bababouey

These are all valid points, I’m aware of the loan covenants, but I was planning on the growth continuing and them finding more ways to cut expenses, with the cares act extension being a wild card.

I don’t think it’s fair to call us out for being the only one to furlough, Delta is right behind us, and furloughing a larger number, and United took a deal that I don’t think would pass here.

I’m no financial expert, and am learning much of this on the fly, but I think there is still some hope here. I just hope there is enough cash flow for reorganization if that time comes.


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C5Drvr

Didn't say were the only ones, just that AAL didn't wait like DAL, because they can't. Parker was out front on every push to Congress? Why? Because his job is on the line as is all his stock.

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Gone Flying

not true. if you held AMR it turned into AAMRQ stock when AA declared BK, AAMRQ then was converted to AAL stock at about a 1 share of AAMRQ =.75 shares of AAL.( I believe the exact number was .787) If you held AMR stock in 2011 and did not sell it, you had AAL stock in 2015

ZeroTT

the reason to declare early isn’t loan covenants entirely. It’s that the company has to either get more loans (debtor in possession financing) or keep using its own cash. AA doesn’t have anything left to mortgage for DIP.

As for cutting expenses... they’ve had 6 months. Pax numbers are climbing VERY slowly, revenue might not even be that good

Excargodog

It isn’t only that, it is that in addition to the cost of servicing that debt, some of that debt will be due in the next couple of years.
There are, IIRC, two tranches maturing, one for a half billion and another for three quarters of a billion. Both of these were sold back when things were good and the company is currently only paying 3 and a half to 4 percent on this money. They are going to need to sell new bonds to pay off the old bonds and that causes a couple of problems.

For one, many of the resources used to collateralize the initial bonds have lost value. Airplanes are parked, many airlines around the world have failed, and there is a glut of used planes driving down the prices. Similarly, with nearly everyone downsizing, gates and slots aren’t the value they once were. So the same assets that collateralized the original bonds may not be enough to collateralize their replacements.

Another issue is that the replacement bonds are unlikely to sell at the same coupon rate as those original bonds. The last bonds that the company sold this summer - $2.5 billion worth - they sold at an effective rate of 12%. So let’s say the 1.25 billion in bonds gets refinanced at 10% rather than 4%, that will cause an increase in the annual debt service of $75 million. The company already pays about a billion dollar in debt service annually, and unless the bond buyers can be calmed down by better earnings and brighter prospects that can only go up.

So I wouldn’t recommend judging what is going on simply by burn rate versus liquidity, you have to judge it by what the market thinks of the company bonds. Because if they can’t bring the cost of borrowing down as that older debt comes due, the increased debt service costs will put the company in a death spiral. However it got there, it’s not going to be able to withstand servicing $40 billion in debt at 12% interest, it just can’t.

Downtime

They let one fail. That started the full meltdown the rest were guided to other in a government assisted merger. In fact they gave TARP money to healthy banks so that investors couldn’t find the weak ones.

Downtime

No out burn rate didn’t go up. We got a grant in cash for payroll. Burn is the same. As to the rest of it who knows why our unions says anything. They seem to be as surprised as we are by everything.

stbloc

not according to all the articles. If I’m wrong please post it. I read 3%.

Excargodog

What he is trying to explain to you is that anyone owning AMR stock had it automatically convert to AMRQ when AMR went into bankruptcy:



And yes, in the vast majority of cases, “Q” stock becomes worthless in bankruptcy, but not in every case. That depends on the terms of the bankruptcy. The AMR bankruptcy was one of the relatively rare cases Where the people who held the stock did not see it become worthless.

https://americanairlines.gcs-web.com...amrq-beginning




So, clearly you’ve got a lot of emotional investment of your own in being right about this...but you are not.

Name User

During the earnings call they stated they have "over 200 older aircraft" they will park if demand remains as it has.

That tells me they do intend to keep the 777s on property.

Bad news however as it takes us to a little under 600 aircraft, and 9000 total +/- pilots.