SocraticGadfly: The American beatdown could hit $100 million

April 14, 2008

The American beatdown could hit $100 million

Earlier this week, American Airlines CEO Gerald Arpey said the cost of last week’s shutdown of its MD-80 fleet could run in the “tens of millions.”

Well, it looks like he was on the low side by a whole order of magnitude.
Mike Boyd, an airline consultant in Evergreen, Colo., predicts that direct costs to American will top $100 million, including lost ticket revenue, hotel rooms and food vouchers for stranded passengers, overtime pay for employees, and the additional cost of getting crew members to the right places.

Here are some of those costs:
American also was giving $500 travel vouchers to an unspecified number of inconvenienced passengers and putting some travelers up in hotels. There also could be transportation costs to and from hotels (and) extra overtime for employees.

Late last week, the stock for American parent AMR dipped below $10 a share. If Boyd is right, it’s not going anywhere north soon.

And, that’s not all. From the first link:
Boyd figures the airline stands to lose another $150 million in future bookings by travelers so angry that they either refuse to fly or choose other carriers.

Meanwhile, The Dallas Morning News is hypocritical enough to jump on the FAA’s back.

No comments: