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View Full Version : Health of the company


Floobs
10-15-2018, 08:47 AM
Anyone else starting to get worried about the health of the company long term? The stock keeps going down, profit margins keep getting smaller and our debt keeps getting bigger.

If this thing with the Saudis gets out of control we could be in a pile crisis that makes the one in the 1970-80s seem like nothing.


bababouey
10-15-2018, 08:56 AM
Yes, I worry about it too. O think you have to give it time to play out, the Latin American economy doing poorly is a bigger deal than I think most people acknowledge. Maybe our retreat from China will save money.


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aa73
10-15-2018, 08:56 AM
Entering Sec 6 negotiations, that should be the last thing on our minds.

What should be first thing on our minds, is being the highest paid airline pilots in the industry along with an industry leading contract, one which Delta and United pilots aspire to surpass by 1% or more.

Our job is to negotiate the best possible contract that puts us at the top, and to then let the MBAs figure out how to run the show. If they screw it up, it’s on them.

Don’t fall for their FUD, and don’t worry about what you can’t control. The closer we get to Sec 6, the more doom and gloom you will hear from the them... all airline management standard M.O.

Here’s a quote from someone that perfectly describes how we should be thinking... (topic is from experiences riding the 737 Max)

“No, we do not have a say nor should we care. What we should care about is being the highest paid 737 MAX pilots in the world with the best benefits and work rules that enhance our QOL. If they DH me on a MAX and I am sandwiched in and cannot rest, I will call in fatigued. That is all I should care about.

All this other crap is what management uses to get pilots to "buy in" to the corporate rah-rah BS. They use our psychology against us as we are problem solvers and compliant. We are Labor and not managers.

The Market will decide if the MAX succeeds or fails and not the pilots. When our Uber Platinums book away to Delta and take their 4 million miles and revenue with them by the hundreds, THEN management will realize they made a big mistake. Until it costs them big money, they don't care. And OBTW, all management cares about is the opinions of the people in Business Class or better. The crammed in masses are of no concern as they are going to book the cheapest flight. Maybe AAL is smarter than we think? If the margins suck in coach, maybe 12 more seats makes it profitable?

But that is NOT our concern. Our concern is making the most money to fly that jet regardless of configuration.”


biigD
10-15-2018, 09:50 AM
The crammed in masses are of no concern as they are going to book the cheapest flight. Maybe AAL is smarter than we think? If the margins suck in coach, maybe 12 more seats makes it profitable?


Don't disagree with anything you've said, but I'd like to point out that the slimline seats are at United and Delta as well. Just flew on one of Delta's Airbus 320s, and other than their keeping the entertainment in the seatbacks, it might has well have been a MAX, all the way down to the removal of the bulkhead separating business class and coach. Their 320 now seats 160 folks.

https://www.businessinsider.com/slimline-airline-seats-uncomfortable-delta-united-american-2016-11

Doesn't absolve us from our passenger issues, but I wanted to point out that cramming more folks into an existing tube design is happening industry wide. :)

EMBFlyer
10-15-2018, 12:30 PM
Don't disagree with anything you've said, but I'd like to point out that the slimline seats are at United and Delta as well. Just flew on one of Delta's Airbus 320s, and other than their keeping the entertainment in the seatbacks, it might has well have been a MAX, all the way down to the removal of the bulkhead separating business class and coach. Their 320 now seats 160 folks.

https://www.businessinsider.com/slimline-airline-seats-uncomfortable-delta-united-american-2016-11

Doesn't absolve us from our passenger issues, but I wanted to point out that cramming more folks into an existing tube design is happening industry wide. :)

Yes, but your company is continually enhancing the quality of the product for your customers. Meanwhile, we're competing with Spirit and Frontier.

sherpster
10-15-2018, 12:47 PM
I have invested in 4 different stocks that then slowly tanked into bankruptcy. Wall street types know exactly what to look at on a company balance sheet and if they dont like a stock then generally it is for a good reason(s). I am too lazy to figure out the debt load of AA going forward and how it is structured but I bet that is part of the issue haunting the stock.

