I’m going to New Jersey. On yet another ubiquitous MD-80 that looks as if it was rode hard and put up wet.

10 years ago.

Filed under: Airline Service by ajax
3 Comments »

I’ve had some time to think about the new Virgin Atlantic / Delta Airlines deal and several things have occurred to me which make this a bigger threat than I think anyone necessarily perceived including me.

Virgin Atlantic knows its trade across the Atlantic and its got the London Heathrow slots to make a  lot happen for Delta.  For the first time in 30 years, American Airlines and British Airways may be facing a very real threat to their lucrative trans-Atlantic business.

Virgin has the aircraft and airports slots and Delta has the network.  Delta has the network feed into New York City and enough network to actually draw Oneworld (AA/BA) customers away from Dallas and Chicago to Atlanta and New York City and even Detroit.  AA and BA won’t lose their O&D traffic in those cities but it could lose a great deal of the network feed into those cities in favor of a Delta solution.

This will happen just as American Airlines prepares to scale up its operations with 777-300ER aircraft onto those routes and just as British Airways prepares to take delivery of its first Airbus A380s.  If Willie Walsh and Tom Horton aren’t cursing Richard Anderson, they should be.

Virgin has 747-400 and Airbus A340-600 aircraft that it can throw at routes to the US and a newish fleet at that which represents great service and certainly service competitive with AA and BA.

Filed under: Airline News by ajax
No Comments »

As the clock ticks towards the end of the year, more and more people are weighing in on the potential American Airlines / US Airways merger that’s been cooking for a few months now.  I have a few thoughts on this:

1)  It is curious to me that Tom Horton continues to describe himself as neutral on the merger idea on the one hand but also argues for a post bankruptcy merger any time the door is theoretically closed at a meeting.

2)  The fact that the pilots have been engaged on this leads me to believe that an offer is imminent.

3)  If an offer is imminent, someone has found a way to let Tom Horton exit gracefully.  I’m guessing the plan here is something similar to what Glenn Tilton got in the ContiUnited merger.  I’m also guessing that Tom reckons that if Doug Parker blows things, he may yet be able to step into the CEO role again.

4)  Not all pilots are eager for this.  There is a new blog started by about 35 AA pilots, mostly captains and mostly from the DFW base.  The fact that most are captains from the DFW base leads me to believe that these are fairly senior captains who may feel a touch threatened with respect to retaining their seniority against similar US Air (EAST) pilots.

Seniority is going to be a touchy issue for pilots and other crew.  It won’t be Delta like in the integration largely because rational thought isn’t in place for either union involved (APA or USAPA).  If this were an ALPA/ALPA integration, the odds for a smoother integration would go up.

You know what?  Smooth or unsmooth, it doesn’t really matter.  US Airways has already proved it knows how to run a split operation.  Furthermore, there is now federal law that will govern a seniority integration in this case and that should prevent a USAPA-like embroglio.

Some pilots from both unions point to Doug Parker and US Airways not being able to integrate their employees in the previous merger and that’s not quite true.  There was an arbitrated decision that very senior US Air (EAST) pilots threw a temper tantrum over and tossed out by electing a new union organization.  Parker & company couldn’t even be sure who to negotiate with for the last several years much less solve a problem.

Parker & company keep making offers to US Airways flight attendants and they keep voting them down asking for more.  And who wins in those situations?  Parker & company.  Because the NLRB won’t let the crews strike and does keep the new agreements coming which proves that progress can be made and that therefore justifies not letting the unions strike.  Meanwhile, US Airways keeps paying the old rates.

At some point, you need to make the deal you can get, not the deal you want.  US Airways crews haven’t been able to get their act together to realize that much less make it happen.

I rate a merger announcement as 80% probable at this point but I’m not sure that I agree that it will happen before the end of the year.  I can see this deal getting announced in the 2nd week of January, however.

