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AA Has $14 Billion In Total Debt! Any Hope?  
User currently offlineKL911 From Czech Republic, joined Jul 2003, 5308 posts, RR: 16
Posted (5 years 3 months 16 hours ago) and read 14832 times:

This shocked me. How much interest do they pay? And according to the article they keep on borrowing. Is there a way out of this? Has any airline worldwide had such a large debt?


http://news.yahoo.com/s/ap_travel/20...s_travel_brief_amr_restructuring_1

Quote:

ATLANTA – American Airlines' parent company said Thursday it is taking on significant new debt at a time when revenues are being hammered, but the $2.9 billion in cash and fresh financing it raised should quiet concerns — for now — that it is in danger of a cash crunch and a bankruptcy filing.

AMR had $14 billion in total debt at the end of the second quarter. It's unclear how much that figure will increase at the end of the third quarter. And AMR has $1.3 billion in debt maturities in 2010.

End Quote.

111 replies: All unread, showing first 25:
 
User currently offlineDocLightning From United States of America, joined Nov 2005, 20365 posts, RR: 59
Reply 1, posted (5 years 3 months 16 hours ago) and read 14809 times:



Quoting KL911 (Thread starter):

AMR had $14 billion in total debt at the end of the second quarter. It's unclear how much that figure will increase at the end of the third quarter. And AMR has $1.3 billion in debt maturities in 2010.

Seems to me like fares need to go up. And air travel needs to become more rare.

God, if only they could manage that "cheap fuel" thing.


User currently offlineAntoniemey From United States of America, joined Dec 2005, 1607 posts, RR: 4
Reply 2, posted (5 years 3 months 16 hours ago) and read 14785 times:



Quoting KL911 (Thread starter):
This shocked me. How much interest do they pay? And according to the article they keep on borrowing. Is there a way out of this? Has any airline worldwide had such a large debt?

They had $21 billion at one point. For a company the size of AA it's manageable as long as they're making an operating profit a majority of the time.



Make something Idiot-proof, and the Universe will make a more inept idiot.
User currently offlineElmoTheHobo From United States of America, joined Aug 2006, 1545 posts, RR: 1
Reply 3, posted (5 years 3 months 16 hours ago) and read 14753 times:



Quoting KL911 (Thread starter):
This shocked me. How much interest do they pay? And according to the article they keep on borrowing. Is there a way out of this? Has any airline worldwide had such a large debt?

They paid a little over $1 billion in interest last year.


User currently offlineCommavia From United States of America, joined Apr 2005, 11983 posts, RR: 62
Reply 4, posted (5 years 3 months 16 hours ago) and read 14762 times:

The key point is not debt, but cash flow.

As others have said, many airlines - and, indeed, many large corporations - have carried debt burdens substantially higher than AMR is right now before. It's definitely not unheard of. Many of the airlines that have had such high debt burdens have, true, filed for bankruptcy, although to date AMR management has been committed to avoiding that course.

AMR has proven adept at navigating the capital markets, religiously paying down debt, and living up to their obligations - to their shareholders, creditors and employees - in the last decade.

During that time, AMR has generated billions upon billions in operating cash flow, which is really the most important metric to consider, since it gives a sense of the amount of money that is coming in and the amount of money that is going out as a result of day-to-day operating of the company.

Profit and loss, and even debt, are to varying degrees essentially "paper numbers" that are built - in whole or in part - are accounting formulations and regulatory requirements, not on hard cash in a bank account. Cash flow is the amount of money in AMR's bank account at the beginning of the day and the end of the day, and more often than not in the recent past, AMR has had more money in its bank account at the end of the day than the beginning.

As long as they can keep that up, they will survive.


User currently offlineKL911 From Czech Republic, joined Jul 2003, 5308 posts, RR: 16
Reply 5, posted (5 years 3 months 16 hours ago) and read 14752 times:

But it's still a lot right? Is it something to worry about? The winter will see low yields..

