February 1 was a big day at American. It was the day that the airline went over its (not really) new and improved business plan with employee groups, and that meant detailing the cuts it was going to ask for. As you can imagine, this brought some outrage but also a lot of sadness. American is asking for very deep cuts from employees (and elsewhere), and it’s not really presenting anything new. This seems like the same plan it’s been operating under, just free of some employee contract limitations.

Admittedly, American hasn’t shared all the details of its plan. That wouldn’t be very smart at this point, I suppose. But it’s shared enough at a high level so that it can make its case for massive cost reductions. You can read CEO Tom Horton’s letter to the troops with the high level plan to “not just to compete, but to win.” There’s the “win” phrase again. Ugh.

In short, Tom outlines a strategy of increasing revenue by $1 billion a year while cutting costs $2 billion a year, more than half of which ($1.25 billion) will come from employees. This is the magic plan. Let’s take this one side at a time.

Plan to increase revenue by $1 billion a year
The revenue plan has three parts to it. The $1 billion a year is expected to come from “network scale, fleet optimization, and product improvements.”

Network Scale
American has laid out an ambitious (and quite likely overly aggressive) plan to increase departures by 20 percent over five years from its cornerstone markets of LA, New York, Chicago, Miami, and Dallas/Ft Worth. That’s right. TWENTY percent. For the relatively mature industry we have here in the US, this seems to be very aggressive. I was going to guess that much of this would be from smaller airplanes with fewer seats, but then I saw Tom tell Terry Maxon that the increase would be more in the international arena than domestic. That makes me think that it’s less about regional jets and more about larger aircraft growth. That could mean some serious capacity growth. It’s starting to sound like the days of old when airlines mistakenly chased market share only to hurt themselves and everyone else in the process.

This isn’t just about the 20 percent increase under the American brand, however. This is also about increasing codesharing. Right now, it can’t grow its domestic codesharing business but it has proposed eliminating those shackles. Hello, JetBlue.

Fleet optimization
At first, this seems like a cost savings and not a revenue savings, right? I mean, the airline keeps talking about adding newer, more fuel efficient airplanes and retiring older ones. That has nothing to do with revenue. But that’s not what I think the airline is talking about here. This is really American talking about growing its regional fleet. Today, there is a very tight cap on outsourcing of flying on aircraft with more than 50 seats. American has maxed it out with 47 CRJ-700s, and that’s the only aircraft American has between 50 and 136 seats.

That’s a huge disadvantage for American versus Delta and United, both of which operate about 200 to 250 regional aircraft with more than 50 seats. American is getting aggressive, shooting for the right to outsource a boatload of flying on airplanes all the way up to 88 seats. In a minor bright spot for American’s own employees, American has also ordered Airbus A319s that will give it an option below 136 seats (maybe in the 120 seat range). That’s what American means by fleet optimization, having more aircraft in between the 50 and 136 seat range that it can use to better match seat supply with demand.

Product improvements
This is something that really has nothing to do with bankruptcy. American has already suggested it would improve the onboard product, but what can it do to actually goose revenues? Well, the new flat beds that it’s putting in business class on the 777-300ER aircraft are a good start. Hopefully that expands to the rest of the international fleet, because people aren’t willing to pay a premium for the inferior product in business class today. The new premium economy section could help as well, though that also reduces the number of seats so it relies on American being able to generate a good premium to make it worthwhile.

So that’s what we see on the revenue side. Bankruptcy should allow for more liberal codesharing and regional flying contracts. That’s really it. Now let’s look at the flip side.

Plan to decrease costs by $2 billion a year
Of the $2 billion in annual savings that American wants to see, $1.25 billion will come from employees. The rest will come from a variety of things that allow American to reduce costs – get out of expensive contracts, reduce rates for suppliers, ditch assets it no longer needs, etc. But as expected, American rests the bulk of the weight on employees.

The basic proposal (and it’s only a proposal at this point) is for every work group to give up 20 percent of compensation. That doesn’t mean salaries get cut by 20 percent, but it’s a combination of all types of compensation from benefits to productivity. The cuts vary by each group, and you can read all the union term sheets here.

Some will see pay reductions, all will see pensions terminated, and benefits will cost more for the employee if American has its way. There will also be major increases in productivity. For example, for flight attendants, American wants to increase the maximum monthly hours from 77 (domestically) to 100 which will result in an average of 80 to 90 hours scheduled per person month. I won’t get into the details of each workgroup’s proposed changes, but you should definitely take a look.