Filed under: Airline News by ajax
No Comments »

It’s occurred to me that American Airlines may want an accelerated pilot contract hearing in bankruptcy court for multiple reasons.  First, it enables them to woo the Unsecured Creditor’s Committee towards their stand-alone plan.

Second, they have 777-300ER aircraft arriving shortly and that pilot contract allows them to train pilots and presumably stay on schedule for entry into service for that aircraft.  I rather believe that this is  the prime driver.

Filed under: Airline News by ajax
No Comments »

With the AA Pilot Contract ratified by the Allied Pilots Association, speculation as to what’s next has gone into full overdrive.  Some think American Airlines will make a case for its stand-alone bankruptcy exit plan and some think this clears the last hurdle for a merger with US Airways.

American Airlines has asked that the court set a hearing to approve the contract more quickly than the customary 21 days.  I suspect that request is more about checking the box quickly than anything.  With this contract settled, American Airlines is done with the big challenges of reorganization in its mind.

Is it done?  Frankly, we’ve seen them address costs in a very aggressive manner and not just in the area of labor.  AA’s fleet has been slashed of aircraft and leases on other aircraft have been renegotiated.  Costs have been addressed more than adequately.

But where is the revenue plan?  It remains the cornerstone market strategy of old.  Routes haven’t been radically altered and hubs haven’t been re-tooled and new markets haven’t been explored.  Bankruptcy reorganization gives AA time to work on this area too and it appears there has been no real interest in putting in the same effort here as what has been done to costs.

My concern is that American Airlines has achieved another 10 year holding action.  Time will tell but this reorganization feels like the company has puts its hopes into the cost cutting basket without truly addressing the need to grow revenue and, frankly, repair relations with employees.

I sit amazed that the company hasn’t acknowledged its challenges going forward with respect to employee morale.  Were I an analyst, I would be worried about this companies exit from bankruptcy not because the employees would intentionally sink the ship but because a service company such as an airline is extremely dependent upon its employees providing a positive experience.

American Airlines seems to think it’s still the dominant player in all its markets and that people don’t have choice.  That’s just not true.  Los Angeles and New York City are extremely competitive marketplaces and areas where other airlines have been much more aggressive than AA to date.  Chicago is a very, very competitive market with United Airlines and Southwest Airlines eating at American’s constituency every day.  Miami / Fort Lauderdale has a tremendous amount of LCC competition and airlines are flying to South America from other gateway cities and competing just fine with AA.  Dallas / Fort Worth has increasing competition at DFW airport and the prospect of a fairly unlimited Southwest Airlines in 2014.

The differentiating difference for an airline over the next 3 ot 5 years in the SuperLegacy category is going to be service and its those employees who have been roughed up badly who will be delivering it.  What’s being done to sooth those wounds and what’s being done to incentivize a positive experience for passenger?  A plan for this would be a good thing.

Filed under: Airline Service by ajax
No Comments »

American Airlines says it has lost $164 million in October with $72 million of that related to bankruptcy expenses leaving $92 million related to its operations.  The company says that about $40 million of that is related to Superstorm Sandy and another $45 million was due to the recent operational troubles it experienced in October.

Every airline is reporting losses from Superstorm Sandy and $40 million does kind of pass the gut check.  However, I think attributing $45 million in losses to recent troubles in October is a bit . . . convenient.  And it certainly doesn’t take responsibility for those problems.  Let’s be mindful of the fact that the airline and union went back to the negotiating table in early October and operations regained sanity.

Filed under: Airline News by ajax
No Comments »

Two respected analysts (William Swelbar and Aaron Gellman) in the airline industry have come out swinging at the AMR – US Airways merger in small but significant ways.  Each questions the value of such a merger to American Airlines in terms of synergies.

Synergies of a merger are important and should be talked about with respect to a merger in this industry but they aren’t everything about a merger.  They are, in short, the talking point that the world understands.

In the case of American Airlines and US Airways, many scoff because of US Airways exceptionally weak position in international markets.  That’s where the sexy and fairly profitable flying is today.  But the day to day bread and butter of a US airline remains in the domestic markets.

