CFO Kerr: AA focus on merger, just starting on changes (May 2015)
#91
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I agree, BUT they love to market the mergers as a huge benefit for the customer which it completely is not. I've had enough of AA/DL/UA personally. They're all terrible. I don't think anyone has forced them to follow the Walmart business model. They're already making excessively high profits and could easily reinvest that in the customer experience.
Profits in the airline business today are confused by the level of leasing. The airlines lease lots of massively expensive assets which understates the capital employed and exaggerates the return on capital when times are good, and tends to depress them when times are bad as the lessors still get the same income regardless of the state of the airline business, except where the Bankruptcy courts connive in the process by supporting "re-negotiation".
At present the picture is very murky because the cost of the aircraft and the lease costs aren't public so it's very hard to figure out how airlines profitability compares to banks, oil companies, Apple, Intel etc.
Meantime the carriers are not going to invest in anything related to service unless the customers demonstrates they will either spend their money elsewhere or spend more for a better product.
Sadly we, the consumer, are just beginning to see the "benefits" of reduced competition. Unless VX or B6 or new entrants can pose serious competition across broad areas of the legacies market I'd be reasonably confident in predicting we've got some way further to go on the current path before it changes.
Thanks then to the DoJ and the self serving politicians - you really did a great job for us consumers, didn't you?
#92
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#93
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The current success is an aberration; airlines are one crisis / recession away from $100 per barrel oil, half full planes. Yes - they have finally learned the hard lesson of keeping capacity down, avoiding head-to-head competition (current exception is AS and DL battling over SEA), but that only works when demand is high. I am glad to see AA using some of the current windfall to pay off leases on some of the new aircraft, rather than simply buy back shares, increase dividends.
#94
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This is the official party line, however if we look at customer satisfaction ratings we find this is not true and Europe is very different from the US. Anti-competitive practices should not be tolerated by the DOJ.
#95
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He also said American's operating efficiency is not yet where it should be. "US Airways.operations are running strong. We need to get the mentality of US Airways operations into American Airlines operations," he said. "If we do not run an operation and run it correctly, we know we will lose passengers."
A frequent and standard harbinger of doom is when upper management starts spouting how smart we are and how dumb they are. If in this case only because the US legacy people at all levels start believing it, and the AA legacy people will not be fully committed.
#96
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Well of course people want a Wal Mart price but a Bloomingdale experience. Spirit is notorious for low customer ratings but one of the financially strongest airlines around. They have learned you can treat customers poorly, people will complain but as long as the price is low (which to many of the dunces that don't understand Spirit's fees its not) there will be no shortage of idiots lining up to buy your product.
#97
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#98
Join Date: Sep 2010
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What I find most hypocritical by the pilots and f/a unions were that "we gave up so much the past 10 year and now Horton is going to get $20 million from the backs of our sacrifice" yet when Parker is going to collect $40+ million and Kirby is going to collect $20 million...not a peep from these unions..
http://fortune.com/2015/04/28/united-airlines-ceo-pay/