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jayunited
Posts: 2948
Joined: Sat Jan 05, 2013 12:03 am

Re: Speculation: American Airlines might file bankruptcy again

Fri Mar 13, 2020 1:53 pm

enilria wrote:
Trust me I am extremely aware of the variability of airline costs. You are confusing short term variability with long term variability. Short term they can't get rid of aircraft, they have to pay the crew 100% inside the crew bid, and they only really save inflight food, landing fees, and fuel. As you saw, I already cut their systemwide fuel bill significantly. So no, I'm dead on. Plus I'd say 70% down for April is now VERY conservative. It's gonna be worse.


Enilria is correct. This is one of the reasons why UA wanted to get a jump on April. Parking or retiring the aircraft landing fees, food and fuel will only save so much money but airlines like AA and UA still have to pay the crew 100% inside the crew bid this is one reason why UA back in February announced they were offering to pay pilots 50 hours pay to stay home. UA pilots are normally guaranteed 80 flying hours a month. But by getting a jump on things UA (depending on how many pilots took the offer) will save 30 hours of flying time in April for every pilot that took them up on the offer. I'm sure DL has to abide by a strict contract with their pilots, but since their FA's are nonunion who knows if DL can just make up the rules as they go along. But one thing is for sure especially here at UA these contract are a lot more stringent than they were during UA's bankruptcy years. Failure to act in a timely manner in order to protect the airline only cost the airline money down the road.

Judging from the time when AA made these announcements and depending on how AA's contracts read if the crew bid was completed AA may not reap the full savings benefit from these cuts until May, it may already be to late for them to save those crew hours in April. I'm not picking on AA because the same is true here at UA this last minute travel ban will cost UA money in April as well. For highly unionized airlines like AA and UA the changes caused by travel ban is to late to save April it is done. Now is the time that they start looking at May and June which is why AA put out a schedule showing suspensions and delays to seasonal flights till May or June.
 
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enilria
Posts: 10269
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Re: Speculation: American Airlines might file bankruptcy again

Fri Mar 13, 2020 2:14 pm

jayunited wrote:
enilria wrote:
Trust me I am extremely aware of the variability of airline costs. You are confusing short term variability with long term variability. Short term they can't get rid of aircraft, they have to pay the crew 100% inside the crew bid, and they only really save inflight food, landing fees, and fuel. As you saw, I already cut their systemwide fuel bill significantly. So no, I'm dead on. Plus I'd say 70% down for April is now VERY conservative. It's gonna be worse.


Enilria is correct. This is one of the reasons why UA wanted to get a jump on April. Parking or retiring the aircraft landing fees, food and fuel will only save so much money but airlines like AA and UA still have to pay the crew 100% inside the crew bid this is one reason why UA back in February announced they were offering to pay pilots 50 hours pay to stay home. UA pilots are normally guaranteed 80 flying hours a month. But by getting a jump on things UA (depending on how many pilots took the offer) will save 30 hours of flying time in April for every pilot that took them up on the offer. I'm sure DL has to abide by a strict contract with their pilots, but since their FA's are nonunion who knows if DL can just make up the rules as they go along. But one thing is for sure especially here at UA these contract are a lot more stringent than they were during UA's bankruptcy years. Failure to act in a timely manner in order to protect the airline only cost the airline money down the road.

Judging from the time when AA made these announcements and depending on how AA's contracts read if the crew bid was completed AA may not reap the full savings benefit from these cuts until May, it may already be to late for them to save those crew hours in April. I'm not picking on AA because the same is true here at UA this last minute travel ban will cost UA money in April as well. For highly unionized airlines like AA and UA the changes caused by travel ban is to late to save April it is done. Now is the time that they start looking at May and June which is why AA put out a schedule showing suspensions and delays to seasonal flights till May or June.

Thanks. To be clear, this is not about wishing ill on anybody. This is just realism. If this goes on into Summer we are going to have Ch11 filings. That's not the end of the world as the legacies aren't going anywhere. Spirit's stock is completely crashing so apparently Wall Street thinks they are at greater risk, although I'm not sure of the reasons.

It looks to me like traffic industry-wide is presently down over 30%. Closing Disney is going to be a HUGE kick to traffic. That's going to wipe out a lot of the leisure stimulation we saw in the last few days from low fares. I also think it is not outside of possibility that domestic flights are also shut down or severely limited by govt fiat. It's going to come down to the growth rate of the infections.
 
Boof02671
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Re: Speculation: American Airlines might file bankruptcy again

Fri Mar 13, 2020 2:25 pm

AA also has $10 billion of unencumbered assets
 
Boof02671
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Re: Speculation: American Airlines might file bankruptcy again

Fri Mar 13, 2020 2:26 pm

It’s a force majuere issue now, they could get away with not paying.
 
