Along those lines, an excerpt from a Wall St Journal article two days ago:

http://online.wsj.com/news/articles/...32100811998912

"A bias for action with less preparation." For those who have followed US Airways for a long time, that admission explains a lot.

Ooops. I thought CHO was the code for Chattanooga.

Apparently the leases are month-to-month, per this article.

Exactly why I cannot understand those who tell me I'm overreacting to this merger and the death of an AA I was again starting to really love.

A leopard doesn't change it's spots, and I fail to see how Parker and company suddenly will. The whole "they are smart, they couldn't do it any other way with US" I believe is total crap. I think the emails point to what many of us so called "doom and gloom" guys have been saying from day one. Look at his record in the business world and in his personal life, they all are important in determine what kind if leader he will be....the actions in both areas shows a bit of disregard for anyone or anything that he doesn't value. I will be shocked if "we plan to keep AA service" is not a complete farce and I think he will impose a US culture that will lead to mass exit from middle management and unrest amongst the original AA employees.

Cheers,
AA777

The difference here is that there are a lot of AA people on the board that DP is accountable too, as well as a good amount of AA talent sticking around. While you can argue that a leopard doesn't change his spots, you're also forgetting that this isn't a leopard but another animal entirely.

If DP was coming in and taking over like Smisek and Co from CO did to UA, you'd have a stronger point.

DP's also had his HP/US merger as well as DL/NW, FL/NW, and UA/CO mergers to learn from since then. There are plenty of lessons to learn. Unlike a lot of CEOs, DP at least seems willing to learn from his mistakes and reverse course rather than double down on bad policy (like UA).

A lot of US's changes came, IMO, from the fact that HP was an LCC, and back when the US/HP merger took place, the LCC craze was going on as well. This time, it's a merger with a more premium airline, one that's making money and is actively improving service. FFPs aside, in the competition you have DL that's actively trying to improve its product and UA that is continues to kill its product. The financial results are telling, and I don't think DP is going to follow UA down that path.

Some of DP's decisions over time have been controversial, and ones that some may not agree with. IFE, for example, is one of those ones in the middle. On one hand, people like IFE as an option to pass the time on the flight. On the other hand, with tablets and laptops constantly improving and people able to bring whatever digital content they want with them, is the loss of domestic IFE really that big of a deal? Most of the IFE is usually older stuff that people have either seen or don't want to watch, so if it can save weight and licensing fees, is it worth getting rid of? Maybe, maybe not.

I can understand the skepticism regarding DP and any potential changes. US folks are losing a lot too - we're losing a great alliance and going to an arguably inferior one. OW alone is enough to make some people want to jump. However, nothing has been done yet so we have no idea what's going to happen yet. I don't think it's going to be nearly the gloom and doom a lot of people are predicting, but I don't expect it's going to be all lollipops and unicorns either.

Right now, I'm in wait-and-see mode with cautious optimism. I'll give DP a chance to deliver on improving things and making things better. If he doesn't, I know where the door is and I have no problem walking thru it.

Indeed -- though I'd imagine there are many times more CKs than Prems. And Prem isn't even invitation only, but nomination only :eek:

Add to the fact AA's cost basis is once again going to increase dramatically, I don't see how this ends well.

"Five weeks from now, after an 8 percent pay raise, our hourly pay rates will be 12.3 percent higher than when AMR filed bankruptcy. In January 2015, we will receive another 3 percent raise followed by a January 2016 move to the average of pay rates at Delta and United, which we estimate to be another 15–16 percent improvement. With 3.5 percent raises in 2017 and 2018, our pay rates will be higher than those at Southwest, Delta and United, and our 777 captain rates will be 10–12 percent higher than the highest pay rates currently at FedEx and UPS."

http://aviationblog.dallasnews.com/2...nkruptcy.html/

They will do it by cutting under performing capacity and thus raise fares, continue to increase fees, monetize F and so on. Also, to the chagrin of employees reductions in staffing. This is what this merger was really about.

Hourly pay isn't the whole picture with regards to labor cost, and labor cost isn't the whole cost picture. But if they end up contractually at the average pay rate of UA and DL, it's hard to argue they won't be able to compete with UA and DL.