The domestic synergies between the two airlines amount to a savings in costs with respect to a combined infrastructure to serve such an airline (less labor needed to serve the two combined entities, less overhead since one reservations system is used, etc.) and they amount to opportunities generated with a larger network.  Curiously, no one ever seems to talk much about how US Airways has two hubs that slot into areas of the country where AA is at its weakest.

Not only are those areas where AA is at its weakest (the West Coast and Southeast), but they are where US Airways actually performs really well.  That ain’t nothing.

Furthermore, despite AA’s Corners Strategy, American Airlines is now far from a dominant Northeast airline in New York City or Washington D.C.  US Airways plays very well there.  They have their shuttle operation and excellent position in Washington DC.  While US Airways gave up market share in NYC to Delta in exchange for its position in Washington DC, if you combine US Airways operations in NYC with AA’s, it started to look good and respectable again.  That ain’t nothing either.

Swelbar talks about the labor conflicts at such a merged entity.  I would like to make an observation:  A conflict free merger with respect to labor is bar far the exception to the norm.  Delta and Northwest got it and that’s nice.  Southwest and Airtran are doing OK but that was a different situation really.  ContiUnited hasn’t had it so good.  Few airlines ever did have it very good with labor in a merger.  It’s a fact of life.  So, how, then, is it much of a disadvantage? US Airways has actually proved that a profitable airline can be run despite unions biting at each other left and right.  If anything, its been an advantage for US Airways.

But there is a benefit to such a merger and particularly so to American Airlines that gets ignored by both these academic analysts:  US Airways management takes over.  It is pretty much agreed that the American Airlines management and board of directors is dysfunctional and even in this merger they have not taken full advantage of the opportunity to come out the other side a lean, competitive company.  With the roadmaps for doing so set in the examples of Delta, Northwest, US Airways,  America West and United Airlines, you would think that there had been more slash and burn than there has been.

Finally, there is room for more consolidation and the ugly truth is that both these airlines need each other.  There is nobody else left to work with and there is, perhaps, just one opportunity to pull this off and save both airlines.  They need each other and the sad fact is that they need each other equally but for different reasons.  That’s OK but it’s time to acknowledge the elephant in the corner.

Filed under: Airline News by ajax
No Comments »

The Allied Pilots Association and American Airlines have reached a tentative agreement for a new contract.  APA President Keith Wilson seems optimistic about it and describes it as an industry standard contract.  American Airlines seems to think it’s got a deal as well.

I’m pleased to hear a deal has been reached but . . .

There was a deal a few months ago that the pilots voted down.  We’ll see just how much the deal has changed once some details leak.  It’s possible that the pilots are ready for a deal and, if so, they’ll be likely to vote on it.

Maybe I’m cynical but I remain a little skeptical that this deal is truly done.

Filed under: Airline News by ajax
No Comments »

American Airlines enjoyed a 58% on-time rate in September.  The sound and fury of very angry pilots and an operation not coping well.  To put things in perspective, United Airlines experienced an 82% on time rate and Delta had a 89.7% on time rate.

US Airways, AA’s suitor for a merger, managed an 87% on time rate and was the 2nd best CONUS legacy airline behind Delta.  Southwest Airlines was right behind US Airways at 86.5% and was tied with another airline for that position:

American Eagle.

Yes, American Eagle managed an 87.5% on-time rate.  A regional jet operation that traditionally doesn’t do as well as its mainline partner ran absolutely great ops for September.

I have a suggestion for US Airways if they manage to strike a deal with AA:  Get Dan Garton back from American Eagle quick.  Garton is one of those rare AA executives who manages to outperform and yet never quite get the respect for his achievements.  He’s done very well at American Eagle and did very well at AA before getting shoved aside in favor of Tom Horton as heir apparent.  I like Garton and I like the way he communicates to American Eagle employees.

