bababouey

Yep, don’t forget the 321xlr coming too.


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sanicom3205

Very. Not really a debate

Shiner

And so it begins, the great predictor of bankruptcy and liquidation starts to walk it all back.

Of course, people suggested at the time of your fear grenades, government intervention would keep all of the legacies afloat, but you didn’t listen. You were too busy beating your chest in most AA related threads about the fact you didn’t need this job.


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chrisreedrules

Uh... I’m not walking back my position that bankruptcy is coming. It would have happened already if not for the government money. I still think it’s coming. Just hard to say exactly when because if you would have told me that the government would give airlines this many cash infusions I wouldn’t have believed you in 2020.

Being kept afloat is different than being made financially sound. From a big picture perspective the federal government wants stability. A legacy airline failing amid a pandemic is not stability. Once things begin to “normalize” American has some very difficult realities to contend with and won’t be in a good position to do so. I still think both AA and UA will go through Ch11 bankruptcy as a result of this. And they’ll likely restructure fleets/hubs as a result. I do not think liquidation is a real possibility at this point.

nonononononono

They bleed to death in 1.5 years. i will eat all the crow you want if im wrong.

victormike

Someone help my smooth brain understand this "BK is certain" talk because I fly airplanes better than I can read a balance sheet.


As of year end 2020 the breakdown of assets between AAL, UAL, and DAL was as follows:


Total Equity (total assets minus total liabilities)

AAL: -6.87B

UAL: 5.96B

DAL: 1.53B

We can clearly see how up a creek AAL is right there, but digging into more numbers does that remain the case?


Current Liabilities/ Long Term Liabilities (>12 months):

AAL: 16.56b / 52.30b

UAL: 12.72b / 40.86b

DAL: 15.92b / 54.53b

Yes, AAL has some more current liabilities then the rest which doesn't help cash burn but we don't have long term liabilities that are out of line for the fleet size using DAL as a comparator.


Average Fleet Age:

AAL: 11.2 years

UAL: 16.3 years

DAL: 14.4 years

Obviously the younger the fleet, generally you get a savings in fuel, and maintenance cost. When you remove the newer outlier fleets from both UAL (787) and DAL (350 & 220) they age significantly and the 767, and 757 aren't cheap frames to replace. Even taking into account AAL having some old little busses, you pop new engines on them, do new interiors, and they do become more efficient in a way Delta or United can't make a 757 or 767 thereby saving cash. We also reduced our fleet types streamlining maintenance, equipment and training which saves cash. I'm old enough to remember when the magazine had over 10 mainline bodies consisting of 9 aircraft types. We are down to 4 types today.


Here's my naive take on the whole industry right now. Covid is going to end and its going to end sooner than we think. The anxiety of the public is the same as the anxiety of most on this forum. Everyone just wants to move on with their lives and for a lot of the public that means traveling. Once July/August rolls around you'll see restrictions ease as the vaccine gets rolled out to everyone and even the people who right now are like, nah I'm not taking it will end up getting it purely to move on with their lives. Back to normal in December. Good luck non-reving for a while after that.


When things get back to normal American will be positioned with the most efficient and streamlined operation of the three meaning they make more money to pay more debt. We have the new planes, we have efficient engines, the interiors are fresh, the max is flying again and people are traveling. Its going to explode because this was an artificial suppression of the free market and all you inflation bears need to chill because if AA and the rest of the industry got their debt at fixed rates the debt becomes valued less with increased inflation. Theoretically the cash congress gave us at that dirt cheap interest rate could become a negative interest rate under the right market (as in the LIBOR (currently .28%) + 3.5% rate could be outpaced by inflation of 4% from now till maturity in 2025 for a net negative of (inflation-(LIBOR+3.5%)) since they tied it to LIBOR which is a global indicator and isn't as directly affected by USD inflation like the fed rate. So, in summary, we got new planes, a streamlined operation, and lots of debt. Everyone else has old planes, an antiquated operation and also lots of debt. Who makes more money under that scenario to pay that debt off? I think American and I hope American. If they manage it right we will walk away from this winning after covid in a big way.

I think people need to start being a little more positive for your own mental health.

Note: All my finance figures are from Yahoo finance balance sheets for 12/31/20 and ages from airfleets if you want to check my work.

rickair7777

^^^ This makes sense to me.

Last year, before the vaccines were a done deal, AA appeared to be in a more precarious position that the others. If it got to the point where the fed felt that they had to let one airline go BK (or fail), AA was the obvious candidate just based on short-term finances.

But the fed has consistently backed-stopped the airlines' finances (both administrations) and the recovery looks like it's happening now. DC never lost sight of the fact that a severely damaged airline industry would take years to recover, and would drag down the rest of the economic recovery in the meantime... not just us but plenty of businesses and jobs rely on air travel directly or indirectly. And the really cunning politicians know they need an economy to tax, or they're out of business and out of office.

nonononononono

"I think people need to start being a little more positive for your own mental health."

Ya no um the economy completely collapses and the dollar is totally worthless but yet somehow american will emerge unscathed. suuurrreeeee

AAL24

um who is saying the economy completely collapses and the US dollar will be totally worthless? Did you hear that on your favorite daily radio show?

victormike

Dude you've gotta buy bitcoin, quit the airlines and go squat on public land somewhere, that's your only salvation before the impending collapse of the whole economy!!!