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onwFan
Posts: 478
Joined: Wed Feb 03, 2016 4:02 am

Re: Speculation: American Airlines might file bankruptcy again

Mon Mar 16, 2020 3:39 pm

MIflyer12 wrote:
tphuang wrote:
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.


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.

It's really impossible to deny that AA could file for bankruptcy. It's hard to argue that AA (by virtue of more debt, consistently lower margins, lower value of unencumbered assets) isn't likely among the earlier into Ch 11 if multiple U.S. carriers file.


LOL... Now that it looks like all the US3 are going to need help, I note that the statement has changed to: "AA will be the first to file for bankruptcy". Looks like it makes some people feel better somehow. Good to know!
 
747fan
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Re: Speculation: American Airlines might file bankruptcy again

Mon Mar 16, 2020 4:02 pm

I would hope folks posting on here realize that some of your fellow posters may work for AA, depend on that job for income, and if this continues beyond the next few months, are concerned that jobs could be gone for a period of time, if not permanently.
 
Exeiowa
Posts: 353
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Re: Speculation: American Airlines might file bankruptcy again

Mon Mar 16, 2020 4:09 pm

How do loans against secured assets work in bankruptcy? Because most of what is owed by AA is for aircraft purchases (presumably secured against said asset) so I was curious how that is handled.
 
Miamiairport
Posts: 741
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Re: Speculation: American Airlines might file bankruptcy again

Mon Mar 16, 2020 4:23 pm

747fan wrote:
I would hope folks posting on here realize that some of your fellow posters may work for AA, depend on that job for income, and if this continues beyond the next few months, are concerned that jobs could be gone for a period of time, if not permanently.


If all flying is halted the entire industry will crash, not just AA. And lenders won't lend even against collateral. People will lose jobs very quickly with nothing out there to replace that airline job. Suicides will immediately soar. I could go on and on.

The knock on effects just from this one industry would be unimaginable. If you are healthy you are far more at risk driving an automobile. We should have leadership telling those people to continue to lead their lives taking necessary precautions like hand washing and avoiding high at risk individuals. This is not the time to go visit Grandma. At risk people need to immediately take precautions such as self quarantine and avoid other human contact as much as possible.

The stupidity and hysteria from this is beyond astounding.
 
AAguy1992
Posts: 5
Joined: Thu Aug 15, 2019 1:18 am

Re: Speculation: American Airlines might file bankruptcy again

Mon Mar 16, 2020 4:43 pm

AA has 6.2 Billion in cash on hand, DL about the same amount. We all should be worried about the impact on the regionals, F9, NK and even WN. Who knows, let me look in my crystal ball too, I'll get the super bowl winners for us all.
 
Boof02671
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Re: Speculation: American Airlines might file bankruptcy again

Mon Mar 16, 2020 4:54 pm

AAguy1992 wrote:
AA has 6.2 Billion in cash on hand, DL about the same amount. We all should be worried about the impact on the regionals, F9, NK and even WN. Who knows, let me look in my crystal ball too, I'll get the super bowl winners for us all.

AA has $7.1 billion on hand.
 
AAguy1992
Posts: 5
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Re: Speculation: American Airlines might file bankruptcy again

Mon Mar 16, 2020 5:07 pm

Boof02671 wrote:
AAguy1992 wrote:
AA has 6.2 Billion in cash on hand, DL about the same amount. We all should be worried about the impact on the regionals, F9, NK and even WN. Who knows, let me look in my crystal ball too, I'll get the super bowl winners for us all.

AA has $7.1 billion on hand.


.9 of that is secured or locked up.
 
DoctorVenkman
Posts: 218
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Re: Speculation: American Airlines might file bankruptcy again

Mon Mar 16, 2020 5:09 pm

[url][/url]
Exeiowa wrote:
How do loans against secured assets work in bankruptcy? Because most of what is owed by AA is for aircraft purchases (presumably secured against said asset) so I was curious how that is handled.


Assuming you are talking about chapter 7 BK (i.e. liquidation) instead of chapter 11 (i.e. reorganization).

The secured assets go to their specific creditor first, up to the value of their secured debt. Next on the chain is bondholders, who split up any remaining value on the secured assets (if any) and any unsecured assets to pay off the debt owed to them. Finally the shareholders get to pick apart the scraps that are left over (if any) after the bondholders.
 
Boof02671
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Re: Speculation: American Airlines might file bankruptcy again

Mon Mar 16, 2020 5:16 pm

AAguy1992 wrote:
Boof02671 wrote:
AAguy1992 wrote:
AA has 6.2 Billion in cash on hand, DL about the same amount. We all should be worried about the impact on the regionals, F9, NK and even WN. Who knows, let me look in my crystal ball too, I'll get the super bowl winners for us all.

AA has $7.1 billion on hand.


.9 of that is secured or locked up.

AA has stated they have $7.1 billion of unencumbered cash and equivalents.
 