User currently offlineHPAEAA From United States of America, joined May 2006, 1026 posts, RR: 1
Reply 6, posted (5 years 3 months 16 hours ago) and read 14709 times:

Just a couple of thoughts ...

the recent debt taken on was in response to some projections of a cash crunch in the near term, by adding some cash, they've been able to mitigate the risk of a crisis and demonstrate that they have the ability to raise capital.

Second is that by increasing the cash on hand they can put some additional cushion against debt/banking covenants which could have some severe adverse effects.

lastly - many companies either refinancing debt or taking on additional debt due to favorable credit terms available now, while AMR may hold the cash in the near term, longer term they can use it to pay off higher rate debt once the environment improves.



Why do I fly???
User currently offlineKL911 From Czech Republic, joined Jul 2003, 5308 posts, RR: 16
Reply 7, posted (5 years 3 months 16 hours ago) and read 14659 times:



Quoting Commavia (Reply 4):
The key point is not debt, but cash flow.

As others have said, many airlines - and, indeed, many large corporations - have carried debt burdens substantially higher than AMR is right now before. It's definitely not unheard of. Many of the airlines that have had such high debt burdens have, true, filed for bankruptcy, although to date AMR management has been committed to avoiding that course.



Quoting ElmoTheHobo (Reply 3):
They paid a little over $1 billion in interest last year.

It's just 1 billion up in smoke every year. How can you fight it if you start the year already minus 1 billion. Good luck making a profit. Margins are already so small. Wouldn't it be better to file, restructure, and start all over with a much lower costbase?


User currently offlineKhobar From United States of America, joined Mar 2006, 2379 posts, RR: 4
Reply 8, posted (5 years 3 months 15 hours ago) and read 14600 times:

Maybe they are going to attract more customers by charging for soft drinks. LOL.

User currently offlineAntoniemey From United States of America, joined Dec 2005, 1607 posts, RR: 4
Reply 9, posted (5 years 3 months 15 hours ago) and read 14596 times:



Quoting KL911 (Reply 7):
It's just 1 billion up in smoke every year. How can you fight it if you start the year already minus 1 billion. Good luck making a profit. Margins are already so small. Wouldn't it be better to file, restructure, and start all over with a much lower costbase?

No, because as it is they can afford to pay the interest and still reduce the debt overall. Filing for bankruptcy protection puts a BIG hit on your ability to borrow. If they needed the relief they'd arguably be better off talking directly to their larger creditors and working out a deal to defer some payments... not too different from managing an individual's finances.

Bankruptcy is always an option, but in most cases it should be a last option, only to be used if you have creditors with unreasonable expectations or extreme unexpected circumstances that impact your cash flow.



Make something Idiot-proof, and the Universe will make a more inept idiot.
User currently offlineN62NA From United States of America, joined Aug 2003, 4594 posts, RR: 8
Reply 10, posted (5 years 3 months 15 hours ago) and read 14513 times:

Well, they may go bankrupt, but they won't fail. The U.S. Congress and the President will come in and take them over. And then AA will truly be American Airlines.  Smile

User currently offlinePar13del From Bahamas, joined Dec 2005, 7717 posts, RR: 8
Reply 11, posted (5 years 3 months 15 hours ago) and read 14492 times:

So since 14 billion is a huge number for comparison what DL's debt, or BA, AF, KLM just so we have other numbers for comparison and put the 14 bill in perspective, it was 21 bill and they have knocked it down, without Chpt 11 no less.

User currently offlineAA767400 From United States of America, joined Jan 2001, 2401 posts, RR: 27
Reply 12, posted (5 years 3 months 15 hours ago) and read 14361 times:



Quoting Khobar (Reply 8):
Maybe they are going to attract more customers by charging for soft drinks. LOL.

That was USairways.

