How long will it last?
10-19-2020 | 06:56 AM
#211
Line Holder
Joined: Mar 2014
Posts: 898
Likes: 47
As of last month we had $16.2 bill liquidity. We can survive until ‘22 at current burn rates. If we get either a much better demand market or govt help, we should be able to pull out of the spin. If neither happen then hard choices must be made by top men, not us. I’m sour about a mgmt team that took on this debt to begin with, but this company had 10% of global travelers last year, don’t quit and go home yet. Better days are ahead and my bet is our furloughed colleagues will be back next summer.
10-19-2020 | 06:59 AM
#212
Perennial Reserve
Joined: Jan 2018
Posts: 14,253
Likes: 257
see above.
But, FWIW, unless - like most company execs - you have a sweet deal on ESOPs, I don’t recommend anyone keep much of their investment money in company stock (or even in the same industry). And even ESOP gains should be shifted to something more diversified as soon as feasible.
And the real problem is that as the debt matures, it must be refinanced at new rates, which for American are currently obscenely high. I know that people have the beak about stock buybacks, but for 2019 AA spent four times as much on paying off old bonds than they did on stock buybacks, which they largely did by selling new bonds using the equity of what they had just paid off for collateral. Except the $4+ Billion they refinanced in 2019 and what they will have to be refinancing in the future as it comes due, are bonds they sold at 3.5-4% interest then, while their most recent bond sale was around 12% interest. And even so, they paid as much debt service on the interest in existing relatively low rate bonds in 2019 as they did in share buyback.
And with the rating agencies continuing to lower the rating on AA debt because used aircraft don’t have the value they did pre-COVID, it would be a mistake to think AA is anywhere near out of the woods yet. Right now they are like a person with a lot of credit card debt rolling it over to a new credit card that charges a higher rate. And they can’t NOT roll it over, because they don’t have the earnings or liquidity to stop.
At this point, watch the ratings agencies. If they start upgrading AA bonds, they are betting on recovery. If they keep downgrading them, it will get worse.
But, FWIW, unless - like most company execs - you have a sweet deal on ESOPs, I don’t recommend anyone keep much of their investment money in company stock (or even in the same industry). And even ESOP gains should be shifted to something more diversified as soon as feasible.
And the real problem is that as the debt matures, it must be refinanced at new rates, which for American are currently obscenely high. I know that people have the beak about stock buybacks, but for 2019 AA spent four times as much on paying off old bonds than they did on stock buybacks, which they largely did by selling new bonds using the equity of what they had just paid off for collateral. Except the $4+ Billion they refinanced in 2019 and what they will have to be refinancing in the future as it comes due, are bonds they sold at 3.5-4% interest then, while their most recent bond sale was around 12% interest. And even so, they paid as much debt service on the interest in existing relatively low rate bonds in 2019 as they did in share buyback.
And with the rating agencies continuing to lower the rating on AA debt because used aircraft don’t have the value they did pre-COVID, it would be a mistake to think AA is anywhere near out of the woods yet. Right now they are like a person with a lot of credit card debt rolling it over to a new credit card that charges a higher rate. And they can’t NOT roll it over, because they don’t have the earnings or liquidity to stop.
At this point, watch the ratings agencies. If they start upgrading AA bonds, they are betting on recovery. If they keep downgrading them, it will get worse.
Last edited by Excargodog; 10-19-2020 at 07:16 AM.
10-19-2020 | 10:09 AM
#214
Perennial Reserve
Joined: Jan 2018
Posts: 14,253
Likes: 257
well, LAST TIME, not to put too fine a point on it:
https://fortune.com/2014/04/10/the-u...es-big-payout/
https://www.google.com/amp/s/mobile....0BF0T020130215
.
8:34 PM on Apr 8, 2014 CDT
When AMR Corp. filed for bankruptcy on Nov. 29, 2011, it looked as if the shareholders of American Airlines Inc.’s parent would be big losers. Typically, the common stock becomes worthless when a company goes through the bankruptcy wash.
But people who owned AMR shares — and in particular, the ones who bought its stock during its two years in bankruptcy proceedings — wound up making a killing.
American Airlines Group Inc. on Tuesday made the last of five distributions of its stock to unsecured creditors, claimants, American’s labor groups and shareholders of its
AMR shareholders made a killing
By dallasnews Administrator8:34 PM on Apr 8, 2014 CDT
When AMR Corp. filed for bankruptcy on Nov. 29, 2011, it looked as if the shareholders of American Airlines Inc.’s parent would be big losers. Typically, the common stock becomes worthless when a company goes through the bankruptcy wash.
But people who owned AMR shares — and in particular, the ones who bought its stock during its two years in bankruptcy proceedings — wound up making a killing.
American Airlines Group Inc. on Tuesday made the last of five distributions of its stock to unsecured creditors, claimants, American’s labor groups and shareholders of its
https://www.google.com/amp/s/mobile....0BF0T020130215
10-19-2020 | 11:18 AM
#216
Gets Weekends Off
Joined: Dec 2007
Posts: 618
Likes: 0
well, LAST TIME, not to put too fine a point on it:
https://fortune.com/2014/04/10/the-u...es-big-payout/
https://www.google.com/amp/s/mobile....0BF0T020130215
https://fortune.com/2014/04/10/the-u...es-big-payout/
https://www.google.com/amp/s/mobile....0BF0T020130215
Tell me how much of the $400m each shareholder got? My guess is a penny in the dollar. Again the stock was worthless and wiped out. Sure share holders MAY have got 400m but how many shares were their? In Chapter 11 shareholders are last to collect if their is anything leftover.
