Archive for November, 2011
I woke up this morning to find the following text message on my phone: (from @AmericanAir) “It will be business as usual at American Airlines throughout our Chapter 11 reorganization.”
Those 14 words showed that American Airlines’ parent corporation, AMR Corporation, had filed for Chapter 11 bankruptcy protection, a move that many say should have happened long ago. United, Continental, Northwest, Delta had all filed for Chapter 11 in the past few years, enabling them to get out from under massive dept burdens while lowering their labor costs. AMR CEO Gerard Arpey was adamant that AMR would not do the same and maintained that stance as the corporation lost more and more money as the only legacy carrier to not have any profitable quarters over the past two years. At a time when fuel costs were skyrocketing, American had the highest labor costs in the industry.
As AMR lost money its stock price plummeted.
- Down 41% in the last month
- Down 50% in the last three months
- Down 74% in the last six months
- Down 79% since January 1, 2011
- Down 81% in the last year
- Down 95% in the last five years
The major goal of a publicly traded corporation is to make money for its shareholders; AMR had not done that in a very long time.
Today’s announcement adds “As announced separately today, the Board of Directors of AMR Corporation appointed (Thomas W.) Horton Chairman and Chief Executive Officer of the Company, succeeding Gerard Arpey, who informed the Board of his decision to retire. Horton will also succeed Arpey as Chairman and Chief Executive Officer of American Airlines and will retain the title of President.” (Here is the complete announcement)
I can’t help but think that Arpey wanted to stay on the job but the board did not give him that option, and so he “retired.” The Dallas Morning News however reports that “We’re told that the AMR board urged Arpey to stay and help the company through the reorganization. However, after long and careful thought, he decided he would leave.” (Here is the complete article.)
What does this mean for people like me who fly on American Airlines? The announcement addresses that question (with emphasis added).
“American Airlines and American Eagle are operating normal flight schedules today, and their reservations, customer service, AAdvantage® program, Admirals Clubs and all other operations are conducting business as usual. Likewise, throughout the Chapter 11 process, American and American Eagle expect to continue to:
- Provide safe and reliable service;
- Fly normal schedules;
- Honor tickets and reservations, and make exchanges and refunds as usual;
- Fully maintain AAdvantage frequent flyer and other customer service programs, and ensure all AAdvantage miles and elites status earned by members remain secure and intact;
- Provide Admirals Club access and similar amenities to members and eligible customers;
- Remain an integral member of the oneworld® alliance, of which American is a founding member, and continue its codeshare partnerships;
- Provide employee wages, healthcare coverage, vacation, and other benefits, without interruption; and
- Pay suppliers for goods and services received during the reorganization process.”
The most important parts of that message for me are that the airline will keep flying, and that frequent flyier miles and elite status will remain “secure and intact.”
The situation for American employees is not as positive.
“”But as we have made clear with increasing urgency in recent weeks, we must address our cost structure, including labor costs, to enable us to capitalize on these foundational strengths and secure our future. Our very substantial cost disadvantage compared to our larger competitors, all of which restructured their costs and debt through Chapter 11, has become increasingly untenable given the accelerating impact of global economic uncertainty and resulting revenue instability, volatile and rising fuel prices, and intensifying competitive challenges.”
AMR could not continue with the highest labor costs in the industry; its employees can expect a reduction in their salary and a reduction in their benefits as the airline goes forward. I feel sorry for them: while the board can say the labor costs were too high, the flight attendants, pilots, luggage handlers, and other employees themselves did not cause the bankruptcy, but they will now pay the cost for it.
AMR placed the one of the largest commercial aircraft orders in history earlier this year with both Boeing and Airbus. As part of the deal, the two manufacturers are financing the purchase. What will happen now that AMR hs filed for Chapter 11 protection? Will AMR negotiate for a better deal? Will it cancel part of the order? It will be interesting to see what happens.
I have three mileage runs in January and February, and hope to use my AAdvantage miles to take my wife on another overseas vacation later in the year. It looks like my miles and elite status will remain intact — this is what happened at the other carriers when they filed for bankruptcy.