This whole thread is a sad spinoff to Worldtraveler's anti-AA thread. Same old tired threads about AA's doomsday, and how DL is king.  bored 



"The low fares airline."
User currently offlineKL911 From Czech Republic, joined Jul 2003, 5308 posts, RR: 16
Reply 13, posted (5 years 3 months 15 hours ago) and read 14353 times:



Quoting AA767400 (Reply 12):
This whole thread is a sad spinoff to Worldtraveler's anti-AA thread. Same old tired threads about AA's doomsday, and how DL is king

No it's not. I'm not anti AA, and certainly not pro DL. I just want to know how an airline can get out of 14 billion and make a profit again. ( And with profit I mean having no debts, and end the year in the black.)


User currently offlineN62NA From United States of America, joined Aug 2003, 4594 posts, RR: 8
Reply 14, posted (5 years 3 months 14 hours ago) and read 14295 times:



Quoting KL911 (Reply 13):
( And with profit I mean having no debts, and end the year in the black.)

Actually, I believe a profit is defined as having more revenues than expenses over a set period of time. So, if AA brings in $100 for the 2nd quarter of 2009, and it's expenses (including interest on their debt) is $90, then they have a profit of $10.

By your standard of having no debt in order to have a profit, practically no company would ever achieve a profit.


User currently offlineAirframeAS From United States of America, joined Feb 2004, 14150 posts, RR: 24
Reply 15, posted (5 years 3 months 14 hours ago) and read 14280 times:



Quoting DocLightning (Reply 1):
Seems to me like fares need to go up.

Fares at AA are already ridiculously too high as it is. I cannot even afford to fly on AA at all, even if I wanted to. I have never flown on AA exactly because of this.

What AA needs to do is to get their cost structure in order, get it lower to the point to where they can actually repay some of these debts. Eliminate routes that do not make any money at all, especially the routes that have low load factors. That is only one suggestion.... AA can figure out the rest.

But then again, AA is a huge, HUGE airline...to huge to fail. That seems to be the mantra these days.... and it is ridiculous!



A Safe Flight Begins With Quality Maintenance On The Ground.
User currently onlineRoseflyer From United States of America, joined Feb 2004, 9829 posts, RR: 52
Reply 16, posted (5 years 3 months 14 hours ago) and read 14257 times:

What I am more concerned about is that their market cap is only 25% of the total company's enterprise value. What that means is that investors don't believe in the strength of the company. That shows its risk for bankruptcy since investors and creditors are shying away from it. It also means a lower credit rating which means higher interest rates which just feed on each other.

If you compare that to one of the better performing airlines like Alaska and Southwest, you will see they have a ratio 60% and 80% likewise. While still not that good, it is a lot more comfortable. A company performing reasonably well with consistent profits will be at about 100%. Boeing for example is currently 92%. A strong company like Microsoft is 115%. A really horrible company like AIG is at 8%, so it can get worse, of course AIG should have filed for bankruptcy, but powers they be decided against it.

[Edited 2009-09-28 18:00:51]


If you have never designed an airplane part before, let the real designers do the work!
User currently offlineCommavia From United States of America, joined Apr 2005, 11983 posts, RR: 62
Reply 17, posted (5 years 3 months 14 hours ago) and read 14261 times:



Quoting KL911 (Reply 13):
And with profit I mean having no debts, and end the year in the black.

Three critical points:

1. It is virtually impossible as a company to have "no debts." You would find it hard to find any major corporation anywhere on earth that has no debt. The reason - at least in the United States - is that there are distinct advantages to structuring your capital with at least some debt because of its accounting, regulatory and tax treatment under U.S. legal and financial regulations. The key point is to have a reasonable, manageable debt level, which is something that AMR does need to continue to work on - as they have been.

2. Carrying debt and recording "profits" are not mutually exclusive. It is quite possible - indeed, a virtual certainty - for a "profitable" company to carry debt. Again, every company carries some debt. Some industries - like the airline industry - are known for carrying more than others systemically. It's part of the game in the airline business. But just because a company has debt in no way precludes that same airline from reporting an accounting "profit" - after all, AA (as an example) has done it many times.

3. Again, "profit" is not really the focus, and AMR management knows that. "Profit" is a paper number generated through various accounting rules, financial regulations, estimates and actuaries, etc. It is not a reflection of the actual amount of money coming into and/or going out of a company's bank account in any given period (day, quarter, year, whatever). Cash flow from operations is the actual measure of how much money is going into or coming out of a company's bank account at the end of the day. And AMR's operations - the day-to-day running of the airline - has generated billions upon billions in operating cash flow in recent years, which is what has allowed AA to so successfully pay down debt, continue to fund all their employees' pensions, not default on their debts, etc., even given above-market labor costs, a credit crisis, two wars, a historic fuel cost spike, etc.


User currently offlineTugger From United States of America, joined Apr 2006, 5797 posts, RR: 10
Reply 18, posted (5 years 3 months 14 hours ago) and read 14218 times:



Quoting KL911 (Reply 7):
It's just 1 billion up in smoke every year. How can you fight it if you start the year already minus 1 billion. Good luck making a profit. Margins are already so small. Wouldn't it be better to file, restructure, and start all over with a much lower costbase?

That $1 billion may seem like a lot but if you break it down it is only an additional three-quarters of a cent per passenger flight mile (based on 2008 RPM: 131,757,000,000).

Quoting Par13del (Reply 11):
So since 14 billion is a huge number for comparison what DL's debt, or BA, AF, KLM just so we have other numbers for comparison and put the 14 bill in perspective, it was 21 bill and they have knocked it down, without Chpt 11 no less.

Delta's regulatory filings show show a total debt of $14.8 billion as of the end of the second quarter. (They did just pay down some of it, I don't know how that affected it.)

Tugg



I don’t know that I am unafraid to be myself, but it is hard to be somebody else. -W. Shatner
User currently offlineCommavia From United States of America, joined Apr 2005, 11983 posts, RR: 62
Reply 19, posted (5 years 3 months 14 hours ago) and read 14110 times:



Quoting AirframeAS (Reply 15):
Fares at AA are already ridiculously too high as it is. I cannot even afford to fly on AA at all, even if I wanted to. I have never flown on AA exactly because of this.

Depends on where you fly and your definition of "too high," I guess.

I just got a round-trip to MCO for less than $200 round-trip, and I recently got a one-way LAX-DFW for $79 + tax.

Quoting AirframeAS (Reply 15):
What AA needs to do is to get their cost structure in order, get it lower to the point to where they can actually repay some of these debts. Eliminate routes that do not make any money at all, especially the routes that have low load factors.

And that is exactly what AA has been doing consistently since 9/11, and is doing today.

Quoting Roseflyer (Reply 16):
What that means is that investors don't believe in the strength of the company. That shows its risk for bankruptcy since investors and creditors are shying away from it.

AA doesn't seem to have a problem finding investors who believe in the "strength of the company," and believe it is capable of avoiding bankruptcy. It's recent debt offering was substantially over-subscribed, and AMR also had no trouble placing $400M in stock last week. Not all that bad as far as market signals go, I'd say.


User currently offlineAlias1024 From United States of America, joined Oct 2004, 2813 posts, RR: 2
Reply 20, posted (5 years 3 months 14 hours ago) and read 14007 times:



Quoting Commavia (Reply 17):
Three critical points:

1. It is virtually impossible as a company to have "no debts." You would find it hard to find any major corporation anywhere on earth that has no debt. The reason - at least in the United States - is that there are distinct advantages to structuring your capital with at least some debt because of its accounting, regulatory and tax treatment under U.S. legal and financial regulations. The key point is to have a reasonable, manageable debt level, which is something that AMR does need to continue to work on - as they have been.

2. Carrying debt and recording "profits" are not mutually exclusive. It is quite possible - indeed, a virtual certainty - for a "profitable" company to carry debt. Again, every company carries some debt. Some industries - like the airline industry - are known for carrying more than others systemically. It's part of the game in the airline business. But just because a company has debt in no way precludes that same airline from reporting an accounting "profit" - after all, AA (as an example) has done it many times.

3. Again, "profit" is not really the focus, and AMR management knows that. "Profit" is a paper number generated through various accounting rules, financial regulations, estimates and actuaries, etc. It is not a reflection of the actual amount of money coming into and/or going out of a company's bank account in any given period (day, quarter, year, whatever). Cash flow from operations is the actual measure of how much money is going into or coming out of a company's bank account at the end of the day. And AMR's operations - the day-to-day running of the airline - has generated billions upon billions in operating cash flow in recent years, which is what has allowed AA to so successfully pay down debt, continue to fund all their employees' pensions, not default on their debts, etc., even given above-market labor costs, a credit crisis, two wars, a historic fuel cost spike, etc.

All very good points.

Another advantage to carrying debt is that it makes a company a less attractive takeover target. Airlines learned this the hard way back in the 80s. The great film "Wall Street" took on this very scenario. Airlines with good balance sheets were bought up by private investor groups and had their cash stripped and assets sold off, with the profits from the sales being paid to the investor group as dividends.



It is a mistake to think you can solve any major problems with just potatoes.
User currently offlineByrdluvs747 From United States of America, joined Jul 2004, 2470 posts, RR: 1
Reply 21, posted (5 years 3 months 14 hours ago) and read 13952 times:

Outside of of any additional prepayment, can anyone tell me what is the scheduled amount AA pays on the debt principal each year? Last I heard, it was around a billion a year. Is that right?

Quoting AirframeAS (Reply 15):
Fares at AA are already ridiculously too high as it is. I cannot even afford to fly on AA at all, even if I wanted to. I have never flown on AA exactly because of this.

AA has plenty of SFO-JFK fare available for close to $200. If you can't afford that then maybe flying isnt your first worry.



The 747: The hands who designed it were guided by god.
User currently offlineKhobar From United States of America, joined Mar 2006, 2379 posts, RR: 4
Reply 22, posted (5 years 3 months 13 hours ago) and read 13753 times:



Quoting AA767400 (Reply 12):
That was USairways.

Yes, I know. Key word was.

Given the current trend of driving customers away, I wouldn't be surprised if AA instituted this failed policy.


User currently offlineAA767400 From United States of America, joined Jan 2001, 2401 posts, RR: 27
Reply 23, posted (5 years 3 months 12 hours ago) and read 13618 times:



Quoting Khobar (Reply 23):
Given the current trend of driving customers away, I wouldn't be surprised if AA instituted this failed policy.

No, I said was. You just stated how AA would implement a failed policy that no other airline has implemented. Which makes no sense what so ever to the topic, and followed it with a nice LOL.

Because don't you think if US failed on that and retracted on it, why would other airlines follow?



"The low fares airline."
User currently offlineDeltaL1011man From United States of America, joined Sep 2005, 9700 posts, RR: 15
Reply 24, posted (5 years 3 months 12 hours ago) and read 13517 times:



Quoting KL911 (Reply 5):

But it's still a lot right? Is it something to worry about? The winter will see low yields..

it is if it is all due in Jan. 2010...........if they can slowly pay it off(of get a loan to pay it off) then everything is ok. The airlines have been hurting a bit more because its hard to get a loan and they are having to use cash to pay off debt. If you aren't making money you hate to have to use the little bit you have left.

Quoting Commavia (Reply 20):
I just got a round-trip to MCO for less than $200 round-trip, and I recently got a one-way LAX-DFW for $79 + tax.

No joke. I could have done ATL-DFW-SAT-DFW-ATL on AA for IIRC 160. wwwwaaaaaaaaaaayyyyyyyyyyyy to low



yep.
25 Brons2 : AA's fares from my home airport AUS are usually equal to or lower than their competitors. When it's more, it's usually $20 or less, and I will pay th
26 Commavia : That's what I usually found, too - AA was always competition, and Southwest was usually the high-fare carrier when I priced flights out of AUS. For L
27 Theredbaron : To me it looks like AA is looking eerily like Aeroflot circa 1980... A money pit to big to fail. Just my 2 pesos.
28 Antoniemey : AA has REDUCED their debt by a third in not too large of a timespan, however. That's hardly a money pit and unlikely in any danger of failing.
29 LACA773 : Wouldn't be helpful for AA to file bankruptcy not to just get rid of the huge amount of debt they have, but also to completely revamp their union cont
30 GreenIsle : "many companies either refinancing debt or taking on additional debt due to favorable credit terms available now, while AMR may hold the cash in the n
31 Post contains links Indy : It is all relative. My personal debt stinks to me. But I'm sure there are plenty of people on here who could handle my debt payments with no problems.
32 Kevinasaurus : I suppose it depends on the route you fly. I did a random search of YYC-LAX and got a price of $475USD on AC, and $865USD for AA. Not to mention the
33 DLD9S : I highly doubt AA expects to sell a whole bunch of tickets from YYC to the west coast based on where their hubs are. I just did a random search of DF
34 LAXdude1023 : I tend to agree with this. My only concern is that, while I would love to see the pilots get hosed, the ground staff and FA's who have worked hard an
35 LipeGIG : As many mentioned, debt is not a problem and there's a lot of examples about this. The point is which debt + capital mix is the perfect for a company
36 MD80fanatic : I'd like to know that too. However it seems the majority of people here don't see any thing wrong with owing 1000 million dollars per annum for inter
37 Jetbluefan1 : As has already been stated, virtually no company in the US has "no debt." The best way to measure if debt is too high or not is to take the value of a
38 Khobar : Because airlines have implemented just about every bone-headed idea that has done nothing but bolster very short term revenue at the expense of long
39 Post contains links Sydscott : Has anyone actually read the SEC filing of what makes up the debt? http://www.sec.gov/Archives/edgar/da.../000000451509000029/aa0630-10q.htm So rathe
40 Theredbaron : Agree. Now when you buy a ticket to get to LAX for example, maybe 20 to 30% of the price goes to a bank, just to pay debt. And most people tend to fo
41 Mayor : My, aren't we touchy. I could probably find as many threads that talked about DL's doomsday and how AA was king.
42 TSS : Exactly. Minimal debt makes a publicly-owned company a huge takeover target. Corporate "raiders" buy up a majority of the stock, sell off the company
43 WorldTraveler : It is absolutely amazing how far some people will go to convince themselves that someone else is the enemy without being able to look in the mirror a
44 Post contains images MD80fanatic : Whatever the new age ideas are on a healthy business, I can safely say that the USA was not built on debt, where companies were borrowing millions to
45 LipeGIG : The big issue is not the US$ 1 billion today, but what this could be in one year with higher interest rates. In a world that they al;ready have to be
46 AADC10 : The Feds will not need to take them over. AA can simply file for Ch. 11 bankruptcy like all of the other legacy carriers. CO has been there twice. Th
47 Yellowtail : Correct. I think we must all remember that the AA brand name alone is worth a ton.
48 OA412 : Show us where the OP made that inference. No one brought up DL until you did.
49 PlaneAdmirer : Actually, as much as I like AA, I don't think it is. Customers go online and chose an airline by price most of the time, not brand. Frequent fliers a
50 Yellowtail : Being in the marketing business, I can tell you "owning" the name American (especially if you are in business outside the USA) is a big advantage. Pe
51 Post contains images AA767400 : Respect your opinion, but it is not going to happen. We will have to wait and see. Please post them. Absolutely amazing how you deny that you just do
52 HawkerCamm : Trying to compete with 265 gas guzzling MD82/83s which are old high maintenance frames can not be good....
53 WorldTraveler : Brand equity is carried as goodwilll on a balance sheet... its demonstrable value from a financial standpoint is manipulated at will by accountants t