Alias1024
Posts: 2670
Joined: Mon Oct 25, 2004 11:13 am

Re: Speculation: American Airlines might file bankruptcy again

Fri Mar 13, 2020 4:02 pm

Boof02671 wrote:
AA also has $10 billion of unencumbered assets


The Fed just had to buy $1.5 trillion in bonds to stop the credit markets from locking up. Securing loans against those assets could be tricky for any airline right now.
It is a mistake to think you can solve any major problems with just potatoes.
 
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enilria
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Re: Speculation: American Airlines might file bankruptcy again

Fri Mar 13, 2020 4:05 pm

Alias1024 wrote:
Boof02671 wrote:
AA also has $10 billion of unencumbered assets


The Fed just had to buy $1.5 trillion in bonds to stop the credit markets from locking up. Securing loans against those assets could be tricky for any airline right now.

Yup. Those are airplanes. If one of the carriers files Ch11 the first thing they will do is dump those same planes. The credit market knows this and will price any debt with pretty poor terms.
 
Breathe
Posts: 684
Joined: Sat Mar 18, 2017 8:06 pm

Re: American Airlines might file bankruptcy again

Fri Mar 13, 2020 4:12 pm

Cointrin330 wrote:
AA has a higher debt load but Sam Chui is an expert at sitting in business class chatting with the crew, not an armchair CEO.

More like chatting up! He comes across as pretty creepy/thirsty in some of his videos when talking to the female cabin crew. His recent Aeroflot A350 video being a good example.
 
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VirginFlyer
Posts: 5571
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Re: Speculation: American Airlines might file bankruptcy again

Fri Mar 13, 2020 4:46 pm

dcaviation wrote:
3holer wrote:
So who plagiarized who with this “article”?

This has a date prior to the Sam Chui post....

https://www.ccn.com/fasten-your-belts-american-airlines-investors-flying-into-another-bankruptcy/

Anything for clicks.


This Sam Chui couldn't tell the difference between 747 and a bicycle few years ago, now he is industry guru. It's funny.

Without going into the questions of Sam’s finance credentials or his motives for blog posts, this is simply not correct. He has been an aviation enthusiast (like most people on this website...) for at least the last two decades. Whether or not he knows anything about airline financials, he definitely isn’t a Johnny-come-lately to aviation in general. In fact, for more than a decade every member of this site was looking at his work when they looked at the Airliners.net logo:



V/F
It is not for him to pride himself who loveth his own country, but rather for him who loveth the whole world. The earth is but one country, and mankind its citizens. —Bahá'u'lláh
 
burnsie28
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Re: American Airlines might file bankruptcy again

Fri Mar 13, 2020 4:56 pm

jfklganyc wrote:
A string of bankruptcies of mergers is plausible

NK B6 F9 Have less exposure and should be OK

I don’t even know how airlines like United an Delta get out of bed this morning. They have a real mess


Actually likely the opposite, airlines like NK, B6, F9 rely more on higher load factors with ancillary fees. They are at higher risk with lower bookings as their margins are already thin.
 
dstblj52
Posts: 498
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Re: American Airlines might file bankruptcy again

Fri Mar 13, 2020 5:04 pm

burnsie28 wrote:
jfklganyc wrote:
A string of bankruptcies of mergers is plausible

NK B6 F9 Have less exposure and should be OK

I don’t even know how airlines like United an Delta get out of bed this morning. They have a real mess


Actually likely the opposite, airlines like NK, B6, F9 rely more on higher load factors with ancillary fees. They are at higher risk with lower bookings as their margins are already thin.

Moreover business people are more likely to travel because they have to be there then the leisure travel of the LCC/ULCC.
 
Miamiairport
Posts: 692
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Re: American Airlines might file bankruptcy again

Fri Mar 13, 2020 6:36 pm

dstblj52 wrote:
burnsie28 wrote:
jfklganyc wrote:
A string of bankruptcies of mergers is plausible

NK B6 F9 Have less exposure and should be OK

I don’t even know how airlines like United an Delta get out of bed this morning. They have a real mess


Actually likely the opposite, airlines like NK, B6, F9 rely more on higher load factors with ancillary fees. They are at higher risk with lower bookings as their margins are already thin.

Moreover business people are more likely to travel because they have to be there then the leisure travel of the LCC/ULCC.


If the economy takes a sustained hit like 2008/2009 ULCCs will be in unchartered territory. Business travel will recover to a certain extent but if people are losing jobs or feel economically threaten they won't be going to Disney. Not to mention all of the routes and new planes they've taken on. B6 has a decent size amount of business travel/corporate contracts. NK is the airline with potential problems given it's growth and new A320s/321s. Even flying 75%-80% load factors would kill them.
 
