ARE FAA GROUNDINGS A SUBSIDY TO IMPERILED AIR INDUSTRY?

[leveymg]

AA Was Losing $3 million a Day Before Groundings; Lost 3/4 of its Stock Value Since 1/07

Despite tens of billions of dollars in federal subsidies to the U.S. airlines since 9/11, the nation’s largest airlines have continued to operate at a loss. It costs the carrier money to fly you to your destination. It even costs the airline money to lose your luggage.

Skyrocketing fuel costs have forced several U.S. carriers to shut down altogether this year. Even American Airlines, the world’s biggest, is facing severe losses and cash shortages. Like most airlines in this country today, American is flying at the edge of bankruptcy. Since early 2007, the price of AA’s parent company, AMR, has declined from over $40 per share to $9.50 this morning.

AMR Corp. lost more than $300 million in the first three months of the year. http://money.aol.com/news/articles/_a/american-cancels-flights-for-third-day/20080408173809990001

American cancelled some 900 flights today, the airline claims in response to a two-year old FAA maintenance order to reposition wiring ties on its workhorse MD-80 aircraft. There have been no reported accidents or problems due to that cause since that order was first issued. Southwest Airlines, which exclusively operates Boeing 737s, grounded much of its fleet last week. Southwest, traditionally one of the most profitable companies in the industry, has seen its stock lose nearly half of its value during the last five years.

U.S. commercial aviation may be taking the recent spate of FAA maintenance orders as an opportunity to take a paid vacation.

If that’s an inconvenience to the public, that’s just life in the rubble of Bush’s collapsing economy.

Have a nice flight.

[meegbear]

1. Now that's an interesting thought ...

a good way to re-align the profit base.

[babylonsister]

2. That doesn't explain other airlines who have kept their

maintenance programs up-to-date (so far). I think this is a huge hit for American; they're paying for hotels and meals for all these disgruntled flyers, and will have to deal with all this horrible negative publicity, not to mention their stocks tanking. I kind of doubt this was a planned vacation.

[leveymg]

3. Cheaper to stop flying; AA may not have handed out many vouchers for rooms/meals

Airlines don't charge each other cash for carrying stranded passengers - their agreement is to credit for seats. So not much out of the pocket probably far less than $3 million daily loss.

[babylonsister]

6. AA claims they are offering vouchers, hotels, meals, trans. costs:

The airline, which is the world's largest carrier, said it would give vouchers worth $500 toward future airline tickets to any passenger stuck overnight. It is also reimbursing passengers for hotel, meal and ground transportation costs.

http://www.redorbit.com/news/business/1334614/american_airlines_expects_900_more_cancellations_thursday/

That's got to hurt!

[leveymg]

9. The same article points out AA hasn't said how many vouchers were actually given

It'll be interesting to see if anyone in the MSM actually asks the airline this question, and what the answer will be.

[NavyDavy]

18. wrong, we do charge each other and its at the highest rate

[Bake]

24. Delta didn't.

My wife got stranded in Atlanta, and Delta didn't provide diddly squat. No vouchers for sh*t.

Bake

[ProdigalJunkMail]

27. why was she stranded

they only offer 'diddly squat' if the stranding was the airline's fault...

sP

[Bake]

29. Same as American, inspection problems with the wiring bundling.

On the MD-80s, 88s, etc.

Bake

[NavyDavy]

4. I work for an airline that has won the FAA maintenance and safety

award called the Diamond Award for 9 consecutive years....so it can be done if you don't become lazy and cocky, which I believe these airlines that were grounded did.....they put profit over the safety of their passengers

[leveymg]

8. These aren't normal times. Delayed maintenance a bean counter's cost-cutting device

Curious, how did your company's superior maintenance record line up with profitability?

[babylonsister]

21. My DH works for a major airline who has had no major hit as a result

of the latest FAA actions. And logically, because of the price of oil since the start of the year, they've lost a lot of money. That hasn't affected their maintenance.

I wonder if the FAA is hitting so hard because of their abysmal appearance at the hearing last week. IIRC, AA supposedly went through all these problems last week, and didn't live up to the FAA's guidelines? Did the guidelines change?