Exeiowa
Posts: 353
Joined: Fri Jul 06, 2018 4:49 pm

Re: Speculation: American Airlines might file bankruptcy again

Mon Mar 16, 2020 5:44 pm

DoctorVenkman wrote:
[url][/url]
Exeiowa wrote:
How do loans against secured assets work in bankruptcy? Because most of what is owed by AA is for aircraft purchases (presumably secured against said asset) so I was curious how that is handled.


Assuming you are talking about chapter 7 BK (i.e. liquidation) instead of chapter 11 (i.e. reorganization).

The secured assets go to their specific creditor first, up to the value of their secured debt. Next on the chain is bondholders, who split up any remaining value on the secured assets (if any) and any unsecured assets to pay off the debt owed to them. Finally the shareholders get to pick apart the scraps that are left over (if any) after the bondholders.


I doubt liquidation is coming up soon, the chapter 11 is what I was wondering, Because you can't forgive them and give them "free airplanes" but taking away the asset that generates the income will not do much to help matters. So if the majority of the debt is secured on airplanes how do you square that circle?
 
DoctorVenkman
Posts: 218
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Re: Speculation: American Airlines might file bankruptcy again

Mon Mar 16, 2020 5:57 pm

Exeiowa wrote:
DoctorVenkman wrote:
[url][/url]
Exeiowa wrote:
How do loans against secured assets work in bankruptcy? Because most of what is owed by AA is for aircraft purchases (presumably secured against said asset) so I was curious how that is handled.


Assuming you are talking about chapter 7 BK (i.e. liquidation) instead of chapter 11 (i.e. reorganization).

The secured assets go to their specific creditor first, up to the value of their secured debt. Next on the chain is bondholders, who split up any remaining value on the secured assets (if any) and any unsecured assets to pay off the debt owed to them. Finally the shareholders get to pick apart the scraps that are left over (if any) after the bondholders.


I doubt liquidation is coming up soon, the chapter 11 is what I was wondering, Because you can't forgive them and give them "free airplanes" but taking away the asset that generates the income will not do much to help matters. So if the majority of the debt is secured on airplanes how do you square that circle?


Chapter 11 bankruptcy is basically a big negotiation between the creditors and the debtor. Almost anything can happen so there's no real way to answer your question comprehensively. At the end of the day, the secured creditor is entitled to the value of the secured asset if the debtor defaults, but they cannot take control of the secured asset during chapter 11. So AA would still be able to fly their aircraft and generate revenue, but they would need to pay the creditor the value of the aircraft eventually. All of the specific terms of that repayment can be negotiated, but eventually AA will have to pay them back.
 
AAguy1992
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Re: Speculation: American Airlines might file bankruptcy again

Mon Mar 16, 2020 6:01 pm

I'm worried about the 700 to 800k of employees, think of that impact to the economy.
 
AAguy1992
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Re: Speculation: American Airlines might file bankruptcy again

Mon Mar 16, 2020 6:08 pm

I'm worried about the 700 to 800k of employees, think of that impact to the economy.
 
jayunited
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Re: Speculation: American Airlines might file bankruptcy again

Mon Mar 16, 2020 7:55 pm

Boof02671 wrote:
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


AA like UA and DL is suspending a large number of their international schedule and is also reducing domestic capacity. UA this morning stated they now believe domestic capacity may be impacted through the summer travel season. If you don't think AA is in talks with the unions behind the scenes about furloughs then only person you are deceiving is yourself.

Just because UA is being more vocal and upfront with their employees and making sure employees know where the airlines is right now does not mean UA is in worse shape than AA. Just looking at the shear number of reductions the US3 have announced in recent days furloughs are coming even to AA.

According to several published reports out this morning there are 10 US airlines the federal government is working with to finalize a bailout for the US industry I'm sure AA just like UA is among those 10 carriers looking to the government for help.
 
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lightsaber
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Re: Speculation: American Airlines might file bankruptcy again

Mon Mar 16, 2020 8:00 pm

Folks:
1. Moderators do not arbitrate the truth.
2. Be respectful. We're talking people's jobs here.
3. When it is your opinion, state it is your opinion.
Winter is coming.
 
Boof02671
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Re: Speculation: American Airlines might file bankruptcy again

Mon Mar 16, 2020 8:10 pm

jayunited wrote:
Boof02671 wrote:
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


AA like UA and DL is suspending a large number of their international schedule and is also reducing domestic capacity. UA this morning stated they now believe domestic capacity may be impacted through the summer travel season. If you don't think AA is in talks with the unions behind the scenes about furloughs then only person you are deceiving is yourself.

Just because UA is being more vocal and upfront with their employees and making sure employees know where the airlines is right now does not mean UA is in worse shape than AA. Just looking at the shear number of reductions the US3 have announced in recent days furloughs are coming even to AA.

According to several published reports out this morning there are 10 US airlines the federal government is working with to finalize a bailout for the US industry I'm sure AA just like UA is among those 10 carriers looking to the government for help.