In return, what will employees get? There will be company-wide profit sharing that starts with the first dollar of income. Of course, that’s for the employees that don’t get a pink slip. American will be laying off 13,000 employees, about 15 percent of the airline’s total today, and it will come from all groups. We’ll see 1,400 management positions gone, 2,300 flight attendants, and 400 pilots.

But the biggest cut comes to mechanics and fleet service workers – more than 4,000 each. Those deep cuts will come thanks to more outsourcing. American will shut one maintenance base (Alliance, in Ft Worth) and it will start to outsource a lot of work so that it doesn’t need all these employees anymore. The TWU represents both these groups and leadership sounded downright sad in its conference call discussing the proposed cuts. The pilots and flight attendants, on the other hand, sound more angry. At least the pilots don’t sound surprised. The flight attendants strangely acted like they didn’t see this coming.

Let’s back up for a second. Twenty percent more departures in five years but 15 percent fewer employees? Seems strange to think about it, but it really is all about outsourcing.

We do need to keep in mind that these are not final. There will be negotiations and the ultimate resolution will undoubtedly be less dramatic than what we’re seeing here. Regardless, the employees that remain will need to be more productive and they won’t be compensated as well for the work they do. There will need to be more flexibility with work rules, including codesharing and regional flying.

In the end, this doesn’t sound much like a turnaround plan at all. It sounds like an airline continuing to push forward with its same old strategy, just with a new fancy lower cost structure to help it stumble into profitability. I find it hard to really become a believer in this plan, since it’s nothing really new at all. If anything, US Airways, Delta, and other potential buyers should be thrilled to see the current team not really proposing anything game-changing. It gives them a bigger opening to walk through.

Why Spirit Airlines Is Right – Conde Nast Daily Traveler
Admittedly, this post was meant to stir the pot up a little. I do see merit in what Spirit is doing in fighting the feds on one hand, but that doesn’t mean I think the rule should necessarily disappear. Still, fun to look at it from Spirit’s side.

The Pros and Cons of American Airlines’s New First Class and Business Class – Conde Nast Daily Traveler
Just a little piece on American’s new 777 interiors. Not much more than what I wrote about here.

Waiting to board with Brett Snyder – Cheapflights.com Waiting to Board
I did an interview with Cheapflights talking about the blog and some travel tips.

When American announced it would roll out a slew of new features on its new 777-300ER aircraft in December, I was left with more questions than answers. Now, just a bit more info has been released, and we have some answers but not all. Oh, and we have pictures.

A picture of the new First Class cabin shows that it’s not much different than what’s out there today. It’s just cleaned up, new fabric, etc. That’s ok, because much of a change wasn’t necessary. In Business Class, however, it’s a different story.

As you can see, American is using the same reverse-herringbone style of seat that US Airways has on its airplanes. (Calm down, conspiracy theorists. This has nothing to do with a potential merger between the two.) We can now be sure that the “fully lie flat” seats are going to be flat beds. Whew.

There are also a few things we can glean from the new coach seats.

The above picture shows coach seating, and American confirms that there will be a premium economy section with the exact same seats but more legroom. It’s like American is bringing back “More Room Throughout Coach,” but not actually throughout coach.

In this picture, there are at least 4 seats uninterrupted by an aisle. That can mean one of two things. It could mean that American is sticking with the 2-5-2 configuration that it has on its 777-200s, but that would be surprising. Most airlines have moved away from 2-5-2 to 3-3-3 instead because it requires fewer video power units and it allows for standardized seat sets. (United has switched to 3-3-3 as it renovates its 777 fleet.)

But this can’t be 3-3-3 because there are four together. That would most likely mean that American is moving to the increasingly popular 3-4-3 layout. I say “increasingly popular,” but I mean that only on the airline side. Passengers hate it because, naturally, it means narrower seats. That hasn’t stopped several airlines from going this route, so it wouldn’t surprise me to see American do the same.

We could try to do some math to figure out the number of seats across if American would release its planned configuration on the airplane, but it won’t. My requests were met with the response that no further information is being given at this time. What’s with all the secrecy? I don’t understand why they want to keep pushing out dribs and drabs of info.

Anything else we know? Yep. American had been saying that London would be the first to get the new 777-300ER, but now that’s not happening. The first market will now be Dallas/Ft Worth to Sao Paulo. This market is apparently doing so well for American that it’s throwing a ton of capacity into it. In June, the market goes from a daily flight to 12 weekly. And then in December, the 777-300ER will go on to the route, bringing even more capacity to the market.

I suppose we shouldn’t be surprised that Latin America gets it first. After all, that’s really where American excels. It’s almost non-existent in Asia, it’s pretty weak in Europe, but it is the king of Latin. Stick to your strengths, right?

