Health of the company
10-17-2018, 03:58 PM
#21
Gets Weekends Off
Joined APC: Aug 2013
Posts: 207
Re Saudi we imported 9% of our oil from them last year. Second most behind Canada with 40%. That from the US energy info admin FWIW.
While it doesn't seem to me as the main driving force of AA's future, I think debt is. They have nearly triple the debt load as do their major competitors. No other statistic stands out to have the stock so undervalued. No matter where you think the company is going in the future whether it be through good times (like now) or bad the market views AA as not a healthy investment.
7B cash on hand (mostly borrowed) with well over 20B in debt wouldn't be the way I would want to operate and I would hate to have that hanging over my head for the long term. Long story short I think your concerns are valid and you should plan accordingly if you have that option.
While it doesn't seem to me as the main driving force of AA's future, I think debt is. They have nearly triple the debt load as do their major competitors. No other statistic stands out to have the stock so undervalued. No matter where you think the company is going in the future whether it be through good times (like now) or bad the market views AA as not a healthy investment.
7B cash on hand (mostly borrowed) with well over 20B in debt wouldn't be the way I would want to operate and I would hate to have that hanging over my head for the long term. Long story short I think your concerns are valid and you should plan accordingly if you have that option.
10-17-2018, 04:57 PM
#22
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Joined APC: Oct 2017
Posts: 243
Originally Posted by jcountry
Oil is always a threat for short term problems.
My main long term concern is this flag-of-convenience crap.
Both sides of the aisle are screwing us on this one. And once that really gets going, Uber Driver will become a more attractive career.
My main long term concern is this flag-of-convenience crap.
Both sides of the aisle are screwing us on this one. And once that really gets going, Uber Driver will become a more attractive career.
10-18-2018, 07:33 AM
#25
Gets Weekends Off
Joined APC: Nov 2014
Posts: 1,238
Originally Posted by Name User
1/3 of our income is eaten up by debt payments. The scarier issue is our profits will fall 50% due to fuel price increases, meaning the majority of our profit will go towards debt repayment and we will just be treading water.
Hence, the stock price.
That being said back in 2011-2012 time frame, with oil climbing and 300 old-ass S80's on the line, what would you do if you were management? They were really between a rock and a hard place. Had oil not gone bonkers (again) I would imagine AA managment wouldn't have bought so many new airplanes.
Another issue is we overpaid for them because of the bankruptcy filing.
To pile it on, we bought 2005 models when the MAX and NEO was just around the corner. So, we'll be at a 15%-20% fuel burn disadavange for 25 years.
Not to be a Debbie downer, though.
Overall the board made a hugely bad decision to buy back stock when they could've paid down our debt. We had an opportunity to be ahead financially but choose not to take it. The company financial performance is the main reason I have not and probably will not move to a domicile. I don't trust this place. We save about 70% of our income and I fully expect to be out of a job in the next five years. After almost five years here, I have given serious thought to leaving.
If I were at Delta or SWA I would move. For this place? Not a chance. They have made it clear they have no long term plan and no desire to run it for a future.
And this resonates with front line employees, most of us don't give a crap which is sad. When we see the company being run better wth more long term decisions being made, maybe morale will improve.
Hence, the stock price.
That being said back in 2011-2012 time frame, with oil climbing and 300 old-ass S80's on the line, what would you do if you were management? They were really between a rock and a hard place. Had oil not gone bonkers (again) I would imagine AA managment wouldn't have bought so many new airplanes.
Another issue is we overpaid for them because of the bankruptcy filing.
To pile it on, we bought 2005 models when the MAX and NEO was just around the corner. So, we'll be at a 15%-20% fuel burn disadavange for 25 years.
Not to be a Debbie downer, though.
Overall the board made a hugely bad decision to buy back stock when they could've paid down our debt. We had an opportunity to be ahead financially but choose not to take it. The company financial performance is the main reason I have not and probably will not move to a domicile. I don't trust this place. We save about 70% of our income and I fully expect to be out of a job in the next five years. After almost five years here, I have given serious thought to leaving.
If I were at Delta or SWA I would move. For this place? Not a chance. They have made it clear they have no long term plan and no desire to run it for a future.
And this resonates with front line employees, most of us don't give a crap which is sad. When we see the company being run better wth more long term decisions being made, maybe morale will improve.
10-18-2018, 08:00 AM
#26
Gets Weekends Off
Joined APC: Nov 2013
Posts: 1,764
Originally Posted by Al Czervik
I love how this topic is being discussed during record profits right before section 6.
10-18-2018, 11:42 AM
#29
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Joined APC: May 2009
Position: 787
Posts: 454
I am not going to comment on the debt besides saying a heavy debt load is expected when you buy 500+ aircraft.
What should concern us is top line revenue, not cost...Delta’s CBA cost a lot more than AA’s (annecdotally) yet their margins are 5+ points better than ours. At an aggrogate, passengers on DL (and to an extent SWA, and UA) are willing to pay more to fly those carriers as there is a perceived value proposition.
AA will improve, it has to. Leadership is compensated because they provide a return to investors. Investors are mad right now, our share price reflects that.
Lets see what happens during the earnings call on 25th. If they can show that our forward revenue outlook is improving, great. If not. I would not be surprised to see shakeup of some kind in thr next year.
What should concern us is top line revenue, not cost...Delta’s CBA cost a lot more than AA’s (annecdotally) yet their margins are 5+ points better than ours. At an aggrogate, passengers on DL (and to an extent SWA, and UA) are willing to pay more to fly those carriers as there is a perceived value proposition.
AA will improve, it has to. Leadership is compensated because they provide a return to investors. Investors are mad right now, our share price reflects that.
Lets see what happens during the earnings call on 25th. If they can show that our forward revenue outlook is improving, great. If not. I would not be surprised to see shakeup of some kind in thr next year.
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