They’ve already negotiated over the weekend for unpaid leaves. AA wants the new CBAs to pass otherwise all ramp and maintenance have different procedures.
 
jayunited
Posts: 3028
Joined: Sat Jan 05, 2013 12:03 am

Re: Speculation: American Airlines might file bankruptcy again

Mon Mar 16, 2020 11:12 pm

Boof02671 wrote:
They’ve already negotiated over the weekend for unpaid leaves. AA wants the new CBAs to pass otherwise all ramp and maintenance have different procedures.



Unpaid leave is not the same same as furloughs, UA already has a large number of employees from pilots, to FA, to ramp and maintenance employees even employees behind the scenes here are Willis Tower on reduced (pilots) or unpaid leave. But make no mistake about it unpaid leave will not be enough because there is no way an airline like AA would ever get enough employees to volunteer to take enough unpaid leave for the length of time necessary to gain the amount of savings the airline needs to navigate this crisis and come out on the other side. It is because of this UA is now in talks with the unions about furloughs. When you are talking about a 50% reduction in domestic travel and at least a 75% reduction in international travel for an airline like UA in my opinion you would need around 30,000 - 40,000 employees out of 95,000 employees to take a leave of absence for at least 3 - 6 months.


American Airlines has over 100,000 employees they like UA in my opinion would need 30,000 or more employees to take unpaid leave of absence for months. I don't believe AA will get those number through their voluntary unpaid leave program there will be furloughs at American Airlines.

I work for United Airlines and for all I know I could be out of a job very soon. Trust me I take no pleasure in saying this but you are deceiving yourself if you believe AA will get through this crisis without any furloughs. The truth is a large number of airline employees across this country are now facing the real prospect of loosing their job myself included.
 
jfk777
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Re: Speculation: American Airlines might file bankruptcy again

Mon Mar 16, 2020 11:52 pm

Who would have ever predicted such an event in these modern times, bringing entire industries to a halt. Hoping some airlines get revenue by using the belly space in their long haul planes for freight with empty cabins.
 
Boof02671
Posts: 2286
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Re: Speculation: American Airlines might file bankruptcy again

Mon Mar 16, 2020 11:59 pm

jayunited wrote:
Boof02671 wrote:
They’ve already negotiated over the weekend for unpaid leaves. AA wants the new CBAs to pass otherwise all ramp and maintenance have different procedures.



Unpaid leave is not the same same as furloughs, UA already has a large number of employees from pilots, to FA, to ramp and maintenance employees even employees behind the scenes here are Willis Tower on reduced (pilots) or unpaid leave. But make no mistake about it unpaid leave will not be enough because there is no way an airline like AA would ever get enough employees to volunteer to take enough unpaid leave for the length of time necessary to gain the amount of savings the airline needs to navigate this crisis and come out on the other side. It is because of this UA is now in talks with the unions about furloughs. When you are talking about a 50% reduction in domestic travel and at least a 75% reduction in international travel for an airline like UA in my opinion you would need around 30,000 - 40,000 employees out of 95,000 employees to take a leave of absence for at least 3 - 6 months.


American Airlines has over 100,000 employees they like UA in my opinion would need 30,000 or more employees to take unpaid leave of absence for months. I don't believe AA will get those number through their voluntary unpaid leave program there will be furloughs at American Airlines.

I work for United Airlines and for all I know I could be out of a job very soon. Trust me I take no pleasure in saying this but you are deceiving yourself if you believe AA will get through this crisis without any furloughs. The truth is a large number of airline employees across this country are now facing the real prospect of loosing their job myself included.

Furloughs are not negotiated. There are provisions in the current CBAs. They want to only use one procedure, so they won’t do anything until after March 26th, and since it’s a force majuere situation their hands are free. And I’ve never said their won’t be furloughs and layoffs, don’t put words into my posts that aren’t there. I lived 9/11 at US and both bankruptcies. And was on the IAM Mechanic and Related Negotiating Committee during our second chapter 11.
 
Cedar
Posts: 76
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Re: Speculation: American Airlines might file bankruptcy again

Tue Mar 17, 2020 12:22 am

Boof02671 wrote:
tphuang wrote:
Boof02671 wrote:
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


UA is not in lay-off talks, they are in discussions about how further to reduce payroll. That could mean further unpaid leave offers or forced unpaid leave, reduction in crew hours, asking certain managerial staff to take pay cuts, etc.

Cedar
 
Boof02671
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Re: Speculation: American Airlines might file bankruptcy again

Tue Mar 17, 2020 1:16 am

AA is in talks with banks for $4 billion in loans.

https://www.bloomberg.com/news/articles ... rus-impact
 
jayunited
Posts: 3028
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Re: Speculation: American Airlines might file bankruptcy again

Tue Mar 17, 2020 1:24 am

Cedar wrote:
UA is not in lay-off talks, they are in discussions about how further to reduce payroll. That could mean further unpaid leave offers or forced unpaid leave, reduction in crew hours, asking certain managerial staff to take pay cuts, etc.

Cedar


Further reduce payroll is furloughs because people have already volunteered for voluntary leave at UA. The furloughs could be in addition to what may amount to temporary pay cuts for employees who remain.