54 KL911 : Absolutely true. I mentioned that as well in the beginning. Ch. 11? Which hampers and sabotages free market. When you fail , you fail. Then another a
55 Jbernie : It all depends on what the debt they have has come from/being used for. If AA takes on debt to purchase new efficent aircraft to replace very old, ha
56 Commavia : No. Profit is a focus, but cash flow is more important. Companies do not live or die based on profit, but they do live or die based on cash flow. If
57 LipeGIG : I don't know from where this come from, but Cash flow never is more important than profit. Profit means if your business is sustainable in the long t
58 Commavia : Hardly - it's the other way around. Profit is a largely short-run number that is dominated by accounting calculations like accruals, depreciation and
59 OA412 : I still don't understand the point that you are trying to make. WorldTraveler is not the OP of this thread and did not post in it until well after yo
60 SeaBosDca : This is completely false. Debt may be morally unappealing to you, but it is a fact that it can be financially beneficial. I'll use myself as an examp
61 Ocracoke : Not true at all. There are plenty of corporations that have no debt. Off of the top of my head, I can name two right away: HobbyLobby & Chick Fil-A.
62 Commavia : First off, I should have been more specific - I was originally referring to publicly-traded companies. And I stand by my earlier statement: it would
63 Mayor : Maybe not you, but there are others that do. I hardly think these two companies are as capital intensive as any of the legacies. Not a very good comp
64 LDVAviation : I am going to quote this now, so I will be sure to remember it when you make one of your Delta rah-rah threads. I'll wait till then to demonstrate to
65 Mayor : If I read it correctly there is nothing in those three paragraphs that has anything to say about DL. AA was an airline that prided itself on innovati
66 TSS : But these are for the most part (if not entirely, I'm not sure... some might be leased) fully-owned aircraft that carry no outstanding debt and have
67 Post contains links Sydscott : That's actually basically irrelevant because around $9 billion of the debt is in Operating Lease commitments which are contractual arrangements set i
68 WorldTraveler : Amazing. Cash flow may keep a company out of BK but it is always the focus of a company - first and foremost.... unless of course you work for compan
69 Commavia : Sorry, but again - that is simply not true. Profit is certainly a focus, and it certainly is an important metric to determine certain aspects of the
70 United1 : Wouldn't the brand be valued in with the intangible assets of which AA lists 1.1 Billion of?
71 Commavia : The only mention of intangibles anywhere in AMR's most recent SEC filing - the Q2 10Q - was the categorization of route authorities as intangible ass
72 LipeGIG : Are you sure Sydscott ? Mostly financing is in terms of Libor (for those not familiar with financial stuff, it's a bank index for the interest rate o
73 Tommytoyz : Some have said that refinancing old debt at a lower rate or more favorable terms is a good thing. That is very true. And if this is what AA was doing
74 Tommytoyz : I would categorize that type of thinking as being "old school" and dangerous to assume it still applies. Because today, the financial markets have ch
75 Commavia : AMR has already detailed how some of the money will be spent and where it's going: $1.6B will be used to finance new aircraft deliveries (investment
76 N1120A : Neither is true. In order to support a carrier the size of AA and an industry the size of the aviation industry, you need revenue and cash flow. You
77 WorldTraveler : I really have to say that you have lowered your credibility in alot of people's eyes; it would be one thing to walk away and admit you were misunders
78 Commavia : Well, if by "a lot of people," you mean you, then I really couldn't care less. In your opinion. There are plenty of people out there who believe, as
79 Antoniemey : Except that multiple companies (CO under Lorenzo included) have shown that you can manipulate the books to not make a profit for tax purposes. Profit
80 WorldTraveler : But that is not what you said multiple times above. Shall I show you where you said that sure they can... intangible assets most certainly can be val
81 Antoniemey : I didn't say they were out to do that. I just said that it has been done.
82 Antoniemey : One example that I know of how "Profit" can be manipulated... A company that I know of, one that many on here may know of at least peripherally, has