Filed under: Airline Service by ajax
No Comments »

Terry Maxon, who I respect immensely in the business of airline reporting, has a story in the Dallas Morning News saying that sources close to the potential merger between American Airlines and US Airways say an official offer is imminent.

All parties involved were supposed to meet last week in New York City but that meeting was delayed after Hurricane Sandy.

The radio silence since October 31st, the date the non-disclosure agreement between the two airlines was to expire, has made me curious.  The NDA was extended for more time between the two parties.

It’s hard to read the tea leaves on this one and at this point.  American Airlines and its executive team isn’t in the worst position possible although their position hasn’t improved measurably either.  My expectation was that the AA team would stall for more time.

To make this deal attractive, US Airways will have to make an offer that creditors find hard to refuse.  The expected valuation of the company upon bankruptcy exit is likely to be $6 Billion or more.

The combined revenues of each company would be approximately $36 Billion and that exceeds that of Delta and United Airlines.  The synergies that would result have the potential to offer profitability that might approach that of Delta and that isn’t trivial.

The creditors have to balance what their holdings would be worth with a stand-alone exit and what the prospects of AA are as a stand-alone company against what value might be created over the same time combined with US Airways.  Creditors aren’t going to sell their holdings as soon as the markets open upon bankruptcy exit.   My guess is that the time frame they’ll consider is somewhere between 3 and 5 years.

If I’m a creditor, I’m interested in the executive team that can create the most value over that time period.  Based on that, US Airways as a merger partner looks very attractive based on their performance with a sub-par network.  I would not be concerned about the ability of the US Airways team to integrate or operate the new airline as this team has proven that it can run an airline and that it knows American Airlines.  And it really does know American Airlines.

This is the part where pilots would have been very wise to have taken the deal they were offered this past summer.  With a 13.5% equity stake in the new airline, they would have been in a stronger position to profit.  I wonder if the creditors would be as excited about such a large stake in the airline given to the pilots with a US Airways merger involved.

We may hear something soon but we won’t hear it today, in my opinion.  I would look for an announcement next Monday or Tuesday at the earliest as I suspect all voices will need to be heard for the next few days.

Filed under: Airline News by ajax
No Comments »

AMR has reported a net loss of $291 million for September which includes $160 million in special bankruptcy charges.  This means that American Airlines had a significant loss for September regardless.  And I would remind readers of the artificially low costs AA is experiencing right now as well.

Yes, this absolutely had to do with the pilots conniption with the company but I assure you that the pilots didn’t do $131 million in damages with their behavior either.  That would be so spectacular as to cause the airline to head immediately to court for relief.   Furthermore, the pilot problem is at the least 50% of AA’s fault in the first place.

Filed under: Airline News by ajax
1 Comment »

The other night I was doing some searching of area north and west of DFW and came across something that has to be a bit unusual.   A photo of an aircraft.  Actually, it shows as 2 aircraft but I suspect it’s one captured in two different frames.  It is, I believe, an American Airlines MD-82.

You can see it HERE (I hope.)

Filed under: Trivia by ajax
No Comments »

When the new American Airlines Boeing 777-300ER was spotted at Boeing, everyone was a touch surprised to see it painted in grey with some preparation for a different scheme shown in how the tail was painted.  Current speculation is that AA will introduce a new livery with this aircraft although it might simply be a one-off design.

American Airlines is, of course, famous for its polished aluminum aircraft although that livery has been modified here and there over the years.  When the A300 came onboard, it was originally painted grey since Airbus aircraft nominally can’t be polished and left bare.  MD-80s ultimate saw their tail surfaces painted grey although originally they were polished as well.

Some think this 777 may just be a Oneworld paint scheme but it doesn’t follow what has been done with Oneworld aircraft so far.

I think it’s a new livery but if I’m a creditor of American Airlines, I would be pretty annoyed at discovering this.  Changing liveries is costly and with the future of AA much in doubt, it would be wiser to pause on a livery re-design until other issues are settled.