Airline employees need to face the stark reality which is no carrier will get the savings they need without furloughs. Future bookings for April and May are terrible at best and that is with a 50% reduction in domestic capacity. Long term I believe AA, DL, UA and WN will be just fine (and let me say I don't believe there will be a new round of bankruptcies) but short term it is going to be painful, just look at the reduction in service both domestically and internationally. Demand is not going to magically return in June or July, the lingering effects of COVID-19 may last through all of 2020, full recovery may not take place till 2021 or even 2022. Airlines like AA and UA can not afford to maintain a 100,000 plus work for (AA), and a 95,000 employee workforce (UA) for that extended period of time. Delta isn't excluded from the fallout either it just DL doesn't have a large union workforce not like AA and UA but DL employees will feel the effects of COVID-19 as will all airline employees.
 
Ziyulu
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Re: Speculation: American Airlines might file bankruptcy again

Tue Mar 17, 2020 2:05 am

Their stock actually went up today while DL and UA went down.
 
flyingisthebest
Posts: 56
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Re: Speculation: American Airlines might file bankruptcy again

Tue Mar 17, 2020 2:14 am

Could this be an opportunity for AA to accelerate maintenance at its facilities while aircraft are being parked? Given that AA have the most In house maintenance out of the big 3?
 
Cedar
Posts: 76
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Re: Speculation: American Airlines might file bankruptcy again

Tue Mar 17, 2020 2:38 am

jayunited wrote:
Cedar wrote:
UA is not in lay-off talks, they are in discussions about how further to reduce payroll. That could mean further unpaid leave offers or forced unpaid leave, reduction in crew hours, asking certain managerial staff to take pay cuts, etc.

Cedar


Further reduce payroll is furloughs because people have already volunteered for voluntary leave at UA. The furloughs could be in addition to what may amount to temporary pay cuts for employees who remain.

Airline employees need to face the stark reality which is no carrier will get the savings they need without furloughs. Future bookings for April and May are terrible at best and that is with a 50% reduction in domestic capacity. Long term I believe AA, DL, UA and WN will be just fine (and let me say I don't believe there will be a new round of bankruptcies) but short term it is going to be painful, just look at the reduction in service both domestically and internationally. Demand is not going to magically return in June or July, the lingering effects of COVID-19 may last through all of 2020, full recovery may not take place till 2021 or even 2022. Airlines like AA and UA can not afford to maintain a 100,000 plus work for (AA), and a 95,000 employee workforce (UA) for that extended period of time. Delta isn't excluded from the fallout either it just DL doesn't have a large union workforce not like AA and UA but DL employees will feel the effects of COVID-19 as will all airline employees.


I do believe the return of bookings will be as surprising as the drop & just as quick, people forget easily & quickly - locking people up at home = cabin fever, they are going to want to travel. In addition - vacations will need to be used and the extra time off from unpaid leaves of absence, will result in travel once we get over the hump. People will want to visit loved ones, and companies will want to get back to BAU as quick as possible & will need to play catch up.

Anyone taking bets?! - LOL

Cedar
 
strfyr51
Posts: 5092
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Re: American Airlines might file bankruptcy again

Tue Mar 17, 2020 3:07 am

jfklganyc wrote:
A string of bankruptcies of mergers is plaus
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

If you can't figure that out? Then you need to quit blogging! Look at their
balance sheets and their Networks, they're still major domestic airlines.. and? because they have widebodies? They can still fly major league belly freight and possibly not need passengers to break even from Asia. Especially if they can Land Load. turn and Go with 3 flight crews on board so nobody has to stay in Asia and Nobody has tp fly over 8 hours. because with no passengers? No Exposure! And if I can think of it? Then so can they! Yes, it will use up a LOT of pilot crews but there are many items that the USA has outsourced to China that we still need. Or haven't you been to the store lately? This is the downside of off shoring production.
 
WingsOfLove
Posts: 223
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Re: Speculation: American Airlines might file bankruptcy again

Tue Mar 17, 2020 3:11 am

chepos wrote:
It seems like the day AA goes back into BK will be a day of celebration for some on this website


no worries, Delta will screw its paycheck fan boys first... why? NO UNION :D
 
airplaneboy
Posts: 720
Joined: Sat May 15, 2004 11:59 am

Re: Speculation: American Airlines might file bankruptcy again

Tue Mar 17, 2020 3:16 am

Cedar wrote:
jayunited wrote:
Cedar wrote:
UA is not in lay-off talks, they are in discussions about how further to reduce payroll. That could mean further unpaid leave offers or forced unpaid leave, reduction in crew hours, asking certain managerial staff to take pay cuts, etc.

Cedar


Further reduce payroll is furloughs because people have already volunteered for voluntary leave at UA. The furloughs could be in addition to what may amount to temporary pay cuts for employees who remain.

