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Boof02671
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AA 2020 Q2 results

Thu Jul 23, 2020 12:48 pm

Second-quarter pretax loss of $2.7 billion. Excluding net special items1, second-quarter pretax loss of $4.3 billion.
Second-quarter net loss of $2.1 billion, or ($4.82) per share. Excluding net special items1, second-quarter net loss of $3.4 billion, or ($7.82) per share.
Boosted available liquidity by a net $3.6 billion in the quarter through offerings of common stock, convertible bonds and secured bonds.
Ended second quarter with approximately $10.2 billion of available liquidity. Additionally, signed term sheet with the U.S. Department of the Treasury for $4.75 billion secured loan, which is expected to close in the third quarter, and announced two senior secured note transactions totaling $1.2 billion. The company’s second-quarter pro forma liquidity balance including these transactions would be approximately $16.2 billion

http://news.aa.com/news/news-details/20 ... fault.aspx
 
UpNAWAy
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Re: AA Q2 results

Thu Jul 23, 2020 12:51 pm

Just said they will end 3rd qtr with 13 billion cash on hand and they revised down 3rd qtr guidance based on recent events/trends.
 
Boof02671
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Re: AA Q2 results

Thu Jul 23, 2020 12:59 pm

And he opened up the call thanking the whole America West team and before the Q and A had to issue a mea culpa.
 
Boof02671
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Re: AA Q2 results

Thu Jul 23, 2020 12:59 pm

UpNAWAy wrote:
Just said they will end 3rd qtr with 13 billion cash on hand and they revised down 3rd qtr guidance based on recent events/trends.

Thought he said $16 billion
 
gen2stew
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Re: AA Q2 results

Thu Jul 23, 2020 1:06 pm

Boof02671 wrote:
And he opened up the call thanking the whole America West team and before the Q and A had to issue a mea culpa.


How the BOD hasn't sacked him yet is a question people both in and out of the company ask multiple times daily. That Freudian slip is a dead giveaway as to what he has and wants to turn a once good airline into. Sad and disgusting. The DL people were so smart to say "bless your heart, NO".
I don't know why blessings wear disguises. If I were a blessing, I'd run around nude!
 
UpNAWAy
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Re: AA Q2 results

Thu Jul 23, 2020 1:15 pm

Boof02671 wrote:
UpNAWAy wrote:
Just said they will end 3rd qtr with 13 billion cash on hand and they revised down 3rd qtr guidance based on recent events/trends.

Thought he said $16 billion

16.2 is what they have now, 13 end of the qtr.
 
Brickell305
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Re: AA Q2 results

Thu Jul 23, 2020 1:34 pm

Their average cash burn for Q2 seems high IMO @ $55M. IIRC, it was $40M for DL and $30M for UA.
 
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spinotter
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Re: AA Q2 results

Thu Jul 23, 2020 1:40 pm

gen2stew wrote:
Boof02671 wrote:
And he opened up the call thanking the whole America West team and before the Q and A had to issue a mea culpa.


How the BOD hasn't sacked him yet is a question people both in and out of the company ask multiple times daily. That Freudian slip is a dead giveaway as to what he has and wants to turn a once good airline into. Sad and disgusting. The DL people were so smart to say "bless your heart, NO".


I have no personal opinion about Parker's role at AA, but I do wonder whether American Airlines would have survived without the merger with US, and if so, how its current incarnation would have differed from what we see now, especially considering the DL-NW and UA-CO combinations. The slip mentioning HP instead of AA is remarkable after so many years.

Now that we have all of the US3 quarterly results, what does everyone think about the various strategies employed (percentage of flights brought back, hub usage, seat blocking, etc.) and their financial repercussions?
 
DoctorVenkman
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Re: AA Q2 results

Thu Jul 23, 2020 1:42 pm

Brickell305 wrote:
Their average cash burn for Q2 seems high IMO @ $55M. IIRC, it was $40M for DL and $30M for UA.


UA will be down to $25M/day once they get through their voluntary separation program. A cash burn of $55M/day is egregious. How much of that is debt servicing vs.operations?
 
AMALH747430
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Re: AA Q2 results

Thu Jul 23, 2020 1:48 pm

Brickell305 wrote:
Their average cash burn for Q2 seems high IMO @ $55M. IIRC, it was $40M for DL and $30M for UA.