When the news broke that Delta was sniffing around the possibility of making a bid for American while it sits in bankruptcy, there were a lot of people shaking their heads, thinking that the mere thought was ridiculous. I couldn’t disagree more. Delta could and should have a real interest here.

What we’re seeing is Delta being really smart, and really aggressive. That’s fun to watch from an airline that used to just be a sleepy old Southerner. The first thing people say about this is . . . there’s no way it would pass anti-trust review. But is that true? I’m not an expert in anti-trust law, but I have no doubt that Delta has been actively working with its lawyers to see what would work and what wouldn’t. If Delta is truly expressing an interest, then it’s done its homework to make sure that it would even be a possibility under the law.

I think the key here is that I imagine Delta isn’t entirely interested in walking away with all of American. Remember when I first wrote about how US Airways should buy American, I suggested that maybe US Airways wouldn’t have much interest in LA or New York? Well, guess who would be interested? That’s right, Delta.

In LA, the market is highly fragmented. I can’t imagine any sort of anti-trust concern if Delta took over American’s operation there. It might even benefit LA by finally building up a stronger single carrier. Sure, the Asian oneworld partners would have a fit, but that’s not Delta’s problem, or the US government’s.

In New York, it might be a tougher sell, but it’s not really that much of a stretch. At JFK, JetBlue carries around 40 percent of the passengers already. So Delta and American combined wouldn’t be a monopoly by any measure. LaGuardia would probably be more of a concern, but the DOT could require some more slots to be auctioned off to low cost carriers and fix that problem right up. I’m sure Delta would be happy to comply if it means eliminating a full service competitor and sprinkling the slots around to other low cost guys.

Of course, this is just one possible scenario, Delta might want Miami as well here, or some other pieces. The point is that the default assumption that the big three airlines can’t combine isn’t true. There are creative ways that they could try to come together with other entities to make a proposal that could work. With American in bankruptcy, it’s really anybody’s game to win, except American’s.

Sure, American could stay as a standalone entity, but the oddsmakers (analysts) aren’t giving that a good chance of happening. When you go into bankruptcy, you lose absolute control of your company. That doesn’t mean that you can’t get out unscathed, but it means that others are going to take a real shot.

Do I think it would be better if Delta bought American? Nah. I mean, I think it’s good to have three large airlines in three separate airlines that can compete with each other. That doesn’t mean, however, that I’m against bits and pieces being moved around to make each remaining airline stronger. But would American be able to survive if Delta took New York and LA?

I don’t see why it couldn’t work if US Airways took the rest. Were I the surviving American in this case, I’d look to buy Alaska Airlines immediately to solidify at least one strong position on the west coast and take that partnership away from Delta. Not sure if that could happen or not, but the point is that there are opportunities for three large airlines to survive even if Delta “buys” American in some fashion.

Will it happen? I have no clue, but Delta would be stupid not to be sniffing around. (And in case you were wondering, United would be stupid TO be sniffing around because it’s hands are very full right now.)

Remember that October snowstorm and the meltdown that followed in Hartford? This woman and her husband were stuck in the thick of it. Here’s a great read about their experiences along the way.

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In late October, my husband and I enjoyed a fabulous vacation in Europe. We managed to see 4 different countries, caught up with friends, and experienced as much as we could in a short time. Little did we know what was in store for us on our voyage home.

Our flight from Paris to New York was circling in the weather when the pilot informed us we were heading to Hartford, Connecticut. We’d been in the air an hour past our arrival time, and the urgency to land was apparent. We finally landed in Hartford, being told we would get back in the air as soon as possible to get to JFK.

My husband and I turned on our phones and checked AA for our reroute. We found ourselves booked out of LaGuardia on Monday morning. It was Saturday. This COULDN’T be right. Angry, I called American and waited on hold for 20 minutes to find out most of the flights at JFK were canceled and Monday was clearly the best they can do for us right now. I was encouraged to call back. Irate, I hung up the phone. My husband and I started to process the information, and to understand the spot we were in. The snow was piling up on the wings. The captain gave updates:

430p: Pilot tells us we will be here for a little while to get refueled and then de-iced
5p: Pilot says we are next in line
530p: Pilot tells us they only have one fuel and de-ice truck working so it will be awhile. He also tells us if we don’t leave by 550p his flight day is done and we have to stay here in Hartford for the night. “In my over 20 years of flying planes I can tell you that I cannot take off with slush on the runway. Folks, I’m looking at an inch of slush on the runway and there is no equipment working to clear it.”
6p: Pilot tells us that we know we are here for the night and still no news on fuel or de-ice. The pilot seems more upset, but tells us the airline is working to find hotels for us.