But until AA has an actual money losing quarter I wouldnt sweat it too much. Hard to go bankrupt if you are making a profit every quarter.

On the other hand, I also worked for steel company for less than a year that started tanking not much after my arrival. They ended up going Chapter 7 so I might be bad luck and you should get out while you can.

Name User
10-15-2018, 01:33 PM
1/3 of our income is eaten up by debt payments. The scarier issue is our profits will fall 50% due to fuel price increases, meaning the majority of our profit will go towards debt repayment and we will just be treading water.

Hence, the stock price.

That being said back in 2011-2012 time frame, with oil climbing and 300 old-ass S80's on the line, what would you do if you were management? They were really between a rock and a hard place. Had oil not gone bonkers (again) I would imagine AA managment wouldn't have bought so many new airplanes.

Another issue is we overpaid for them because of the bankruptcy filing.

To pile it on, we bought 2005 models when the MAX and NEO was just around the corner. So, we'll be at a 15%-20% fuel burn disadavange for 25 years.

Not to be a Debbie downer, though.

Overall the board made a hugely bad decision to buy back stock when they could've paid down our debt. We had an opportunity to be ahead financially but choose not to take it. The company financial performance is the main reason I have not and probably will not move to a domicile. I don't trust this place. We save about 70% of our income and I fully expect to be out of a job in the next five years. After almost five years here, I have given serious thought to leaving.

If I were at Delta or SWA I would move. For this place? Not a chance. They have made it clear they have no long term plan and no desire to run it for a future.

And this resonates with front line employees, most of us don't give a crap which is sad. When we see the company being run better wth more long term decisions being made, maybe morale will improve.

mainlineAF
10-15-2018, 01:59 PM
The debt load has been addressed multiple times in crew news sessions. Itís a concern to me as well but when listening to Parker talk about their strategy and why theyíve gone the direction they have, it makes sense. Maybe they arenít as dumb as we think?

Donít forget UA, DL and i think SWA have bought back lots of stock as well.

Theyíre not running the airline like Dave Ramsey would, thatís for sure. And Iím glad they arenít[emoji23]

And Iíd say thereís absolutely no way this company goes out of business. If it could survive a major recession coupled with a massive terror attack back in 2001 thereís just no way. Bankruptcy? Maybe. But out of business, I wouldnít worry about it.

If AA went out of business UA, SWA, DL, whoever wouldnít be looking too pretty either. Thereís no point in worrying about it, you canít do anything to change it.

sherpster
10-15-2018, 02:00 PM
1/3? How much and for how long? Does the debt load lighten in a few years?

drinksonme
10-15-2018, 10:51 PM
Man, so nice to have a real Chicken Little thread back.

Funny thing is, all of you that say the sky is falling will eventually be right (some of you are way more dramatic then others though) cause everything goes up and down. Youíll then say ďI told you soĒ and pat yourself on the back.....all for doing nothing but stating the obvious.

I predict, that the company will have bad times and good times. There I am now a zealot and should be showered with awe at my knowledge

fully expecting to be out of job in 5 years.....you must be a ball at a party.

Arado 234
10-16-2018, 02:41 AM
Always have a plan B. Keep your contacts alive and well and don't burn any bridges.

If Doug & Co. are so obsessed with DL (remember KDA?) how come they can't run a half way decent operation?

It seems the merger combined the worst management of both former Airlines.

Walk around DL international terminal in ATL and you'll see the difference.

sherpster
10-16-2018, 02:46 AM
The opposite of Chicken Little is somebody with their head in the sand. Companies with unserviceable debt loads go bankrupt. I have no idea if AA debt will become unserviceble in the future but wall street is obviously concerned a little. I agree with your advice to not worry too much about it but I also would plan for the worse. Its an airline business not a public utility.

