That is the point. It is not perfect, but it is a lot better than what we can see. A perfect example is the V Australia deal.

 

Wow, Carl, you are quoting the business press, excellent source of financial analysis. Go and read some financial analysis by people that make their living doing it. Is that really what you are standing on, the headline from the Fort-Worth Star Telegram? Is this a joke or are you seriously using the Fort-Worth Star Telegram as your source for financial analysis.

American only has a little over $1 billion in unsecured debt, I will answer the question but clearly you don't have any information beyond the Fort-Worth Star Telegram. Unsecured debt is just about all that gets wiped out in bankruptcy. The rest is secured, mostly by aircraft, so they will not be able to wipe it out.

American does not have double the debt load of Delta. American (about 8.2 billion) has less long term debt than Delta (about 12.5 billion), but they are a much smaller company now. Another Carlism that flies out the window with yesterday's Fort-Worth Star Telegram. American's chief problem is a revenue problem.

Since you are so into reading newspapers, Carl, why don't you go back two years and list out the PRASM performance of American vs. Delta. Show me how each airline has done in that time. Then tell me why there is a difference. Carl, you can bluster and attack, but you can't come up with a reason why American has underperformed Delta in the last few years.

You show headlines from the press that has no clue on anything that happens in this industry. I offer analysis gleaned from researching company reports and from people that get paid lots of money to do nothing else but analyze the industry. I guess everyone else can decide which sources to believe.

 

They are in bankruptcy to:

1. Get rid of small aircraft 30-40 seats that lose money hand over fist
2. Accelerate MD-80 retirements
3. Fix productivity issues that weren't addressed in 2003
4. Freeze or terminate pensions
5. Hit labor one more time
6. Reduce debt as much as practical
7. Take a shot as vendors, airports, etc. to negotiate better contracts
8. Redo leases on aircraft they want to retain

Most of AA's aircraft and debt are in EETC's. Bundles of aircraft are secured by one EETC which is split in tranches and each tranche is sold to multiple buyers in varying amounts. It is impossible to unwind those EETC unless they give up all the aircraft. No airline has been able to crack the EETC problem in bankruptcy and I don't expect AA to be the first. They are designed that way to protect creditors, that is why the interest rates are lower.

As I said to Carl, the underlying issue for them is not costs but revenue. Sure they can in the short term push costs down to a level that will help them out, but in the end they are too small a player in a market that is increasingly getting crowded with Delta and United.

If you were a corporate travel manager for a global business, whom would sign a contract with? Look at where you can go with Delta and United and then look at American. They don't compete. We are everywhere in the world and American has gaping holes in their network. This is not theory, it is happening every day as Delta steals more and more high value customers away from American and US Airways. Airways survives only because their labor force has gone completely insane and they are now operating on essentially regional airline wages. At some point the merry go round stops for Airways too. Why else has Doug Parker put on his high heeled boots and low cut dress and hung out on every street corner saying "Buy me, please. Come on big fella, don't you want to get in bed with me." There is no long term future there.

The problem that both airlines have is that if they merge 1+1 = about 1.4. After you eliminate duplication, there is not enough left there to compete with Delta and United. Where do either of those airlines go west of the international date line? How about Africa? Middle East? Wait Airways goes to Cancun so they have that booming business market to fall back on.

So American will scrape some costs off in bankruptcy, but if that is all they do then they still have serious long term problems. Their network doesn't compete and they are getting their butts kicked every day by Delta and United. They need to get to bigger, they need to expand their network, they need to recapture high value business travelers that are the life blood of an international network carrier.

 

Alfa;

I am not one to give much credence to the talking heads, but his quotes were Associated Press re-printed in other papers.

I guess you posting on an anonymous web-board doesn't require any level of press reliability, but since most of us know your real world identity, this does smack of deflection.

Carl backed up his assertions as challenged by you. If this is all you got, the round goes to Carl.

Scambo (unbiased judge)

BTW, Carl says the problem is debt, you say the problem is revenue. What's the difference? Debits dont equal credits. If this is just a Johnson measuring contest please let me slip out of the way and you two just keep on comparing.

 

Alfa, as usual I agree with your data. A revenue problem that I am not sure CH11 fill fix.

