Once a Great Airline

Once on Top, American Now Fights to Keep Up

Excerpt:

Most airlines found a way back to profitability in the last few years by shedding costs through bankruptcy, reducing capacity and merging with one another. But American lost passengers to newly merged carriers like Delta Air Lines and United Airlines as well as low-cost competitors like Southwest Airlines. It retrenched around fewer hub airports. It struggled with older, jet fuel-guzzling planes and delayed renewing its fleet.

So American’s decision to file for bankruptcy this week highlighted both the industry’s remarkable transformation over the last decade and the distance now separating this airline from its peers. While other airlines have found ways to remain profitable even with elevated fuel prices and slowing passenger demand, American has been losing about $100 million each month. American was once the nation’s leading domestic and international carrier; now it is a distant third.

Comment: I worked for American for 2 years as a Campus Sales Representative at the University of Cincinnati. Pay was $ 50 per month plus I received 2 round trips anywhere ever year. The second year I received three. Once I flew from Cincinnati to New York and then flew first class on a 747 to LA.

American Airlines: Another bankruptcy due to labor costs

The AMR Union Warning

Excerpt:

GM. Chrysler. For that matter, Greece. Now add AMR Corp., the holding company that runs American Airlines and filed for bankruptcy Tuesday, to the growing roll of union-induced failures.

...

American has been negotiating since 2006 with its major unions representing pilots, flight attendants, mechanics and baggage handlers, but the talks stalled this month when the pilots union refused to allow he rank and file to vote on a management proposal for a 3.2% pay raise followed by 1% annual increases. The pilots demanded 10% upfront and 7% for each of the next three years, among other la dolce vita demands.

American's wages, benefits, work rules and pensions are the most costly in the industry, a disadvantage that it puts at $800 million compared to its peers. The company is the last major U.S. legacy carrier to file for Chapter 11, which has allowed its profitable competitors like United and Delta to rationalize their labor obligations and extract union concessions. Perhaps those unions understood that sooner or later one of these airlines won't muddle through but instead go into Chapter 7 liquidation. The wonder is that it takes a strategic bankruptcy to underline this reality.

Around the world, we are hearing the death knell for the expansive benefit systems that were built in and for other era, whether union compensation or government entitlements. The numbers simply don't add up. American's bankruptcy is merely the latest omen.

Comment: My sister has 28 or 29 years of service with American Airlines