redbaronahp

Now that Airbus has completed the C series transaction which makes the C Series aircraft part of the Airbus family, what are your thoughts on AA ordering them to replace the S80’s and 190s? Farborough is coming up in 2 weeks and aircraft manufacturers are scrambling to make deals to announce at the Airshow.

Varsity

AA has a massive mountain of debt.

Wouldn't plan on it.

BackintheLPA

AA should have the Embraer production line tied up building 195s. Delta for the win again.

SilverandSore

Ummm, a large portion of our debt is from new aircraft orders...

Arado 234

Expect the unexpected. Today the aircraft fleet is being "harmonized", tomorrow we'll get a new type because we got a really good deal.

Stock is wAAy down, I believe debt is one of the reasons.

$.02

Name User

The stock is down because revenue isn't keeping up with expenses due to fuel and expected capacity reductions/lowering guidence. Earnings go down = lower EPS = lower stock price. Wall Street 101.

Debt isn't a big deal if you make more money on your assets. If you could borrow $1b and earn $100m a year (10%) but only pay $35m in interest (3.5%) wouldn't you borrow as much as you could? That is pretty close to AA's numbers.

Not to mention as rates go up their debt mostly remains fixed and with our cash on hand earning that rate or better it's essentially a wash.

Dent isn't worrisome as long as you have the ability to pay. What does irk me is they didn't use the income to invest in additional revenue but to buy back stock which has little tangible value and won't help us weather a downturn. With the airlines being as cyclical as they are it just doesn't make long term sense. In fact it rarely never does, 95% of buy backs occur at peak stock price.

The other thing is it shows a lack of consideration to the employees. If the company was smart and frugal with their money, when times are bad I'd be fine taking a pay cut to help out. They lost pretty much any goodwill they have given out by pay raises by all the wasted money they've thrown around at stupid #### that doesn't bring in revenue or improve our financial health.

Name User

The 195 E2 is actually a better airplane inside of 1000 miles. The C series is efficient at long thin routes but because of its long range (3000 miles) it has a higher CASM on shorter flights due to having to carry the heavier structure around (ability to carry fuel costs weight which costs fuel).

On some shorter routes the 767-300 is actually more efficient than the 787 because of this.

Otterbox

You’re more likely to see them push for scope relief and upgauge all their 50 seat RJs to 76 (or more) and use those in combination with 319s during peak load times...

The 76 seat RJ/319 combo has already started to replace some of the S80 routes. Provided this combo is viewed as a financial win it will likely be the preferred course of action compared to a new fleet type (and they get to eliminate an additional fleet type that’s inefficient).

redbaronahp

The CRJ 200 has got to be one of the most hated passenger planes within any passenger network. I think they should be parked, but I’m not a fan of providing any scope relief. The CRJ 900 has more first class seats than the A319 to make it a regional aircraft. I think the vast majority of flying should be done by AA.

jcountry

Very well said.

I don’t think anyone thinks new aircraft are stupid to incur debt over.

I don’t think anyone thinks the stock buybacks are a good idea on any level. Especially not the idea of borrowing to do them.