American Airlines faces turbulent ride

mrivc211 said:
With SkyWest Inc operating 724 airplanes combined, I don't think it's an "if" they want to dominate. They already do.

http://inc.skywest.com/facts/combined.php
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Skywest owns the leases on a sizable amount of the regional feed out there, and they operate for every mainline company EXCEPT American. Domination is, to me, diversification, and that means having your feed split between every carrier out there. The next goal is likely Beagle, with the final goal probably being more Airways flying.

Once Skywest is flying 50% of the feed for every mainline company out there, I'd say they are the only player that matters. That's not the case.

Yet.
 
JOEFRIDAY2 said:
Actually the mission of the Bankruptcy Court is to protect the creditors and return as much to them as possible. They are not concerned about the shareholders.

In reality everyone (creditors, employees and shareholders) generally gets the shaft and the legal system makes a lot of money on bankruptcy cases.

Joe
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Yep, I understand the mission of the bankruptcy court. I thought that the companies mission was to protect shareholder value meaning a company should do everything it can to avoid bankruptcy knowing that a bankruptcy erases shareholder value. It seems like bankruptcy is just a standard business tool these days and that companies just take it sitting down.
 
How can someone who has worked most of his professional life for one company accept that his pension could be wiped out like this ? It's maybe time to transfer the retirement thing to the federal government so that it doesn't affect one's ability to retire...
I'm not American but based on what I'm reading here, a company that folds goes under with its employees pension ? How does one manage retirement then ?
 
Pépé le Pilot said:
I'm not American but based on what I'm reading here, a company that folds goes under with its employees pension ? How does one manage retirement then ?
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They don't. Instead, they just get their mandatory retirement age raised from 60 to 65 in hopes they can at least partially recover their expected post-retirement standard of living.

That's how the American dream now works.
 
Thanks for this clarification. There's still obviously something very wrong with this system. In France, one works, but the state manages the pension, and you have the option to use private funds to complement the state retirement, it seems to me a cleverer way, no matter what happens your basic retirement is guaranteed.
 
RDoug said:
They don't. Instead, they just get their mandatory retirement age raised from 60 to 65 in hopes they can at least partially recover their expected post-retirement standard of living.

That's how the American dream now works.
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But for so long the "expected post-retirement standard of living" for Americans has been own a few vacation homes, travel the world, etc. etc. Forgive me for not shedding a tear if someone making $200k+ a year hasn't saved enough to squeek out a decent existence. People are up in arms at the thought of having to live a modest lifestyle after retiring - must be nice.

Many of us on 401(k) plans have seen our employer contributions dwindle to next to nothing. And because of salary and benefit cuts, many can't even contribute enough to get the entire employer match. Not to mention the fact that a lot of folks have less in there than they contributed.

Again, not going to feel too bad for AA retirees. In the words of a great Lonely Island song - "welcome to the real world jackass!"
 
Pépé le Pilot said:
How can someone who has worked most of his professional life for one company accept that his pension could be wiped out like this ? It's maybe time to transfer the retirement thing to the federal government so that it doesn't affect one's ability to retire...
I'm not American but based on what I'm reading here, a company that folds goes under with its employees pension ? How does one manage retirement then ?
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No thanks. I'll manage my own retirement with as little government interference as humanly possible. Social Security is bad enough.
 
Pépé le Pilot said:
How can someone who has worked most of his professional life for one company accept that his pension could be wiped out like this ? It's maybe time to transfer the retirement thing to the federal government so that it doesn't affect one's ability to retire...
I'm not American but based on what I'm reading here, a company that folds goes under with its employees pension ? How does one manage retirement then ?
Click to expand...
Have you seen what the US government has done with the retirement program they do run? Social security is in such a mess it will be bankrupt in the next 20 years or so.
 
A quote from "Airline Forecasts"? I took a look around the site and I'm largely unconvinced that it's not a fanboy in his parent's basement with a Blogger account.
 
If American paid the same wages and benefits that Virgin America does, it would save $4.6 billion a year.
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I guess the author of the article didn't realize a few key points about how VA still isn't making money. It's not labor, it's your business plan.

"Man, if my employees just worked for minimum wage, I could make BILLIONS bringing back the slide rule." Uhhh..... MMmmmMHmmmmm..
 
Murdoughnut said:
Again, not going to feel too bad for AA retirees. In the words of a great Lonely Island song - "welcome to the real world jackass!"
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Sorry, but I don't know a single, solitary individual in this entire world who somehow got ahead or otherwise bettered their lot in life through schadenfreude, and there's far too much of that going around nowadays as well. The only ones who get more in this world are those who demand more for themselves rather than wishing less for others.
 
exneophyte said:
Yep, I understand the mission of the bankruptcy court. I thought that the companies mission was to protect shareholder value meaning a company should do everything it can to avoid bankruptcy knowing that a bankruptcy erases shareholder value. It seems like bankruptcy is just a standard business tool these days and that companies just take it sitting down.
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It's more of a survival decision. In other words there are two or three choices and all of them are bad. In American's case, they are losing money and they will continue to lose money with the present cost structure.