Yes, American does need a new livery because it is taking on new Airbus A320 series aircraft that must be painted and the 787 cannot be polished either.  More important, AA’s current livery is just . . . old and dated.

AA has lately been throwing out lots of change into the media.  Changes in seating, changes in first class experiences and just change.  Much of it scheduled years away.  Clearly it’s designed to create some excitement about the brand again but it seems slow and uncoordinated and against the best interests of a bankruptcy exit.   None of it fundamentally improves AA’s revenue plan so far either.

Enthusiasts will be excited and that includes me since a livery change is rare for most airlines and rarer still for American Airlines.

Filed under: Trivia by ajax
No Comments »

Terry Maxon of the Dallas Morning News has a summary of 3rd Quarter Earnings that brings clear light to how airlines have done these past 3 months.  Before going further, let me say that both companies and pundits like to exclude special items from their analysis of earnings.  It is the airlines’ way of saying “Yeah But!”

Yeah, but if we had not screwed up on our hedges, we would have made this much.  Yeah, but if we had not had to pay off a bunch of senior employees to leave, we would have made this much.

I don’t like Yeah Buts.  Special items occur every month, every quarter and every year.  More so than ever before.  It’s time to accept that it is what it is regardless of how special items affect performance.   Now on to a few observations:

Delta Airlines is doing exactly what CEO Richard Anderson said was necessary in the airline industry.  They are raising their margins considerably to truly cover their capital costs as well as their operating costs.  Well done.  Very, very well done. Admittedly, they are farthest down the road in the New World Order of consolidation but it is a consummate performance nonetheless.

Alaska Airlines:  Ditto!  They are playing their game perfectly right now.

Hawaiian Airlines:  Again, well done and particularly so in light of where their market was just a few short years ago when it comes to competition.  Yes, they face less complex challenges than continental US airlines but they still are performing well.

US Airways:  I’ve already said it once this week.  These guys know how to run an airline and earn a profit even under trying circumstances.  They make a better case for merger with their financial results than any PR machine could make publicly in the news.

United Airlines:  It’s time for these guys to get a little more on the ball.  One begins to sense a certain lag in realizing their synergies and having a seamless system.  Special items shouldn’t be killing your entire net income at this point.

JetBlue:  Nice job but kind of a yawn.  We’ve been seeing roughly the same level of performance for years with no substantial growth whatsoever.  I’d rather have Alaska Airlines than JetBlue at this point.

Southwest:  I think their recent performance reflects their merger.  What I think hasn’t been brought up but should be is that their merger isn’t exactly brand new at this point and the lag is primarily due to how ill equipped they were to absorb another airline with respect to their systems.  Consider this:  SWA has made noise about how their IT systems impact their ability to do business with the rest of the world for a bit over 5 years.  They are operationally seeking to do business with the rest of the world in many different ways and they are certainly changing the way they operate to be more in line with a legacy airline.  SO WHY HASN’T THE IT PROBLEM BEEN ADDRESSED AGGRESSIVELY AT THIS POINT?

American Airlines:  B’ah.  Even with artificially contained costs and a fairly friendly bankruptcy judge, they continue to lose money.  What’s the definition of insanity?  Doing the same thing over and over again expecting a different result?

Summary:  It’s no surprise that the two top performers are also partners and close ones at that.  These are airlines that know what they’re doing and who exercise strict discipline in operating their airlines.  Yes, I’m talking about Alaska Airlines and Delta.

No one is talking about growth, everyone is talking about capacity restraints and raising margins.  Well, all except American Airlines.  That alone speaks volumes.

