IADCAflyer

DL turned in some big numbers today. Will be interesting to watch UA next week.

Highlights from a.net:
September Quarter Financial Highlights
• Adjusted pre-tax income increased $361 million, or 22 percent versus prior year.
• Adjusted earnings per share were $2.32, a 29 percent increase year over year; Earnings per share and
adjusted earnings per share reflect 6.5 percent top-line growth, 2.5 points of operating margin expansion
and $1.4 billion of free cash flow.
• Total adjusted revenue, which excludes refinery sales, grew 6.5 percent to $12.6 billion; Total revenue and
adjusted total revenue are a new quarterly record, as the company served a record 55.2 million passengers
in the quarter.
• Total unit revenue, adjusted, increased 2.5 percent; Total unit revenue and total unit revenue adjusted
increases were driven by healthy leisure and corporate demand and an approximate one point benefit from
the amended American Express agreement.
• Consolidated operating cost per available seat mile ("CASM") decreased 2.1 percent compared to the
September 2018 quarter, primarily due to lower fuel costs and higher capacity.

Antarius

Newsroom - Kerry Philipovitch Announces Retirement; American Airlines Realigns Operations and Commercial Leadership Teams - American Airlines Group, Inc.

American Airlines announced today that Kerry Philipovitch, Senior Vice President of Customer Experience, will retire from the airline at the end of 2019. Philipovitch’s retirement is part of a long-planned personal desire to move into a new phase of her life and the airline has been preparing for this day for some time.

The following four leaders will assume responsibility for these teams and each individual will report to Isom:

• David Seymour, Senior Vice President of Operations
• Vasu Raja, Senior Vice President of Network Strategy
• Don Casey, Senior Vice President of Revenue
• Kurt Stache, Senior Vice President of Customer Experience

MiamiAirport Formerly NY George

Yes AA is confirming SVPs but not C level. That tells me possibly one or more C level officers "could be" (but not definitely) negotiating a severance package.

ryan182

Note that Delta was actually profitable when it comes to flying passengers, something AA cannot seem to achieve. They also lowered their debt, issued dividends, employee profit sharing and buy-backs.

teemuflyer

Well technically, after the breakeven point, everything is profit, not extra profit, convoluted accounting aside.. And yes, I know, the cost of providing the service moves the breakeven point out marginally.

24left

Interesting read from Cranky Flier


American Rearranges the Deck Chairs

By CF on Oct 10, 2019

https://crankyflier.com/2019/10/10/a...e-deck-chairs/


QUOTE:

"In a normal world, this kind of reshuffling probably wouldn’t get much attention at all. But we are in a world where nearly everyone is looking for and expecting big change at American. This kind of shift makes it look like American feels fully confident that it has all the right people, just not in the right places. I think many people outside the company would disagree with that assessment."

rowingman

I have met Kurt Stache as well during my travels on AA, and thought he completely "got" my comments to him, many of which are mirrored above. (Oasis in particular). I won't continue to compare AA to DL, other than to say US Air's essential debt purchase of AA (aka merger 21st century style) made Parker, many banks, and likely many on the BOD very wealthy. Once upon a time the WSJ ran an article on "why would anyone be buying AMR shares when they are in bankruptcy", commenting on major trading in the bankrupt shares. Little did we know, they converted, and an awful lot of people became very very wealthy. I won't get political and wonder why the DOJ suddenly dropped the anti trust objections, because that would make me a tin foil hat wearing conspiracy theorist.

All that said, AA has been buying/leasing new aircraft like crazy. Delta is refurbishing MD 80s, hedging oil and owning a refinery (which at various points in time has been either really smart, or really dumb, depending on world oil markets) and is proud of it. There is debt from the buy out. No wonder AA's cash flow is quite different. AA has a unionized workforce. DL largely non union. There are many differences. The operative question I would be asking, looking at AAL stock and financial performance, is their return on equity. How well are they creating wealth given the cards they have to play (debt, union cost structure etc).

All just questions, but enjoyable commentary fellow posters. Thank you.

acvitale

Pretty sure the problem is the Executive Chairman of the Board aka Doug Parker who has had free reign and lack on innovation. He is using the same US Airways playbook that he is intimately familiar with and which is also out of date and not well thought out.

AA needs a true leader, visionary who understands the need to invest in people, products and customers. Unfortunately, Delta has them and AA is going to be in Chapter 13 if there is an economic downturn. They have destroyed and lost their high yield customers, lost their loyalty and handed over key markets where they used to be leaders to competitors (Look at New York, Boston, San Francisco, and others.) The world does NOT revolve around PHX, DFW and CLT. (DFW is admittedly the strongest of the hubs but a laggard compared to DL in ATL).

I am a multi million miler and EXP for years but my DL and UA flying is WAY WAY UP... AA used to be about 55-60% now it is 35% and still qualified for EXP in May.

richarddd

This looks like Parker trying to hang on by pretending the problems are elsewhere in the management structure. The board clearly agrees, or at least is willing to give this move a chance, perhaps pending stock market reaction and changes in revenue, profit, etc.

Many posters appear to believe customer satisfaction is a driving factor for the board. I'd bet the board only cares to the extent it affects the stock price and other relevant metrics. If you think BE or Oasis or operations generally or employee satisfaction is terrible, but keep paying, they don't care.

JonNYC

Tend to agree.

Antarius

But they aren't. Theres no other way to explain how AA pulls in less revenue than DL, despite operating a materially larger fleet.

So the finances are crap. This isnt a case of people complaining about Anderson or Bastian.

richarddd

Let's put it another way, do you think the board would care about customer satisfaction if the stock was doing well?

MiamiAirport Formerly NY George

The BOD isn't going to get deep into data and nuances. They expect management to exceed internal targets, and to lesser extent meet or beat their peers. For AA those 2 peers would be UA and DL, maybe to a certain extent WN. Ultimately if senior management can't make the numbers the BOD (sometimes due to extreme pressure from shareholders or Wall Street, if applicable) will look for replacements.

Those that think a new CEO would immediately stop Oasis, bring back the FF program of yesteryear, enhance upgrade possibilities (free ones), replace crabby, surly employees with a wave of a magic CEO wand have no idea. Look at the move by UA. That is the direction of airlines. Pay for what you want not want you'd like to have-like a free J seat on a Y fare.

No Director is going to tell Parker (or any other CEO) to get rid of complimentary upgrades and the like. But the need to make budget will mean 2 for sure things-raise revenues and reduce costs.

george 3

I would. Customer satisfaction (or disastisfaction) can be an indicator of future demand trends.

Antarius

in any luxury product segment which intl J and F are to some degree, customer service does matter. With Spirit, they compete on price, so often it is a. Deal with Spirit b. Dont travel. With AA, there is more competition for the high price luxury good; bad customer service could result in long term brand damage, and thus lower profits.

Caveat - the above is the job of the CEO, not the board. So yes going full circle, the board would not care.