83 Commavia : Yeah, it is what I said - I can't reiterate my point every single time just so I keep you up to speed. I haven't altered, backed away from, or recant
84 Luv2cattlecall : Just as a comparison of why this isn't doom and gloom... Say you have a $900,000 home, but the remaining principle is $750,000... your only other asse
85 Post contains links Sydscott : Just read what Commavia has said on the accounting principles. He's entirely correct. As Commavia has said this value refers to route authorities and
86 PC12Fan : I'd say what I'd like to say, but I think I'd be banned. Signed, STL
87 Post contains links WorldTraveler : and that is indeed a permissible expense... whether you like the principle is immaterial.. .it is a legal and meaningful expense and it does in fact
88 LDVAviation : Thanks to Commavia and Sydscott. Enjoyed reading both your posts. They were civil, informative, and conclusive.
89 Commavia : In your haste to try and salvage your argument, you kind of missed the entire point in the text you just quoted. The above quote deals entirely with
90 LipeGIG : Yes but they are the big problem. The long term in total is around US$ 11 billion by year-end 2008. You're right about leasing, mostly times the leas
91 Antoniemey : Which I myself said. It doesn't change the fact that it obfuscates the actual financials. Another thing that can impact profits and loss is depreciat
92 Asiaflyer : A company can not carry the goodwill of their own brand in their own balance sheet. The goodwill is carried by the one who owns the company, in this
93 Sydscott : Your lack of ability in dealing with financial issues is also noteworthy considering that is exactly what I've said and what Commavia has said! I don
94 777STL : Like all of your little DL buddies who cry and complain when the DL cheerleading threads get crapped on, usually initiated by their own bashing of AA
95 NYCAdvantage : 14 Billion total debt! any hope? For a company as big like AA that is not a problem, they had 21 billion before, what it bother me is that AA should h
96 Yellowtail : This is getting so funny. I think we have established firmly that Commavia and Sydscott do know what they are talking about.
97 Jbernie : I think this is what GM was trying to do when Wagoner was in charge, make the corrections themselves, be responsible corporate citizens and fix their
98 Mayor : As you said, that cuts both ways......I've seen plenty of threads praising AA, CO and WN and in turn bashing DL. I've also seen those same people tha
99 777STL : Something, something glass houses. Every time I hear a DL fanboy cry about being persecuted, I literally laugh out loud - the hypocrisy is astounding
100 Mayor : Quite frankly, I don't care what you think of DL or whether you bash them or not, BUT, don't complain when the same thing happens to you. From what I
101 777STL : If *you'd* read the thread in its entirety - you would see I never complained about anything. I only responded to WT's comment regarding people compl
102 Mayor : But, man, can't you see that it happens with other carriers, too? I've seen the same type of cheerleading from CO, AA and WN fanboys and yet I don't
103 777STL : It seems much more intense from DL people - maybe it's my imagination, but I've seen others echo the same sentiment in the past.
104 LAXdude1023 : Its not your imagination, but most DL fanboys on here are no different than any other fanboys of other airlines. Its just two or three that are super
105 Post contains links Mayor : Here's a thread about CO that makes my point: CO Joins Star Alliance On Oct. 27th (by Avek00 Aug 7 2009 in Civil Aviation)?threadid=4510608&searchid=
106 OA412 : IMHO a lot of it is imagination/perception. Over the last few years on here there's been this myth created about DL fans and how rabid they are. The
107 SlcDeltaRUmd11 : Speaking of AA and total debt i am sure that AA will recover over a long period of time, but what do people think about AA stock? Is there any chance
108 Byrdluvs747 : I have to agree with the extreme DL fanboy sentiment. Now I'm an AA fan, and I try defend the airline when within reason. However, the DL guys take fa
109 OA412 : Good grief! It's fairly obvious that he was trying to get a discussion started rather than wishing that AA's stock tanks.
110 Sydscott : The problem with the "super-intense" DL people is they hijack the threads. It's a CO love thread. So what? There have been plenty of love threads abo
111 LipeGIG : As this thread is getting day after day more and more off-topic comments and issues, it seems that the subject of the topic has been discussed till th
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