American Airlines in financial trouble

[CarolA]

From USAToday.com

American Airlines next to file?
The world's largest airline could find itself in bankruptcy court by Memorial Day, says the pilots union at American Airlines. An independent analysis of American's finances by the Allied Pilots Association found that AMR, the airline's parent company, has just three months of cash reserves. The review concluded that the $1.8 billion in annual employee concessions American has sought might not be enough to save the world's largest airline. "Realize that the $1.8 [billion] is a minimum figure," a posting on the union's Web site says. "There is no guarantee that AMR won't ask for more. AMR states the alternative is bankruptcy

 

[hercamore]

I read this in the paper today.

Too bad.

How is Northwest doing these days? Read something about them cutting pilot salaries.

herc.

 

[CarolMN]

Originally posted by hercamore
I read this in the paper today.

Too bad.

How is Northwest doing these days? Read something about them cutting pilot salaries.

herc.

They are actually in good shape relative to the other large carriers. According to an article earlier this week in the Minneapolis Star Tribune, their operating costs are 9.5 cents/mile. SWA is 7.41 cents per mile and Continental is less than NWA but higher than SWA. The other carriers are in the 10-12 cents per mile range.

One of the reasons NWA is better off than the other major carriers is that it does not owe a lot of $$ on the airplanes it took out of service due to the reduction in demand. The other carriers (except) SWA have also "parked" airplanes but are still paying "mortgages" on them. NWA does have a fairly good cash reserve, but it is still losing money. It has been agressively cutting costs since before 9/11. Management says it still needs to take about 1 billion more of costs out to be competitive/survive long term. Since labor is by far the largest share of an airline's costs, they will have to get concessions from their employees. I'm sure the rising cost of fuel is only making the situation worse right now, too.

 

[speedbird0001]

One of the big reasons that American is having so much trouble is that recently they were forced to take on I believe 11 new Boeing jets that they didn't want. Unfortunately, they had orders on them from when times were better and Boeing obviously couldn't eat the costs of building, so American is out the money.