Filed under: Airline News by ajax
No Comments »

American Airlines pilots are now reporting what they’re after in negotiations with American Airlines management and I find it . . . ambitious.  The highlights of their “asks” are:

• Eliminate Group II pay band and move the A-319 into Group III, with a weighted industry average before year three

• Pay rates that align us with our network-carrier peers at Delta and United

• Codeshare restrictions in line with those in the US Airways conditional labor agreement

• Contract duration that is shorter than the six-year duration in management’s “last, best, final offer”

• An industry-standard pension

• An equity claim that can be monetized and has an established “hard floor” protection

• Scope limits that include a hard cap or percentage limits on the 50- to 76-seat jets

To a degree, when you enter into negotiations at airlines, you ask for the world, promise the world to your membership and ultimately settle for something less than the world.

These goals are too much for the present situation.  They don’t set appropriate expectations for either side.

Changing airliners around into different pay groups will materially affect American Airlines’ cost plans.  AA has a solution for that problem:  Impose terms and live with the pilots bad behavior.

Negotiating for pay rates that are equivalent to those of both Delta and United pilots is too aggressive.  Let’s not forget that pilots at both those airlines paid their dues with lower rates and got their airlines to a high performing level before they earned those industry leading rates.  AA pilots haven’t paid their dues and I’m beginning to wonder if anyone bothered to tell them that the AIRLINE IS IN BANKRUPTCY.

Codeshare restrictions are about preserving jobs.  I get that and even approve.  I think that airlines should fly their flights and compete rather than buddy up in every possible way out there.  But I would also point out that while the bankruptcy judge didn’t let AA have carte blanche on codeshares, he pretty much let them get as much they needed and wanted.  This shouldn’t be the hot button issues that the union keeps making into.  American Airlines isn’t going to be a Virtual Airline.

Contract duration seems silly at this point too.  The pilots are already into their 6th year of negotiating a contract now.  Get something in place that allows both parties to go to work on their jobs.  Quit making a fuss and causing a distraction every 3 years when it comes to pay.  Take the 6 year duration and the stability and the benefit it will provide the company as well as you.  Going for a 3 year duration in the hopes that you’ll get an even better rate is just . . . silly.  There isn’t room in the airline industry to see those pay rates grow substantially and there won’t be for years to come.  Sorry guys, you’re fighting for a right that potentially leaves you at a greater disadvantage.

Industry standard pension:  How about you guys take an Industry Standard 401K like the rest of us.

Equity claim:  I’m fine with this but if the pilots want this, they *have* to give something up to get it.  You don’t get industry standard/industry leading benefits and wages plus a substantial equity claim that can be converted to cash and distributed to pilots as well.  That is called having your cake and eating it.  I really do wonder if anyone has mentioned that AMERICAN AIRLINES IS IN BANKRUPTCY.

Scope limits:  I’m in violent disagreement here.  I actually think that AA has limited itself too much with scope limits even now.  There will be growth on routes and routes that are 60 seat commuter routes today may well be 90 seat routes 10 years from now.  But a 90 seat route isn’t a mainline route.  Not in this decade.  There is a solution here:  Offer low, low pay rates to American Airlines to take on this flying internally.  Ask for an apprentice program that hires and trains new pilots and puts them into this commuter flying at “industry standard” regional airline rates with a growth path to mainline flying internal to the company.  But make it *cheap* for AA.  The upside?  The union gets these pilots earlier and has them “feeding” the union earlier in the process and they get to control one hell of a lot of more pilots than they otherwise would.

I don’t think we’ll see a successful agreement out of these latest talks.  I think reality hasn’t hit either party in a substantive way and I think that pilots will decry management and start impacting operations again after these negotiations break down.  I think the prospect of a real contract is slim and I begin to wonder if AA shouldn’t impose terms and take the operational hit for another month or two and let pilots get tired of their behavior.  Or, better yet, impose terms and hire yet another law firm to be prepared to seek an injunction against pilots when they start their slow down again.

Filed under: Airline News by ajax
3 Comments »

In a bold understatement, American Airlines CEO Tom Horton has acknowledged in new stories that AA has had a rough few weeks.  Horton was admitting to AA’s operational problems primarily with respect to cancelled flights and reduced schedules due to pilot driven maintenance issues.