Airline employees need to face the stark reality which is no carrier will get the savings they need without furloughs. Future bookings for April and May are terrible at best and that is with a 50% reduction in domestic capacity. Long term I believe AA, DL, UA and WN will be just fine (and let me say I don't believe there will be a new round of bankruptcies) but short term it is going to be painful, just look at the reduction in service both domestically and internationally. Demand is not going to magically return in June or July, the lingering effects of COVID-19 may last through all of 2020, full recovery may not take place till 2021 or even 2022. Airlines like AA and UA can not afford to maintain a 100,000 plus work for (AA), and a 95,000 employee workforce (UA) for that extended period of time. Delta isn't excluded from the fallout either it just DL doesn't have a large union workforce not like AA and UA but DL employees will feel the effects of COVID-19 as will all airline employees.


I do believe the return of bookings will be as surprising as the drop & just as quick, people forget easily & quickly - locking people up at home = cabin fever, they are going to want to travel. In addition - vacations will need to be used and the extra time off from unpaid leaves of absence, will result in travel once we get over the hump. People will want to visit loved ones, and companies will want to get back to BAU as quick as possible & will need to play catch up.

Anyone taking bets?! - LOL

Cedar


Agreed, but the economic fallout and domino effect of many people who already have lost their jobs (and have yet to lose their jobs) might make discretionary spending on things like leisure travel less possible for many. As an example, MGM and Wynn have closed their properties in Las Vegas. Hotels are laying off staff- at some hotels, airline crews are the only guests they now have. Demand for air travel will bounce back eventually I’m sure- but it’s going to take longer and will be gradual.
Last edited by airplaneboy on Tue Mar 17, 2020 3:40 am, edited 1 time in total.
 
Byrdluvs747
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Re: Speculation: American Airlines might file bankruptcy again

Tue Mar 17, 2020 3:38 am

jfk777 wrote:
Who would have ever predicted such an event in these modern times, bringing entire industries to a halt. Hoping some airlines get revenue by using the belly space in their long haul planes for freight with empty cabins.


Seriously? Epidemiologists, virologists, and other social sciences have been predicting this for decades. They have super computers that simulate these pandemics. None of this should have come as a surprise.
The 747: The hands who designed it were guided by god.
 
Insertnamehere
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Re: Speculation: American Airlines might file bankruptcy again

Tue Mar 17, 2020 4:25 am

In my personal opinion:
No airline should be getting any bailout from the government. These airlines have more then enough money on hand from the last 4 to 5 years of good profits and more then enough assets to run lines of credit against. These businesses should not be helped out by the government.
 
Pinto
Posts: 60
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Re: Speculation: American Airlines might file bankruptcy again

Tue Mar 17, 2020 4:59 am

Insertnamehere wrote:
In my personal opinion:
No airline should be getting any bailout from the government. These airlines have more then enough money on hand from the last 4 to 5 years of good profits and more then enough assets to run lines of credit against. These businesses should not be helped out by the government.



How much money do you really think airlines have??
 
LCDFlight
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Re: Speculation: American Airlines might file bankruptcy again

Tue Mar 17, 2020 5:58 am

Sorry, no special reason to bail out airlines over other organizations. Airlines are a cyclical industry. The expectation that it won’t be cyclical was incorrect, as always. I was glad to see airlines and employees do so well for so long. But it is no guarantee and cycles end. Investors will lose everything... again. IMHO. The demand will always be served.
 
Insertnamehere
Posts: 336
Joined: Tue Jul 24, 2018 3:44 am

Re: Speculation: American Airlines might file bankruptcy again

Tue Mar 17, 2020 6:09 am

Pinto wrote:
Insertnamehere wrote:
In my personal opinion:
No airline should be getting any bailout from the government. These airlines have more then enough money on hand from the last 4 to 5 years of good profits and more then enough assets to run lines of credit against. These businesses should not be helped out by the government.



How much money do you really think airlines have??


This lull in demand is going to be a deep but relatively short period. This isn’t going to be a multi year slowdown like 2008 it’s a lot of capacity cuts but it will be gone by the summer.

Why should the government be bailing out airlines like American or Delta who have enough assets and cash on hand to survive and had enough time to build up reserves.

If small businesses aren’t going to get the same treatment why should the big airlines?
 
ShinyAndChrome
Posts: 280
Joined: Fri Aug 28, 2015 1:53 am

Re: Speculation: American Airlines might file bankruptcy again

Tue Mar 17, 2020 6:10 am

LCDFlight wrote:
Sorry, no special reason to bail out airlines over other organizations.


Unless the White House is straight up lying, a whole lot of other businesses big and small will be getting some kind of relief so no problem there.

Airlines are a cyclical industry. The expectation that it won’t be cyclical was incorrect, as always.

I was glad to see airlines and employees do so well for so long. But it is no guarantee and cycles end.


Every industry is cyclical to some extent. The airlines have gotten much better at preparing for the normal downswing of the cycle. The expectation was that the airlines would stop going bankrupt every twenty years.

Investors will lose everything... again. IMHO. The demand will always be served.


There's only so many times the first sentence can be true before the second one isn't.
 