So American's choice is to continue to lose money and run out their cash reserves or shut down and liquidate using what money they have left to pay the creditors (A Chapter 7 Bankruptcy Filing) or restructure with a Chapter 11 Bankruptcy and attempt to stay in business.

None of these choices are pleasant and none of these choices guarantees American's survival. In fact, two of the choices almost guarantee they will not be in business any longer. So given these three choices, American would have only one choice for its potential survival. These are tough choices.

There is no way that anyone will merge with American prior to a bankruptcy filing, because of their present cost structure, so a pre bankruptcy merger, or capital infusion, is out.

Once American does file for Chapter 11, I would expect USAir to be there with their checkbook and try to pick American up. USAir may or may not get American. American would need both their DIP and exit financing lined up to stop USAir from acquiring them. This is my opinion and is not based on any offical information.

Joe
 
Pépé le Pilot said:
How can someone who has worked most of his professional life for one company accept that his pension could be wiped out like this ? It's maybe time to transfer the retirement thing to the federal government so that it doesn't affect one's ability to retire...
I'm not American but based on what I'm reading here, a company that folds goes under with its employees pension ? How does one manage retirement then ?
Click to expand...

For the love of god please do not let the government touch my personal retirement savings. These clowns that supposedly write the tax code claim they didn't know they didn't properly pay their taxes and can't even figure out how to balance a damn budget. They're like college kids with their first credit cards.... if you keep spending more than you earn you go broke. That's the US Government. If they even start to hint at taking over individual's retirements the country will collapse. Everyone with half a brain will withdraw their money in cash, hide it under a mattress, and the banks will implode. I like Europe and France and all but you guys can keep that government pension thing for yourselves. Our elected officials can't figure out how to handle dollars.

Now I do agree that it would suck to lose your pension. This stuff scares me because what I see is one form of retirement becoming obsolete and a generation being caught in the transition. I just hope in 40 years I don't get caught in a transition from 401(k)'s and Roth IRAs to whatever the next big thing is. What can you do though? You simply make the best choice you can with the information at hand and when these guys started at AA the pension sounded like a sweet, sweet deal so why not bank on it?
 
Once again I'm not very familiar with the pension system in the US, but it seems that you would want more safety in what is going to pay for 30 or 40 years of your life no ?
 
Pépé le Pilot said:
Once again I'm not very familiar with the pension system in the US, but it seems that you would want more safety in what is going to pay for 30 or 40 years of your life no ?
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Yes, that is what everyone seeks in retirement.

Currently in the US there are 2 major types of retirement plans. The company sponsored pension and the employee funded 401(k) or IRA. The company pension plans you pay a portion of your check to the pension fund and expect a certain guaranteed pay out after so many years of contributions. I'm not sure how it works in France but I'm guessing it is similar only the pension is collected and managed by the government. The second plan is the 401(k) or IRA where an individual decides how much of their paycheck they choose to contribute. Some employers offer a match where if you put in say 5% of your paycheck they will contribute the same dollar amount. The money placed in the 401(k) is invested how the employee chooses from a selection of different investments which typically includes an assortment of mutual funds but varies from company to company or brokerage to brokerage.

The third possible source of retirement income is Social Security which is really a joke if you plan on doing anything more than existing once you retire. Social Security is a percentage of pay taken from every single person's check by the US Government. The money is managed by the government and at a certain age you can begin to collect that money. Using the Social Security Administration's calculator I calculate that if I retire making $80,000 in todays dollars then I will receive a pay out of $2,300/month. A little less than half of the approximately $5,300 I would be taking home if I made $80,000. The reason people have little faith in the government to manage this money is because they continue to borrow money to cover our existing federal budget. As more and more people retire how will they have enough money to continue paying out social security when we've already essentially maxed out our credit card.

The reason a handful of posters in this thread say they don't want the government to run a pension fund is because we don't even have faith in them being able to run the government. I guess I'm kinda putting words in people's mouths. I personally would not trust our government to manage enough money for every American to retire comfortably. I present to you US Social Security as exhibit A.

I'd much rather choose how much of my money I save for retirement and choose how much risk I'm willing to accept while investing it in the stock market or in bonds etc. Unfortunately, many in this country can't understand the concept of personal responsibility so they want the goverment to simply take care of them becasue they "paid taxes gosh darnit!" while the whole time they've been buying houses they can't afford along with trucks, boats, jetskis and any other toy you can think up. Oh and they don't wanna pay higher taxes either.

So it sucks for the guys at American because if their pension goes away many of them will likely be screwed. If the airline goes away though most of them are screwed. Pick the lesser of two evils I suppose.

Edit: I'm not 100% up on my Social Security stuff so if there are minor errors go ahead and call me a dummy for it.
 
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