HPAEAA
Posts: 1142
Joined: Mon May 08, 2006 7:24 am

Re: American Airlines might file bankruptcy again

Fri Mar 13, 2020 6:39 pm

Miamiairport wrote:
dstblj52 wrote:
burnsie28 wrote:

Actually likely the opposite, airlines like NK, B6, F9 rely more on higher load factors with ancillary fees. They are at higher risk with lower bookings as their margins are already thin.

Moreover business people are more likely to travel because they have to be there then the leisure travel of the LCC/ULCC.


If the economy takes a sustained hit like 2008/2009 ULCCs will be in unchartered territory. Business travel will recover to a certain extent but if people are losing jobs or feel economically threaten they won't be going to Disney. Not to mention all of the routes and new planes they've taken on. B6 has a decent size amount of business travel/corporate contracts. NK is the airline with potential problems given it's growth and new A320s/321s. Even flying 75%-80% load factors would kill them.


Yeah - I would say this is uncharted.. Delta just announced that they're parking 300 aircraft (about 20% of the fleet assuming it's mainline & regional) due to the drop off in demand, AA's announced 16 by May and 34 through next year, I suspect this might be the tip of the iceberg.
1.4mm and counting...
 
milemaster
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Re: Speculation: American Airlines might file bankruptcy again

Fri Mar 13, 2020 7:27 pm

Nick614 wrote:
The amount of debt relative to other operators is irrelevant. While serious, the Wuhan Virus will be gone by the summer.


Summer where? It's always summer somewhere in 25% of the world and this is a on every continent now.
 
MrBretz
Posts: 556
Joined: Tue Jun 14, 2016 9:13 pm

Re: Speculation: American Airlines might file bankruptcy again

Fri Mar 13, 2020 8:56 pm

Just read a news report that UA is seeking support from the US government because of their drop in business. The article also says AA and DL are in talks also.

https://finance.yahoo.com/news/united-a ... 35234.html
 
OB1504
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Re: Speculation: American Airlines might file bankruptcy again

Fri Mar 13, 2020 9:07 pm

Boof02671 wrote:
It’s a force majuere issue now, they could get away with not paying.


And torpedo labor relations in the process.
 
MSPNWA
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Re: Speculation: American Airlines might file bankruptcy again

Fri Mar 13, 2020 9:13 pm

enilria wrote:
Trust me I am extremely aware of the variability of airline costs. You are confusing short term variability with long term variability. Short term they can't get rid of aircraft, they have to pay the crew 100% inside the crew bid, and they only really save inflight food, landing fees, and fuel. As you saw, I already cut their systemwide fuel bill significantly. So no, I'm dead on. Plus I'd say 70% down for April is now VERY conservative. It's gonna be worse.


I'm not going to go into the math again which has been wiped away, but you are talking to an economist, so you can be assured that I'm acutely aware of airline cost variability.

Anyway one slices it by looking at fuel, labor, maintenance, landing fees, and other savings, we can expect AA to be saving considerably more than 2.5% with a 10% April capacity cut. And it jives with the theory. If airlines are only going to yield a 25% cost savings of a capacity cut, there's essentially no point to reducing a schedule close-in. It doesn't take much revenue to render the capacity cut an even larger loss of money.
 
StTim
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Re: Speculation: American Airlines might file bankruptcy again

Fri Mar 13, 2020 9:20 pm

One wonders why banks lend to Airlines. It always seem like they are feast or famine companies and thus potentially serial Chapter 11 candidates. How many times do they have to lose money to stop doing it again, and again.
 
UpNAWAy
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Re: Speculation: American Airlines might file bankruptcy again

Fri Mar 13, 2020 10:02 pm

BA or more specifically IAG is at much bigger risk right now.
 
tphuang
Posts: 5302
Joined: Tue Mar 14, 2017 2:04 pm

Re: Speculation: American Airlines might file bankruptcy again

Fri Mar 13, 2020 10:22 pm

MrBretz wrote:
Just read a news report that UA is seeking support from the US government because of their drop in business. The article also says AA and DL are in talks also.

https://finance.yahoo.com/news/united-a ... 35234.html

Whatever they do, it should be for all airlines. Legacies should not get more support than lccs.
 
chonetsao
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Re: Speculation: American Airlines might file bankruptcy again

Fri Mar 13, 2020 10:33 pm

StTim wrote:
One wonders why banks lend to Airlines. It always seem like they are feast or famine companies and thus potentially serial Chapter 11 candidates. How many times do they have to lose money to stop doing it again, and again.


It is difficult to explain. But consider this, first, Airlines needs to buy aircrafts, manufacturers benefits. Airlines needs to do maintenance, manufacturers benefits. Airlines needs to buy inventory, manufacturers benefits. Airlines need to buy or lease terminals, retail, real estate benefits. Where do all those beneficiaries get money from? Banks. Or financial institutions.

To lend money to one airlines, Banks benefits from hundreds more businesses.

Second, every loan by bank, in theory, will be hedged in debts market. Airline chapter 11 does not bankrupt banks. It may cause a small percentage of losses. But that would be offset by other lending and hedging activities.

If banks only does profitable business, there would be no loans at all. After all it is risky. And there are banks that do not lend to airlines, it does not stop them to loss money.
 
tphuang
Posts: 5302
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Re: American Airlines might file bankruptcy again

Fri Mar 13, 2020 10:42 pm

dstblj52 wrote:
burnsie28 wrote:
jfklganyc wrote:
A string of bankruptcies of mergers is plausible

NK B6 F9 Have less exposure and should be OK

I don’t even know how airlines like United an Delta get out of bed this morning. They have a real mess


Actually likely the opposite, airlines like NK, B6, F9 rely more on higher load factors with ancillary fees. They are at higher risk with lower bookings as their margins are already thin.

Moreover business people are more likely to travel because they have to be there then the leisure travel of the LCC/ULCC.

Legacies having to parka lot of aircraft and cut 40% of capacity is disastrous for them. A lot of fixed costs and not enough places to fly to pay them off.

Keep in mind that b6 relies a lot on vfr travel which is least affected by this.

Business travel is way down. At this point, full travel ban isn't far away.
 
JAMBOJET
Posts: 293
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Re: Speculation: American Airlines might file bankruptcy again

Fri Mar 13, 2020 11:16 pm

Pretty sure we can safely change the title of the thread to: "American, Delta, and United might file bankruptcy again".
Delta seems to be the first one to publicly say that they need government help: http://d18rn0p25nwr6d.cloudfront.net/CI ... 40f9a0.pdf

But clearly the big 3, at least, need it.
https://onemileatatime.com/government-aid-airlines/
Last edited by JAMBOJET on Fri Mar 13, 2020 11:24 pm, edited 1 time in total.
 
JohanTally
Posts: 162
Joined: Tue Jun 18, 2019 3:44 am

Re: Speculation: American Airlines might file bankruptcy again

Fri Mar 13, 2020 11:24 pm

Sam Chui pretty much cut and paste this article. Do we know their credentials are they a reputable source or just click bait?

https://www.ccn.com/fasten-your-belts-a ... ankruptcy/
 
A320FlyGuy
Posts: 284
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Re: Speculation: American Airlines might file bankruptcy again

Sat Mar 14, 2020 2:10 am

I work for American Airlines...I’m proud of the company and where we are going. I have great faith that this COVID-19 mess will blow over. Everything we have heard from Dallas is that we are in great shape financially and can handle this. I take offence to Chui and his sensationalist posting because he has no access to internal data that we are privy to, and he’s spreading lies and falsehoods. AA will weather this storm like we have weathered every other one in our 94 year old history.
My other car is an A320-200
 
Cedar
Posts: 76
Joined: Mon Dec 25, 2017 1:07 am

Re: Speculation: American Airlines might file bankruptcy again

Sat Mar 14, 2020 2:44 am

MrBretz wrote:
Just read a news report that UA is seeking support from the US government because of their drop in business. The article also says AA and DL are in talks also.

https://finance.yahoo.com/news/united-a ... 35234.html



Careful with words - they are not "seeking" support, they are in talks regarding what kind of possible financial support there could be.
They were asked to come to the White House to discuss how they've been impacted, and for their expertise. The White House wants to know how to shape a financial assistance package if needed.

Not a single US airline has "requested" assistance - they have the ability to ride out this storm.

Cedar
 
grbauc
Posts: 1469
Joined: Sat Mar 28, 2015 9:05 pm

Re: American Airlines might file bankruptcy again

Sat Mar 14, 2020 2:47 am

FRNT787 wrote:
2 days ago, on the JPMorgan Industrials Call, the management team identified they have ~$7.3 Billion in liquidity (above their standard target of ~$7 billion and well above their stated debt covenants requiring ~$2 Billion). They identified a further ~$10 billion in unencumbered assets. They have significant debt, but few maturities over the next couple of years. High debt is bad, but the company is pretty well positioned to ride through this. They were asked on the call about aircraft deliveries and said they have no plans to defer them.

One note Doug Parker made, is that the airline industry today is very different than before 2013. Large airlines have the financial ability to power through this without assistance, bailouts, or restructuring, because the restructure was already completed.

Attached is the slide deck for the conference, their investor page has links to a recording of their segment of the conference.

https://americanairlines.gcs-web.com/st ... 9a1eb4aea5



Thank you great post and much more informative then the speculation blog... TY
 
grbauc
Posts: 1469
Joined: Sat Mar 28, 2015 9:05 pm

Re: Speculation: American Airlines might file bankruptcy again

Sat Mar 14, 2020 3:28 am

F9Animal wrote:
Well.... I have to ask this... Anyone remember when Doug Parker said the airline would never lose money again? Anyone get his thoughts as of lately on that outrageous statement? I know he is cocky, but this may come back to haunt him.

I sincerely hope none of the airline go bankrupt, or fail. Some are comparing this virus to the financial crisis the airlines faced after 9/11. It's just awful, and this is all unfolding so fast. So so sad.

https://chiefexecutive.net/american-air ... ug-parker/


I don't think it was the best of statements but you have to take in context of losing money due to many airlines with limited networks causing a uneven equilibrium. This event is a Mother nature event that's not of the norm.
 
MrBretz
Posts: 556
Joined: Tue Jun 14, 2016 9:13 pm

Re: Speculation: American Airlines might file bankruptcy again

Sat Mar 14, 2020 5:36 am

Cedar wrote:
MrBretz wrote:
Just read a news report that UA is seeking support from the US government because of their drop in business. The article also says AA and DL are in talks also.

https://finance.yahoo.com/news/united-a ... 35234.html



Careful with words - they are not "seeking" support, they are in talks regarding what kind of possible financial support there could be.
They were asked to come to the White House to discuss how they've been impacted, and for their expertise. The White House wants to know how to shape a financial assistance package if needed.

Not a single US airline has "requested" assistance - they have the ability to ride out this storm.

Cedar


I think you are splitting hairs. They are not there to socialize. They want to know how the gov’t can help them. Maybe they can postpone paying taxes, maybe there will be who knows what, etc.
 
jayunited
Posts: 2948
Joined: Sat Jan 05, 2013 12:03 am

Re: Speculation: American Airlines might file bankruptcy again

Sat Mar 14, 2020 4:12 pm

MrBretz wrote:
Cedar wrote:
MrBretz wrote:
Just read a news report that UA is seeking support from the US government because of their drop in business. The article also says AA and DL are in talks also.

https://finance.yahoo.com/news/united-a ... 35234.html



Careful with words - they are not "seeking" support, they are in talks regarding what kind of possible financial support there could be.
They were asked to come to the White House to discuss how they've been impacted, and for their expertise. The White House wants to know how to shape a financial assistance package if needed.

Not a single US airline has "requested" assistance - they have the ability to ride out this storm.

Cedar


I think you are splitting hairs. They are not there to socialize. They want to know how the gov’t can help them. Maybe they can postpone paying taxes, maybe there will be who knows what, etc.


I don' t think Cedar is splitting hairs the White House did invite the CEO's of all the major carriers including WN and AS to discuss the impact of COVID-19 on their business. Even yesterday during the presidents press conference he was asked if he was close to a final decision on whether or not he would ban travel to/from the Washington State, and Northern California the president responded no decision has been made as his team is still discussing many things including the fallout it would create. Because if the president closes down those sections AS and DL would be effected greatly at SEA, WN would be effect at OAK, AS and UA would be effected at SFO. Also if Washington State and Northern California are designated hot spots then New York (which has become a hot spot in recent days) should then be added to the list of potential closures and shutting down New York would close JFK, LGA, and EWR.

I don't think any airline will turn down government assistance but that is not the only reason they are there to really give insight as to how these decision will effect their business. Having said that I would also say it is entirely possible the president does restrict domestic travel for a period of at least 2 weeks. Just look at the US cruise industry, all cruises have been canceled for at least the next 30 days with some cruise lines suspending operations for 60 days. Most cruise lines are saying they voluntarily shut down operations but I think the reality is the president was going to order the shut down it just looks better to volunteer before the order comes. The same could happen with domestic air travel and just like the presidents team met with cruise line CEO's to discuss the fallout, they are doing the same with the CEO's at the nations airlines they are not just discussing a bailout.
 
AA747123
Posts: 287
Joined: Wed Dec 14, 2016 5:15 pm

Re: Speculation: American Airlines might file bankruptcy again

Sat Mar 14, 2020 4:26 pm

I hope ALL airlines avoid a trip to bankruptcy court. But the hard truth is, if things don't turn around soon, every airline could be at risk. Load factors are dropping fast and no airline could survive with 50% load factors.
 
MrBretz
Posts: 556
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Re: Speculation: American Airlines might file bankruptcy again

Sat Mar 14, 2020 4:31 pm

jayunited, you are correct. I was too abrupt with cedar. Sorry.
 
