue to build on the strong foundation we have in place. I look forward to where they’ll take American.”

On another related note, AA today reported April traffic results, including higher YOY capacity and load factor, and record April traffic of 18.6B RPMs. More notably, though, AAL stock is up in early trading because in the same release AA also upped its Q2 guidance for total revenue per available seat mile (TRASM) to +3.5-5.5% YOY (vs prior guidance of +3.0-5.0%) and pre-tax margin to 12-14% (vs prior guidance of 11-13%).

commavia wrote:

On another related note, AA today reported April traffic results, including higher YOY capacity and load factor, and record April traffic of 18.6B RPMs. More notably, though, AAL stock is up in early trading because in the same release AA also upped its Q2 guidance for total revenue per available seat mile (TRASM) to +3.5-5.5% YOY (vs prior guidance of +3.0-5.0%) and pre-tax margin to 12-14% (vs prior guidance of 11-13%).

Thanks Commavia. Disappointing how low the capacity increase is (for those of us that want ASM increases)...but that LF increase was substantial (1.8%).

UA also posted huge RSM numbers (around 7%) and big LF increases, too. Traffic definitely looks stronger than anticipated, so I hope to see more growth.

If/When Airbus launches a rewinged A321neo and A322, especially if its in the next few years, perhaps a swap for the type in exchange for the A350s?

Depending on the performance, it could be an ideal 757 replacement.