At this point my husband got angry. The American app on our phone still showed us leaving LaGuardia on Monday morning, so he called American. We had a new strategy and asked about flights out of Hartford on Sunday. He was told the first flight we could get on was around 10p. This seemed absurd to us, he hangs up still angry but feeling better after doing something about it. This was a lesson we learned: Do something with your anger. Don’t sit and stew.

7p: Pilot tells us that there is only 1 international gate here and that there are no customs officials to deplane us. Therefore we have to stay on plane
8p: Pilot tells us that we will be heading to the gate to deplane.
820p: Pilot tells us that he isn’t sure if we’ll get to gate, he tells us getting information out of these people is like pulling teeth
9p: Pilot says we are going to head to another gate and then we will deplane and be held in the terminal area by that gate since we can’t go anywhere until we clear customs
915p: Pilot tells us that we will wait to get the international gate but we can not get off plane until everyone from the Swiss flight in front of us clears customs. All 300 of them.

At this point I was on the phone with American. I booked that flight out at 10p, hoping that when we got on the ground I could make something better happen.

We’d been given snacks and water regularly while we were sitting on the tarmac for 8 hours. The bathrooms were functioning. The mood was patient on the plane, which was surprising. In the row in front of us, a single mom had been entertaining her year-old daughter. This mother had worked HARD all trip, and the baby had been none the wiser of our predicament. We were honestly in awe of her patience and ingenuity to keep that baby happy. Lesson #2: It could still be worse. We were trying to get home to our own children, and could fully appreciate how different this experience would have been if our children were trapped there with us.

1020p: Pilot tells us that we are going to the gate
1025p: Pilot tells us the power is out in the terminal so the gate isn’t working, we will have to exit on tarmac
1050p: Doors open and we can deplane
11p: We enter customs area
1130p: We clear customs — without our bags. Can we even do that?
1140p: We get to baggage area and are told that our bags can’t be taken off the plane because they don’t have equipment at this airport for our size plane and shuttles will be coming to bus us to the other terminal
1150p: We bus over to other terminal
midnight: We arrive at terminal to find a spot to sleep
1215a: We are lucky enough to find spot where they are first giving out cots and sheets for sleeping
1230a: We settle in to sleep. Here’s a video of the sleeping situation in the ticketing area at the Hartford airport:

1a: 6’7″ 350 lb Bostonian decides to pull up a cot next to us and shake the windows with his snoring
2a: Windows still shaking and many people are awake
4a: We wake up for the day
7a: We get to American counter.

While in line to speak to the lone American employee, we witnessed some interesting drama. The Europeans from our flight got angry. First a few men were angry at the only employee trying to help us. Then they turned on themselves. A French lady in the crowd started chastising the lead man who was giving the employee a hard time. “It is not her fault!” she told him. The French lady brought calm to the crowd, and we resumed our spaces in line. The man in front of us sat next to my husband on the plane. We knew he was French and was trying to get to Cleveland. He gave the American employee a hard time.

He was put back on our flight, which left for JFK that afternoon, and arrived 45 minutes before his connection to Chicago, where he would then have to figure out his flight to Cleveland. She told him this was the best she could do. We also needed to get to Chicago, and when it was our turn we suggested the same itinerary. She admitted to us that there was no real chance of making that connection and thought our plan to fly from Hartford to O’Hare directly was a better one. She printed our boarding passes to Chicago. Lesson # 3 — being nice pays. We again questioned if we could get our luggage. She confirmed we would be abandoning it to fly home from there.

We took our tickets and passed through security 15 hours early…

11a: See there are 2 spots open on flight to Chicago at 2pm, I call American Airlines and get us booked…We will be home by 4pm
130p: We board the flight
2p: We take off for Chicago…
4p (Chicago Time): We land in Chicago!!!!

After some time had passed, we remembered more of the fabulous experiences on our trip and less about the unfortunate circumstances of our return. The airline had compensated us with vouchers and miles.

We will fly again, we have already booked a trip for the whole family. I will not boycott a single airline, because I saw planes from every airline I could fly stuck in the same predicament. I vow to fly directly whenever possible. We love to travel and experience new places, and this bad experience will not keep us from enjoying our hobby. We will be smart and prepared for our next trip in February. Wish us luck!

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Corry Stanley lives in the Chicago suburbs with her 2 and 4 year old sons, husband of nearly ten years, and two rescue dogs. She’s a native Wisconsinite, lifelong Packer fan, and an IT professional. She tweets infrequently at @corry_s.