Originally Posted by Bucking Bar

Alpha,

Would you agree that American's bankrutcy is about:
(1) The cost of funding a defined benefit pension plan in a bear market (and that unfunded liability)
(2) Renegotiating aircraft leases
(3) Scope
(4) Debt

AMR surely has their fleet "cross collateralized." You probably understand the term, but for the rest of the sports fans, this means that the paper for every airplane is set up so that is does not correlate on ONE airplane. To prevent reposession, the parts are scattered everywhere ... an airframe here, one engine on that jet, another engine on this other jet, the APU sub leased to JAL, the FMC is over there ... etc. The Courts are still trying to unscrew the mess that ACA created to keep its Dorniers out of the hands of their creditors.

ACL65:

American does not have DIP financing because:
(1) They do not need it ... they have similar cash levels to Delta
(2) DIP is dangerous ... management could lose control of the Company
(3) DIP might not be available in this market. Would you lend AMR money going into 2012? Me either.

Of the various outcomes to American's bankruptcy, fragmentation is the least likely.

More likely is a retrenchment to lines which support better revenue while keeping their network intact. This will involve changes to frequency and gauge of service, better aircraft utilization and more reliance on partners like Alaska, Jet Blue and a new panopoly of regional carriers (TO THE EXTENT THEIR SCOPE IS MODIFIED TO ALLOW THIS). Eagle's scope is already destroyed. ALPA is advising the APA. If history repeats itself, so called "labor leaders" will try to engineer a quick fix to American's economic problems and use outsourcing as a form of credit to try to hold up the standards of mainline compensation.

The APA already rejected the so called B Scale to recover their flying and management published that a failure to reach an agreement on this point would trigger bankruptcy. Well, the APA stood their ground on B Scale. We will if they hold their ground on scope.