[Staph]

16. I have some doubts ...

about the validity of the Diamond Award. According to an article in Sky Control - Aviation and Aerospace News, published online on August 30, 2007,

"FORT WORTH , Texas — American Airlines, American Eagle, and Texas Aero Engine Services Limited (TAESL), an affiliated engine repair facility, received today the coveted Federal Aviation Administration’s Diamond Award for excellence in training their Aviation Maintenance Technicians (AMT). Jim, Ballough, Director of Flight Standards from FAA headquarters in Washington, D.C.; Tom Stuckey, Manager of the Flight Standards Division for the Southwest Region; and Greg Lander, Manager of the FAA’s Certificate Management Office for American, presented the awards. Accepting on behalf of their respective organizations were Bob Reding, Senior Vice President – Technical Services for American and David Campbell, Senior Vice President – Technical Services for American Eagle. Carmine Romano, Vice President – Base Maintenance for American, accepted for TAESL, located on Fort Worth’s Alliance Maintenance Base."

Eight months ago they receive this award, and today they ground 900 flights.

So I checked the FAA website. A technician can receive an Aviation Maintenance Technician (AMT) Award by completing certain levels of training:

For Aviation Maintenance Technicians

All phases require that individuals attend a minimum of 2 hours of training on FAA regulations and policy in addition to satisfactory completion of the following for the level desired:

 * Bronze Award — 6 hours of aviation industry maintenance training
 * Silver Award — 14 hours of aviation industry maintenance training
 * Gold Award — 34 hours of aviation industry maintenance training
 * Ruby Award — One of the following:
   o A 10-day industry aviation maintenance course
   o 58 hours of aviation industry maintenance training
   o Teach at least 15 hours of aviation industry maintenance training
 * Diamond Award — Complete a college-level course of 3-credit hours or 40 classroom hours in mathematics, english, science, safety, human factors, management subjects, or similar career-related maintenance courses; and one of the following:
   o A 10-day industry aviation maintenance course
   o 58 hours of aviation industry maintenance training
   o Teach at least 15 hours of aviation industry maintenance training

For Employers

The FAA award for employers is the Certificate of Excellence. Each level or phase is based on the number of eligible employees that get an AMT award:

 * Gold Certificate of Excellence — 50 percent employee participation
 * Diamond Certificate of Excellence — 100 percent employee participation

The award appears to reward training (which is always a good thing), but not necessarily the use of that training in the real world. NavyDavy, I'm sure that the airline that you work for is a good one. But I'm not sure that the AMT award is necessarily an indicator of that.

[rsmith6621]

5. They still Have To Carry The PAX

...also do the math just on the hotel rooms alone based at fifteen percent of those are eligible that would be over 2 million dollars alone....again AA has to get the PAX to their destination.

[leveymg]

11. One doubts the airline will hand out 6000 vouchers - that would be break even

Hope this doesn't become a regular part of the industry business model.

[pitohui]

32. they are handing out the vouchers in new orleans

i can't speak to other airports but our local news has verified that stranded american airlines pax at msy (new orleans airport) have received free hotel/food vouchers

this is not a weather cancellation, this is cxl based on failure of airline to maintain so they are required by law to put you on another flight and give you paid hotel/food

no one controls the weather, so you don't get vouchers when your flight is cxl by weather but this is another issue entirely...american airlines had TWO YEARS to check out these issues

[Romulox]

7. Airlines = massive SUVs in the sky

The airline industry should receive zero subsidy from the US government--the passengers should be forced to pay the entire cost of their consumption, including the price of fuel and the devastation to the environment wrought by air travel.

[rsmith6621]

10. I Cant Reply to You Stupid Remarks...

...I changed my mind.

.....you have not a clue who has been subsidizing the ability to get your A$$ to grandmas house for a low airfare.....the employees of the airline..... pay has dropped by at least a third in the past few years.....

Yes some carriers have EAS contract but those are very limited and serviced by smaller aircraft not Boeing 737.

The SUV comment is ridiculous.....on average the gas millage per passenger per mile is three times higher then the best MPG car on the market today.

[Romulox]

19. The environmental impact per mile traveled is much greater with air travel

Furthermore, I've never driven to Europe, so the comparison is a bit specious!

Even if airline travel wasn't a disaster for the environment, why should taxpayers subsidize it? We don't subsidize the auto industry, which puts lots of people to work too.