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DL717
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Re: Speculation: American Airlines might file bankruptcy again

Tue Mar 17, 2020 6:16 am

LCDFlight wrote:
Sorry, no special reason to bail out airlines over other organizations. Airlines are a cyclical industry. The expectation that it won’t be cyclical was incorrect, as always. I was glad to see airlines and employees do so well for so long. But it is no guarantee and cycles end. Investors will lose everything... again. IMHO. The demand will always be served.


This isn’t cyclical. This is a dumpster fire. We were due for a recession, but this is hell in the making.
Funny. It only took one pandemic for those who argue endlessly about natural selection to stop believing in natural selection.
 
WidebodyPTV
Posts: 289
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Re: Speculation: American Airlines might file bankruptcy again

Tue Mar 17, 2020 6:33 am

Pinto wrote:
Insertnamehere wrote:
In my personal opinion:
No airline should be getting any bailout from the government. These airlines have more then enough money on hand from the last 4 to 5 years of good profits and more then enough assets to run lines of credit against. These businesses should not be helped out by the government.



How much money do you really think airlines have??


The legacy airlines should've been more prepared for a crisis (look at how many billions were spent on share buybacks). Personally, I'd rather see the money given directly to the public. Millions of Americans are going to be hurting from this, but it's good to know our current administration is considering giving the legacies billions in subsidies so that e.g. DL can continue to burn through millions of dollars in its quest to chase AS from the market.
 
chonetsao
Posts: 716
Joined: Sun Nov 06, 2005 3:55 pm

Re: Speculation: American Airlines might file bankruptcy again

Tue Mar 17, 2020 9:05 am

WidebodyPTV wrote:
Pinto wrote:
Insertnamehere wrote:
In my personal opinion:
No airline should be getting any bailout from the government. These airlines have more then enough money on hand from the last 4 to 5 years of good profits and more then enough assets to run lines of credit against. These businesses should not be helped out by the government.



How much money do you really think airlines have??


The legacy airlines should've been more prepared for a crisis (look at how many billions were spent on share buybacks). Personally, I'd rather see the money given directly to the public. Millions of Americans are going to be hurting from this, but it's good to know our current administration is considering giving the legacies billions in subsidies so that e.g. DL can continue to burn through millions of dollars in its quest to chase AS from the market.


But the shareholder you mentioned, are mostly pension fund and endowment funds. There are actually very few individuals would hold the shares. In AA's case, 87% of the shares are held by various institutional funds. Those funds provide secure pension pay out to many schools, universities, railroads, and health care pension funds and plans. A share back provides cash return for such pension funds so that they have more money to invest or held for situations like this.

You can't simply blame the shareholder or the company buy back shares.

Even DL's activity in Seattle, its economical input to local economy is huge. Everyone benefits, even AS benefits by upping the game and more investments to fend off DL.
 
Skyguy
Posts: 507
Joined: Sat Feb 28, 2004 1:55 am

Re: Speculation: American Airlines might file bankruptcy again

Tue Mar 17, 2020 12:55 pm

Lootess wrote:

None of it is unfounded, Sam uses material facts in the article. AA has double the debt of UA and DL, and over the years AA has not paid it down compared to it's peers instead just been buying back stock.


AA was making over $7billion in annual profits recently, and it spent it's cash on share buy backs and borrowing money to pay for new planes. Why? Doug Parker's compensation is purely in stock, he receives no cash salary, so he convinced the pliable board that stock buyback was the best way to increase shareholder value and therefore his compensation. Talk about misalignment of executive compensation and corporate goals.
"Those who talk, do not know, and those who know, do not talk."
 
Boof02671
Posts: 2286
Joined: Sun Jul 10, 2016 12:15 am

Re: Speculation: American Airlines might file bankruptcy again

Tue Mar 17, 2020 2:14 pm

Skyguy wrote:
Lootess wrote:

None of it is unfounded, Sam uses material facts in the article. AA has double the debt of UA and DL, and over the years AA has not paid it down compared to it's peers instead just been buying back stock.


AA was making over $7billion in annual profits recently, and it spent it's cash on share buy backs and borrowing money to pay for new planes. Why? Doug Parker's compensation is purely in stock, he receives no cash salary, so he convinced the pliable board that stock buyback was the best way to increase shareholder value and therefore his compensation. Talk about misalignment of executive compensation and corporate goals.

AA never made $7 billion in one year in profits.
 
Skyguy
Posts: 507
Joined: Sat Feb 28, 2004 1:55 am

Re: Speculation: American Airlines might file bankruptcy again

Tue Mar 17, 2020 2:29 pm

Boof02671 wrote:
Skyguy wrote:
Lootess wrote:

None of it is unfounded, Sam uses material facts in the article. AA has double the debt of UA and DL, and over the years AA has not paid it down compared to it's peers instead just been buying back stock.


AA was making over $7billion in annual profits recently, and it spent it's cash on share buy backs and borrowing money to pay for new planes. Why? Doug Parker's compensation is purely in stock, he receives no cash salary, so he convinced the pliable board that stock buyback was the best way to increase shareholder value and therefore his compensation. Talk about misalignment of executive compensation and corporate goals.