FWIW, I recall DAL having a PRASM of 95-98% the industry average and AMR having a 102% PRASM back in 2005. We are now at 104-107%

 

The FWST and AP are not people I would use to judge what AMR's issues are. PRASM is the metric that is the best indicator and AMR has had a declining trend line.

 

Carl claims that AMR's lack of profitability is debt related. Carl said AMR's debt was double Delta's.

In the 3Q, AMR spent $171 million in interest expense on about $8.2 billion in debt. Delta spent $229 million in interest on about $12.5 billion in debt. American reported a net LOSS of $153 million and Delta reported a net PROFIT of $547 million, after all special items. Do the math, if a magic fairy comes along and wipes out all of American's debt and let's them keep all their airplanes, American still has a third quarter where their profit is $18 million. $18 million profit in the third quarter, you know the money quarter, summer travel, the one that is supposed to support you the whole year. $18 million if they eliminate ALL THEIR DEBT. Sure they don't have a revenue problem, it's all about debt.

With ZERO DEBT American would still lose money for the entire year, they would still lose money for next year, and the one after that. Is this really all about debt?

If debt is the problem, how come Delta spent more on interest and still reported a healthy 3Q while American sucked it once again?

Is American's debt double Delta's or not? I am not sure but when I went to elementary school, I learned that 8.2 was not double 12.5 but in fact 8.2 was less than 12.5. Maybe I am wrong.

In the third quarter Delta increased PRASM by 11% while American increased PRASM by 5.8%, but you know that has nothing to do with profitability, it's all about debt. It is completely unrelated to profit that Delta was able to raise fares to cover the run up in fuel prices while American lagged behind once again, revenue doesn't matter, it's all about debt.

So Delta has more debt, Delta pays more in interest every quarter than American. Delta also has been leading the industry in PRASM growth while American is the laggard. Delta makes a PROFIT in the third quarter while American has another LOSS. Delta will be solidly profitable this year and next while American is in bankruptcy.

Yes, Carl, proved it, it's all about debt. Revenue doesn't matter, it's all about debt. Hey, if some guy sitting on the desk at AP says it's so, it must be true.

Since we all know your true identity too, you are not an unbiased observer. But hey, let's not look at real numbers, they are just a deflection of the truth.

 

I also listed quotes from Time and the AP. The good thing about those guys is that they actually quote the company officers in their report. And again from the AP report quoting the company: AMR said it had $29.6 billion in debt and $24.7 billion in assets.


But you didn't answer the question. You insulted me and my sources in the business press, but you didn't answer the question. For review, the question is: Since you claim that AMR is where they are because of a lack of Joint Ventures and code share, where are any news stories/analysis to back that up? Your own personal opinions don't count as analysis.


Then you shouldn't have any problem posting news stories to back up your thesis. I did, why can't you? While you're at it, let's not forget what you said to start this whole thing. You said that AMR is where they are because of a lack of JV's and code share. Please look for those stories to back up this opinion of yours as well.


In case you haven't noticed, the only bluster and attack here is from you. You say I "can't come up with a reason why American has underperformed Delta...", yet I've posted media stories quoting AMR officers as to what THEY think caused them to seek chapter 11. Don't know what else can be done when I post my evidence, then you respond by telling me "I can't come up with a reason..."


You mean besides the fact that they quote company officers, and the business press does this stuff for a living?

No you haven't. You've done nothing but post your opinion. Furthermore, you've still refused to back up your assertion that AMR is where they are because of a lack of JV's and code share.

Indeed. Press sources who quote company officials, or the personal opinion of an MEC bureaucrat.

Carl

 

Translation: I screwed up when I said that AMR is where they are because of a lack of JV's code share. So I need to keep posting lots and lots of words to help people forget.

Carl

 

Translation. Bankruptcy has nothing to do with fixing their revenue problems. Bankruptcy will fix the issues I listed which will give American some short term breathing room.

American has a long term revenue problem. The only way for them to increase revenues is to get bigger. They need to merge and make American Airlines bigger. They need to increase their extended network through codes shares and JV's. It is very consistent.

Face it, Carl, you are just shooting in the dark here. You have no data, no numbers, no analysis, nothing. Oh, you have some wire reporter from the AP. Wow, that seals the deal.