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Has AA Canceled Their A320neo/737max Orders?  
User currently offline747400sp From United States of America, joined Aug 2003, 3758 posts, RR: 2
Posted (2 years 9 months 3 weeks 1 day 3 hours ago) and read 14025 times:

With the recent Chanpter 11, I wonder, has AA cancel their A320neo/737max order?

19 replies: All unread, jump to last
 
User currently offlineRubberJungle From , joined Dec 1969, posts, RR:
Reply 1, posted (2 years 9 months 3 weeks 1 day 2 hours ago) and read 13879 times:

No, but Airbus - as a precautionary measure - is no longer treating the A320neo order as firm.

User currently onlinekl911 From Czech Republic, joined Jul 2003, 5310 posts, RR: 15
Reply 2, posted (2 years 9 months 3 weeks 1 day ago) and read 13442 times:

Quoting RubberJungle (Reply 1):
No, but Airbus - as a precautionary measure - is no longer treating the A320neo order as firm.

And Boeing? AFAIK that was just an MOU right, not firm yet?


User currently offlineORDJOE From United States of America, joined Aug 2010, 753 posts, RR: 0
Reply 3, posted (2 years 9 months 3 weeks 1 day ago) and read 13225 times:

There is definitely something more to the story, I thought that huge order was in early fall and they declared BK in Nov. Airbus, AA, and boeing knew BK was coming one day eventually

User currently offlineSLCPilot From United States of America, joined Aug 2003, 593 posts, RR: 2
Reply 4, posted (2 years 9 months 3 weeks 1 day ago) and read 13097 times:

They're not out of money OR the ability to borrow it, they just declared bankruptcy, something entirely different ! This just means management can selectively toss aside commitments it's made in the past, to banks, contracted services, and it's own employees while destroying stock value and employee pension values.

Am I right?



I don't like to be fueled by anger, I don't like to be fooled by lust...
User currently offlinejfk777 From United States of America, joined Aug 2006, 8517 posts, RR: 6
Reply 5, posted (2 years 9 months 3 weeks 23 hours ago) and read 12957 times:
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AA is still taking delivery if 738's from prior orders.

User currently offlineLAXtoATL From United States of America, joined Oct 2009, 1659 posts, RR: 2
Reply 6, posted (2 years 9 months 3 weeks 23 hours ago) and read 12819 times:

Quoting SLCPilot (Reply 4):
This just means management can selectively toss aside commitments it's made in the past, to banks, contracted services, and it's own employees while destroying stock value and employee pension values.

False! Bankruptcy is not a "let management do what they want ride". In fact once a company enters bankruptcy, management gives up control of what will happen to the company. The creditors and judge now control the fate of the company. Management will request the moon and the stars, but they cannot unilaterally implement or cut anything in bankruptcy. (example: look at how AA initially asked to dump all pension obligations and the creditors (led by the unions and PBGC) said that was not acceptable and already they are now trying to freeze instead of dump most of their pensions). The one thing bankruptcy usually does is destroy all stock value, however by the time a company files for bankruptcy there is very little value to begin with.

Quoting SLCPilot (Reply 4):
They're not out of money OR the ability to borrow it, they just declared bankruptcy, something entirely different !

They are not out of money, but their ability to borrow right now is almost non-existent. Its complicated, but they don't have the ability to pledge assets to back loans while in bankruptcy which is why the orders and financing was arranged before the filing.


User currently offlineBlueman87 From United States of America, joined Aug 2009, 535 posts, RR: 0
Reply 7, posted (2 years 9 months 3 weeks 22 hours ago) and read 12431 times:

i Heard the Bankruptcy Court let them Buy all the Airplanes i try to find that link


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User currently offlineBlueman87 From United States of America, joined Aug 2009, 535 posts, RR: 0
Reply 8, posted (2 years 9 months 3 weeks 22 hours ago) and read 12366 times:

http://www.aa.com/i18n/amrcorp/newsr...p?v_locale=en_US&v_mobileUAFlag=AA
they didnt cancel there are odered



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User currently offlinerfields5421 From United States of America, joined Jul 2007, 7607 posts, RR: 32
Reply 9, posted (2 years 9 months 3 weeks 22 hours ago) and read 12331 times:

The aircraft purchase is supposed to happen AFTER the airline emerges from bankruptcy.

So other than the manufacturers being unable to receive any new payments during that approx one year long process, the orders will be completely normal.

Bankruptcy will let AA get rid of their financial obligations to some older aircraft they no longer want in their fleet. They will still need the new aircraft after they are finished with Chapter 11.


User currently offlineAAIL86 From Finland, joined Feb 2011, 428 posts, RR: 3
Reply 10, posted (2 years 9 months 3 weeks 22 hours ago) and read 12264 times:

Quoting ORDJOE (Reply 3):
There is definitely something more to the story, I thought that huge order was in early fall and they declared BK in Nov.

No, the order was announced to the press on July 20, 2011.

Source: http://www.npr.org/blogs/thetwo-way/...aircraft-order-in-aviation-history



Next
User currently offlineStitch From United States of America, joined Jul 2005, 31444 posts, RR: 85
Reply 11, posted (2 years 9 months 3 weeks 20 hours ago) and read 11325 times:
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Quoting 747400sp (Thread starter):
With the recent Chanpter 11, I wonder, has AA cancel their A320neo/737max order?