Their throwing caution to the wind attitude is coming back to bite them. DL and UA have been much more proactive about matching demand to supply in order to control cash burn.

https://seekingalpha.com/article/435956 ... uptcy-risk
 
onwFan
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Re: AA Q2 results

Thu Jul 23, 2020 1:50 pm

DoctorVenkman wrote:
Brickell305 wrote:
Their average cash burn for Q2 seems high IMO @ $55M. IIRC, it was $40M for DL and $30M for UA.


UA will be down to $25M/day once they get through their voluntary separation program. A cash burn of $55M/day is egregious. How much of that is debt servicing vs.operations?

If you read carefully, the cash burn for the month of June is already $30M/day. The $55M/day was average over entire Q2. So $25M/day after voluntary separation is not any different. AA had the highest cash burn in the beginning, and people were doubting whether AA will bring it down. Looks like they have, despite a widely different strategy.
 
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Midwestindy
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Re: AA Q2 results

Thu Jul 23, 2020 1:51 pm

AMALH747430 wrote:
Brickell305 wrote:
Their average cash burn for Q2 seems high IMO @ $55M. IIRC, it was $40M for DL and $30M for UA.


Their throwing caution to the wind attitude is coming back to bite them. DL and UA have been much more proactive about matching demand to supply in order to control cash burn.

https://seekingalpha.com/article/435956 ... uptcy-risk


You realize that is full Q2 right? April/May, AA didn't run a large schedule.

In June AA had $30M burn rate, compared to $27M for DL (No idea about UA's June). And AA started from a larger cost base.......

The risk to running a large schedule from June-September is minimal with salaries largely paid for by the gov't
Status for 2019/2020: AAdvantage Platinum, Delta Gold, Southwest A-List
 
MIflyer12
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Re: AA Q2 results

Thu Jul 23, 2020 1:57 pm

spinotter wrote:

Now that we have all of the US3 quarterly results, what does everyone think about the various strategies employed (percentage of flights brought back, hub usage, seat blocking, etc.) and their financial repercussions?


One can see the 'keep flying' (AA + WN) and 'park it' (DL + UA) strategies play out in change in passenger revenues (DL and UA dipped more) but also in yield: passenger revenue per RPM. DL was flat, UA actually increased, while WN was down 21% and AA was down 13%. They struggled to 'fill' the planes, and we do need quotes on that. Load factors:

AA 42%
DL 34%
UA 33%
WN 31%

WN, with both the biggest drop in yield and lowest load factor showed the most price/demand sensitivity.

UA, consistent with its sharp and repeated statements regarding need for many employee departures, had the biggest change in total wages:

UA -29%
DL -24%
AA -21%
WN -17%

(I'm assuming CARES Act Payroll Support Program grants/loans were treated consistently.)

The similarities between DL and UA are strong but for UA really boosting cargo revenues. There really wasn't much difference in total operating revenues among the Big 3:

AA $1.622 Billion
UA $1.475 Billion
DL $1.468 Billion
and WN $ 1.008 Billion

One really needs to get into the details of special charges to see effects on profit: aircraft write-downs, investment write-downs (ooh, Delta!), severance accruals and the like.
Last edited by MIflyer12 on Thu Jul 23, 2020 2:04 pm, edited 1 time in total.
 
tphuang
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Re: AA Q2 results

Thu Jul 23, 2020 1:57 pm

Brickell305 wrote:
Their average cash burn for Q2 seems high IMO @ $55M. IIRC, it was $40M for DL and $30M for UA.


I believe it's $43 million for DL and $40 million for UA for the entire quarter. I think UA is project $25 million for Q3 and DL about $25 to 30 million. Looks like AA is projecting around $35 million based on their estimates for end of Q3 cash position.

All this does beg the question of how much lower the burn rate can get unless demand increases dramatically. AA has already cut a lot of senior leadership and seems to me that there have also been a good number of takers for early out programs. Even if we add in likely furlough in Oct, that still probably will only get them to $30 million a day unless bookings start to really climb again.
 
panamair
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Re: AA Q2 results

Thu Jul 23, 2020 1:59 pm

Brickell305 wrote:
Their average cash burn for Q2 seems high IMO @ $55M. IIRC, it was $40M for DL and $30M for UA.


I think you may have mixed up some of the metrics here. There are two types of cash burn numbers being reported:

1) Average daily cash burn for Q2 (so this is the average across the 3 months Apr - June):
AA: $55m
DL: $43m
UA: $40m

2) Average daily cash burn in the month of June:
AA: $30m
DL: $27m
UA: Not specifically mentioned; they projected $25m/day going forward for Q3 2020.


