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NYT Opinion piece takes on AA (and everyone else)

NYT Opinion piece takes on AA (and everyone else)

Old Mar 16, 20, 8:15 pm
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NYT Opinion piece takes on AA (and everyone else)

https://www.nytimes.com/2020/03/16/o...s-bailout.html

An overall indictment of the industry but which rightly focuses on AA's egregious behavior.
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Old Mar 16, 20, 8:32 pm
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I think there's some conflation of customer-unfriendly changes (removing screens, tons of fees) with poor business practices (financing a ton of planes with debt then using the spare cash for buybacks, poor labor relations). In the long term, most B2C companies need to have a product that consumers want to buy, and to folks without status or a credit card, AA is not giving you that many reasons to pick them over DL, B6, WN. However, the current crisis is specifically an economic one exacerbated by poor business: when revenue drops 80%, invoices/payroll/debt service becomes a huge issue, especially when you have limited cash on hand and a huge debt burden.

There are going to be a ton of articles beating up AA and the airline industry. My suspicion is that AA/DL/UA have enough weight to get a bailout tailored to their needs. However, this might be the end for B6 or SY, and probably a lot of overseas partner airlines as well (CX possibly? AY is owned by the Finnish state, so they will likely stay around). AA/oneworld looks better set than Delta's partners... VS/AF/KL/AZ/LA/KE/AM... literally all of their core partners besides MU that DL owns equity in might be in trouble (though I suspect AFKL will be OK). On the *A side, we might see SK or TP go belly-up as well.
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Old Mar 16, 20, 8:33 pm
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Wow, did not know the number of Chairman Parker's directed AAL stock buyback was 15 Billion dollars. Wow. 15 billion (additional) in the bank right now sure would of been nice to have at a time like now.

What the NYT OPED did not mention was that Chairman Parker sold 94 million dollars worth of AAL stock from 2015-2016, with a average share price of over $36.

That is right... Chairman Parker personally sold 94 million dollars of AAL stock. He went from the poorest executive of a major airline. His net worth was high six/ very low seven figures around 2012, to a nine figure net worth today. Pretty fascinating.
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Last edited by JY1024; Mar 17, 20 at 4:15 pm Reason: Merged consecutive posts
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Old Mar 16, 20, 8:46 pm
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Originally Posted by Danwriter View Post
https://www.nytimes.com/2020/03/16/o...s-bailout.html

An overall indictment of the industry but which rightly focuses on AA's egregious behavior.
IMHO-The attached article says it all.
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Old Mar 17, 20, 7:35 am
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Originally Posted by VFR View Post
I think there's some conflation of customer-unfriendly changes (removing screens, tons of fees) with poor business practices (financing a ton of planes with debt then using the spare cash for buybacks, poor labor relations).
It's not inappropriate to conflate elements of a company's corporate strategy. The consumer-facing aspects and the financial mechanisms to support them were developed in the same boardroom...
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Old Mar 17, 20, 10:04 am
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Originally Posted by arlflyer View Post
It's not inappropriate to conflate elements of a company's corporate strategy. The consumer-facing aspects and the financial mechanisms to support them were developed in the same boardroom...
Not to mention, the profits were in large part driven by revenue generated from increasingly consumer-unfriendly practices allowed by consolidation and the swallowing up of competition.

Sara Nelson, head of AFA, today released a video saying that while the government should help airlines, the money should be used to ensure that employees are taken care of, and that not a penny should go to executive compensation, stock buybacks, dividends, etc. I wholeheartedly agree.

If Congress provisions any money for the airlines, it should come with some extremely tight strings and restrictions, and they should absolutely demand concessions w/r/t labor, consumer protections, executive compensation, and more. They can't act like they are owed taxpayer money, and that they should be able to use it in the furtherance of their customer-unfriendly and frankly greedy corporate practices. We're not giving you money to enable further cash grabs.
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Old Mar 17, 20, 10:37 am
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There are hundreds of comments on this and on a WSJ article about possible airline bailouts, and most strike a somewhat angry tone and mention that the Feds should mandate reduced/eliminated change fees, baggage fees, and should dictate increased seat pitch and/or width if there is going to be a bailout.

I wholeheartedly agree with these suggestions, as apparently the airlines are never going to be allowed to fail and therefore need to be treated at least somewhat as a public utility.
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Old Mar 17, 20, 11:45 am
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Originally Posted by GunsOfNavarone View Post
What the NYT OPED did not mention was that Chairman Parker sold 94 million dollars worth of AAL stock from 2015-2016, with a average share price of over $36.