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par13del
Posts: 10350
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Re: Speculation: American Airlines might file bankruptcy again

Sat Mar 14, 2020 4:38 pm

So if such high capacity cuts were done on China in December 2019 or early January 2020, would the airlines have assisted in limiting the damage to their Asian network versus what is taking place now?
The issue is not whether the virus would still spread, but how fast, the slower the spread the more time scientist have, the more time the rest of the network can continue to function allowing a viable product, heck they could have even offered promotions to unaffected sections of their network to keep the business going.
A 30 day shutdown is going to hurt, but unless someone finds a cure within the next 30 days, what exactly happens, will the virus be dead, will everyone suddenly want to travel, will hotels have staff, car companies, all the other ancillary jobs / functions that go hand in hand with air travel.
I have to assume authorities are looking for a decrease in new infections and or recovery of infected persons.
One thing we do know, if the airlines offer discounts, unless governments prevent, folks will start travelling, slowly at first.
 
MIflyer12
Posts: 8234
Joined: Mon Feb 18, 2013 11:58 pm

Re: Speculation: American Airlines might file bankruptcy again

Sat Mar 14, 2020 5:23 pm

par13del wrote:
One thing we do know, if the airlines offer discounts, unless governments prevent, folks will start travelling, slowly at first.


No, we don't know that. A $50 discount off NYC-MCO may not have someone risk their health, and the health of those to whom they return.
 
MIflyer12
Posts: 8234
Joined: Mon Feb 18, 2013 11:58 pm

Re: American Airlines might file bankruptcy again

Sat Mar 14, 2020 5:30 pm

grbauc wrote:
FRNT787 wrote:
2 days ago, on the JPMorgan Industrials Call, the management team identified they have ~$7.3 Billion in liquidity (above their standard target of ~$7 billion and well above their stated debt covenants requiring ~$2 Billion). They identified a further ~$10 billion in unencumbered assets. They have significant debt, but few maturities over the next couple of years. High debt is bad, but the company is pretty well positioned to ride through this. They were asked on the call about aircraft deliveries and said they have no plans to defer them.

One note Doug Parker made, is that the airline industry today is very different than before 2013. Large airlines have the financial ability to power through this without assistance, bailouts, or restructuring, because the restructure was already completed.

Attached is the slide deck for the conference, their investor page has links to a recording of their segment of the conference.

https://americanairlines.gcs-web.com/st ... 9a1eb4aea5



Thank you great post and much more informative then the speculation blog... TY


Construct a pro forma P&L statement that has a 40% capacity cut and 50% revenue loss (don't tell me fares are going to hold up), with 100% employment at 100% of wage rates. Go ahead and plug in the fuel savings from capacity cuts and lower fuel prices. AA is going to blow thru cash very, very fast. How easy is it going to be to mortgage unencumbered assets in a fiercely down market worldwide? We could have 3,000 surplus planes worldwide before this abates.
 
Boof02671
Posts: 2121
Joined: Sun Jul 10, 2016 12:15 am

Re: Speculation: American Airlines might file bankruptcy again

Sun Mar 15, 2020 1:31 am

Munchin even stated they are working on an airline bailout.
 
Cedar
Posts: 76
Joined: Mon Dec 25, 2017 1:07 am

Re: Speculation: American Airlines might file bankruptcy again

Mon Mar 16, 2020 3:46 am

MrBretz wrote:
jayunited, you are correct. I was too abrupt with cedar. Sorry.


@JayUnited - thanks for clarifying
@MrBretz - no harm done,

Airlines have learned from the past & have adapted to macro-economics. Their ability to take decisive action & be nimble is much better than before.
Their cash reserves are full, debt is managed better, decisions are quicker, and ability to implement change is a realization that they understand the importance of.

That's not to say if the gov't offer something like tax breaks, they wouldn't take advantage of it - wouldn't you!

Cedar
 
AWACSooner
Posts: 2544
Joined: Tue Jan 22, 2008 12:35 am

Re: Speculation: American Airlines might file bankruptcy again

Mon Mar 16, 2020 5:53 am

First off, I think the proposition of AA filing Ch 11 is preposterous.

That being said, IF it does happen, Doug “we will never lose money again” Parker needs to be publicly flogged. And the airline should just call it and fold...
 
questions
Posts: 2337
Joined: Thu Sep 15, 2011 4:51 am

Re: Speculation: American Airlines might file bankruptcy again

Mon Mar 16, 2020 7:23 am

A320FlyGuy wrote:
I work for American Airlines...I’m proud of the company and where we are going. I have great faith that this COVID-19 mess will blow over. Everything we have heard from Dallas is that we are in great shape financially and can handle this. I take offence to Chui and his sensationalist posting because he has no access to internal data that we are privy to, and he’s spreading lies and falsehoods. AA will weather this storm like we have weathered every other one in our 94 year old history.


Wow. Congratulations on drinking the Corporate Kool AAid.

