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UA444
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Re: FT: Investors bet AA will file for BK

Thu May 21, 2020 10:36 pm

STT757 wrote:
I'm not a bankruptcy expert here but I wanted to pose an alternative to some of the scenarios being thrown around. What about a deal with either an investment group, another airline (or both) where AA enters CH-11 and the assets of AA are purchased from the creditors by the investors and are transferred to a holding company. That company would then either emerge as the new AA with a new operating plan or be integrated into the merger partner.

Much of the debt could then be left behind with the old entity. Feasible?

That’s basically a 363 sale and what the US Government did with GM. Set a new company up, buy all the assets to GM, leave old GM with debt and liabilities, and US Govt owns GM and sells it off.
 
Dmoney
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Re: FT: Investors bet AA will file for BK

Thu May 21, 2020 11:32 pm

I mean you can't just screw the creditors. They own the company when your equity is all gone. You can just make the case that they are better off taking what you have on offer vs liquidation and get the judge onside.

Norwegian is a good example. Aercap wankers just up the road are now the biggest shareholders in the company.
 
Miamiairport
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Re: FT: Investors bet AA will file for BK

Thu May 21, 2020 11:39 pm

Most of this debt I assumed is secured however what would be the market for slightly used aircraft? Chances are creditors will bend over backwards to get AA through another Chapter 11.
 
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lightsaber
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Re: FT: Investors bet AA will file for BK

Thu May 21, 2020 11:45 pm

Miamiairport wrote:
Most of this debt I assumed is secured however what would be the market for slightly used aircraft? Chances are creditors will bend over backwards to get AA through another Chapter 11.

With so many aircraft lessed, I suspect creditors will have to rescue AA. But it will be a reorganizational bankruptcy where current stock ownership is voided and like Norwegian, aircraft leasing companies could end up owning a majority.

Lightsaber
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incitatus
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Re: FT: Investors bet AA will file for BK

Fri May 22, 2020 12:48 am

LAXintl wrote:
Somewhat related to see how AA stacks up to peers.
This was an estimated ratio of cash, revolver, and assets they can tap vs debt. Chart created prior to Q1 results.

Image


There is one catch with this chart. Unencumbered assets may not be worth much in the current scenario. Remember United's failed bond offering from a couple of weeks ago? This puts American, Delta and United in about the same situation.
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UPlog
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Re: FT: Investors bet AA will file for BK

Thu May 28, 2020 12:29 am

Doug Parker says he does not see AA or another major airline filing BK, nor would it be a beneficial outcome for the industry or nation.

https://www.bizjournals.com/dallas/news ... arker.html
https://www.dallasnews.com/business/air ... an-option/

He also said expects a protracted recovery with the industry being 10-20% smaller for summer of 2021 with big questions remaining about how revenue will stack up as the passenger demand recovers.
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tphuang
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Re: FT: Investors bet AA will file for BK

Thu May 28, 2020 12:53 am

Apparently, still burning $70 million a day. I think there is a good chance they won't get that cut down to $50 million for June.
 
LHUSA
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Re: FT: Investors bet AA will file for BK

Thu May 28, 2020 12:57 am

tphuang wrote:
Apparently, still burning $70 million a day. I think there is a good chance they won't get that cut down to $50 million for June.


Wow, United is apparently at $40M a day and slowly improving that figure
 
onwFan
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Re: FT: Investors bet AA will file for BK

Thu May 28, 2020 1:17 am

tphuang wrote:
Apparently, still burning $70 million a day. I think there is a good chance they won't get that cut down to $50 million for June.

It doesn’t say anywhere that the $70m is an updated number provided for today or yesterday.
Last edited by onwFan on Thu May 28, 2020 1:22 am, edited 1 time in total.
 
tphuang
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Re: FT: Investors bet AA will file for BK

Thu May 28, 2020 1:18 am

onwFan wrote:
tphuang wrote:
Apparently, still burning $70 million a day. I think there is a good chance they won't get that cut down to $50 million for June.

It doesn’t say anywhere that the 70% is an updated number provided for today or yesterday.

I was just reading that off jonnyc tweet.
 
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LAXintl
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Re: FT: Investors bet AA will file for BK

Thu May 28, 2020 2:13 am

AA looking to cut 30% of management and administrative support workers to become "leaner"

Image

https://pbs.twimg.com/media/EZEeDPGUcAA ... ame=medium

Image

https://pbs.twimg.com/media/EZEeDPOUYAg ... ame=medium
Last edited by LAXintl on Thu May 28, 2020 2:18 am, edited 1 time in total.
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747fan
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Re: FT: Investors bet AA will file for BK

Thu May 28, 2020 2:18 am

https://viewfromthewing.com/american-ai ... ort-staff/

AA laying off at least 30% of management and support staff, but hoping the "early-out" offers mentioned in the article will mitigate some of the involuntary layoffs.
Almost exactly the same thing United announced to their management/administration staff a few weeks ago.

