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Quote:

Originally Posted by Mozam (Post 3206688)

Pilots are paid by the airline. My checks do not say US treasury, I doubt your do either.

How clever you are. Can you sleep at night now?

Quote:

Originally Posted by Mozam (Post 3206688)

Pilots are paid by the airline. My checks do not say US treasury, I doubt your do either.

In previous years, did your paycheck say “passenger revenue” or something like that?

What do you understand the source of the funds in your paycheck to be?

Get what he’s saying - but especially if your Junior your check is signed by Uncle Sam.

Quote:

Originally Posted by Saabs (Post 3206806)

Get what he’s saying - but especially if your Junior your check is signed by Uncle Sam.

Indeed. And not to put too fine a point on it, your check is signed by your fellow citizens, aka, the american taxpayers.

Or at least the 50% of the population that pays income taxes.

Quote:

Originally Posted by AAL24 (Post 3206475)

the smart money disagrees with you.

I read an article that said the 10B that AA is borrowing includes AA opening a company in the Caymans called AAdvantage Loyalty IP Ltd.
Its possible the smart money sees how AA will separate that bonafide assets from the liabilities before filing BK.

If they can split off the loyalty program and funnel the cash flow and assets that direction, then they can easily let the airline fall on its face and pick up the pieces without risking "their stake".

From today’s WSJ:

Quote:

American Airlines Joins Debt-Market Behemoths

Financing boosts the carrier’s total obligations to $50 billion dollars

Matt WirzMarch 17, 2021 5:30 amAmerican Airlines Group Inc. raised $10 billion of debt last week to repay government loans and keep its business running as the economy recovers. The deal also boosted the company’s debt by about 20%, transferring much of that risk onto debt investors.

American has survived the pandemic by taking on $22 billion of new debt, bringing its total obligations to $50 billion. Borrowing saved the company—and others like Carnival Corp. and AMC Entertainment Holdings Inc.—from bankruptcy, but it comes with higher interest costs that could affect profitability for years to come.

The deal has freed American of its obligations to the U.S. taxpayer and positioned the company to benefit from a potential economic boom the likes of which Wall Street hasn’t seen in decades. Economists have boosted forecasts for economic growth this year to about 6% in response to the $1.9 trillion Covid-19 relief package Congress passed this month. American’s shares have risen 55% this year as domestic travel bookings picked up.

“For the first time since the crisis hit…we at American are not looking to go raise any money,” American’s chief executive, Doug Parker, said Monday at a conference hosted by JPMorgan Chase & Co. Even after accounting for roughly $30 million of cash burned each day, American expects to have $17 billion of liquidity at the end of March and no major debt coming due until 2023.

Mr. Parker called the $6.5 billion of bonds and $3.5 billion of loans American issued on March 10 “the largest transaction in the history of commercial aviation.”

https://www.wsj.com/articles/america...hs-11615973407

“No major debt” is in the eye of the beholder. I believe there is $500 million due this year and $750 million next year, both of which can probably be refinanced by another bond sale, albeit probably at a higher coupon. But most of the big bond issueswill mature in 2023 and later.

Quote:

Originally Posted by Excargodog (Post 3208280)

From today’s WSJ:

https://www.wsj.com/articles/america...hs-11615973407

“No major debt” is in the eye of the beholder. I believe there is $500 million due this year and $750 million next year, both of which can probably be refinanced by another bond sale, albeit probably at a higher coupon. But most of the big bond issueswill mature in 2023 and later.

It seems like one big rob Peter to pay Paul scheme. I’m not nearly smart enough for this kind of high finance, but thats how it seems.

Quote:

Originally Posted by Cyio (Post 3208286)

It seems like one big rob Peter to pay Paul scheme. I’m not nearly smart enough for this kind of high finance, but thats how it seems.

Well, the difficulty with excessive debt is that as the credit rating goes down, the debt service tends to go up. Nothing wrong with taking on debt for an asset that can be used to make money in the business. It’s like buying a house to rent, as long as the rent payment a little more than covers the mortgage, it’s OK. But the problem with having debt in this environment is that - through no fault of the borrower - the ‘rent’ just isn’t there.

Worse yet, you got good terms from the lender because you collateralized those bonds with shiny new airplanes at a time when the waiting list for new aircraft was long and the market for used aircraft was similarly high. But it will be five years (or ten years) later pretty soon and - again through no fault of the borrower - COVID has kept those aircraft from being gainfully employed, increased the debt, and driven down the liquidity of the borrower. So now the money isn’t there to pay off the bonds when they mature, so you HAVE to refinance them with another bond issue to pay off the original one. Except now the aircraft aren’t new and shiny, they are five (or ten) year old USED aircraft, and that makes their market (and collateral) value less and even at that, the used aircraft market is flooded and so you wind up needing to sell the new bonds at a higher coupon rate.
which increases your debt service cost without decreasing your debt.