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tphuang
Posts: 5233
Joined: Tue Mar 14, 2017 2:04 pm

Re: AA's Doug Parker says U.S. Carriers Will Survive Without Bankruptcies

Thu May 28, 2020 1:21 am

UA444 wrote:
I feel like he means AMR/UAL/DAL survives without bankruptcy. I definitely see at least one smaller carrier filing.

He makes a good argument about the demand problem vs unsustainable costs. The issue is that people are too scared to walk their dog in their neighborhood, let alone get on a plane. And the way some in the media get their jollies reporting this 24/7, I think it’s going to cause massive damage long term.

The legacy carriers are in tougher position. They will have mountain of debt coming out of this.

It's a really bad thing that corporate spending and international long haul travel will be down for a while.
 
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lightsaber
Moderator
Posts: 20086
Joined: Wed Jan 19, 2005 10:55 pm

Re: Boeing CEO: A major US airline likely will go out of business this year,

Thu Jun 04, 2020 2:50 pm

[twoid][/twoid]AA's debt downgraded to B-, from B.

https://www.marketwatch.com/story/ameri ... 2020-06-03

This is highly speculative (risky) debt.

The credit rating agency said the outlook on the rating, which is now six notches deep into speculative grade, or "junk" territory, remains negative. S&P said it's also maintaining its assessment of liquidity at "less than adequate," given the expectation of a "substantially negative level of cash generation" over the next 12 months.

If the rating drops any more, I speculate AA will violate covenants.

Lightsaber
Winter is coming.
 
Miamiairport
Posts: 668
Joined: Tue Apr 10, 2018 8:14 pm

Re: Boeing CEO: A major US airline likely will go out of business this year,

Thu Jun 04, 2020 3:02 pm

What is the make up of debt? If much of it is related to a/c AA in many ways is in the driver seat. It's not like there's a huge demand for commercial a/c given the number that parked all over the world. I would lenders would be very flexible in covenant forbearance and refinancing of terms. A prepackaged bankruptcy is possible but I don't see liquidation. Worst comes to worst I see the Feds helping, arranging and financing a shot gun wedding.
 
JAMBOJET
Posts: 293
Joined: Tue Dec 11, 2018 6:23 pm

Re: Boeing CEO: A major US airline likely will go out of business this year,

Thu Jun 04, 2020 3:52 pm

lightsaber wrote:
[twoid][/twoid]AA's debt downgraded to B-, from B.

https://www.marketwatch.com/story/ameri ... 2020-06-03

This is highly speculative (risky) debt.

The credit rating agency said the outlook on the rating, which is now six notches deep into speculative grade, or "junk" territory, remains negative. S&P said it's also maintaining its assessment of liquidity at "less than adequate," given the expectation of a "substantially negative level of cash generation" over the next 12 months.

If the rating drops any more, I speculate AA will violate covenants.

Lightsaber

And yet aal stock is up 24% at the moment, significantly higher than DAL/UAL at the moment. I don’t think the market agrees with your speculation.
 
VS11
Posts: 1661
Joined: Mon Jul 02, 2001 6:34 am

Re: Boeing CEO: A major US airline likely will go out of business this year,

Thu Jun 04, 2020 4:12 pm

JAMBOJET wrote:
lightsaber wrote:
[twoid][/twoid]AA's debt downgraded to B-, from B.

https://www.marketwatch.com/story/ameri ... 2020-06-03

This is highly speculative (risky) debt.

The credit rating agency said the outlook on the rating, which is now six notches deep into speculative grade, or "junk" territory, remains negative. S&P said it's also maintaining its assessment of liquidity at "less than adequate," given the expectation of a "substantially negative level of cash generation" over the next 12 months.

If the rating drops any more, I speculate AA will violate covenants.

Lightsaber

And yet aal stock is up 24% at the moment, significantly higher than DAL/UAL at the moment. I don’t think the market agrees with your speculation.


That's because AA are seeing demand bouncing back sooner than expected. Busiest day in July will see close to 4,000 flights.

American Air Sparks Rally With 74% Jump in Flying on New Demand
https://www.bloomberg.com/news/articles ... nd-rebound
 
LJ
Posts: 5338
Joined: Wed Nov 17, 1999 8:28 pm

Re: Boeing CEO: A major US airline likely will go out of business this year,

Thu Jun 04, 2020 6:59 pm

JAMBOJET wrote:
lightsaber wrote:
[twoid][/twoid]AA's debt downgraded to B-, from B.

https://www.marketwatch.com/story/ameri ... 2020-06-03

This is highly speculative (risky) debt.