It’s notable that Horton would not speak about a merger with US Airways but did mention IAG (International Airlines Group: British Airways / Iberia) CEO Willie Horton was willing to take a minority stake in the airline to emerge from bankruptcy.

I strongly suspect that Horton and his team are continuing to look for every option to emerge independently from bankruptcy.  In short, he seems determined to benefit from the rewards previous airline CEOs have enjoyed upon emerging from bankruptcy rather than necessarily being oriented towards the best interests of AA’s stakeholders.

The problems going on at AA are many and not just limited to the pilots.  We now see an airline unable to cope with its unions with respect to coming to an agreement with pilots to settle the pilot induced operational problems as well as it seems to be having trouble figuring out how to deal with reduced staff as a result of “early out” options negotiated with unions representing flight attendants and mechanics.

Furthermore, it has enjoyed a PR disaster over the operational problems as well as the seat problems on 757 aircraft.

Here is the point:  None of these problems as a single event is that big of an issue.  Airlines go through these from time to time.  However, the ensuing perfect storm belies a company lacking leadership.   To further my point, this is really the first we’ve seen Tom Horton answering media questions in weeks and the answers aren’t entirely forthcoming.

Instead, we’ve seen subordinates and spokespersons responding to each problem as if to say “there really isn’t anything wrong here, look away.”

Denial starts to make you look stupid in these situations.  The growing consensus among industry observers is that it is time for this executive team to go.  I agree.

Whether it be a takeover by US Airways or another executive team, we see a leadership crisis that needs to be solved.  No one is out front and leading the airline through these crisis.  We continue to see “committee” responses to these problems that seem couched to avoid public mea culpas.  Airlines in denial fail more.

I expect that we will see financial results over the next few months that point to this denial and we’ll see a return to the “Wait, wait!  It will get better!  We promise” approach to advocating to the airline.

Filed under: Airline News by ajax
No Comments »

The Dallas Morning News Airline Biz Blog notes that American Airlines isn’t doing quite as bad with their on-time record last week.   Just 33.1% of flights were later than 15 minutes minutes.

It’s notable that American Eagle had just 15% of its flights late and that puts it ahead of all the major legacy airlines except Delta and Alaska (and Alaska traditionally does well in these assessments.

American remains dead last among the legacy airlines with United being the next worst at 22%.

Yes, there continues to be a problem at American Airlines.

Filed under: Airline News by ajax
No Comments »

There is a growing consensus among many that AA’s leadership just isn’t making the grade.  Most recently, Leeham News and Commentary made a post summarizing, once again, the story of failed leadership at AA since Robert Crandall retired.  It’s a story I’ve told and many others out there have too.

It’s my personal observation that leadership doesn’t look or feel like what it is portrayed as in Hollywood.  There is some kind of belief that a strong leader runs around and says “My way!  I’m in charge! You don’t know, I know!”  This is what I would refer to as the Alexander Haig model.  Many of you may know how well that went.

It seems to me that the very best leaders in business, politics or elsewhere have some common attributes.  One of them is a certain amount of humility.  A humility that takes the form of that person not seeing himself as greater than any other individual.  In fact, that quality is often expressed in the way the leader or leaders see themselves in the service of those they actually lead.

They also learn how to change directions when circumstances call for it.  They are not married to a process that has been outgrown or which no longer fits the circumstances.

They learn to bring in new blood and adopt best practices from other businesses.

They may be tough but they aren’t imperious and they aren’t greedy.  They make decisions based upon what is right for all stakeholders and not just those whose interests are financially aligned with their own.

Sounds a lot like Bethune and Crandall, no?

What it doesn’t sound like is Carty or Arpey or Horton.  And that’s the point that all of us are making now.  Pilots and other labor groups hate the current leadership for both objective and emotional reasons.  I get that.

But this isn’t about hate.  It’s about failure to lead and the body of evidence says its time for other parties to lead.