*Looks like others already beat me to it.
Last edited by 747fan on Thu May 28, 2020 2:27 am, edited 2 times in total.
 
joeblow10
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Re: FT: Investors bet AA will file for BK

Thu May 28, 2020 2:24 am

LAXintl wrote:
AA looking to cut 30% of management and administrative support workers to become "leaner"

Image

https://pbs.twimg.com/media/EZEeDPGUcAA ... ame=medium

Image

https://pbs.twimg.com/media/EZEeDPOUYAg ... ame=medium


Talk about “blunt”

At least UA and others had some fluff in there about trying times, difficult decisions, and what not... this memo got to the layoffs part within about 2 sentences of that section starting. Two weeks for everybody to consider voluntary separation and then automatically going to involuntary... yikes

Not unexpected, but still
 
HeavyMx01
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Re: FT: Investors bet AA will file for BK

Thu May 28, 2020 2:38 am

No severance...wow. They are really trying to force people to consider the early out
 
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UPlog
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Re: FT: Investors bet AA will file for BK

Thu May 28, 2020 4:07 am

Unfortunately it is inevitable if the industry will be smaller for the next few years. Simply don't require the numbers of staff to run the airline.

Its interesting they note fleet will be about 100 frames smaller next summer. It says mostly widebodies. From my math the A330 fleet was 24, and recently retired 763 count was 17.
So how do we get from 41 to 100? Do we add in the 47 772 frames?
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Westerwaelder
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Re: FT: Investors bet AA will file for BK

Thu May 28, 2020 6:45 am

UPlog wrote:
Unfortunately it is inevitable if the industry will be smaller for the next few years. Simply don't require the numbers of staff to run the airline.

Its interesting they note fleet will be about 100 frames smaller next summer. It says mostly widebodies. From my math the A330 fleet was 24, and recently retired 763 count was 17.
So how do we get from 41 to 100? Do we add in the 47 772 frames?


If you take into account that European airlines are looking to be between 20 and 40% smaller next year and the high share of widebodies compared to narrowbodies being taken out by AA, we can conclude that longhaul across the Atlantic will be very slow to come back a perhaps the 772s are in for some down time? Looks like AA expect domestic travel to bounce back quickly.
 
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LAXintl
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Re: FT: Investors bet AA will file for BK

Thu May 28, 2020 3:20 pm

AA did say they were reviewing their widebody fleet with eye on future of 777s.

If international travel remains down in a global recession then one could presume AA would operate a smaller international footprint.
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Vctony
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Re: FT: Investors bet AA will file for BK

Thu May 28, 2020 3:26 pm

UPlog wrote:
Unfortunately it is inevitable if the industry will be smaller for the next few years. Simply don't require the numbers of staff to run the airline.

Its interesting they note fleet will be about 100 frames smaller next summer. It says mostly widebodies. From my math the A330 fleet was 24, and recently retired 763 count was 17.
So how do we get from 41 to 100? Do we add in the 47 772 frames?


Wouldn't the 34 757s and some of the early batch of 738s add up to 100 (not to mention this doesn't account for the MAX frames, the A321NEOs, and 787s that are all expected to be delivered.
 
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lightsaber
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Re: FT: Investors bet AA will file for BK

Thu May 28, 2020 5:25 pm

Seperate thread to discuss layoffs in detail:
viewtopic.php?f=3&t=1446875&p=22242923#p22242923
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LAXintl
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Re: FT: Investors bet AA will file for BK

Thu May 28, 2020 10:36 pm

Vctony wrote:

Wouldn't the 34 757s and some of the early batch of 738s add up to 100 (not to mention this doesn't account for the MAX frames, the A321NEOs, and 787s that are all expected to be delivered.



Dont think so with the verbiage AA used in their letter -- "we will fly roughly 100 fewer aircraft next summer -- mostly widebodies - than we had originally planned."
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F9Animal
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Re: FT: Investors bet AA will file for BK

Fri May 29, 2020 3:15 am

joeblow10 wrote:
LAXintl wrote:
AA looking to cut 30% of management and administrative support workers to become "leaner"

Image

https://pbs.twimg.com/media/EZEeDPGUcAA ... ame=medium

Image

https://pbs.twimg.com/media/EZEeDPOUYAg ... ame=medium


Talk about “blunt”

At least UA and others had some fluff in there about trying times, difficult decisions, and what not... this memo got to the layoffs part within about 2 sentences of that section starting. Two weeks for everybody to consider voluntary separation and then automatically going to involuntary... yikes

Not unexpected, but still


Yeah, it's pretty dry in terms of a letter like this. Not sure who wrote it, but I am assuming it is one of the bean counters that is focused on the dollar, and someone that has no concerns about other workers livelihoods. I know Parker gets some flaming on here, but one thing Parker was good at was keeping workers employed. I worked for US and lost my job before HP came knocking. Parker came in and said he was reversing all the stations US contracted out, and brought us back. I remember one of the execs sitting down with us, and he specifically said the management team at that time wanted their own staffing, and that contractors were not at the level they wanted.