AA never made $7 billion in one year in profits.


My bad, I meant annual EBITDA. Since 2016 when it was over $7billion, it has been over $5.5.billion since 2017.
"Those who talk, do not know, and those who know, do not talk."
 
delimit
Posts: 840
Joined: Fri Jan 09, 2009 8:08 pm

Re: Speculation: American Airlines might file bankruptcy again

Tue Mar 17, 2020 2:54 pm

LCDFlight wrote:
Sorry, no special reason to bail out airlines over other organizations. Airlines are a cyclical industry. The expectation that it won’t be cyclical was incorrect, as always. I was glad to see airlines and employees do so well for so long. But it is no guarantee and cycles end. Investors will lose everything... again. IMHO. The demand will always be served.

Um...when your business is moving people around, and the entire world is being told to stop moving around, you might be a bit move exposed than other industries. The travel industry is going to be hit much harder than pretty much any other industry.
 
Insertnamehere
Posts: 336
Joined: Tue Jul 24, 2018 3:44 am

Re: Speculation: American Airlines might file bankruptcy again

Tue Mar 17, 2020 3:07 pm

delimit wrote:
LCDFlight wrote:
Sorry, no special reason to bail out airlines over other organizations. Airlines are a cyclical industry. The expectation that it won’t be cyclical was incorrect, as always. I was glad to see airlines and employees do so well for so long. But it is no guarantee and cycles end. Investors will lose everything... again. IMHO. The demand will always be served.

Um...when your business is moving people around, and the entire world is being told to stop moving around, you might be a bit move exposed than other industries. The travel industry is going to be hit much harder than pretty much any other industry.


It's not like this is new, the airline and entire travel industry is very exposed to pandemics and global political issues. It is the management's job to ensure they have money on hand to whether these short to medium term slow-downs and be flexible enough to be able to cut the fat when times get tough. If this was a one-off situation? sure but this happens on a semi-regular basis even this century there should be no excuse for the US3 not being able to take care of themselves.
 
User avatar
chepos
Posts: 7273
Joined: Sat Dec 02, 2000 9:40 am

Speculation: American Airlines might file bankruptcy again

Tue Mar 17, 2020 3:14 pm

Insertnamehere wrote:
delimit wrote:
LCDFlight wrote:
Sorry, no special reason to bail out airlines over other organizations. Airlines are a cyclical industry. The expectation that it won’t be cyclical was incorrect, as always. I was glad to see airlines and employees do so well for so long. But it is no guarantee and cycles end. Investors will lose everything... again. IMHO. The demand will always be served.

Um...when your business is moving people around, and the entire world is being told to stop moving around, you might be a bit move exposed than other industries. The travel industry is going to be hit much harder than pretty much any other industry.


It's not like this is new, the airline and entire travel industry is very exposed to pandemics and global political issues. It is the management's job to ensure they have money on hand to whether these short to medium term slow-downs and be flexible enough to be able to cut the fat when times get tough. If this was a one-off situation? sure but this happens on a semi-regular basis even this century there should be no excuse for the US3 not being able to take care of themselves.

The global economy does not shut down on a semi regular basis. Countries around the world do not shut their borders en masse on a semi regular basis. Global pandemics do not occur on a semi regular basis (this is nothing like SARS/H1N1/MERS).


Sent from my iPhone using Tapatalk
Fly the Flag!!!!
 
delimit
Posts: 840
Joined: Fri Jan 09, 2009 8:08 pm

Re: Speculation: American Airlines might file bankruptcy again

Tue Mar 17, 2020 3:17 pm

Insertnamehere wrote:
delimit wrote:
LCDFlight wrote:
Sorry, no special reason to bail out airlines over other organizations. Airlines are a cyclical industry. The expectation that it won’t be cyclical was incorrect, as always. I was glad to see airlines and employees do so well for so long. But it is no guarantee and cycles end. Investors will lose everything... again. IMHO. The demand will always be served.

Um...when your business is moving people around, and the entire world is being told to stop moving around, you might be a bit move exposed than other industries. The travel industry is going to be hit much harder than pretty much any other industry.


It's not like this is new, the airline and entire travel industry is very exposed to pandemics and global political issues. It is the management's job to ensure they have money on hand to whether these short to medium term slow-downs and be flexible enough to be able to cut the fat when times get tough. If this was a one-off situation? sure but this happens on a semi-regular basis even this century there should be no excuse for the US3 not being able to take care of themselves.

When was the last time you recall multiple countries closing their borders? The scope of this is so much larger than anything that has happened before in the modern era. Your expectations that any business could drastically shrink it's operations while meeting it expenses for multiple months is unrealistic.
 
Insertnamehere
Posts: 336
Joined: Tue Jul 24, 2018 3:44 am

Re: Speculation: American Airlines might file bankruptcy again

Tue Mar 17, 2020 3:27 pm

delimit wrote:
Insertnamehere wrote:
delimit wrote:
Um...when your business is moving people around, and the entire world is being told to stop moving around, you might be a bit move exposed than other industries. The travel industry is going to be hit much harder than pretty much any other industry.


