What? A $483 million profit? That’s a GOOD thing. Currently, AA is paying a half billion a quarter in interest expense.



Most of that debt - incurred at a coupon as low as 3.5% - is going to have to be refinanced at current rates as it matures over the next several years. They need all the liquidity and profits they can get to pay down that debt or they’ll be refinancing at current rates for b- rated companies which are about 14-15%. And the fed is threatening another 3/4% jump this quarter.

I’m not anti-AA, I just realize the box they’ve gotten themselves in. The AA CFO has pretty much said the same. The headwinds may not be insurmountable, but they are definitely substantial. When quarterly debt service interest actually starts to DECREASE you’ll know they’ve turned a corner. That hasn’t happened yet.