Sad. Very sad to see this happening. The culture has obviously changed from those days. Yeah, it's inevitable with this situation. It just sucks for anyone who may have a job on the line. I am praying for every airline employee across the world. Praying a miracle happens, and that things get back to some normalcy!
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LAXintl
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Re: FT: Investors bet AA will file for BK

Thu Jun 04, 2020 2:42 pm

American Airlines credit downgraded to B- at S&P, the lowest rating among its peers.

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 also said it's assessment of liquidity at "less than adequate," given the expectation of a "substantially negative level of cash generation" over the next 12 months.


https://www.marketwatch.com/story/ameri ... 2020-06-03
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winginit
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Re: FT: Investors bet AA will file for BK

Thu Jun 04, 2020 2:52 pm

LAXintl wrote:
American Airlines credit downgraded to B- at S&P, the lowest rating among its peers.

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 also said it's assessment of liquidity at "less than adequate," given the expectation of a "substantially negative level of cash generation" over the next 12 months.


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


aaaaand then the stock rallies 25% same day...

what a world.
 
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jfklganyc
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Re: FT: Investors bet AA will file for BK

Thu Jun 04, 2020 4:14 pm

winginit wrote:
LAXintl wrote:
American Airlines credit downgraded to B- at S&P, the lowest rating among its peers.

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 also said it's assessment of liquidity at "less than adequate," given the expectation of a "substantially negative level of cash generation" over the next 12 months.


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


aaaaand then the stock rallies 25% same day...

what a world.




Stock rally aside, the downgrade is a bad day for AA
 
VS11
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Re: FT: Investors bet AA will file for BK

Thu Jun 04, 2020 4:18 pm

jfklganyc wrote:
winginit wrote:
LAXintl wrote:
American Airlines credit downgraded to B- at S&P, the lowest rating among its peers.

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 also said it's assessment of liquidity at "less than adequate," given the expectation of a "substantially negative level of cash generation" over the next 12 months.


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


aaaaand then the stock rallies 25% same day...

what a world.




Stock rally aside, the downgrade is a bad day for AA


AA are seeing demand bouncing back sooner than expected. Busiest day in July will have about 4,000 flights.

American Air Sparks Rally With 74% Jump in Flying on New Demand
https://www.bloomberg.com/news/articles ... nd-rebound
 
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Midwestindy
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Re: FT: Investors bet AA will file for BK

Thu Jun 04, 2020 4:25 pm

winginit wrote:
LAXintl wrote:
American Airlines credit downgraded to B- at S&P, the lowest rating among its peers.

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 also said it's assessment of liquidity at "less than adequate," given the expectation of a "substantially negative level of cash generation" over the next 12 months.


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


aaaaand then the stock rallies 25% same day...

what a world.


It was actually downgraded yesterday, but even yesterday Wall Street didn't seem to care, as their stock was up 7% at close.
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tphuang
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Re: FT: Investors bet AA will file for BK

Thu Jun 04, 2020 4:30 pm

VS11 wrote:
jfklganyc wrote:
winginit wrote:

aaaaand then the stock rallies 25% same day...

what a world.




Stock rally aside, the downgrade is a bad day for AA


AA are seeing demand bouncing back sooner than expected. Busiest day in July will have about 4,000 flights.

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


Until they are actually burning less money, adding extra flights doesn't really help much. You just have a higher revenue and higher cost situation. they need to be bringing burn rate below $50 million a day yesterday.

The good news for them is that demand does seem to come back in Texas, Florida and Arizona sooner than other parts of the country like northeast.

Keep in mind, capacity will be up 50 to 100% domestically from June to July. Probably close to the uppper bound of that. i'm not sure demand will go up that fast.
 
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lightsaber
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Re: FT: Investors bet AA will file for BK

Thu Jun 04, 2020 5:00 pm

tphuang wrote:
VS11 wrote:
jfklganyc wrote:



Stock rally aside, the downgrade is a bad day for AA


AA are seeing demand bouncing back sooner than expected. Busiest day in July will have about 4,000 flights.

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


Until they are actually burning less money, adding extra flights doesn't really help much. You just have a higher revenue and higher cost situation. they need to be bringing burn rate below $50 million a day yesterday.