AA entered the order with the expectation they would file Chapter 11. The financing part was one of the reasons AA went with Airbus - they were more willing to finance a deal with an AA C11 filing than Boeing was.

AA have yet to sign their 737MAX order, so it remains an MoU and is not reflected on Boeing's order page. AA did sign their 100 737-800s they ordered at the same time, so that order is listed on Boeing's page.


User currently offlineckfred From United States of America, joined Apr 2001, 5312 posts, RR: 1
Reply 12, posted (2 years 9 months 3 weeks 20 hours ago) and read 11197 times:

Quoting SLCPilot (Reply 4):
They're not out of money OR the ability to borrow it, they just declared bankruptcy, something entirely different ! This just means management can selectively toss aside commitments it's made in the past, to banks, contracted services, and it's own employees while destroying stock value and employee pension values.

Am I right?

At the rate AA was burning through cash, it would have been down to zero in 18 to 24 months. Having a good cash balance upon filing Chapter 11 means not having to obtain debtor-in-possession financing (DIP). DIP is just one more hassle, because the lender wants to add his two cents to the creditors, when it comes to getting decisions approved by the judge.

Pretty much everything AA could mortgage had been mortgaged, meaning that any unsecured financing would have been at very, very high interest rates.

Considering the amount of interest that AA was paying, and the eventual repayment of principal on numerous debt instruments, making capital expenditures were becoming extremely difficult.


User currently offlinefrmrCapCadet From United States of America, joined May 2008, 1746 posts, RR: 1
Reply 13, posted (2 years 9 months 3 weeks 20 hours ago) and read 11147 times:

IIRC getting newer and more efficient planes needed to be part of any plan to successfully emerge from bankruptcy. And I think all stakeholders acknowledged that was true.


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User currently offlineDaysleeper From UK - England, joined Dec 2009, 873 posts, RR: 1
Reply 14, posted (2 years 9 months 3 weeks 19 hours ago) and read 10899 times:

Quoting Stitch (Reply 11):
AA entered the order with the expectation they would file Chapter 11. The financing part was one of the reasons AA went with Airbus - they were more willing to finance a deal with an AA C11 filing than Boeing was.

Hmm, If Boeing didn’t really want to deal with AA because of the finances then why did they offer them the Max before it even had board approval? Or why sell any aircraft to AA at all?

I’ve no doubt that the financial package offered by Airbus played a part in this order, but to suggest this was because Boeing were “less willing” than Airbus is nonsense.


User currently offlineckfred From United States of America, joined Apr 2001, 5312 posts, RR: 1
Reply 15, posted (2 years 9 months 3 weeks 19 hours ago) and read 10805 times:

IIRC correctly, Boeing wasn't willing to offer the financing that Airbus was. They were standing on the fact that AA has an all-Boeing fleet, and that it would be more expensive for AA to bring A320s into the fleet (training, spare parts, etc.). When AA advised Boeing that it would buy a large number of A320 family, that's when Boeing decided to offer the MAX and improve its financing terms.

It was either get 200 planes or none.


User currently offlineStitch From United States of America, joined Jul 2005, 31444 posts, RR: 85
Reply 16, posted (2 years 9 months 3 weeks 19 hours ago) and read 10750 times:
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Quoting Daysleeper (Reply 14):
Hmm, If Boeing didn’t really want to deal with AA because of the finances then why did they offer them the Max before it even had board approval?

Because AA ordered the A320 and A320neo.



Quoting Daysleeper (Reply 14):
I’ve no doubt that the financial package offered by Airbus played a part in this order, but to suggest this was because Boeing were “less willing” than Airbus is nonsense.

Hey, I just read it in the papers. Register your objections with the media, please.


User currently offlinerotating14 From United States of America, joined Jan 2012, 738 posts, RR: 0
Reply 17, posted (2 years 9 months 3 weeks 17 hours ago) and read 8919 times:

Quoting Daysleeper (Reply 14):

Because from a business standpoint something is better than nothing. They already have 738's rolling off the FAL. The board at Boeing would not allow it Im sure. When you take into account they will have new 777's coming soon and the history of being a solid customer, fleet commonality (737), that weighs a lot. I personally wanted B to build a NSA but the market wanted something now not later, thus forcing B to tweak the current model, to furnish what we call the MAX today.


User currently offlinevegas005 From Switzerland, joined Mar 2005, 330 posts, RR: 0
Reply 18, posted (2 years 9 months 3 weeks 16 hours ago) and read 8597 times:

Quoting Blueman87 (Reply 7):
The creditors and judge now control the fate of the company.

My friend, in bankruptcy court the creditors are along for the ride and it is not a pretty one usually. I was surprised to see AA make the original order in the first place and it will be interesting to see what plays out,,,


User currently offlinedtwpilot225 From United States of America, joined Dec 2011, 152 posts, RR: 0
Reply 19, posted (2 years 9 months 3 weeks 11 hours ago) and read 5065 times:
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Remember Chapter 11 is bankruptcy Protection not liquidation. Hence American filed chapter 11 with 4 billion dollars in the bank. They filed because at the rate they were going, they would lose all of that money if they did nothing. The rules of Chapter 11 have changed so it wont be the same as Delta's, but I see American taking all of these deliveries and being a strong airline in 5 years.

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