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View Full Version : Bankruptcy


6ix9ineYearFlow
03-14-2020, 08:13 PM
More leveraged than their last bankruptcy.
More debt than United & Delta combined.
AA bonds approaching distressed levels at 12%.
AAG is in trouble.

The silver lining is that oil is cheap and AAG has $7.3 billion in liquidity....


HobGoblin
03-14-2020, 08:21 PM
More leveraged than their last bankruptcy.
More debt than United & Delta combined.
AA bonds approaching distressed levels at 12%.
AAG is in trouble.

The silver lining is that oil is cheap and AAG has $7.3 billion in liquidity....

AA doesnít have more debt than United and Delta combined.

stbloc
03-14-2020, 08:51 PM
AA doesnít have more debt than United and Delta combined.
Thatís whatís analyst on CNBC keep quoting. Heard that multiple times.


senecacaptain
03-14-2020, 09:05 PM
I believe AA debt is about equal to DAL and UAL combined, but not more

Concerns about debt back in 2018, article: https://www.flightglobal.com/strategy/american-faces-debt-concerns-from-wall-street/130083.article (https://www.flightglobal.com/strategy/american-faces-debt-concerns-from-wall-street/130083.article)

stbloc
03-14-2020, 09:35 PM
I believe AA debt is about equal to DAL and UAL combined, but not more

Concerns about debt back in 2018, article: https://www.flightglobal.com/strategy/american-faces-debt-concerns-from-wall-street/130083.article (https://www.flightglobal.com/strategy/american-faces-debt-concerns-from-wall-street/130083.article)
a lot changed since 18.

Even worse than Southwest and United is American's net total long-term debt, which has ballooned to nearly $20 billion. In fact, American Airlines has more net long-term debt than the other five major U.S. airlines combined. Also concerning is American's debt to capital (D/C) ratio, which is the highest of the group and now exceeds 100%, meaning the company is highly leveraged and prone to using debt financing over equity financing.

Earnings aren't much better. Although American was able to grow net income more than 15% year over year in Q3 2019, these results pale in comparison to Delta's (https://www.fool.com/investing/2020/01/14/can-delta-air-lines-stock-keep-soaring-in-2020.aspx) 29% or United's (https://www.fool.com/investing/2020/01/17/can-united-airlines-surge-another-582.aspx) 31% increase. Both Delta and United expect growth to slow in the coming quarters, and American is no different.

Ual 9.4b
Dal 8.7b in long term debt
congratulations to Doug for buying back stock vs paying down debt.

GhettoJet
03-15-2020, 02:45 AM
Bankruptcy, layoffs, and a major downsizing of the operation is inevitable at this point. AA has been the weakest of the majors for several years now, both operationally and financially. Even if it wasn't a foregone conclusion, there is too much for the management team to gain by pursuing this route with three open contracts. Think partying in Vegas for six months on your credit card while working from your hotel room. The hangover has arrived.

Surprise
03-15-2020, 03:06 AM
Casual observation that there seems to be a lot of new faces here spreading doom and gloom. Is management trying to soften us up for concessions?

M20 Pilot
03-15-2020, 04:10 AM
Online airline CEO's! Its like celebrity political advice! So valuable! (NOT)

Things will workout just fine, so try to destress and enjoy your time with your loved ones.

Al Czervik
03-15-2020, 04:30 AM
Analysts (US guys) are saying China’s economy maybe back to full steam by summer. This may be short lived.
I’m hoping...

Salukidawg
03-15-2020, 06:24 AM
Analysts (US guys) are saying Chinaís economy maybe back to full steam by summer. This may be short lived.
Iím hoping...
Letís say youíre right and the industry rebounds quickly. That still doesnít change the fundamental problems that lay beneath the surface for AA going forward. They need to aggressively pay down debt (should have already been happening) or they are going to find themselves in a world of hurt when the next financial crisis hits. Dougís comments about the industry never losing money again are going to come back to haunt him in a big way.

