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
03-08-2021, 11:33 AM
#382
Gets Weekends Off
Joined APC: Oct 2019
Posts: 414
Originally Posted by rickair7777
It's not exactly a scientific poll 
American Airlines schedules wide-body jets on 3 unexpected domestic routes (msn.com)
Setting the status quo for bankruptcy?
03-08-2021, 12:15 PM
#383
Perennial Reserve
Joined APC: Jan 2018
Posts: 11,476
Originally Posted by Texasbound
APC has scientifically proven repeatable results at predicting the future, well 50% repeatable anyway, 80% of the time.
American Airlines schedules wide-body jets on 3 unexpected domestic routes (msn.com)
Setting the status quo for bankruptcy?
American Airlines schedules wide-body jets on 3 unexpected domestic routes (msn.com)
Setting the status quo for bankruptcy?
03-08-2021, 12:19 PM
#384
Perennial Reserve
Joined APC: Jan 2018
Posts: 11,476
Originally Posted by Cyio
Bankruptcy is done to preserve cash and have as much of it available post BK. Perhaps they are trying to raise as much cash now, so when they file it will be there to come out of it.
03-08-2021, 12:26 PM
#385
Perennial Reserve
Joined APC: Jan 2018
Posts: 11,476
Originally Posted by victormike
First: They didn't release the prospectus, just the press release. Find the prospectus if you think I'm wrong.
Underwriting Bond Issues
In acting as an intermediary between a bond issuer and a bond buyer, the investment banker serves as an underwriter for the bonds. When investment bankers underwrite the bonds, they assume the risk of buying the newly issued bonds from the corporation or government unit; they then resell the bonds to the public or to dealers who sell them to the public. The investment bank earns a profit, based on the difference between its purchase price and the selling price; this difference is sometimes called the underwriting spread.
When the investment banker works with a client corporation or government unit, it generally also prepares required documents for Securities and Exchange Commission (SEC) filing, helps set a price for the issue, and takes the lead in forming and managing an underwriting group--also known as a purchase group or syndicate. This syndicate spreads the risk of the new issue to a larger number of participating investment bankers and improves the likelihood of selling all of the newly issued bonds.
Sometimes the investment banker markets a new issue but does not underwrite it. The investment banker simply acts as a sales agent under a best efforts agreement, promising to do its utmost to market the bonds. The investment banker has the option to buy the bonds and usually purchases only enough bonds to meet buyer demand, receiving a commission on the bonds sold.
03-09-2021, 02:29 PM
#386
Line Holder
Joined APC: Mar 2015
Posts: 77
Originally Posted by Excargodog
Have you never bought bonds? The underwriter handles the prospectus and the market actually sets the terms. The June $2.5 Billion bond offering was offering an 11.5% coupon, but the bonds actually sold below par, so they didn’t even get the full $2.5 Billion (less underwriters fees) but wound up paying about 12% on the bonds they did sell - which will ultimately have to be redeemed at the face value.
Underwriting Bond Issues
In acting as an intermediary between a bond issuer and a bond buyer, the investment banker serves as an underwriter for the bonds. When investment bankers underwrite the bonds, they assume the risk of buying the newly issued bonds from the corporation or government unit; they then resell the bonds to the public or to dealers who sell them to the public. The investment bank earns a profit, based on the difference between its purchase price and the selling price; this difference is sometimes called the underwriting spread.
When the investment banker works with a client corporation or government unit, it generally also prepares required documents for Securities and Exchange Commission (SEC) filing, helps set a price for the issue, and takes the lead in forming and managing an underwriting group--also known as a purchase group or syndicate. This syndicate spreads the risk of the new issue to a larger number of participating investment bankers and improves the likelihood of selling all of the newly issued bonds.
Sometimes the investment banker markets a new issue but does not underwrite it. The investment banker simply acts as a sales agent under a best efforts agreement, promising to do its utmost to market the bonds. The investment banker has the option to buy the bonds and usually purchases only enough bonds to meet buyer demand, receiving a commission on the bonds sold.
Underwriting Bond Issues
In acting as an intermediary between a bond issuer and a bond buyer, the investment banker serves as an underwriter for the bonds. When investment bankers underwrite the bonds, they assume the risk of buying the newly issued bonds from the corporation or government unit; they then resell the bonds to the public or to dealers who sell them to the public. The investment bank earns a profit, based on the difference between its purchase price and the selling price; this difference is sometimes called the underwriting spread.