Hotel Pen
10-16-2018, 06:46 AM
Where are you guys getting these figures like 1/3 AA earnings go to paying interest on debt? Debt isn't always a bad thing. If you can borrow money at 3% and invest it and get an return of 6% you would be making money but still have debt. Doesn't AMR keep more cash on hand to account for its higher debt load? Operationally AA has its problems for sure though.

N10DJ
10-16-2018, 07:17 AM
Where are you guys getting these figures like 1/3 AA earnings go to paying interest on debt? Debt isn't always a bad thing. If you can borrow money at 3% and invest it and get an return of 6% you would be making money but still have debt. Doesn't AMR keep more cash on hand to account for its higher debt load? Operationally AA has its problems for sure though.

AA holds about $7B cash on hand. Donít know where the other numbers are coming from.

BoilerUP
10-16-2018, 07:35 AM
https://americanairlines.gcs-web.com/static-files/17cae9f4-55b0-4a05-a2dc-33fcc0a01985

ShyGuy
10-16-2018, 10:00 AM
Am I understanding this thread correctly? The financial viability of AA, really?

full of luv
10-16-2018, 04:19 PM
Another issue is we overpaid for them because of the bankruptcy filing.

To pile it on, we bought 2005 models when the MAX and NEO was just around the corner. So, we'll be at a 15%-20% fuel burn disadavange for 25 years.
.


Biggest complaint I hear from our pax that fly on AA as well is that they say that even though there are "new" airplanes at AA, there is no in flight entertainment/live TV offered on the flights that they have taken recently.


Don't know if this is true on many of AA's new planes or just on the Florida markets though.

EMBFlyer
10-16-2018, 05:18 PM
Biggest complaint I hear from our pax that fly on AA as well is that they say that even though there are "new" airplanes at AA, there is no in flight entertainment/live TV offered on the flights that they have taken recently.


Don't know if this is true on many of AA's new planes or just on the Florida markets though.

There actually is Live TV and entertainment options, you just need to bring your own device. We have free TV and movies streaming over the inflight wifi, however the seat back screens are being removed (or were never installed in the case of the MAX).

jcountry
10-17-2018, 07:50 AM
Oil is always a threat for short term problems.

My main long term concern is this flag-of-convenience crap.

Both sides of the aisle are screwing us on this one. And once that really gets going, Uber Driver will become a more attractive career.

Rawhide16
10-17-2018, 08:59 AM
Oil is always a threat for short term problems.

My main long term concern is this flag-of-convenience crap.

Both sides of the aisle are screwing us on this one. And once that really gets going, Uber Driver will become a more attractive career.

If not for the pay difference, Uber is already a more attractive careeer IMO.

TRZ06
10-17-2018, 03:58 PM
Re Saudi we imported 9% of our oil from them last year. Second most behind Canada with 40%. That from the US energy info admin FWIW.

While it doesn't seem to me as the main driving force of AA's future, I think debt is. They have nearly triple the debt load as do their major competitors. No other statistic stands out to have the stock so undervalued. No matter where you think the company is going in the future whether it be through good times (like now) or bad the market views AA as not a healthy investment.

7B cash on hand (mostly borrowed) with well over 20B in debt wouldn't be the way I would want to operate and I would hate to have that hanging over my head for the long term. Long story short I think your concerns are valid and you should plan accordingly if you have that option.

Floobs
10-17-2018, 04:57 PM
Oil is always a threat for short term problems.

My main long term concern is this flag-of-convenience crap.

Both sides of the aisle are screwing us on this one. And once that really gets going, Uber Driver will become a more attractive career.

Not too worried, wow, Norwegian and the other are all about to close.

Arado 234
10-18-2018, 06:23 AM
Not too worried, wow, Norwegian and the other are all about to close.

Higher oil prices have already killed a couple of smaller Airlines in Europe.

