742Dash

American had been losing money for years. They had 4 billion in cash, but their liabilities also exceeded their assets by 5 billion.

A key to surviving bankruptcy is to go into it with cash on hand. Wipe out the debt side, or at least give it a good hair cut, then march on. Going in with a weak cash position often leads to Chapter 7.

It should be no surprise that a CEO who gets a company into that position gets replaced. There is an entire subclass of CEOs who specialize in restructuring.

And it was not just labor that took it in the shorts. As usual, the leasing companies took big hits and the debt was restructured.

742Dash

If you are so wise about history then you know that Lorenzo's empire revolved around Jet Capital, which was the tool he used to take control of TIA -- and was privately held.

rickair7777

That's not a lot of money for a company that size with that many liabilities. Especially an airline... the FAA will pull your cert if your financial position gets bad enough, they know a broke company cannot and will not comply with all safety requirements.

Also AA was too big to fail at that point.

Cujo665

It’s never about liabilities vs bank holdings. It’s about does the revenue support the debt servicing. They retained assets they had no business holding onto that were discovered in the bankruptcy that had they sold those assets they could have bought down their debt. They didn’t want to is the real answer. Heck, they even kept their London townhouse near 10 Downing St until the court made them liquidate it. They let countless jets rot in the dessert they were still making payments on rather then sell them or part them out to cut losses. It was a game to them, it still is. Bankruptcy cut all those payments to almost nothing. Pennies on the dollar. Foolish to think they aren’t planning the exact same playbook again.

Parker? He’s a Lorenzo clone. AA will be back in bankruptcy by 2021, just in time to stick bankruptcy contracts on all the labor forces again. AA pilots are already over 14 years without a negotiated or non bankruptcy contract.

Cujo665

Banks and retirees got screwed the most.

dera

You give Dougie way too much credit. Lorenzo invented that play, Doug is just trying to copy it.
And I think you couldn't be more wrong about the contract situation.
With the average age and looming retirements, AA will want to negotiate a contract ASAP that is extremely top heavy. Half the pilots are retiring in the next decade. They will sell everything that screws up the junior guys for a few extra bucks for their retirement.
Airport standby for 2 bucks an hour, they would do it because the majority of voters would never suffer from it.
It's in AAs best interest to get something done, quick. When the retirements kick in, it wont be as easy.
Forum talk is cheap, but that's what will happen, just watch.

742Dash

I think of retirees as being part of labor, but that is just my approach.

Once thing we do agree is on our opinion of Parker. His career shows everything that is wrong with modern American business management.

HeavyLift

Atlas is a contract carrier.

You are comparing apples to oranges here.

Contract carriers have no leg to stand on and will never get a contract until they get the balls to park the airplanes.
When you do, they will move your airframes to the next carrier.

iPilot

So Kalitta is doomed? I can’t keep track if they’re screwed for being too expensive or Connie is a visionary for being so generous.

3pointlanding

Why do think Kalitta is referred to as K4?