Filed under: Airline News by ajax
2 Comments »

Gary Shteyngart wrote a story for the New York Times titled “A Trans-Atlantic Trip Turns Kafkaeque” describing a 30 hour transit from Paris to New York City that involved maintenance problems, returning to an airport (London), an overnight stay and more trouble getting home.

Any one trip can turn into a horror.  It’s happened to the best of airlines.  There are some telling points to this story, however.  First, maintenance problems (again) start this off with delays that for American, shouldn’t be so difficult to deal with for an airline with substantial operations in both Paris and London.  These problems aren’t happening in Omaha, Nebraska.

Given that they are happening major destination points for American and given that the bulk of the horror took place in London, a place where AA has a major operation and support from partner British Airways, it just shouldn’t happen.  Finding a usable 767 shouldn’t have necessarily been the hardest thing to do.  Nor finding a crew for that 767.  In addition, even if a 767 couldn’t be found for the flight, it should have and could have been possible to take care of a great many of those passengers on flights with AA or BA.

It’s an example of an airline not trying.  Trying counts for a lot.  You’ll never keep all people happy but you can substantially reduce the impact of such events by just trying.   There are 13 flights daily between JFK and London Heathrow if one considers both AA and BA.   There are another 6 flights between London and Chicago (BA and AA again).   there are 4 between London and Dallas and 4 between London and Miami and another 4 between London and Los Angeles.  that’s a total of 31 flights from London to the “cornerstone” cities of American Airlines if one considers both American Airlines and its codeshare partner British Airways.

If every seat on that 767-300 was full (and I virtually guarantee they weren’t), there would be only 225 passengers to take care of.  30 business class and the remainder economy class.  The math here isn’t hard.  If you can’t deal with 225 passengers at your major European focus city, you have a problem that goes far beyond maintenance.

I’ll grant that accommodating international passengers in a foreign city is a touch more challenging than a domestic flight.  Here is what you do:

1. Dispatch multiple agents including a British Airways representative to the gate to meet the flight.  Make sure they have communications with them such as cellular phones that will allow them to communicate with company operations personnel.
2. Get the passengers through customs in a quick and organized manner and collect them on the other side into small groups of about 30 passengers.
3. Ask your reservations center(s) to allocate 6 to 8 agents with dedicated phone connections to the gate agents for fast re-booking.
4. Determine the final destinations of the passengers and start routing them to alternate hub cities where possible.
5. For the very few you cannot take care of, refer them to a final agent who should make accommodations available at a nearby hotel (preferably located on or near the airport) and book them on the first flights out that permit connections to their final destinations.

Flights cancel.  It happens.  Having a contingency plan and some staff on hand to deal with this problem is not hard.  That aircraft turned around 1 to 2 hours away from London.  That’s enough time to call in a few extra staff to help.  It really is.  Again, this wasn’t happening in Kabul, it was happening in American Airlines’ major European focus city where its prime trans-Atlantic partner was located.

Keeping passengers happy and, more importantly, keeping passengers such as a writer for the New York Times happy, pays big dividends in the end.

Filed under: Airline Service by ajax
2 Comments »

I found this MarketWatch Top Ten brands to disappear in 2013 and it lists American Airlines first.  The story cites that American was a leader but became a “mid-size” carrier after the unions of Delta/Northwest and United/Continental.

Uh, no, it won’t disappear in 2013.  Disappearing implies either liquidation or a merger where the brand disappears in favor of another.  That won’t happen.  American will either exit bankruptcy as a stand-alone and survive, exit bankruptcy and merge with another carrier or merge with another carrier and then exit bankruptcy.  In any of those situations, the brand is almost certainly going to remain American Airlines.

I will concede that the brand is taking a lot of hits this month and is likely to get hit a bit more over the next few months.  That, alone, won’t undo the brand.  It is highly recognizable and the fact that so many are upset at AA right now indicates that there is still ample opportunity to fix these problems and win people back.

Filed under: Airline News by ajax
No Comments »