The credit rating agency said the outlook on the rating, which is now six notches deep into speculative grade, or "junk" territory, remains negative. S&P said it's also maintaining its assessment of liquidity at "less than adequate," given the expectation of a "substantially negative level of cash generation" over the next 12 months.

If the rating drops any more, I speculate AA will violate covenants.

Lightsaber

And yet aal stock is up 24% at the moment, significantly higher than DAL/UAL at the moment. I don’t think the market agrees with your speculation.


Debt convenants don't look at stock prices but at ratings. When triggered, financial institutions don't care about the stock price, they only care about their own financial position which will be impacted when outstanding loans are downgraded. Moreover, some funds are forbidden to iinvest in less than B graded debt.
 
WaywardMemphian
Posts: 1497
Joined: Sat Dec 13, 2014 9:05 pm

Re: Boeing CEO: A major US airline likely will go out of business this year,

Thu Jun 04, 2020 7:42 pm

VS11 wrote:
JAMBOJET wrote:
lightsaber wrote:
[twoid][/twoid]AA's debt downgraded to B-, from B.

https://www.marketwatch.com/story/ameri ... 2020-06-03

This is highly speculative (risky) debt.

The credit rating agency said the outlook on the rating, which is now six notches deep into speculative grade, or "junk" territory, remains negative. S&P said it's also maintaining its assessment of liquidity at "less than adequate," given the expectation of a "substantially negative level of cash generation" over the next 12 months.

If the rating drops any more, I speculate AA will violate covenants.

Lightsaber

And yet aal stock is up 24% at the moment, significantly higher than DAL/UAL at the moment. I don’t think the market agrees with your speculation.


That's because AA are seeing demand bouncing back sooner than expected. Busiest day in July will see close to 4,000 flights.

American Air Sparks Rally With 74% Jump in Flying on New Demand
https://www.bloomberg.com/news/articles ... nd-rebound


Arkansas is seeing huge spikes in daily cases, one one really cares, they are over it, right or wrongly. Texas, ditto going to phase 3 anyway.
 
smartplane
Posts: 1510
Joined: Fri Aug 03, 2018 9:23 pm

Re: Boeing CEO: A major US airline likely will go out of business this year,

Thu Jun 04, 2020 9:34 pm

LJ wrote:
Debt convenants don't look at stock prices but at ratings. When triggered, financial institutions don't care about the stock price, they only care about their own financial position which will be impacted when outstanding loans are downgraded. Moreover, some funds are forbidden to iinvest in less than B graded debt.

Debt covenants do include stock prices, ratings, other debt defaults, financial performance markers................

Agree, US financial institutions do only care about their own short-term financial position, and rarely work well with overseas lenders and customers to achieve the overall best result for all. Shouldn't generalise, but US financiers are 'fair weather' friends, and the most likely primary lenders have to buy out to work constructively with the rest and customer.
 
JAMBOJET
Posts: 293
Joined: Tue Dec 11, 2018 6:23 pm

Re: Boeing CEO: A major US airline likely will go out of business this year,

Thu Jun 04, 2020 11:39 pm

LJ wrote:
JAMBOJET wrote:
lightsaber wrote:
[twoid][/twoid]AA's debt downgraded to B-, from B.

https://www.marketwatch.com/story/ameri ... 2020-06-03

This is highly speculative (risky) debt.

The credit rating agency said the outlook on the rating, which is now six notches deep into speculative grade, or "junk" territory, remains negative. S&P said it's also maintaining its assessment of liquidity at "less than adequate," given the expectation of a "substantially negative level of cash generation" over the next 12 months.

If the rating drops any more, I speculate AA will violate covenants.

Lightsaber

And yet aal stock is up 24% at the moment, significantly higher than DAL/UAL at the moment. I don’t think the market agrees with your speculation.


Debt convenants don't look at stock prices but at ratings. When triggered, financial institutions don't care about the stock price, they only care about their own financial position which will be impacted when outstanding loans are downgraded. Moreover, some funds are forbidden to iinvest in less than B graded debt.

I’m aware. But equity holders are the first to lose all their money before credit holders and yet, the equity of AAL surged 41% today. Says something about AA’s announcement today and how investors viewed it.
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