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, 10:32 AM
#601
Line Holder
Joined APC: Aug 2021
Posts: 29
Originally Posted by Excargodog
If you aren’t interested in my comments you can easily block me. If not, it’s self inflicted punishment and you get no sympathy.
8/10 of your last posts have been on the American forum. Zero of the last 47 of your posts have been on Spirit. Your own guys run you out of there or something? Now hear this: If an airline furloughs, they do so from the bottom of the seniority list! What a revelation, thank you for your guidance. With such stupidly obvious comments like that, I doubt anyone here wants to read your posts. But I got you, you love to trash talk other airlines, makes you feel better about yours. It's not sympathy I'm after. It's not attention either, hope you get all you want.
10-22-2021, 10:59 AM
#602
Perennial Reserve
Joined APC: Jan 2018
Posts: 11,503
Originally Posted by MartyM
8/10 of your last posts have been on the American forum.
Like I said, if you aren’t interested in reading my comments, go ahead and block me. I’ve got four guys on my blocked list, it’s an easy enough process. Unless you’d rather just continue to whine. Doesn’t bother me greatly one way or another.
10-22-2021, 11:13 AM
#603
In a land of unicorns
Joined APC: Apr 2014
Position: Whale FO
Posts: 6,470
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?
If they prepaid interest, it's not a significant amount.
10-22-2021, 11:18 AM
#604
You scratched my anchor
Joined APC: Feb 2011
Posts: 4,876
Originally Posted by MartyM
8/10 of your last posts have been on the American forum. Zero of the last 47 of your posts have been on Spirit. Your own guys run you out of there or something? Now hear this: If an airline furloughs, they do so from the bottom of the seniority list! What a revelation, thank you for your guidance. With such stupidly obvious comments like that, I doubt anyone here wants to read your posts. But I got you, you love to trash talk other airlines, makes you feel better about yours. It's not sympathy I'm after. It's not attention either, hope you get all you want.
10-22-2021, 12:11 PM
#606
You scratched my anchor
Joined APC: Feb 2011
Posts: 4,876
Originally Posted by Excargodog
Gee Al, would that alter the figures downloaded from the AA earnings report?
LOL
LOL
No, it just makes me wonder if you got turned down here or have some other axe to grind. I figured you were here. Odd obsession.
10-22-2021, 09:30 PM
#609
Perennial Reserve
Joined APC: Jan 2018
Posts: 11,503
Originally Posted by Al Czervik
No, it just makes me wonder if you got turned down here or have some other axe to grind. I figured you were here. Odd obsession.
Originally Posted by PRS Guitars
yeah, it is odd
Nope. Never applied to AA. Nothing against the place and would prefer they NOT go bankrupt again - that would be bad for ALL the pilot groups - but AA clearly has some real challenges in its debt load, not just my opinion but that of quite a few others. Sort of disappointing though that simply posting FACTS draws ad hominem attacks from other pilots. Like people calling posting facts an “odd obsession.” It isn’t like I was the one that started this thread, and the title IS bankruptcy after all. It’s scarcely like what I put up was thread drift.
10-23-2021, 02:17 AM
#610
Gets Weekends Off
Joined APC: Nov 2014
Posts: 1,238
Originally Posted by Excargodog
Always…
But in this case, the fear is more of a 70s like stagflation. And it would appear that worries AA management as well. They indicate that in their own filings:
https://americanairlines.gcs-web.com...02ae581f48_157
Now the real issue is bond interest rates which in turn are affected by inflation rates. Most major airlines issue bonds to buy new aircraft and for other capital needs and with the fed pumping out money for a decade or more bonds have been sold with low coupons and servicing them has been cheap, even for airlines which right now ALL have truly crappy bond ratings - generally below investment grade.
But as long as you were making enough money with the new equipment to be able to service the bonds and come up with the cash to pay them off at maturity it wasn’t a problem. But despite PSP, nobody is really doing that. What they are doing is either borrowing money to pay off the debt (creating another debt) or issuing another set of bonds to pay off the holders of the maturing bonds. Either way it’s kind of robbing Peter to pay Paul, except Peter is going to demand a lot higher interest rate than Paul did because of the upcoming inflation, because the credit rating is lower than it was for the first bond issue, and because the collateral is now used aircraft rather than new ones.