As a consumer and a loyal AAdvantage member, I can only look at this as a positive move. As one who flies almost exclusively with American Airlines, I want it to be financially stable, able to make a profit, and competitive with other airlines. Chapter 11 reorganization should help AMR to achieve those goals which will enable it continue to not only provide service to but also grow in the future. I look forward to that happening.
We were tired after the long trip from from Austin to Rome and the eight-hour time zone change that came with it, so we slept late on our first day in Rome. While we had tours and trips scheduled for almost every day of the vacation, I had intentionally left this day open as a “recovery” day.
We ate lunch in the hotel restaurant, then decided to go into town.
The Sheraton Roma is a nice hotel, but its location is terrible. Basically, it is not near anything. The closest shops and restaurants are a 10-15 minute walk away, and the hotel is nowhere near the famous sites of Rome. On a positive note the hotel knows this and operates a bus to the downtown area that runs every 90 minutes. And this is not a van, it is a full size bus that holds more than 40 passengers. The charge for this is a reasonable 3 Euro per person, round trip. So we took the hotel’s bus. I had a map that showed where we would be let off, and the concierge had told me we would be within walking distance of many sites, but I was still not sure where we would end up.
We took the bus into town, got off, and stood there with a some other couples, looking at our maps, trying to figure out where to go. Without any landmarks in sight we were not even able to get oriented to figure out where we were. Finally, one of the people told us that someone at dinner the night before had told them to go to the right when they got off the bus. With no idea where we were, that was as good a recommendation as we could get.
We walked a block or two and came upon our first ancient ruins, the Teatro Marcello.
This was the first ancient ruin I had seen and I was excitedly taking photos of it when I noticed something odd; they had built apartments on top of this 2,000-year-old structure! I live in Texas where we put historical plaques on a 100-year-old building. To me this ancient structure was so very special that it was wrong to alter its appearance with these apartments, just as wrong as it would be for us to add apartments to the Alamo. However, I soon learned that a 2,000-year-old structure in Rome is not the least bit rare, in fact it is fairly common, so this was not as unusual as I thought it was. As they say, when in Rome…
We walked on a bit more and saw what looked like a monument or memorial. We had no idea what it was, but knew we were going in the right direction!
So, we walked on. We soon came upon a long staircase with statues at the top. Yogi Berra said, “When you come to a fork in the road, take it.” We were at a staircase rather than a fork, but decided to take it nonetheless.
The statues marked the entrance to a small plaza. We later found out that we were atop the Capitoline Hill, the smallest of Rome’s seven hills. It was the religious and political center of the city since its foundation more than 2,500 years ago. Today the hill is also known as Campidoglio, the Italian name for the hill. It is home to the Capitoline Museum and City Hall. The plaza features a statue of Marcus Aurelius on horseback.
We walked through the plaza and came upon the Vittorio Emanuele II monument, a memorial to the first King of a united Italy.
The monument is massive and breathtaking; I was very impressed by it. We later learned that most Romans think it is too large, does not match the architecture of the area and they did not like it. In fact, they refer to it as “the wedding cake.”
The monument is not only a memorial to Italy’s first King, it also features the Tomb of the Unknown Soldier, the final resting place of an unknown soldier from World War I. I found it odd that it did not have a soldier form World War II; perhaps that is a time they would rather not remember.
One of the best things about the memorial is the spectacular views that you can get from the viewing areas on the side of it.
A slow pan showed all of these sites, ending at the Colosseum.
After taking in the view, we stopped for a cappuccino and took the bus back to the hotel. It was a good day — we enjoyed ourselves, We went to bed early that night so that we could get up early the next day for a very special event I had long looked forward to, our guided tour of the Vatican.
There I was, running from one gate to another at Chicago O’Hare. I was pulling my rollerboard with my left hand and had a cup of coffee in my right hand. I wondered if I had time to stop and buy a newspaper — how much time did I have to spare before boarding my flight?