It's not like this is new, the airline and entire travel industry is very exposed to pandemics and global political issues. It is the management's job to ensure they have money on hand to whether these short to medium term slow-downs and be flexible enough to be able to cut the fat when times get tough. If this was a one-off situation? sure but this happens on a semi-regular basis even this century there should be no excuse for the US3 not being able to take care of themselves.

When was the last time you recall multiple countries closing their borders? The scope of this is so much larger than anything that has happened before in the modern era. Your expectations that any business could drastically shrink it's operations while meeting it expenses for multiple months is unrealistic.


My expectations are that the government shouldn't be bailing out large companies if they aren't going to also be helping small businesses. We know for sure that the government is not going to be handing out money to your mom and pop shop so why should the billion dollars worth airlines.
 
Lootess
Posts: 518
Joined: Sun May 13, 2018 6:15 am

Re: Speculation: American Airlines might file bankruptcy again

Tue Mar 17, 2020 3:28 pm

Detroit313 wrote:
Let's give US taxpayer money to Delta so they can buy more stakes in foreign airlines all around the world like 49% of Virgin Atlantic, 20% of Latam, 10% or whatever it is of Korean and the list goes on and on.

At least American outsources the much less and employees way more Americans with good union jobs.


Turns out those investments ended up being worth it, reducing DL's personal international exposure risk and sharing it with their partners. Cutbacks are much less compared to the other two.
 
Insertnamehere
Posts: 336
Joined: Tue Jul 24, 2018 3:44 am

Re: Speculation: American Airlines might file bankruptcy again

Tue Mar 17, 2020 3:29 pm

chepos wrote:
Insertnamehere wrote:
delimit wrote:
Um...when your business is moving people around, and the entire world is being told to stop moving around, you might be a bit move exposed than other industries. The travel industry is going to be hit much harder than pretty much any other industry.


It's not like this is new, the airline and entire travel industry is very exposed to pandemics and global political issues. It is the management's job to ensure they have money on hand to whether these short to medium term slow-downs and be flexible enough to be able to cut the fat when times get tough. If this was a one-off situation? sure but this happens on a semi-regular basis even this century there should be no excuse for the US3 not being able to take care of themselves.

The global economy does not shut down on a semi regular basis. Countries around the world do not shut their borders en masse on a semi regular basis. Global pandemics do not occur on a semi regular basis (this is nothing like SARS/H1N1/MERS).


Sent from my iPhone using Tapatalk


9/11 and 2008 come to mind where we had large cuts in demand.
 
onwFan
Posts: 478
Joined: Wed Feb 03, 2016 4:02 am

Re: Speculation: American Airlines might file bankruptcy again

Tue Mar 17, 2020 3:40 pm

Lootess wrote:
Detroit313 wrote:
Let's give US taxpayer money to Delta so they can buy more stakes in foreign airlines all around the world like 49% of Virgin Atlantic, 20% of Latam, 10% or whatever it is of Korean and the list goes on and on.

At least American outsources the much less and employees way more Americans with good union jobs.


Turns out those investments ended up being worth it, reducing DL's personal international exposure risk and sharing it with their partners. Cutbacks are much less compared to the other two.

What cutbacks are much less? A majority of DL’s cutbacks have not been loaded yet. In any case, if you are talking about April & May - the more an airline flies, the more they are losing money. So I don’t even see the point.

And we don’t know the fate of most of these investments - especially with all of them being loss making even before the crisis. We are going to see the worth of these investments in the months to come.
 
Amsterdam
Posts: 450
Joined: Thu Mar 17, 2011 12:52 am

Re: Speculation: American Airlines might file bankruptcy again

Tue Mar 17, 2020 4:19 pm

This crisis is not cyclical.
 
Amsterdam
Posts: 450
Joined: Thu Mar 17, 2011 12:52 am

Re: Speculation: American Airlines might file bankruptcy again

Tue Mar 17, 2020 4:23 pm

Insertnamehere wrote:
chepos wrote:
Insertnamehere wrote:

It's not like this is new, the airline and entire travel industry is very exposed to pandemics and global political issues. It is the management's job to ensure they have money on hand to whether these short to medium term slow-downs and be flexible enough to be able to cut the fat when times get tough. If this was a one-off situation? sure but this happens on a semi-regular basis even this century there should be no excuse for the US3 not being able to take care of themselves.

The global economy does not shut down on a semi regular basis. Countries around the world do not shut their borders en masse on a semi regular basis. Global pandemics do not occur on a semi regular basis (this is nothing like SARS/H1N1/MERS).


Sent from my iPhone using Tapatalk


9/11 and 2008 come to mind where we had large cuts in demand.


This is much worse.
European airlines are completely stopping operations.
Even after years of record profits they will all go broke without state help.
If you let them go broke, then state owned and/or aided chinese turkish and arab airlines can take over a huge part of the market.
That would be foolish to let happen.

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