1. “This COVID-19 mess” will not “blow over” soon. Its effects will linger through 2020 and 2021. A return to normal will be 2022 at best

2. “Everything we have heard from Dallas...” is nothing more than corporate speak, all designed to keep the masses “engaged.” I’ve seen companies tell employees “we feel good about the progress we’ve made and where we’re heading” or “the worst is behind us” only a week later to lay-off thousands of employees or file bankruptcy. Never expect your corporate “leaders” to tell you the truth

3. Chui and many others do not need “internal data” that you “are privy to” to determine the health of the company. AA is a publicly traded company and a lot of information regarding revenue, expenses, debt and future projections and impact to the business are publicly available with each SEC reporting

AA may “weather this storm.” But it is in a precarious position, especially if a second wave hits in the Fall.
 
questions
Posts: 2337
Joined: Thu Sep 15, 2011 4:51 am

Re: Speculation: American Airlines might file bankruptcy again

Mon Mar 16, 2020 7:29 am

AWACSooner wrote:
First off, I think the proposition of AA filing Ch 11 is preposterous.

That being said, IF it does happen, Doug “we will never lose money again” Parker needs to be publicly flogged. And the airline should just call it and fold...


He will be so drunk he won’t feel it.

AA is in an extremely precarious position. It simply does not have enough cash on hand to weather a near shut down.

The only one who will not lose money is Doug Parker when he receives his golden parachute.
 
Boof02671
Posts: 2121
Joined: Sun Jul 10, 2016 12:15 am

Re: Speculation: American Airlines might file bankruptcy again

Mon Mar 16, 2020 7:48 am

questions wrote:
AWACSooner wrote:
First off, I think the proposition of AA filing Ch 11 is preposterous.

That being said, IF it does happen, Doug “we will never lose money again” Parker needs to be publicly flogged. And the airline should just call it and fold...


He will be so drunk he won’t feel it.

AA is in an extremely precarious position. It simply does not have enough cash on hand to weather a near shut down.

The only one who will not lose money is Doug Parker when he receives his golden parachute.

AA has more cash on hand than UA, DL, or WN. $7.3 billion in cash and equivalents and $10 billion in unencumbered assets.
 
User avatar
PacoMartin
Posts: 901
Joined: Sun May 27, 2018 8:18 pm

Re: Speculation: American Airlines might file bankruptcy again

Mon Mar 16, 2020 10:04 am

Is it possible that some air carriers will be more profitable a year from now? Perhaps AA will pull away from ORD and reroute all their connections through DFW and UA will get the mega hub they have always desired.
 
tphuang
Posts: 5302
Joined: Tue Mar 14, 2017 2:04 pm

Re: Speculation: American Airlines might file bankruptcy again

Mon Mar 16, 2020 11:55 am

Boof02671 wrote:
questions wrote:
AWACSooner wrote:
First off, I think the proposition of AA filing Ch 11 is preposterous.

That being said, IF it does happen, Doug “we will never lose money again” Parker needs to be publicly flogged. And the airline should just call it and fold...


He will be so drunk he won’t feel it.

AA is in an extremely precarious position. It simply does not have enough cash on hand to weather a near shut down.

The only one who will not lose money is Doug Parker when he receives his golden parachute.

AA has more cash on hand than UA, DL, or WN. $7.3 billion in cash and equivalents and $10 billion in unencumbered assets.


AA also has much higher fixed cost than UA and DL. WN is in its own league in terms of finances. It will survive this a lot longer than legacies.

Those unencumbered assets are just something accounting department marked up. When its time to actually sell those assets, who is going to be buying them when there is nobody flying? If half of the airlines are looking to dump unencumbered assets for cash relief, what are these assets going to be worse.

And the #1 thing going against AA are its high debts and terrible credit rating. How much money can it borrow and at what rate when it runs out of cash?
 
onwFan
Posts: 468
Joined: Wed Feb 03, 2016 4:02 am

Re: Speculation: American Airlines might file bankruptcy again

Mon Mar 16, 2020 12:29 pm

Yeah, if AA is indeed the weakest and will file for bankruptcy, and the others don’t - all the more better for them. We will see history repeat in reverse order: AA, UA and then DL; with AA at a much better position with the youngest fleet. I don’t see the point of this thread given the fact that it was DL that first admitted to wanting state aid last week.
 
Boof02671
Posts: 2121
Joined: Sun Jul 10, 2016 12:15 am

Re: Speculation: American Airlines might file bankruptcy again

Mon Mar 16, 2020 1:58 pm

tphuang wrote:
Boof02671 wrote:
questions wrote:

He will be so drunk he won’t feel it.

AA is in an extremely precarious position. It simply does not have enough cash on hand to weather a near shut down.

The only one who will not lose money is Doug Parker when he receives his golden parachute.

AA has more cash on hand than UA, DL, or WN. $7.3 billion in cash and equivalents and $10 billion in unencumbered assets.