I don’t think you read the entire article because only the investors who bought AMRQ made out not the AMR investors. You need to do your homework.
correction I was wrong I looked it up and they received 3 pennies on the dollar. But the stock was wiped out as it always does in bankruptcy regardless if it’s a 7 or 11. So does AAL have value if they file? you be the judge. If you buy the stock today at $12 and they file mostly won’t receive one cent. Now if you want to buy it in bankruptcy when the ticker will be AALQ you do have a chance to make money like the example you provided above. That’s a very different scenario then the common shareholder who bought AMR vs AMRQ.
Last edited by stbloc; 10-19-2020 at 11:55 AM.
10-19-2020 | 12:02 PM
#217
Line Holder
Joined: Jan 2016
Posts: 1,577
Likes: 147
From: Left
Try again, all the common was wiped out. Why do think the new ticker is AAL?
Tell me how much of the $400m each shareholder got? My guess is a penny in the dollar. Again the stock was worthless and wiped out. Sure share holders MAY have got 400m but how many shares were their? In Chapter 11 shareholders are last to collect if their is anything leftover.
I don’t think you read the entire article because only the investors who bought AMRQ made out not the AMR investors. You need to do your homework.
correction I was wrong I looked it up and they received 3 pennies on the dollar. But the stock was wiped out as it always does in bankruptcy regardless if it’s a 7 or 11. So does AAL have value if they file? you be the judge. If you buy the stock today at $12 and they file mostly won’t receive one cent. Now if you want to buy it in bankruptcy when the ticker will be AALQ you do have a chance to make money like the example you provided above. That’s a very different scenario then the common shareholder who bought AMR vs AMRQ.
Tell me how much of the $400m each shareholder got? My guess is a penny in the dollar. Again the stock was worthless and wiped out. Sure share holders MAY have got 400m but how many shares were their? In Chapter 11 shareholders are last to collect if their is anything leftover.
I don’t think you read the entire article because only the investors who bought AMRQ made out not the AMR investors. You need to do your homework.
correction I was wrong I looked it up and they received 3 pennies on the dollar. But the stock was wiped out as it always does in bankruptcy regardless if it’s a 7 or 11. So does AAL have value if they file? you be the judge. If you buy the stock today at $12 and they file mostly won’t receive one cent. Now if you want to buy it in bankruptcy when the ticker will be AALQ you do have a chance to make money like the example you provided above. That’s a very different scenario then the common shareholder who bought AMR vs AMRQ.
10-19-2020 | 12:29 PM
#218
Perennial Reserve
Joined: Jan 2018
Posts: 14,253
Likes: 257
correction I was wrong I looked it up and they received 3 pennies on the dollar. But the stock was wiped out as it always does in bankruptcy regardless if it’s a 7 or 11. So does AAL have value if they file? you be the judge. If you buy the stock today at $12 and they file mostly won’t receive one cent. Now if you want to buy it in bankruptcy when the ticker will be AALQ you do have a chance to make money like the example you provided above. That’s a very different scenario then the common shareholder who bought AMR vs AMRQ.
During bankruptcy, American’s old stock dropped to as low as 26 cents after the company filed for bankruptcy in November 2011. By the time the merger closed in December, the price had reached as high as $13.50.
Shares of the combined American Airlines and US Airways are up more than 50 percent since the merger closed. American’s stock closed down 37 cents Thursday at $37.34 a share.
On Wednesday, JPMorgan Chase analyst Jamie Baker estimated that the final value of old AMR shares, which last traded Dec. 6 at $11.39, could be $28.19 once the final stock distribution occurs.
Wall Street analysts say American’s current stock price could drop in the short term as creditors and unions sell shares to lock in profits.
“Given no change to our unrelenting bullishness as to the post-takeover earnings prospects of AAL, we would recommend investors exploit any unexpected pull-back related to the Day 120 equity conversion,” Baker told investors
Read more here: https://www.star-telegram.com/news/b...#storylink=cpy
Shares of the combined American Airlines and US Airways are up more than 50 percent since the merger closed. American’s stock closed down 37 cents Thursday at $37.34 a share.
On Wednesday, JPMorgan Chase analyst Jamie Baker estimated that the final value of old AMR shares, which last traded Dec. 6 at $11.39, could be $28.19 once the final stock distribution occurs.
Wall Street analysts say American’s current stock price could drop in the short term as creditors and unions sell shares to lock in profits.
“Given no change to our unrelenting bullishness as to the post-takeover earnings prospects of AAL, we would recommend investors exploit any unexpected pull-back related to the Day 120 equity conversion,” Baker told investors
Read more here: https://www.star-telegram.com/news/b...#storylink=cpy
Don’t get me wrong, I’m not recommending investing in companies facing bankruptcy, but you asked for an example and you got one.
Last edited by Excargodog; 10-19-2020 at 12:54 PM.
10-19-2020 | 02:58 PM
#219
Gets Weekends Off
Joined: Dec 2007
Posts: 618
Likes: 0
I was only wrong in that common lost 97% of their investment where I thought it was 100%. But if you still held onto that 3% today’s value would be worth 1 penny of what AMR was converted to.
Last edited by stbloc; 10-19-2020 at 03:09 PM.
10-19-2020 | 03:09 PM
#220
Gets Weekends Off
Joined: Sep 2019
Posts: 1,538
Likes: 0
You're actually both right. The common shares did survive but the value of the shares held prior to the bankruptcy was very badly hit. Those that bought the common after the filing made a lot of money. The pre bankruptcy shareholders did regain some value as the shares were exchanged to the new ticker after the merger.
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