The good news for them is that demand does seem to come back in Texas, Florida and Arizona sooner than other parts of the country like northeast.

Keep in mind, capacity will be up 50 to 100% domestically from June to July. Probably close to the uppper bound of that. i'm not sure demand will go up that fast.

I do not know AA's numbers, but TSA numbers are 13% of the prior daily people.
https://www.tsa.gov/coronavirus/passenger-throughput

I do expect certain areas, like to the South, to recover faster. However, even if AA and DL were magically splitting the total, both are burning cash.

Lightsaber
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dcaproducer
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Re: FT: Investors bet AA will file for BK

Thu Jun 04, 2020 5:11 pm

lightsaber wrote:
tphuang wrote:
VS11 wrote:

AA are seeing demand bouncing back sooner than expected. Busiest day in July will have about 4,000 flights.

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


Until they are actually burning less money, adding extra flights doesn't really help much. You just have a higher revenue and higher cost situation. they need to be bringing burn rate below $50 million a day yesterday.

The good news for them is that demand does seem to come back in Texas, Florida and Arizona sooner than other parts of the country like northeast.

Keep in mind, capacity will be up 50 to 100% domestically from June to July. Probably close to the uppper bound of that. i'm not sure demand will go up that fast.

I do not know AA's numbers, but TSA numbers are 13% of the prior daily people.
https://www.tsa.gov/coronavirus/passenger-throughput

I do expect certain areas, like to the South, to recover faster. However, even if AA and DL were magically splitting the total, both are burning cash.

Lightsaber


Agreed. Looking at the TSA numbers the passengers still aren't there. Airlines obviously know what advanced bookings look like, but currently the numbers aren't there.
 
Miamiairport
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Re: FT: Investors bet AA will file for BK

Thu Jun 04, 2020 5:21 pm

Also a full plane isn't necessarily profitable although it's certainly better than a 50% full plane and will help to reduce cash burn. The US4 need the business traveler to return. I've been traveling heavily as my job just means a wifi signal and a lap top so I can work from anywhere. The business traveler is still pretty much absent (helping we retain a 100% upgrade success rate since early March). The hotels still seem empty and car rental agencies still with cars parked all over the place. My guess is there's more visiting family/friends but with millions being unemployed by the week how before before that hits a wall?

While coach seems mostly packed on my flights the front still seems to be half full with crew.
 
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FLALEFTY
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Re: FT: Investors bet AA will file for BK

Thu Jun 04, 2020 5:25 pm

lightsaber wrote:
tphuang wrote:
VS11 wrote:

AA are seeing demand bouncing back sooner than expected. Busiest day in July will have about 4,000 flights.

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


Until they are actually burning less money, adding extra flights doesn't really help much. You just have a higher revenue and higher cost situation. they need to be bringing burn rate below $50 million a day yesterday.

The good news for them is that demand does seem to come back in Texas, Florida and Arizona sooner than other parts of the country like northeast.

Keep in mind, capacity will be up 50 to 100% domestically from June to July. Probably close to the uppper bound of that. i'm not sure demand will go up that fast.

I do not know AA's numbers, but TSA numbers are 13% of the prior daily people.
https://www.tsa.gov/coronavirus/passenger-throughput

I do expect certain areas, like to the South, to recover faster. However, even if AA and DL were magically splitting the total, both are burning cash.

Lightsaber


I think WN's recent announcement that they plan to be back up to 98.5% of their pre-COVID number of flights by October 1st might be forcing AA's hand. They will have to get their most of their fleet back in the air in the same timeframe, or risk losing signifcant market share in the recovery.

As for the stock market's contrarian performance v.s. the actual economy, now that Vegas' casinos are back open, look for the high-stakes gamblers who have been sitting at home day trading to resume their favorite gaming hobbies at the tables, sports books, slots and wheels. Stock prices are moving upwards on rumors and guesses. The bet is on a "V-shaped" recovery and if that doesn't happen, look for most traders and hedge funds to cash out and move away from speculating on equities.
 
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janders
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Re: FT: Investors bet AA will file for BK

Thu Jun 04, 2020 5:26 pm

Imo, traffic is just not there and throwing capacity is merely going to increase the bleeding.

Just yesterday per Kirby at United employee town hall, he stated that this week their traffic was down 92% compared to last year. United carried a bit over 40,000 revenue passengers daily early this week when last year was over 500,000 during the first week of June.
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jfklganyc
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Re: FT: Investors bet AA will file for BK

Thu Jun 04, 2020 5:36 pm

janders wrote:
Imo, traffic is just not there and throwing capacity is merely going to increase the bleeding.