And no, $17.9 Billion in liquidity does NOT mean they have $17.9 billion sitting around to pay off these bonds, it means that they can come up with that much cash if they have to, but usually only by tapping a line of credit that will have debt service rates likely just as high as that of the bonds - probably higher. That’s just robbing a different Peter to pay Paul, it still doesn’t make the debt go away.
So that’s the real risk right now, that because of a combination of high interest rates and high debt load with relatively low flying and that at a lower yield, eventually the debt service will so eat into the liquidity that the funds necessary to operate just won’t be there. Or realistically, if the liquidity were to get down around $2-3 Billion, they’d declare bankruptcy because they would need that much available to tide them over the cost of reorganization. And no, it wouldn’t be a Chapter 7, it would be a Chapter 11, so the company isn’t going away, and although you may be furloughed briefly (or longer depending on the economy) you’d still have a seniority number and eventually you’d be brought back.
The real long term risk for all of us is what a bankruptcy court might do to contracts, both existing and future ones. Next year military retirees and social security recipients will be getting a 5.9% increase in their payments - a cost-of-living-allowance (COLA) increase to offset inflation. Most of us won’t, because we don’t have COLA built in to our contracts, nor is that something anyone will be anxious to give us. It is in fact more likely, if we were to develop a 70s era stagflation, that someone would try something dumb like wage and price controls. Nixon actually did that, allowing him to kick the can down the road so Carter got blamed for not only his own poor policies that extended the stagflation but the part that belonged to Nixon as well.
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.
But in this case, the fear is more of a 70s like stagflation. And it would appear that worries AA management as well. They indicate that in their own filings:
https://americanairlines.gcs-web.com...02ae581f48_157
Now the real issue is bond interest rates which in turn are affected by inflation rates. Most major airlines issue bonds to buy new aircraft and for other capital needs and with the fed pumping out money for a decade or more bonds have been sold with low coupons and servicing them has been cheap, even for airlines which right now ALL have truly crappy bond ratings - generally below investment grade.
But as long as you were making enough money with the new equipment to be able to service the bonds and come up with the cash to pay them off at maturity it wasn’t a problem. But despite PSP, nobody is really doing that. What they are doing is either borrowing money to pay off the debt (creating another debt) or issuing another set of bonds to pay off the holders of the maturing bonds. Either way it’s kind of robbing Peter to pay Paul, except Peter is going to demand a lot higher interest rate than Paul did because of the upcoming inflation, because the credit rating is lower than it was for the first bond issue, and because the collateral is now used aircraft rather than new ones.
And no, $17.9 Billion in liquidity does NOT mean they have $17.9 billion sitting around to pay off these bonds, it means that they can come up with that much cash if they have to, but usually only by tapping a line of credit that will have debt service rates likely just as high as that of the bonds - probably higher. That’s just robbing a different Peter to pay Paul, it still doesn’t make the debt go away.
So that’s the real risk right now, that because of a combination of high interest rates and high debt load with relatively low flying and that at a lower yield, eventually the debt service will so eat into the liquidity that the funds necessary to operate just won’t be there. Or realistically, if the liquidity were to get down around $2-3 Billion, they’d declare bankruptcy because they would need that much available to tide them over the cost of reorganization. And no, it wouldn’t be a Chapter 7, it would be a Chapter 11, so the company isn’t going away, and although you may be furloughed briefly (or longer depending on the economy) you’d still have a seniority number and eventually you’d be brought back.
The real long term risk for all of us is what a bankruptcy court might do to contracts, both existing and future ones. Next year military retirees and social security recipients will be getting a 5.9% increase in their payments - a cost-of-living-allowance (COLA) increase to offset inflation. Most of us won’t, because we don’t have COLA built in to our contracts, nor is that something anyone will be anxious to give us. It is in fact more likely, if we were to develop a 70s era stagflation, that someone would try something dumb like wage and price controls. Nixon actually did that, allowing him to kick the can down the road so Carter got blamed for not only his own poor policies that extended the stagflation but the part that belonged to Nixon as well.
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.
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