[SidDithers]

22. Taxpayers don't subsidize the Auto Industry?...nt

Sid

[pitohui]

33. a strong business environment requires the ability to move by air

if you want a strong economy, you need to have reliable air transport for people and cargo

there is probably no way that a purely capitalistic system can deliver sufficient flights to keep people and cargo on the move at a real profit, so we must subsidize the airlines to keep them flying, god knows they're not making any money flying, and as another poster points out, salaries for the workers have crashed in that industry in recent years

i would support the airlines being nationalized and instead of a few CEOs getting all the beans, a fair (higher) pay be given to the people who actually do the work of transporting us across this nation and this world

if you want to hamstring the usa and put an end to air travel for americans, you are not saving the planet, you are handing over the wealth of the world to china and the other nations who are a little more realistic about what it takes to compete in a global environment

[SidDithers]

13. More like the public transit buses of the sky...

Now, if everyone were flying their own passenger plane, you might have a point.

Sid

[Romulox]

20. Nope. Private benefits, public costs.

If the airlines are so beneficial, their customers should have no problem paying the actual cost of the service. Why should I subsidize your trip to Disney? :wtf:

[Rabrrrrrr]

34. Why should I subsidize the roads you drive on?

:eyes:

What a dumb argument.

How do you think some of your food (the fresh stuff) and other consumables gets to where you are?

:eyes:

[endarkenment]

12. That is my take on this.

My guess is that right now it is a loss everytime a plane takes off. Five bankruptcies of smaller airlines and suddenly all the majors plane's catch the flu.

[leveymg]

14. So much of the same sort of thing going on at the same time.

Coincidence? What are the odds?

Not just the airlines. Went down to the nearest Home Depot yesterday afternoon - I was literally the only customer in the place. This should be the start of the ccnstruction season here in the Mid-Atlantic. Empty. Not kidding.

BTW - I usually drive an extra five miles to the last independent, family-owned hardware store in the DC area. But, I just needed a box of decking screws and a single 1X3X6 board - more than $10. Outrageous! No wonder nobody's building houses!

[DS1]

15. Bonuses for about 1,000 executives at American Airlines could be worth more than $70 million

http://www.usatoday.com/travel/news/2006-01-19-aa-payouts_x.htm

[leveymg]

17. That's without the cost of the golden parachutes to come.

Geronomo!

[spinbaby]

23. Looks like the delays are going to go on for a while

And spread to other airlines.

http://news.yahoo.com/s/ap/20080410/ap_on_bi_ge/airline_safety_analysis

[Bake]

25. With oil at $112 a barrel, I don't see how they're flying at all.

And I do understand the plight of the airline employees, who have had pay cuts forced down their throats time after time.

Meanwhile, Georgie and Co., our oil-men leaders, continue to twiddle their thumbs while the price goes up, up and away.

Bake

[libnnc]

28. I've heard that some airlines bought fuel years ago at locked in prices

the ones that didn't can't make it.

my SO is an air traffic controller and she heard this at work

[gulfcoastliberal]

26. Interesting hypothesis. Usually it's a major crash that spurs the FAA into taking action.

Has the FAA actually grounded the airplanes until reinspected? Why voluntarily ground much your fleet?

[DemReadingDU]

30. K&R

Saves fuel costs by not flying.

Interesting thread.

[KoKo]

31. It's possible given what goes on today...but the "outrage" and "vouchers"

(even if their reports are hyped about those meals and logings for their aggrieved passengers) is not quite the "truth of it."

Still...maybe it is a plea by AA's to get a Chrysler Bail Out from a very savvy/greedy CEO....

My nephew is an AA Pilot and when he gets back in ....I'll ask him what he thinks about it. I know he's been complaining that AA isn't keeping up their Jets and they are hiring such "newbies" for Co=Pilots that the regular trained pilots spend all their time babysitting them ...trying to teach them basic skills. He says the "toilets" on his planes aren't being serviced and the equipment they have hasn't been upgraded in so many years he bought a "GPS" that's a "no no" for Pilots just to supplement his own navigation equipment for "back up."

My Nephew downloads special music on his I-Pod to treat his passengers to soothing sounds and a mix of stuff that makes his "plane" special. He's a guy who LOVES TO FLY...but cares about his Passengers. He's so disgusted with AA's that he's put in an application at NetJets because he can't take all the stress, clueless co-pilots, low pay, little health insurance...little retirement benefits and SHITTY EQUIPMENT...just threw him over the edge..He's got an application for job in with Warren Buffet's Luxury Airline (NetJets) where your company buys a SHARE and your employees can FLY ANYWwhere at a moment's notice. He thinks the "Luxury Market" has got to be better than the "Junkers" he's flying now with little or no maintenance and other passenger discomforts.

:shrug: Just passing this along.