Just yesterday per Kirby at United employee town hall, he stated that this week their traffic was down 92% compared to last year. United carried a bit over 40,000 revenue passengers daily early this week when last year was over 500,000 during the first week of June.



UA has def been the most pessimistic since this all started.

Please keep in mind even WN is offering very generous buyouts to anyone over 60

-No one is coming away from this unscathed
-Narrowbodies and domestic are starting to recover
-International is still a dead zone
-Hundreds of planes have been grounded resulting in thousands less employees post 10/1

That is the landscape we face.

No one will be normal 10/1
 
tphuang
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Re: FT: Investors bet AA will file for BK

Thu Jun 04, 2020 5:44 pm

FLALEFTY wrote:
lightsaber wrote:
tphuang wrote:

Until they are actually burning less money, adding extra flights doesn't really help much. You just have a higher revenue and higher cost situation. they need to be bringing burn rate below $50 million a day yesterday.

The good news for them is that demand does seem to come back in Texas, Florida and Arizona sooner than other parts of the country like northeast.

Keep in mind, capacity will be up 50 to 100% domestically from June to July. Probably close to the uppper bound of that. i'm not sure demand will go up that fast.

I do not know AA's numbers, but TSA numbers are 13% of the prior daily people.
https://www.tsa.gov/coronavirus/passenger-throughput

I do expect certain areas, like to the South, to recover faster. However, even if AA and DL were magically splitting the total, both are burning cash.

Lightsaber


I think WN's recent announcement that they plan to be back up to 98.5% of their pre-COVID number of flights by October 1st might be forcing AA's hand. They will have to get their most of their fleet back in the air in the same timeframe, or risk losing signifcant market share in the recovery.

As for the stock market's contrarian performance v.s. the actual economy, now that Vegas' casinos are back open, look for the high-stakes gamblers who have been sitting at home day trading to resume their favorite gaming hobbies at the tables, sports books, slots and wheels. Stock prices are moving upwards on rumors and guesses. The bet is on a "V-shaped" recovery and if that doesn't happen, look for most traders and hedge funds to cash out and move away from speculating on equities.


I do agree that some of what we are seeing from AA or even DL/UA is reaction to the LCCs/ULCCs adding back capacity really quickly or risk losing market share. But the reality is they, especially AA, is not really in a position to add things back as quickly.

AA is taking a very risky approach vs what UA has done.

Up to this point, some of what AA has done has been vindicated, because demand has come back faster than people expected. Basically, we are now more than 3x the demand of mid April. AA is going from 30% domestic capacity to 55% domestic capacity (40% overall) in one month. That kind of capacity jump is more significant than DL going to 30% of capacity or UA going to 25% capacity overall. It's more significant than NK running 70% pre-COVID schedule.

Is demand from middle of June to middle of July going to double domestically? Which is what would be necessary to absorb all this capacity. That seems to be quite optimistic. And that's a lot of additional cost they are going to rack up. Is running such a larger schedule going to allow them to capture that much more booking vs DL/UA that it would make up for the additional costs of running these flights. That seems to be quite optimistic also.
 
airhansa
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Re: FT: Investors bet AA will file for BK

Thu Jun 04, 2020 5:47 pm

Westerwaelder wrote:
UPlog wrote:
Unfortunately it is inevitable if the industry will be smaller for the next few years. Simply don't require the numbers of staff to run the airline.

Its interesting they note fleet will be about 100 frames smaller next summer. It says mostly widebodies. From my math the A330 fleet was 24, and recently retired 763 count was 17.
So how do we get from 41 to 100? Do we add in the 47 772 frames?


If you take into account that European airlines are looking to be between 20 and 40% smaller next year and the high share of widebodies compared to narrowbodies being taken out by AA, we can conclude that longhaul across the Atlantic will be very slow to come back a perhaps the 772s are in for some down time? Looks like AA expect domestic travel to bounce back quickly.


The US is a monolithic great expanse with very little public transport infrastructure. Europe is a dense group of segregated countries with significant investment into public infrastructure. The former will have far stronger demand for air travel than the latter, always. It's why the dizzying number of airlines in Europe needs to be reduced.

There will probably be a need for business travel between the UK and the US due to the common language and stronger institutional links, but leisure travel will probably be postponed especially considering the high cost of healthcare in the US and the lack of insurance plans in most of Europe that would cover overseas expenses.
 
winginit
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Re: FT: Investors bet AA will file for BK

Thu Jun 04, 2020 6:15 pm

jfklganyc wrote:
janders wrote:
Imo, traffic is just not there and throwing capacity is merely going to increase the bleeding.

Just yesterday per Kirby at United employee town hall, he stated that this week their traffic was down 92% compared to last year. United carried a bit over 40,000 revenue passengers daily early this week when last year was over 500,000 during the first week of June.



