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
10-22-2021, 08:00 AM
#592
Perennial Reserve
Joined APC: Jan 2018
Posts: 11,503
Originally Posted by DoNoHarm
Was that the interest payment that was actually due, or did they pay future interest now? (I know the answer to this, do you?).
It is easy to move payments between quarters to show either massive losses, massive gains, or what is essentially breaking even. That is what you see here.
That is not the interest that is due every quarter, it shows the interest that they paid this quarter. The actual interest could be significantly more or less than this.
Oh, and what happens if you pay the interest for the next several quarters now, and then pay the principal early?
It is easy to move payments between quarters to show either massive losses, massive gains, or what is essentially breaking even. That is what you see here.
That is not the interest that is due every quarter, it shows the interest that they paid this quarter. The actual interest could be significantly more or less than this.
Oh, and what happens if you pay the interest for the next several quarters now, and then pay the principal early?
https://www.forbes.com/sites/danielr...h=6df5f64027b6
So why was American – already hamstrung by the largest amount of debt in the industry - able to attract so many bidders for its junk-rated five-year bonds? There are two reasons:
- The airline reportedly agreed to pay a jaw-dropping all-in yield of 12 percent on those bonds. Delta recently sold $1.25 billion in bonds carrying a painful 7.375 percent yield. Meanwhile United withdrew a $5 billion bond sale proposal when investors demanded yields around 11.5 percent, but then came back last week to sell $6 billion in bonds at yields of around 7.5 percent. So American’s willingness to pay interest rates so staggeringly high probably was enough to entice many investors into shouldering American’s rather substantial risk of default. That the bonds are being backed by lots of leased airport gates and facilities (including all of American’s huge terminal at John F. Kennedy Airport in New York) plus valuable landing rights at a number of foreign airports, made it so tempting that lots of bond buyers who otherwise would have walked away felt pretty secure about buying bonds from a sick puppy like American.
Now whether you are ABLE to pay the principal early depends upon two things, whether or not the bonds are indeed callable (some are and some aren’t, and generally you have to pay at least a few basis points of extra interest if they are) and whether or not you actually have the liquidity to call them. Now with $18 Billion in liquidity it certainly might be advantageous to call the 12% junk bonds IF they are callable and IF they don’t have an ugly prepayment penalty, but I’m unaware of their exact terms. But even if so, that prepayment has not YET occurred - at least not in the third quarter report. Those are the 11.75 senior secured notes in the 3rd quarter statement, which are actually paying the equivalent of 12% since they sold below par. And yet since they clearly haven’t paid off those junk bonds they are either not callable or management is unwilling to go below the amount of liquidity they have now in the expectation they’ll need every bit of it to meet future obligations and day to day operating needs and the next desperate step after selling 12% junk bonds is generally taking out loans from Guido ‘the kneecapper’ Bertoloni on the street corner at 10% interest a week.
At least that’s my interpretation of the situation. But like I said, if you have some super secret insider insight that you want to dish, lay it out. We’d all be glad to see it.
10-22-2021, 08:18 AM
#593
Gets Weekends Off
Joined APC: Jun 2014
Posts: 589
Originally Posted by Excargodog
So hold off on expensive toys and put some money away until this sorts out. It’s more than just COVID now, and it ain’t over yet.
10-22-2021, 08:19 AM
#594
Gets Weekends Off
Joined APC: Feb 2007
Posts: 2,484
Originally Posted by Dobbs18
Are you saying we need to get our financial houses in order?
I mean, that’s never a bad plan anyway. They sure made it easier for WO flows / new hires, but I’m still thinking about a boat and a truck.
Sent from my iPhone using Tapatalk
10-22-2021, 08:25 AM
#595
Perennial Reserve
Joined APC: Jan 2018
Posts: 11,503
Originally Posted by Dobbs18
Are you saying we need to get our financial houses in order?
10-22-2021, 08:43 AM
#596
Line Holder
Joined APC: Aug 2021
Posts: 29
Originally Posted by Excargodog
Junior FOs should ALWAYS have their financial houses in order, because they are the first ones to get hurt in a recession. That’s the downside of the seniority system. If the lifeboat gets overloaded, they get tossed overboard first. It has happened often enough in the past and anyone who thinks it can’t happen again in the future is an idiot, although in fact AA hasn’t ACTUALLY been in bankruptcy since Dec 2013 - almost eight whole years ago.
Please, tell us more.
10-22-2021, 09:15 AM
#598
Line Holder
Joined APC: Aug 2021
Posts: 29
Originally Posted by Excargodog
let me guess…
Ex Warthog driver?
Ex Warthog driver?
No, but let me guess...
You want to impress upon all of us your great knowledge, because you know better than we do? Junior FOs should ALWAYS have their financial affairs in order? Just the junior FOs? And if airlines must furlough, is it really the junior FOs that get cut first? Wow, more wise words from FO Obvious.
10-22-2021, 09:19 AM
#599
Gets Weekends Off
Joined APC: Dec 2007
Position: Hot tub for now
Posts: 1,203
If psa can afford to pay 1st year captains $150k plus then first year AA f/o should start at $200k.
A lot of us did years at the regionals starting at under $20k. For no reason but timing. Bad timing.
AA needs to step up and pay.
A lot of us did years at the regionals starting at under $20k. For no reason but timing. Bad timing.
AA needs to step up and pay.
10-22-2021, 09:35 AM
#600
Perennial Reserve
Joined APC: Jan 2018
Posts: 11,503
Originally Posted by MartyM
No, but let me guess...
You want to impress upon all of us your great knowledge, because you know better than we do? Junior FOs should ALWAYS have their financial affairs in order? Just the junior FOs? And if airlines must furlough, is it really the junior FOs that get cut first? Wow, more wise words from FO Obvious.
You want to impress upon all of us your great knowledge, because you know better than we do? Junior FOs should ALWAYS have their financial affairs in order? Just the junior FOs? And if airlines must furlough, is it really the junior FOs that get cut first? Wow, more wise words from FO Obvious.
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