Route66
03-15-2020, 06:30 AM
Bankruptcy, layoffs, and a major downsizing of the operation is inevitable at this point. AA has been the weakest of the majors for several years now, both operationally and financially. Even if it wasn't a foregone conclusion, there is too much for the management team to gain by pursuing this route with three open contracts. Think partying in Vegas for six months on your credit card while working from your hotel room. The hangover has arrived.

Youíre not armed, are you?

AllYourBaseAreB
03-15-2020, 06:32 AM
Whatís the point of paying down debt when the debt is so cheap? Especially if they are 0% loans from the government (hopefully coming).

cash WAS wasted on those damn buybacks...

at least we donít hedge fuel.

5and20
03-15-2020, 07:16 PM
Casual observation that there seems to be a lot of new faces here spreading doom and gloom. Is management trying to soften us up for concessions?

Illinois and Ohio just closed all restaurants for 2 weeks. United announce they will cut flying by 50 percent and will lose over a billion dollars in in revenues March. You think this just management games

FourPutt
03-15-2020, 07:48 PM
Illinois and Ohio just closed all restaurants for 2 weeks. United announce they will cut flying by 50 percent and will lose over a billion dollars in in revenues March. You think this just management games

They've got to be losing more than just a bliion in revenue per month, probaby burning through a billion in cash per month with revenues down 50% or more.

Name User
03-15-2020, 08:02 PM
They've got to be losing more than just a bliion in revenue per month, probaby burning through a billion in cash per month with revenues down 50% or more.
44b rev and 42b expenses (pulling #'s out my butt), Loss of 30b in annual revenue (70% haircut...optimistic?)

5b in fuel savings from cheaper gas and not flying.

Leaves 13b revenue and 37b in expenses

Burn of 2b a month or time to expire...less than four months with no more borrowing.

above is just shotgunned. Pay cuts and layoffs will probably give another month or so of burn. Eventually all the majors are going to go through restructuring and shed half or more of their aircraft, there is just no way to recover from this. I'd bet AA furloughs 6000-7000, maybe more. TWA guys will be on the street...again.

And no he demand won't just come right back, because there won't be anyone left that is employed.

I think the U.K. is doing it the right way. It's gonna happen...everyone is gonna get this...at least they will have an economy after it's all said and done.

Arado 234
03-16-2020, 05:45 AM
Illinois and Ohio just closed all restaurants for 2 weeks. United announce they will cut flying by 50 percent and will lose over a billion dollars in in revenues March. You think this just management games

Realty is... People gonna go crazy. I have family in Europe and playgrounds etc. are packed! Good luck staying indoors with a 3 year old for two weeks! And for all others, you'll get tired of 24 hour pornhub very quickly. I bet we'll see birth rates skyrocket in the next 9 to 10 months AND the divorce rate.

CVGair
03-16-2020, 02:37 PM
Letís say youíre right and the industry rebounds quickly. That still doesnít change the fundamental problems that lay beneath the surface for AA going forward. They need to aggressively pay down debt (should have already been happening) or they are going to find themselves in a world of hurt when the next financial crisis hits. Dougís comments about the industry never losing money again are going to come back to haunt him in a big way.

It does not matter the party is over all 3 legacies will go BK (plus weak airlines), Now the next step after bk, lets end this eagle/express experiment all flights run by AA, no Mainline/Eagle after the bk, "B" scales fine. All employees taken care of. Do you have what it takes? Thousands will lose their jobs, this is about the future. Once again get your head out of the sand, BK will happen. Get your affairs in order and the contract for those that survive must be for the future. Many sacrifices, 3 years from now we will be proud if we do it right!! All Legacies must stand tall and get rid of the surf regional system, help one another, love another. The surf system must be abolished after BK, Do you have what it takes?

rld1k
03-16-2020, 02:47 PM
It does not matter the party is over all 3 legacies will go BK (plus weak airlines), Now the next step after bk, lets end this eagle/express experiment all flights run by AA, no Mainline/Eagle after the bk, "B" scales fine. All employees taken care of. Do you have what it takes? Thousands will lose their jobs, this is about the future. Once again get your head out of the sand, BK will happen. Get your affairs in order and the contract for those that survive must be for the future. Many sacrifices, 3 years from now we will be proud if we do it right!! All Legacies must stand tall and get rid of the surf regional system, help one another, love another. The surf system must be abolished after BK, Do you have what it takes?