UA has def been the most pessimistic since this all started.

Please keep in mind even WN is offering very generous buyouts to anyone over 60

-No one is coming away from this unscathed
-Narrowbodies and domestic are starting to recover
-International is still a dead zone
-Hundreds of planes have been grounded resulting in thousands less employees post 10/1

That is the landscape we face.

No one will be normal 10/1


A key distinguishing factor as well is that while narrowbodies and domestic are indeed starting to recover, it's leisure traffic that's spurring that recovery. High yielding business travel remains down 90%+ and is showing virtually no signs of recovery at present.
 
ckfred
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Re: FT: Investors bet AA will file for BK

Thu Jun 04, 2020 7:05 pm

I got an update from CNBC earlier today. AA was up, after it announced that the July schedule would be increased 55% over the May schedule.

Here's something else to consider. My wife's boss told her that corporate is really concerned at the number of people who are carrying their full or nearly full allotment of vacation days. Management is worried that most employees will hold onto their days, both in the U.S. and Europe, and use them between Thanksgiving and the end of the year. That could have a lot of business units very, very short-staffed.

So, the company wants employees to use up half of their vacation days by September 1st. That's going to put pressure on people to take at least one week, if not two weeks, in the next three months.

I suspect other large companies are in similar situations, especially companies in which large numbers of employees are able to work from home.

I suspect their are a lot of people sitting on unused tickets from spring break or graduations. And with so many academic, sports, religion, and other camps cancelled this summer, parents will want to get kids out of the house, as well as themselves.

While flying to Europe or the Caribbean, as well as cruising seems out of the picture, the parks around Orlando are preparing to open within the next 30 days.

People may very well decide to get on airplanes, despite the Covid-19 risk, because so many people are becoming stir crazy.
 
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NWAESC
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Re: FT: Investors bet AA will file for BK

Thu Jun 04, 2020 7:15 pm

$AAL currently up more than 38% on the day (16.39/share).

All of the Big 4 are up. 2020 is bonkers.
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jscottwomack
Posts: 32
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Re: FT: Investors bet AA will file for BK

Thu Jun 04, 2020 7:23 pm

ckfred wrote:
I got an update from CNBC earlier today. AA was up, after it announced that the July schedule would be increased 55% over the May schedule.

Here's something else to consider. My wife's boss told her that corporate is really concerned at the number of people who are carrying their full or nearly full allotment of vacation days. Management is worried that most employees will hold onto their days, both in the U.S. and Europe, and use them between Thanksgiving and the end of the year. That could have a lot of business units very, very short-staffed.

So, the company wants employees to use up half of their vacation days by September 1st. That's going to put pressure on people to take at least one week, if not two weeks, in the next three months.

I suspect other large companies are in similar situations, especially companies in which large numbers of employees are able to work from home.

I suspect their are a lot of people sitting on unused tickets from spring break or graduations. And with so many academic, sports, religion, and other camps cancelled this summer, parents will want to get kids out of the house, as well as themselves.

While flying to Europe or the Caribbean, as well as cruising seems out of the picture, the parks around Orlando are preparing to open within the next 30 days.

People may very well decide to get on airplanes, despite the Covid-19 risk, because so many people are becoming stir crazy.



Bingo. You hit the nail on the head. People are starting to get cabin fever and want to get out of the house. While International flights will be slow, domestic will come roaring back in the fall.
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Midwestindy
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Re: FT: Investors bet AA will file for BK

Thu Jun 04, 2020 7:57 pm

janders wrote:
Imo, traffic is just not there and throwing capacity is merely going to increase the bleeding.

Just yesterday per Kirby at United employee town hall, he stated that this week their traffic was down 92% compared to last year. United carried a bit over 40,000 revenue passengers daily early this week when last year was over 500,000 during the first week of June.


jfklganyc wrote:
janders wrote:
Imo, traffic is just not there and throwing capacity is merely going to increase the bleeding.

Just yesterday per Kirby at United employee town hall, he stated that this week their traffic was down 92% compared to last year. United carried a bit over 40,000 revenue passengers daily early this week when last year was over 500,000 during the first week of June.



UA has def been the most pessimistic since this all started.

Please keep in mind even WN is offering very generous buyouts to anyone over 60

-No one is coming away from this unscathed
-Narrowbodies and domestic are starting to recover
-International is still a dead zone
-Hundreds of planes have been grounded resulting in thousands less employees post 10/1

That is the landscape we face.

No one will be normal 10/1


Something that I think people are overlooking is UA's exposure, UA is the least equipped of the US3 to tap into where demand is currently (Florida, Arizona, and the National Parks). Sure they have DEN, but other than that EWR, SFO, IAD, LAX, and even ORD aren't really tailored to serve the current customer demand.

