Dobbs18

I will take my lightly educated shot at it....1. Load factors pre covid were running north of 87% I believe(and not just us, almost all US airlines. 2. Airlines were making money hand over fist, this wasn’t pre 9/11 times when airlines were already hurting. Don’t forget that not too long ago most airlines only posted a profit in the 2nd quarter(summer). Recently it’s been profits every quarter. 3. There was no huge underlying flaw in our economy or stock market (yes I believe the market was a little high and due for a correction but normal historical correction type). This isn’t the Great Recession where banks were taking huge risks through subprime lending and bundling them in mortgages-backed securities...at the end of the day its all about demand, I think it will return and people will be ok with flying once again just like after 9/11. My biggest worry is the 36 MILLION people who are unemployed, that will take quite a while to recover from, those people will be ok with flying long before they probably have the money to do so. So yes I think AA will make it, a little smaller for a couple of years is all I hope. Most of neighbors all seem to be ok with flying again, just with a little more hand washing I am sure...I am not an economist on CNN or Fox so what do I know haha!...been at AA since Fall of 2014 for reference of my thinking. I am preparing for the ugly as best I can but I just try to stay positive bc it’s the best think I can do for mine and my family’s well being!

lavService

This is a new article comparing credit default prices. It's a scary time for everyone
https://www.ft.com/content/d0b9dc48-d7c2-4524-b469-3d365cb4f4f4

Al Czervik

The CEO of Boeing (And some Users on APC) answered yes to a quick question from a bimbo reporter. He immediately backtracked. Scary times, but chill out. It’s all going to work out.

bababouey

I share your optimism, but I think it's foolish to bury your head in the sand as well. Nobody knows how this will turn out, but it seems like we're the only ones who think we'll come out of this ok.

"The price for the Fort Worth airline’s credit default swaps has risen since February and outstripped other big US carriers. Historically, paying more for swaps, a financial instrument to insure against corporate default on debt, has indicated a greater risk of that happening. Bloomberg data show that investors think the airline’s default probability in the next five years is nearly 100 per cent."

R57 relay

I went through about 1.5 decades and two Chapter 11s with US Air/USAirways. After the successful merger with AWA, the specter death popped up again 2008-09. I cannot count how many times I heard why and how we were supposed to be dead. We didn't die.

I agree that no one needs to bury their heads in the sand, in this business you always need to be ready for disaster, but it's usually not what you worry about in life that gets you.

Andy

Paywalled.
Before Bear Stearns, no one was concerned about CDSs. Now, everyone points to them as if they're an oracle of a company's future. No, they're not. They're used as insurance policies for investors.
These financial instruments are used by hedgies, funds, and other institutional investors. Mostly by managers who buy AMR debt which is selling well below par so there's a juicy yield on the bonds. To insure those bonds in case of ch 11, they buy CDSs to insure their bond holdings.

If one's going to argue where professional investors rack and stack the possibility of airlines filing ch 11, you could point to CDSs.

Let's not forget that there's a counterparty on the other side of the CDS trade who is getting hefty premiums for writing those CDSs. That big money is betting on AMR not going ch 11.

rickair7777

News, yes. I haven't noticed any fake news, that would be deleted or at least ridiculed (see the galactic space virus thread).

bababouey

Thanks for this. If you're at AA, and even if not, please post counterpoints to articles like this. It's bad enough that every clown on seeking alpha is posting from mom's basement that American is dead on arrival, but sucks even more when the big financial news outlets start running stories about the buzzards circling over us.

rickair7777

Agree, there is some cause for optimism, compared to past events. Long-term, macro.

Short-term, airlines, obviously not going to be pretty.

https://www.npr.org/2020/05/17/85714...eat-depression

rdneckpilot

behind a paywall