# American Airlines bankrupt cutting staff



## carverman (Nov 8, 2010)

American Airlines...one of the icons of the US of A declared bankruptcy last
November. So far the bankrupt US gov't has not stepped up to the plate
to give them money like they did with GM and Chrysler and our gov'ts.

AA is cutting 13,000 employees and asking for concessions from the various
unions like pay cuts, benefit reductions and pension reductions. The unions
are not happy about that...but the question now is how much longer they
can survive without a government bailout since they have been losing money since at least 2007. 

"The company will also reduce costs by 20 percent across all work groups as part of its plan to emerge from bankruptcy reorganization and return to profitability — a goal that has been elusive since 2007."


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## Cal (Jun 17, 2009)

I can't think of one airline that would be a good investment for taxpayers dollars.

The employment and associated jobs to the airline industry are small compared to the auto industry and its related jobs.


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## OhGreatGuru (May 24, 2009)

Plus if one US airline goes out of business, their passenger business won't be picked up by foreign airlines, it will be picked up other US airlines, making them more profitable.


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## jcgd (Oct 30, 2011)

Is anyone aware of an airline that has been continuously profitable? As far as I can tell they boom, go bankrupt, repeat.


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## Kalergie (Jan 7, 2011)

Southwest has been profitable since their first day of operation in the 70s. In Europe, its Ryanair which was built on the same business model as Southwest. Common fleet family, constant reduction of cost through innovative ideas, low overhead, short ground times and maximum aircraft utilization as well as 99% direct distribution (now all online). Singapore Airlines has also been profitable for a long time. Asian Pacific Airlines seem very competitive on a global comparison. However, they are mushrooming right now which will be a problem in 10 years. 

Would I buy shares of these Airlines? Hell no! Still a better investment than running an airline though!


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## financialnoob (Feb 26, 2011)

At American Airlines, a Departing C.E.O.'s Moral Stand


> IT seems that every week we hear of a C.E.O. who earned millions from a golden parachute after demonstrating poor business judgment or cutting thousands of jobs with no financial downside for executives. These stories feed the fires of the Occupy movement growing all over the world.
> 
> But on Tuesday, we heard something different. American Airlines, once the largest airline in the United States, declared bankruptcy. This is not surprising news for the beleaguered airline industry; what is different is what is emerging from the wreckage. Gerard J. Arpey, American’s chief executive officer and chairman, resigned and stepped away with no severance package and nearly worthless stock holdings. He split with his employer of 30 years out of a belief that bankruptcy was morally wrong, and that he could not, in good conscience, lead an organization that followed this familiar path.
> 
> ...


The rest is worth a read as well. AA might be in a better place if Arpey had done what made financial sense instead of what he felt was morally right. I'm sure some stockholders are cursing him, but I can't help but think we'd be in a better place overall with more men like Arpey running companies.


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## Daniel A. (Mar 20, 2011)

jcgd said:


> Is anyone aware of an airline that has been continuously profitable? As far as I can tell they boom, go bankrupt, repeat.




WestJet has done well.


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## jcgd (Oct 30, 2011)

True that. I wonder if it'll last. I really hope they destroy Air Canada though.


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## LondonHomes (Dec 29, 2010)

Airlines seems like every week 1 of them is getting bankruptsy protection! You do have to wonder why anybody would invest $1 in them any more and how much to airline prices need to rise to make them a profitable industry.

Perhaps some of the taxes on an airline ticket could be shifted into an actual part of the cost of flying that ends up in the airlines pocket?


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## OhGreatGuru (May 24, 2009)

De-regulation in the US led to rapid expansion in airlines competing for market share; cutthroat rate wars; followed by the inevitable bankruptcy of numerous players. The economic turndown has just hastened the process. Ain't the free market wonderful?


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## RedRose (Aug 2, 2011)

One wonders what happens to those AA DB pensions? 

Re: AC will always be bailed, it is a national airline, as I understand it. Taxpayers money pot to always dip into.

I too much prefer Westjet, much more affordable prices with many direct flights, all those lay overs and connections are a deal breaker for me.


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## carverman (Nov 8, 2010)

OhGreatGuru said:


> De-regulation in the US led to rapid expansion in airlines competing for market share;* cutthroat rate wars*; followed by the inevitable bankruptcy of numerous players. The economic turndown has just hastened the process. Ain't the free market wonderful?


Cut rate/cutthroat wars is what hastened the demise of a few. 

When you deliberately undercut the competition to get the business, , seat sales and all kinds of promotions (frequent flier points, advance bookings etc) you can't make any money that way..because fuel costs, and maintenance costs
are huge expenditures, not to mention landing fees, airport fees, and all the various support services (ticket agents etc) that take a paycheck from the passenger buying that ticket. Now they even charge for any extra bags..although the first one is still free (I think).

Once I was flying from Kansas City Ka. back to Toronto in 2007 and took AA from KC. 
When I brought two bags on board and guitar that I had bought there, the AA counter attendent kind freaked on me..
."You realize that you are only allowed 2 BAGS now? ..so I will have to charge you $75 for the third one!"

What? I exclaimed...I was not informed about that when I called. 

"Well sir" she exclaimed..IF EVERYONE bought 3 bags on board, the plane
would be so heavy... we might not be able to get off the ground!"

"That rule has been in place for quite a while" she said..so which bag do you want me to charge you for?

"Never mind", I said.."I'll take the guitar over the airfreight counter and ship it that way". I did and it only cost me $30 on SAME FLIGHT....GO FIGURE!


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## Daniel A. (Mar 20, 2011)

RedRose said:


> One wonders what happens to those AA DB pensions?
> 
> Re: AC will always be bailed, it is a national airline, as I understand it. Taxpayers money pot to always dip into.
> 
> I too much prefer Westjet, much more affordable prices with many direct flights, all those lay overs and connections are a deal breaker for me.


Just working from memory here so bear with me.

I believe in the case of AC at the end of the day folks on pension took a 25% reduction in addition those that tried to get out on the buyout lost there severance money.

This was on the first bankruptcy.


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## new dog (Jun 21, 2016)

What do you guys make of this story telling black people to be cautious or not to fly American Airlines. Personally I don't think the higher ups would want anything to do with discrimination and I would think the airline will clamp down on this.

http://money.cnn.com/2017/10/25/news/companies/naacp-travel-advisory-american-airlines/index.html


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## Eclectic12 (Oct 20, 2010)

RedRose said:


> One wonders what happens to those AA DB pensions?


It seems it will take some digging to figure it out.

This article says that as part of the 2011 bankruptcy fall out, as of Nov 1st, 2012 - DB pensions credits ceased to be earned. As of that date, AA instead mostly matched employee contributions to 401K plans, up to 5.5% of earnings. The pilot's DC pension was supposed to be frozen as of Nov 1st then terminated as of Nov 30th, where $$ in the account would be transferred to the pilots.
https://www.dallasnews.com/business...-airlines-to-freeze-pension-plans-as-of-nov-1
http://www.reuters.com/article/us-c...nsion-battle-may-spread-idUSTRE81S1Z220120229

That's a while ago so it is not clear if the current status is.


Cheers


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