I didn’t want to stop to put down my coffee so that I could use my right hand to push up my jacket sleeve to see my watch, so I decided to keep moving, I’d soon see a clock with the time. But there was one problem with that idea: I never saw a clock.
The two most important things a flyer needs to know about his flight are what gate is it leaving from, and at what time. Once you know the departure time the next thing you need to know is the current time so that you will know if you need to run to the gate, walk to the gate, or stop for a meal on the way. Knowing the current time is a crucial factor in getting to your gate on time. Why then, is it so hard to get the time at an airport?
As I traveled around, I started to look for clocks in terminals. Here is what I found.
Understand that I am not saying there are no clocks at airports; some terminals (see below) actually have them.
It is possible to find the time at an airport, I just wonder why is it so hard to do? Why don’t we see clocks at regular intervals in airport terminals?
At some airports the time is displayed at the bottom of the screen that lists arrivals/departures, but that is only at some airports, not all of them. At some terminals the monitor behind the gate agent’s counter will display the time, but at most it does not. Why not?
Maybe this isn’t a big deal. I’ve talked with several travelers about this and they have all had the same response: until I pointed it out to them they did not notice there were no clocks.
What do you think? Would it help if the terminals had clocks in them?
Last night, November 22, ABC news ran a story on Nightline about frequent flyers, mileage runs, credit card bonuses, etc. The story was recorded at a seminar that I attended in Chicago in late October.
I was one of the small group of people they interviewed, and I am glad to say I ended up in the story: you’ll see me just after the 3 minute mark talking about a mileage run to Frankfurt.
I am very happy with the way they prepared the story. I’ve found that when it comes to explaining mileage runs to people, they either get it or they don’t. Some people think it is an ingenious idea, while some, on the other hand, think we are our of our minds. I’m happy to say the folks at ABC News who did this story are in the first category.
The segment features Rick Ingersoll, the man behind The Frugal Travel Guy blog. Take time to visit his site, there is a lot of good information there. I hope to be as good at this as Rick is!
In case you missed the story or want to see it again, here it is.
Last week American Airlines launched one of the best double-miles bonus programs that I have seen in quite a while.
You can read the full details here, but here are the key points:
- American is offering double elite qualifying miles AND double flight miles on flights between DFW and San Francisco or Los Angeles, and flights between Chicago and San Francisco or Los Angeles.
- The bonuses will be awarded on flights between now and March 31, 2012
- This bonus is only available to residents of Texas, Illinois, and California.
The thing that jumped out at me is that the bonus runs until the end of March next year. That means I can front load my year with several of these flights in the first few months and get off to a very quick start on earning Platinum status again next year.
I’ve booked AUS-DFW-SFO-DFW-AUS for the middle of January. Here is how the numbers work out for me.
The ticket cost $311. Without the bonus, I’d earn 3,928 EQMs and 7,856 miles at 3.96 cents per mile, not a very good deal.
With the bonus I’ll earn double miles between DFW and SFO, so I can add an additional 2,928 miles to the trip, giving me 10,784 miles at 2.88 cents per mile. That’s okay; not great, but okay.
The most important thing to me however is the double EQMs that I will earn between DFW and SFO. That will raise my EQMs for the trip to 6,856. If I do that trip three times, I’ll earn almost 9,000 bonus EQMs. That’s a great start towards my goal of 50,000 for the year.
I looked at some other routes. From a mileage standpoint the longest flight I can make is AUS-ORD-LAX-ORD-AUS, but I can’t get that to work without spending the night in the Los Angeles airport. So I tried the same trip but with San Francisco as the destination and found a good schedule that would get me home that same day, but the ticket would cost $510, making it impractical.
So, I have booked one of these trips and will look to book at least two more. I not only look forward to the miles, but also look forward to seeing the new American Airlines terminal at SFO that opened last year. I won’t be able to leave the airport during this trip, but will try to make that work on my subsequent bookings.
On another note, I saw a great bonus from Citi for the American Airlines credit card, a 50,000 mile sign-up bonus. That was the good news, The bad news is that it is only available to people who do not currently have a Citi American Airlines card as I do. Here is a link to the offer if you are interested.