DL's ATL hub (somewhat SLC) and AA's CLT, DFW, & PHX hub's are really well placed to serve the market, therefore it makes sense that UA would be slower to bring back capacity than DL or AA.

winginit wrote:
A key distinguishing factor as well is that while narrowbodies and domestic are indeed starting to recover, it's leisure traffic that's spurring that recovery. High yielding business travel remains down 90%+ and is showing virtually no signs of recovery at present.


While I do agree high yielding business travel will take time, there are signs of recovery. DL talked about how Transportation & Automative business travel was returning yesterday, and I'm seeing a lot of reports from business travel returning slowly in June/July

“Most businesses are still in a wait-and-see mode," he says. "However, within the last few weeks, we have seen a flurry of clients expressing a desire to hold face-to-face meetings with clients and colleagues,” he adds, noting that U.S. domestic air travel bookings for June and July are slowly on the rise.
https://www.cntraveler.com/story/how-co ... ess-travel

28% of US companies have plans to resume travel in the near future, compared to 16% who had no plans to resume travel.
https://www.gbta.org/blog/gbta-study-fi ... ar-future/
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alasizon
Posts: 2578
Joined: Sat Apr 28, 2007 8:57 pm

Re: FT: Investors bet AA will file for BK

Thu Jun 04, 2020 8:13 pm

ckfred wrote:
I got an update from CNBC earlier today. AA was up, after it announced that the July schedule would be increased 55% over the May schedule.

Here's something else to consider. My wife's boss told her that corporate is really concerned at the number of people who are carrying their full or nearly full allotment of vacation days. Management is worried that most employees will hold onto their days, both in the U.S. and Europe, and use them between Thanksgiving and the end of the year. That could have a lot of business units very, very short-staffed.

So, the company wants employees to use up half of their vacation days by September 1st. That's going to put pressure on people to take at least one week, if not two weeks, in the next three months.

I suspect other large companies are in similar situations, especially companies in which large numbers of employees are able to work from home.

I suspect their are a lot of people sitting on unused tickets from spring break or graduations. And with so many academic, sports, religion, and other camps cancelled this summer, parents will want to get kids out of the house, as well as themselves.

While flying to Europe or the Caribbean, as well as cruising seems out of the picture, the parks around Orlando are preparing to open within the next 30 days.

People may very well decide to get on airplanes, despite the Covid-19 risk, because so many people are becoming stir crazy.


This is a big factor right now, a lot of people are being forced to burn either a week of vacation or 50% of their vacation prior to September and that is driving demand up quite a bit. In planning to run lean, a lot of management will be required to take their vacation now in prep for a big boost in business come Nov/Dec.
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WaywardMemphian
Posts: 1486
Joined: Sat Dec 13, 2014 9:05 pm

Re: FT: Investors bet AA will file for BK

Thu Jun 04, 2020 8:15 pm

Just from what I see here in NWA, numbers are spiking and folks don't seem to care. It is getting busier and busier and people are bitching about the curtailed hours at the states still being in effect. Texas cases are rising and they are still going to stage 3. Last week my wife was exposed and tested negative and now I have a co worker that was exposed and we arw waiting for results tomorrow.
 
MSPNWA
Posts: 3698
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Re: FT: Investors bet AA will file for BK

Thu Jun 04, 2020 8:48 pm

There's opportunities on both ends of this crisis if the right moves are made. I think it's looking more and more that WN and AA are making the right moves for the recovery opportunity. DL and UA seem to have cut too many flights, leaving few to no viable options for those wanting to fly, compounding the problem of very low demand. To illustrate, there's numerous reports of difficulty for DL customers to change flights. Their phone lines (necessary for so many of their customer service requests) have been jammed for weeks. On top of that (or possibly somewhat caused by that), flight availability with their capacity cap is meager to none weeks in advance. It's a vicious cycle of preventing people from either booking flights or changing flights. You can find endless examples of this availability problem on Google Flights. Fairly easy to find flights on AA. UA and especially DL can be difficult to impossible to find an itinerary, and if you do find a good one, expect to pay up. I would not be surprised to see AA take the lead in reducing cash burn if this trend keeps up.
 
smartplane
Posts: 1471
Joined: Fri Aug 03, 2018 9:23 pm

Re: FT: Investors bet AA will file for BK

Thu Jun 04, 2020 9:13 pm

FLALEFTY wrote:
I think WN's recent announcement that they plan to be back up to 98.5% of their pre-COVID number of flights by October 1st might be forcing AA's hand. They will have to get their most of their fleet back in the air in the same timeframe, or risk losing signifcant market share in the recovery.