They'll also have the advantage of the youngest mainline fleet among the majors immediately upon the merger -- the combined AA/US fleet will be at 13.5 years versus 13.6 at UA and 17 years at DL. (US' fleet is significantly newer than AA's, today.) With retirement plans in place for US 767/734 and AA M80s being phased out, that will continue to drop pretty rapidly compared to the other two majors.

None of this guarantees success -- but it seems like a relatively competitive footing to me.

This. I know it's hard for people to believe, but many of us actually like today's US, and we don't all have Stockholm syndrome.

The other thing I'd add is that Doug Parker is not the only exec from US who's coming over to the new AA. Many of those other execs came to US to fix the issues with the HP/US merger; Hector Adler has been pushing for years to improve catering in F on a shoestring budget, and Suzanne Boda managed to get the absolute disaster that was the post-merger PHL into a pretty tightly run operation (average bag drop times fell from 45 minutes to 19). A decent number of these execs were also at NW/DL during that merger, and have first-hand experience.

I think Parker has done a pretty good job of building a team over the past few years, and I expect he'll continue to leverage good people at the combined carrier.

I agree completely, but let me nitpick in a very pedantic way nonetheless:

I've read lotsa nonsense in lotsa sources over the past two years about the need to "cut underperforming capacity" from those who believe that AA filed for bankruptcy because "it was broke" or because "management flew it into the ground" or because "AA had a severe revenue problem but not a cost problem." Let me be clear - not from you or anyone else posting in this thread.

The published data demonstrate that AA's revenue was slower to recover in 2010 and 2011 following the great recession than at UA or DL.

The published data also demonstrate that AA's yield and unit revenue recovered quite nicely in 2012 and thus far in 2013, and throughout the last two years, AA has overtaken UA in mainline yield and unit revenue and is within a couple hundredths of a penny per mile of DL's mainline yield.

Overall, AA has reported much larger profits (excl special items) in 2013 than has UA, which isn't surprising given that AA's costs are down, as management promised.

The only region in the world where AA is substantially underperforming is in Asia. AA and JAL are getting very low yields and unit revenue compared to DL and UA. And there aren't any serious analysts or even Flyertalkers claiming that new AA needs to gut its Japan and China flights that are seriously underperforming. Except for DFW-NRT, AA is losing money on just about every other Asian route, with the biggest underperformer being Haneda, which AA cut this past weekend.

What's been subsidizing the losses to Asia? The outsized yield and unit revenue to Latin America, where AA is getting, on average, 50% higher yield than in Asia (18 cents per mile to Latin America v 12 cents per mile to Asia).

But a bigger presence in Asia is what everyone says AA needs. Stock pushers and Flyertalkers alike are in agreement on that. To be a successful worldwide network competitor to UA and DL, AA needs to beef up its Asian presence. And it certainly can't cut its Asian schedule.

Sure, there are small dollars to be saved when new AA cuts the redundant flights where AA and US currently both fly. That's about a dozen nonstop routes, IIRC. And there may be some bigger dollars when US stops selling its very low connecting fares where it competes with AA's nonstop fares (the US Advantage Fares program). Problems with cutting and not growing is that cutting raises the unit costs even higher, and new AA needs the revenue. New AA has a lot more debt than Delta and that debt needs serviced, and that takes lots of revenue.

You might be spot-on there! ^

The fleet won't be very young compared to its peers given that DL and especially UA are getting quite a number of new planes as well.

I don't know from the blog if the pay increase also includes the "pay bump" the US employees are getting.

Don't forget, unlike DL, UA, etc. AA did not dump its pensions to the PBGC. It still pays into the pensions.

The "synergies" DP has spouted about of $1 billion by 2015 isn't a lot when taking into the consideration of all of the extra costs.

Add the fact the APA and F/A's union are never happy with management will spell even more trouble IMHO.

All-in-all when all things taken, I simply don't see how this BK being successful 4-5 years down the line.

DL froze the pilots' pension plan but that represents only about 1/7th of total headcount. DL still has a significant underfunded pension liability - even after tossing in an extra $500 million 2Q this year. That contribution was incremental to statutory requirements.

No, Delta terminated its pilot plan and froze all others. Terminating the pilot plan cut its underfunded liability substantially, but you're right - DL still has large underfunded obligations. NW froze all pensions, but its liabilities weren't all that huge.

US and UA terminated all of their pensions while CO's pensions were frozen. Like NW, CO's obligations are small.