But I like surfing

Happyflyer
03-16-2020, 04:01 PM
More leveraged than their last bankruptcy.
More debt than United & Delta combined.
AA bonds approaching distressed levels at 12%.
AAG is in trouble.

The silver lining is that oil is cheap and AAG has $7.3 billion in liquidity....

I think they can just default on the loans for the airplanes without filing BK.

Before it was to reorganize the pensions.

In this case, they just don't need the capacity, and can allow the planes to be repossessed.

When the debt doesn't have collateral you have to use BK. When it does you surrender the collateral.

Name User
03-16-2020, 04:58 PM
It does not matter the party is over all 3 legacies will go BK (plus weak airlines), Now the next step after bk, lets end this eagle/express experiment all flights run by AA, no Mainline/Eagle after the bk, "B" scales fine. All employees taken care of. Do you have what it takes? Thousands will lose their jobs, this is about the future. Once again get your head out of the sand, BK will happen. Get your affairs in order and the contract for those that survive must be for the future. Many sacrifices, 3 years from now we will be proud if we do it right!! All Legacies must stand tall and get rid of the surf regional system, help one another, love another. The surf system must be abolished after BK, Do you have what it takes?
That sounds great. Ok now for reality. Shred union contracts and outsource everything, Total reset. AA becomes a broker. Mesa, Skywest, Republic all operating Airbus and Boeing products and bid on contracts. Assets like slots get sold at fire sale prices because the last carrier left standing only has so much cash. The end game could be one or two carriers left flying 300-500 aircraft between them for the time being, only serving major airports and doing point to point.

Then that is a real good reason for cabotage to enter the fray, let other countries take the risk too.

I don't think you really want to go down that road.

CVGair
03-16-2020, 05:22 PM
That sounds great. Ok now for reality. Shred union contracts and outsource everything, Total reset. AA becomes a broker. Mesa, Skywest, Republic all operating Airbus and Boeing products and bid on contracts.
Oh my Gosh Oh my Gosh, what we have here is a failure to communicate, WOW. Just the opposite bro, we must get rid of the regionals all together, one American for all. Oh my gosh what a failure in reading comprehension. Jobs may be lost short term but protect those that come after you, dont be selfish. The time is now, the old timers gave away small aircraft, it was a mistake, take it back during the BK, stand strong. One american, no more regionals. All legacies must stand strong for the long term, come on bro enough with the immediate gratification. Even now people are salivating by thought of early retirement - bargain say no more regionals now or we wont play!! Quit being selfish!

Stan446
03-16-2020, 05:27 PM
Oh my Gosh Oh my Gosh, what we have here is a failure to communicate, WOW. Just the opposite bro, we must get rid of the regionals all together, one American for all. Oh my gosh what a failure in reading comprehension. Jobs may be lost short term but protect those that come after you, dont be selfish. The time is now, the old timers gave away small aircraft, it was a mistake, take it back during the BK, stand strong. One american, no more regionals. All legacies must stand strong for the long term, come on bro enough with the immediate gratification. Even now people are salivating by thought of early retirement - bargain say no more regionals now or we wont play!! Quit being selfish!
Lay off the booze.

Name User
03-16-2020, 05:32 PM
Oh my Gosh Oh my Gosh, what we have here is a failure to communicate, WOW. Just the opposite bro, we must get rid of the regionals all together, one American for all. Oh my gosh what a failure in reading comprehension. Jobs may be lost short term but protect those that come after you, dont be selfish. The time is now, the old timers gave away small aircraft, it was a mistake, take it back during the BK, stand strong. One american, no more regionals. All legacies must stand strong for the long term, come on bro enough with the immediate gratification. Even now people are salivating by thought of early retirement - bargain say no more regionals now or we wont play!! Quit being selfish!
oh my gosh, what leverage will you exert to "get rid of the regionals altogether"?

Your idea is a figment of your imagination, and nothing else.