Al Czervik
10-18-2018, 07:09 AM
I love how this topic is being discussed during record profits right before section 6.

Route66
10-18-2018, 07:33 AM
1/3 of our income is eaten up by debt payments. The scarier issue is our profits will fall 50% due to fuel price increases, meaning the majority of our profit will go towards debt repayment and we will just be treading water.

Hence, the stock price.

That being said back in 2011-2012 time frame, with oil climbing and 300 old-ass S80's on the line, what would you do if you were management? They were really between a rock and a hard place. Had oil not gone bonkers (again) I would imagine AA managment wouldn't have bought so many new airplanes.

Another issue is we overpaid for them because of the bankruptcy filing.

To pile it on, we bought 2005 models when the MAX and NEO was just around the corner. So, we'll be at a 15%-20% fuel burn disadavange for 25 years.

Not to be a Debbie downer, though.

Overall the board made a hugely bad decision to buy back stock when they could've paid down our debt. We had an opportunity to be ahead financially but choose not to take it. The company financial performance is the main reason I have not and probably will not move to a domicile. I don't trust this place. We save about 70% of our income and I fully expect to be out of a job in the next five years. After almost five years here, I have given serious thought to leaving.

If I were at Delta or SWA I would move. For this place? Not a chance. They have made it clear they have no long term plan and no desire to run it for a future.

And this resonates with front line employees, most of us don't give a crap which is sad. When we see the company being run better wth more long term decisions being made, maybe morale will improve.

Other airlines are hiring. Theyíre run better so go work for them.

Arado 234
10-18-2018, 08:00 AM
I love how this topic is being discussed during record profits right before section 6.

Doesn't matter. If DL is able to run a good show, so should we. This time management has no excuse for their self induced cluster ****. Any excuse coming from management should be met with KDA signs.

Sliceback
10-18-2018, 08:48 AM
KDA has a different meaning if youíre in mgt and trying to keep your job. Thatís also true of a union, the military, politics, etc.

ORDinary
10-18-2018, 09:49 AM
I love how this topic is being discussed during record profits right before section 6.

So does management.

FlyPurdue
10-18-2018, 11:42 AM
I am not going to comment on the debt besides saying a heavy debt load is expected when you buy 500+ aircraft.

What should concern us is top line revenue, not cost...Deltaís CBA cost a lot more than AAís (annecdotally) yet their margins are 5+ points better than ours. At an aggrogate, passengers on DL (and to an extent SWA, and UA) are willing to pay more to fly those carriers as there is a perceived value proposition.

AA will improve, it has to. Leadership is compensated because they provide a return to investors. Investors are mad right now, our share price reflects that.

Lets see what happens during the earnings call on 25th. If they can show that our forward revenue outlook is improving, great. If not. I would not be surprised to see shakeup of some kind in thr next year.

sherpster
10-18-2018, 12:01 PM
KDA has a different meaning if youíre in mgt and trying to keep your job. Thatís also true of a union, the military, politics, etc.

Took me a few seconds to decipher but that was awesome!

Cheddar
10-22-2018, 02:48 AM
Itís amazing how much of a ******show we are, and yet STILL make $3BILLION!!! With decent management with actual vision we would be a powerhouse.

Regardless, section 6 is almost here. And oh yeah, the bill is due... FUPM.


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Rawhide16
10-22-2018, 09:46 AM
https://seekingalpha.com/article/4206297-american-airlines-beaten-pulp

Botched
11-08-2018, 06:36 AM
Itís amazing how much of a ******show we are, and yet STILL make $3BILLION!!! With decent management with actual vision we would be a powerhouse.

Regardless, section 6 is almost here. And oh yeah, the bill is due... FUPM.


Sent from my iPhone using Tapatalk

best do some more homework son.

https://www.cnbc.com/2018/10/25/american-airlines-third-quarter-profit-in-line-with-expectations.html



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