AMR recently made the historic aircraft order that some say was needed to survive. Sure it makes them more competitive, more appealing to customers, but how are they going to pay for the planes. Per my recent article, still see the airplane lessors as the winners. Companies like AerCap Leasing (AER) will continue to benefit from major airlines that need new fuel efficient planes to compete, but can't afford to buy them.
This quote sums it up the best:
"American can't really afford to do this, but they cannot afford not to do it," said Robert Herbst, industry analyst and founder of AirlineFinancials.com. "American's in serious financial trouble. They had to order these aircraft because without more fuel-efficient aircraft requiring less maintenance, American can't compete. In the end, it could break American, but they really can't afford not to order new aircraft," Herbst said.
Ultimately though the issues with labor unions rule the future direction of AMR as much or more than the new planes. Clearly from the losses above, AMR can't afford higher wages and benefits for unions though the minute AMR posts profits the unions want their share. Even though, looking at the cumulative losses and the massive costs of the new planes one has to wonder what report they are reviewing.
- Boyd and Herbst, both former American employees, said resolving the breach between management and labor is critical for American's survival.
- Management/labor relations are at a low point as unionized mechanics, pilots and flight attendants have been unable to reach agreement with the company on new contracts after more than four years of negotiations.
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