AA also has much higher fixed cost than UA and DL. WN is in its own league in terms of finances. It will survive this a lot longer than legacies.

Those unencumbered assets are just something accounting department marked up. When its time to actually sell those assets, who is going to be buying them when there is nobody flying? If half of the airlines are looking to dump unencumbered assets for cash relief, what are these assets going to be worse.

And the #1 thing going against AA are its high debts and terrible credit rating. How much money can it borrow and at what rate when it runs out of cash?

Marking up assets is illegal. AA has high debt at low interest. All airlines are working on preserving as much cash as possible and there will be a Federal Bailout. I would worry about UA who is already in lay-off talks with unions.

https://hub.united.com/2020-03-15-a-mes ... 95847.html
 
KCaviator
Posts: 238
Joined: Wed Nov 16, 2016 6:00 pm

Re: Speculation: American Airlines might file bankruptcy again

Mon Mar 16, 2020 2:04 pm

EVERY airline is at risk of going bankrupt right now.

Cash on hand for cash expenses in terms of days:

AA: ~40
DL: ~25*
UA: ~40
WN: ~80
NK: ~150

Source:
https://www.transportation.gov/sites/do ... OO_g9QGkSA
 
LCDFlight
Posts: 612
Joined: Wed Jan 01, 2020 9:22 pm

Re: Speculation: American Airlines might file bankruptcy again

Mon Mar 16, 2020 2:36 pm

KCaviator wrote:
EVERY airline is at risk of going bankrupt right now.

Cash on hand for cash expenses in terms of days:

AA: ~40
DL: ~25*
UA: ~40
WN: ~80
NK: ~150

Source:
https://www.transportation.gov/sites/do ... OO_g9QGkSA


Exactly. Boom, it is now realistic that all mentioned carriers will go bankrupt. The pilots will be very leery and cranky. They were last time. It is a cyclical industry and cycles repeat. "We never thought this could happen..." Yes, that is the thing about destructive cycles, though. I wish everybody the best. I have a feeling a large number of pilots and FAs will be furloughed. Possibly half.
 
User avatar
chepos
Posts: 7273
Joined: Sat Dec 02, 2000 9:40 am

Speculation: American Airlines might file bankruptcy again

Mon Mar 16, 2020 3:16 pm

It seems like the day AA goes back into BK will be a day of celebration for some on this website. Not sure if it is because some believe it will help DL, or because it will help B6, or because it will make Doug Parker look bad, etc, etc.


Sent from my iPhone using Tapatalk
Fly the Flag!!!!
 
Alias1024
Posts: 2670
Joined: Mon Oct 25, 2004 11:13 am

Re: Speculation: American Airlines might file bankruptcy again

Mon Mar 16, 2020 3:19 pm

Detroit313 wrote:
AA has more cash availabe than United and Delta and a much newer fleet. United and Delta have tons of 757 and 767 to replace. AA is done with all that. AA has all the expensive investments behind.


This is about the short term cash flow problems that all airlines are facing over the next few months. United and Delta having 757s and 767s to replace has no bearing on the problem unless they for some reason MUST replace them in the next 90-120 days.
It is a mistake to think you can solve any major problems with just potatoes.
 
onwFan
Posts: 468
Joined: Wed Feb 03, 2016 4:02 am

Re: Speculation: American Airlines might file bankruptcy again

Mon Mar 16, 2020 3:33 pm

chepos wrote:
It seems like the day AA goes back into BK will be a day of celebration for some on this website. Not sure if it is because some believe it will help DL, or because it will help B6, or because it will make Doug Parker look bad, etc, etc.


Sent from my iPhone using Tapatalk

Yeah, I think you nailed it.
 
Alias1024
Posts: 2670
Joined: Mon Oct 25, 2004 11:13 am

Re: Speculation: American Airlines might file bankruptcy again

Mon Mar 16, 2020 3:34 pm

MIflyer12 wrote:
Delta snapped their fingers and raised $1 Billion last week against owned aircraft. There's an SEC filing. Keep up. Carriers may not get book value for all assets but they can still borrow.

So far US airlines are seeing the ability to raise cash. Hopefully that continues the next couple weeks, because they're all likely to need it.

Delta mortgaged 33 owned aircraft to US Bank for $1 billion. 5 A321s, 22 739ERs, and 6 A333s. Blended interest rate of roughly 2.1%.

American also raised some cash recently, placing $500 million in 5-year bonds a couple weeks ago at 3.25%. First interest payments aren't due until September. Nothing recent about drawing on credit facilities or raising cash against aircraft.

United entered into a $2 billion one-year Term Loan Facility with JPMorgan Chase, and immediately borrowed the full amount. Rate is LIBOR plus 2.00-2.50%.
It is a mistake to think you can solve any major problems with just potatoes.
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