That is right... Chairman Parker personally sold 94 million dollars of AAL stock. He went from the poorest executive of a major airline. His net worth was high six/ very low seven figures around 2012, to a nine figure net worth today. Pretty fascinating.
Pretty good for a guy with three DUIs.
https://moneyinc.com/american-airlines-ceo-doug-parker/
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Old Mar 17, 20, 12:05 pm
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AA Directors and Members of Congress: Are You Listening?

Most of us at Flyer Talk are, by definition, travelers who have reasons to monitor what's happening with the airlines we rely upon. We also play important roles in our own businesses so we also know first hand what it takes to run a company, meet a payroll, serve customers, provide technical support, deal with regulators, etc. I would hope the board of directors at American are paying attention to what is being said here. Of course we want your/our airline to stay in business, but these comments also are warning signs that if you really want American to survive (for your shareholders, bondholders, employees, and us, your customers) you are going to need to change how things are run, starting at the top. Congress and this or the next U.S. President are going to be unmerciful for bad practices. AA had over 215 million passengers in 2019 and over 128,000 employees. That's a lot of lobbying power. Are you going to look to your employees and customers in your efforts, or stonewall us once again?
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Old Mar 17, 20, 3:22 pm
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Originally Posted by Bonehead View Post
There are hundreds of comments on this and on a WSJ article about possible airline bailouts, and most strike a somewhat angry tone and mention that the Feds should mandate reduced/eliminated change fees, baggage fees, and should dictate increased seat pitch and/or width if there is going to be a bailout.

I wholeheartedly agree with these suggestions, as apparently the airlines are never going to be allowed to fail and therefore need to be treated at least somewhat as a public utility.
If the airline industry is going to do away with the endless fees and have seats made for adults then the BE fares and the ULCC will go away. Personally I'm in favor but the airlines shouldn't be expect to fly people for $59 on midcons and $99 for transcons. At some point the industry can't continue to fly people that do not have the financial means to purchase product.
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Old Mar 17, 20, 5:20 pm
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AA bought an "unregulated capitalism" fare a year ago, and now wishes to upgrade to a "corporate bailout" fare close-in. Taxpayers should charge a fee and difference in fare for this sudden change of heart.
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Old Mar 17, 20, 7:08 pm
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I don't feel bad for the airlines, and agree that they've gone wild with fees and charges. With the potential bailout it probably would be beneficial to have some strings attached in terms of caps on fees and legroom pitch or seat width minimums set.

However, the real problem is that most of the flying public has decided they would much rather pay less for their tickets and be subject to optional fees and charges, rather than paying more for a ticket. If you get rid of these charges and fees altogether you'll no doubt see fares rise drastically, then have people complaining that airfare is too expensive.

Last edited by freeagent; Mar 17, 20 at 7:27 pm
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Old Mar 17, 20, 7:21 pm
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While we are at it can we have them justify fuel surcharges still being a thing? Oil is now under $30/bbl well below the >$160 peak when these surcharges were added and its just beyond stupid that they get away with keeping them at this point.
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Old Mar 17, 20, 7:26 pm
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Originally Posted by freeagent View Post
I don't feel bad for the airlines, and agree that they've gone wild with fees and charges. With the potential bailout it probably would be beneficial to have some strings attached in terms of caps on fees and legroom pitch or seat width minimums set.

However, the real problem is that most of the flying public has decided they would much rather pay less for their tickets and be subject to optional fees and charges, rather than paying more for a ticket. If you get rid of these charges and fees altogether you'll no doubt see fares rise drastically, then have people complaining that airfare being too expensive.
More like a f*ckload of strings attached! First of which should be wiping out current shareholders and current management!
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Old Mar 18, 20, 10:56 am
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Originally Posted by RoadWarrior200 View Post
Most of us at Flyer Talk are, by definition, travelers who have reasons to monitor what's happening with the airlines we rely upon. We also play important roles in our own businesses so we also know first hand what it takes to run a company, meet a payroll, serve customers, provide technical support, deal with regulators, etc.
This. x1000. Over and over again. There's a reason most frequent flyers are business flyers. We work across industries as consultants, sales reps, business executives, you name it. We're global thinkers and know that perception is as much a driver as reality. We know how good businesses are run and how to make good decisions, and can easily spot bad ones. I know hindsight is always 2020, but some of the things he's been quoted as having said are real head scratchers.

This piece was right to drag AA through the mud. Airlines have been largely off the hook as a product of the consolidation wave. The volume of the stock buybacks was a mistake. Parker understands numbers (to an extent), but the half of his brain that drives other decision making doesn't seem to be as competent. And rather than let someone who does understand brand value, etc. have full autonomy, it seems that he insists on having the final say or surrounds himself with people who don't challenge his thinking.
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