When the investment banker works with a client corporation or government unit, it generally also prepares required documents for Securities and Exchange Commission (SEC) filing, helps set a price for the issue, and takes the lead in forming and managing an underwriting group--also known as a purchase group or syndicate. This syndicate spreads the risk of the new issue to a larger number of participating investment bankers and improves the likelihood of selling all of the newly issued bonds.
Sometimes the investment banker markets a new issue but does not underwrite it. The investment banker simply acts as a sales agent under a best efforts agreement, promising to do its utmost to market the bonds. The investment banker has the option to buy the bonds and usually purchases only enough bonds to meet buyer demand, receiving a commission on the bonds sold.
But yes there is a prospectus/terms/etc. (might be the wrong terminology) and it looks something like this: https://www.sec.gov/Archives/edgar/d...32513dex41.htm
When you buy the bonds in the secondary market you there is no terms filing, yes but AA isn't selling joe shmo 2.5b in bonds, they have to go to a bank with real money first. If you remember United also announced a junk bond sale and once their terms came out and found zero interest (because their fleet is 1 foot in the dessert), it was pulled.: https://www.barrons.com/articles/a-f...ns-51589219455
But I digress. I hope none of you invest in AA bonds.. if you want to waste your money give it to me. PM for my Venmo lol
03-10-2021, 10:47 AM
#387
Gets Weekends Off
Joined APC: Oct 2019
Posts: 414
03-10-2021, 03:48 PM
#388
Line Holder
Joined APC: Mar 2015
Posts: 77
Originally Posted by Texasbound
03-10-2021, 04:42 PM
#389
Perennial Reserve
Joined APC: Jan 2018
Posts: 11,476
Originally Posted by Texasbound
American Air Sees $45 Billion of Demand on $10 Billion Debt Sale (msn.com)
That is a lot of demand.
That is a lot of demand.
Let’s see, $10 BILLION at 5.75% interest is $575 million in annual debt service. Interest expense last year was a $1.277 BILLION dollar item and that only reflected about half of the annual cost of the major borrowing done in June. So with a full year’s expensing of that borrowing (with an effective 12% coupon) plus this borrowing AA is looking at an ANNUAL interest expense of roughly $2 BILLION.
To put this in perspective, net income for the two years preCOVID averaged about $1.55 Billion a year. That’s twice the interest expense prior to COVID.
That is a lot of interest.
https://americanairlines.gcs-web.com...e28c18f351_103
Moreover, certain of our financing arrangements contain significant minimum cash balance or similar liquidity requirements. As a result, we cannot use all of our available cash to fund operations, capital expenditures and cash obligations without violating these requirements. See Note 5 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 3 to American’s Consolidated Financial Statements in Part II, Item 8B for information regarding our financing arrangements.
In the past, we have from time to time refinanced, redeemed or repurchased our debt and taken other steps to reduce or otherwise manage the aggregate amount and cost of our debt, lease and other obligations or otherwise improve our balance sheet. Going forward, depending on market conditions, our cash position and other considerations, we may continue to take such actions.
In the past, we have from time to time refinanced, redeemed or repurchased our debt and taken other steps to reduce or otherwise manage the aggregate amount and cost of our debt, lease and other obligations or otherwise improve our balance sheet. Going forward, depending on market conditions, our cash position and other considerations, we may continue to take such actions.
Last edited by Excargodog; 03-10-2021 at 05:05 PM.
03-11-2021, 05:35 AM
#390
Line Holder
Joined APC: Mar 2015
Posts: 77
Originally Posted by Excargodog
Let’s see, $10 BILLION at 5.75% interest is $575 million in annual debt service. Interest expense last year was a $1.277 BILLION dollar item and that only reflected about half of the annual cost of the major borrowing done in June. So with a full year’s expensing of that borrowing (with an effective 12% coupon) plus this borrowing AA is looking at an ANNUAL interest expense of roughly $2 BILLION.
To put this in perspective, net income for the two years preCOVID averaged about $1.55 Billion a year. That’s twice the interest expense prior to COVID.
That is a lot of interest.
https://americanairlines.gcs-web.com...e28c18f351_103
To put this in perspective, net income for the two years preCOVID averaged about $1.55 Billion a year. That’s twice the interest expense prior to COVID.
That is a lot of interest.
https://americanairlines.gcs-web.com...e28c18f351_103
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