Adding capacity back quickly, if you have costs under control, lower burn rate and good access to credit, is less about meeting possible / creating demand, and more about permanently removing the weakest link competitor. No collusion, but watch stronger / more nimble players mimic WN having reached the same conclusions. Short-term pain for long-term gain.
 
UALifer
Posts: 80
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Re: FT: Investors bet AA will file for BK

Thu Jun 04, 2020 9:23 pm

Midwestindy wrote:
Something that I think people are overlooking is UA's exposure, UA is the least equipped of the US3 to tap into where demand is currently (Florida, Arizona, and the National Parks). Sure they have DEN, but other than that EWR, SFO, IAD, LAX, and even ORD aren't really tailored to serve the current customer demand.

DL's ATL hub (somewhat SLC) and AA's CLT, DFW, & PHX hub's are really well placed to serve the market, therefore it makes sense that UA would be slower to bring back capacity than DL or AA.


Agreed, I think this is a big part of it. In addition to not being geographically ideal to connect people where traffic is currently going, UA’s hubs are in places that have opened up the least so far (think San Francisco, Chicago, New York). This may change over the next few weeks and we may see a bigger reaction from UA. But for now they have reason to be pessimistic.
 
Miamiairport
Posts: 585
Joined: Tue Apr 10, 2018 8:14 pm

Re: FT: Investors bet AA will file for BK

Thu Jun 04, 2020 9:25 pm

AA/WN are also betting the farm the demand will continue to rise and that unemployment will quickly ebb. That's one big bet. WN might be nimble enough to quickly cut capacity although it's going to get ugly in the crew relations area if this doesn't pan out and thousands of pilots and FAs are sent to the unemployment gallows.
 
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Midwestindy
Posts: 5122
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Re: FT: Investors bet AA will file for BK

Thu Jun 04, 2020 9:54 pm

UALifer wrote:
Midwestindy wrote:
Something that I think people are overlooking is UA's exposure, UA is the least equipped of the US3 to tap into where demand is currently (Florida, Arizona, and the National Parks). Sure they have DEN, but other than that EWR, SFO, IAD, LAX, and even ORD aren't really tailored to serve the current customer demand.

DL's ATL hub (somewhat SLC) and AA's CLT, DFW, & PHX hub's are really well placed to serve the market, therefore it makes sense that UA would be slower to bring back capacity than DL or AA.


Agreed, I think this is a big part of it. In addition to not being geographically ideal to connect people where traffic is currently going, UA’s hubs are in places that have opened up the least so far (think San Francisco, Chicago, New York). This may change over the next few weeks and we may see a bigger reaction from UA. But for now they have reason to be pessimistic.


Good point, looking at future bookings that looks to be the case

ATL, MIA, & DFW are ahead of the pack in terms of recovery
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tphuang
Posts: 5067
Joined: Tue Mar 14, 2017 2:04 pm

Re: FT: Investors bet AA will file for BK

Thu Jun 04, 2020 10:01 pm

Midwestindy wrote:
UALifer wrote:
Midwestindy wrote:
Something that I think people are overlooking is UA's exposure, UA is the least equipped of the US3 to tap into where demand is currently (Florida, Arizona, and the National Parks). Sure they have DEN, but other than that EWR, SFO, IAD, LAX, and even ORD aren't really tailored to serve the current customer demand.

DL's ATL hub (somewhat SLC) and AA's CLT, DFW, & PHX hub's are really well placed to serve the market, therefore it makes sense that UA would be slower to bring back capacity than DL or AA.


Agreed, I think this is a big part of it. In addition to not being geographically ideal to connect people where traffic is currently going, UA’s hubs are in places that have opened up the least so far (think San Francisco, Chicago, New York). This may change over the next few weeks and we may see a bigger reaction from UA. But for now they have reason to be pessimistic.


Good point, looking at future bookings that looks to be the case

ATL, MIA, & DFW are ahead of the pack in terms of recovery
Image


Does that include connection? If it does, that just shows where airlines are getting people to connect at. Not that I doubt NYC is down 95%, but that demand drop would be more accurate here.
 
UpNAWAy
Posts: 678
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Re: FT: Investors bet AA will file for BK

Thu Jun 04, 2020 10:02 pm

janders wrote:
Imo, traffic is just not there and throwing capacity is merely going to increase the bleeding.

Just yesterday per Kirby at United employee town hall, he stated that this week their traffic was down 92% compared to last year. United carried a bit over 40,000 revenue passengers daily early this week when last year was over 500,000 during the first week of June.



Wow AA as been double that daily for about 10 days.
 
N649DL
Posts: 929
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Re: FT: Investors bet AA will file for BK

Thu Jun 04, 2020 10:06 pm

AA went into BK to save face back then and it worked. They'll probably do it again, shed employees and aircraft and return fast should they do so.
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