View Poll Results: Will AA declare bankruptcy?
Yes
219
70.65%
No
91
29.35%
Voters: 310. You may not vote on this poll
Bankruptcy
10-21-2021 | 06:50 AM
#561
Gets Weekends Off
Joined: Jul 2021
Posts: 305
Likes: 0
Actually, to anyone who actually understands what they are reading, this is not bad at all. I expect AAL stock to be up quite a bit today based on this news.
It was a fairly strong quarter, but the money is being moved around with good finance/accounting techniques to set AA up better in the future.
It was a fairly strong quarter, but the money is being moved around with good finance/accounting techniques to set AA up better in the future.
10-21-2021 | 06:54 AM
#562
Line Holder
Joined: Mar 2017
Posts: 436
Likes: 18
How many aircraft do United and Delta have on order that are not on their balance sheet yet? AA has almost zero. It's just a numbers game. AA has the largest fleet and newest fleet, and has already paid off a huge chunk of it. The others will be in a much worse position once they put that debt on their balance sheet.
Don't forget, inflation is happening and 2022 is likely going to be a TERRIBLE time for large capital expenditures as prices are going up across the board. Plus, with supply chain shortages, the advantage goes to the airline that is not counting on hundreds of new orders (deliveries are expected to be backed up for years) and to the airline that has the newest fleet requiring the least repairs.
AA is showing a loss for tax purposes as it depreciates its aircraft and pays them off. They will get a huge tax check back this year because of it, and have actually gained revenue in the terms of assets.
Here's an over simplified version of what is happening (doesn't work exactly like this, but it is the same theory). Let's say you own a construction business and are doing well. Would you rather pay $250,000 in taxes at the end of the year, or purchase equipment and depreciate it so you actually have an extra $1,000,000 in expenditures and show a loss so you do not need to pay those taxes? You still made the same profits as a company, but chose to hide the profits into scheduled depreciation and purchases. Maybe you pay for materials for projects that you have in 2022 and put them in inventory for now. You repair equipment in December that was not scheduled to be repaired until January, so those expenses show as 2021 expenses and not 2022. Maybe you pay vendors early. Maybe you accelerate the depreciation on a track hoe and buy another one.
In the future, you have more cash on hand (you didn't need to pay the $250,000 in taxes), have additional equipment that you will use to make you more money, and are better set for the years to come. Your company is worth more as a whole than it was before, and is much healthier. Even though you showed a loss the previous year.
Last edited by DoNoHarm; 10-21-2021 at 07:05 AM.
10-21-2021 | 07:02 AM
#563
On Reserve
Joined: Sep 2021
Posts: 72
Likes: 1
To a casual observer, maybe. But to people that actually understand things like economics, finance, and accounting, things are not bad at all.
How many aircraft do United and Delta have on order that are not on their balance sheet yet? AA has almost zero. It's just a numbers game. AA has the largest fleet and newest fleet, and has already paid off a huge chunk of it. The others will be in a much worse position once they put that debt on their balance sheet.
AA is showing a loss for tax purposes as it depreciates its aircraft and pays them off. They will get a huge tax check back this year because of it, and have actually gained revenue in the terms of assets.
Here's an over simplified version of what is happening (doesn't work exactly like this, but it is the same theory). Let's say you own a construction business and are doing well. Would you rather pay $250,000 in taxes at the end of the year, or purchase equipment and depreciate it so you actually have an extra $300,000 in expenditures and show a loss. You still made the same profits as a company, but chose to hide them into scheduled depreciation and purchases.
Now, in the future, you have more cash on hand (you didn't need to pay the $250,000 in taxes), have additional equipment that you will use to make you more money, and are better set for the years to come. Your company is worth more as a whole than it was before, and is much healthier. Even though you showed a loss the previous year.
How many aircraft do United and Delta have on order that are not on their balance sheet yet? AA has almost zero. It's just a numbers game. AA has the largest fleet and newest fleet, and has already paid off a huge chunk of it. The others will be in a much worse position once they put that debt on their balance sheet.
AA is showing a loss for tax purposes as it depreciates its aircraft and pays them off. They will get a huge tax check back this year because of it, and have actually gained revenue in the terms of assets.
Here's an over simplified version of what is happening (doesn't work exactly like this, but it is the same theory). Let's say you own a construction business and are doing well. Would you rather pay $250,000 in taxes at the end of the year, or purchase equipment and depreciate it so you actually have an extra $300,000 in expenditures and show a loss. You still made the same profits as a company, but chose to hide them into scheduled depreciation and purchases.
Now, in the future, you have more cash on hand (you didn't need to pay the $250,000 in taxes), have additional equipment that you will use to make you more money, and are better set for the years to come. Your company is worth more as a whole than it was before, and is much healthier. Even though you showed a loss the previous year.
10-21-2021 | 07:06 AM
#564
On Reserve
Joined: Jan 2014
Posts: 70
Likes: 12
Now, in the future, you have more cash on hand (you didn't need to pay the $250,000 in taxes), have additional equipment that you will use to make you more money, and are better set for the years to come. Your company is worth more as a whole than it was before, and is much healthier. Even though you showed a loss the previous year.
Except when there is less work (less passengers). What are you going to do with those worthless depreciating assets sitting around... But at least you get a tax break.
10-21-2021 | 07:08 AM
#565
Line Holder
Joined: Mar 2017
Posts: 436
Likes: 18
10-21-2021 | 07:10 AM
#566
On Reserve
Joined: Jan 2014
Posts: 70
Likes: 12
10-21-2021 | 07:18 AM
#568
In a land of unicorns
Joined: Apr 2014
Posts: 7,071
Likes: 102
From: Whale FO
To a casual observer, maybe. But to people that actually understand things like economics, finance, and accounting, things are not bad at all.
How many aircraft do United and Delta have on order that are not on their balance sheet yet? AA has almost zero. It's just a numbers game. AA has the largest fleet and newest fleet, and has already paid off a huge chunk of it. The others will be in a much worse position once they put that debt on their balance sheet.
How many aircraft do United and Delta have on order that are not on their balance sheet yet? AA has almost zero. It's just a numbers game. AA has the largest fleet and newest fleet, and has already paid off a huge chunk of it. The others will be in a much worse position once they put that debt on their balance sheet.
Total property and equipment, net
29,797
Total stockholders' deficit
(7,437 )
That's 600 million more in deficit than last year. So AAG situation hasn't improved at all from a pure assets v liabilities standpoint.
Compare it to Delta, Stockholders' Equity: 2,606
10-21-2021 | 07:21 AM
#569
Line Holder
Joined: Mar 2017
Posts: 436
Likes: 18
I am not a cheerleader for AA, and I think a lot is messed up. But this quarterly report and the financial situation is not one of those things. Financially, AA is killing it right now. Watch AAL stock at we move into the afternoon and you will see what all of the experts think. Overall market is down today, and for good reason. Yet AAL is still 2% up.
10-21-2021 | 07:24 AM
#570
In a land of unicorns
Joined: Apr 2014
Posts: 7,071
Likes: 102
From: Whale FO
78.7% load factor Q3 is not "really high" and yield of 16.55 is not "way up". PRASM of 13.02 is actually very low.
It's trending the right way, but it's not "really high and way up".
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