UpNAWAy wrote:
16.2 is what they have now, 13 end of the qtr.


No, what they actually had at the end of Q2 was $10.2 billion. The $16.2b is 'pro forma' (which is essentially a projection of what it would be if they included the upcoming US govt loan of $4.8 bn and the $1.2bn of additional debt offering). They are the only one so far which has seemingly decided that they will take the second tranche of the original US government CARES aid in the form of the $4.8 bn loan. Both Delta and United I believe have not committed to taking the second tranche of US government aid yet (they have till Sept 30 to decide) and thus have not included it in any of their liquidity projections.
 
TWFlyGuy
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Re: AA Q2 results

Thu Jul 23, 2020 1:59 pm

Did he make a mistake? Sure but as the youngest of three boys it's not rare for my mom to call me three names before getting to mine. Let's not overblow it.

I appreciated his comments about "higher than forecast" revenue. The problem with the AA strategy at this point honestly is that they assumed we'd have functional political leaders and this would go away sooner. They had the least international exposure so it made sense but now may not. The new hot spots are their points of strength (TX, FL, NC). So, they may be in for some pain going forward.
 
DoctorVenkman
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Re: AA Q2 results

Thu Jul 23, 2020 2:05 pm

I think looking at the June cash burns to project forward is a bit disingenuous since that was by far the best post-covid month. The situation in Q3 is significantly worse than in June. A better metric to compare across airlines is the guided Q3 burn rate. AA still appears to be significantly higher than DL and UA in that regard, on the order of ~$10M-$15M per day. That translates into approximately $900M - $1.3B in additional cash burn over its competitors in Q3.
 
HPRamper
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Re: AA Q2 results

Thu Jul 23, 2020 2:11 pm

TWFlyGuy wrote:
Did he make a mistake? Sure but as the youngest of three boys it's not rare for my mom to call me three names before getting to mine. Let's not overblow it.

I appreciated his comments about "higher than forecast" revenue. The problem with the AA strategy at this point honestly is that they assumed we'd have functional political leaders and this would go away sooner. They had the least international exposure so it made sense but now may not. The new hot spots are their points of strength (TX, FL, NC). So, they may be in for some pain going forward.

He very well should thank us, his old team at HP, for making it possible for him and AA being where they are today - without AWA, US would have liquidated and AA would have long ago had their lunch eaten by the other big 3 and declared BK or been absorbed.
 
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Midwestindy
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Re: AA Q2 results

Thu Jul 23, 2020 2:16 pm

DoctorVenkman wrote:
I think looking at the June cash burns to project forward is a bit disingenuous since that was by far the best post-covid month. The situation in Q3 is significantly worse than in June. A better metric to compare across airlines is the guided Q3 burn rate. AA still appears to be significantly higher than DL and UA in that regard, on the order of ~$10M-$15M per day. That translates into approximately $900M - $1.3B in additional cash burn over its competitors in Q3.


Looking at Q2 includes April/early May, which is arguably more disingenuous. The two worst financial months in aviation history by a long shot.

TWFlyGuy wrote:
The problem with the AA strategy at this point honestly is that they assumed we'd have functional political leaders and this would go away sooner. They had the least international exposure so it made sense but now may not. The new hot spots are their points of strength (TX, FL, NC). So, they may be in for some pain going forward.


Vasu mentioned those locations are still seeing significantly more bookings than the rest of the network.
Status for 2019/2020: AAdvantage Platinum, Delta Gold, Southwest A-List
 
MrPeanut
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Re: AA Q2 results

Thu Jul 23, 2020 2:34 pm

DoctorVenkman wrote:
I think looking at the June cash burns to project forward is a bit disingenuous since that was by far the best post-covid month. The situation in Q3 is significantly worse than in June. A better metric to compare across airlines is the guided Q3 burn rate. AA still appears to be significantly higher than DL and UA in that regard, on the order of ~$10M-$15M per day. That translates into approximately $900M - $1.3B in additional cash burn over its competitors in Q3.


Agreed the guided Q3 burn rate is better to use, especially considering June/July may be the best months over the Q2/Q3 time frame. Traffic is definitely going to be worse in September, and most likely August than it was in June/July.
 
TWFlyGuy
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Re: AA Q2 results

Thu Jul 23, 2020 2:42 pm

Midwestindy wrote:
DoctorVenkman wrote:
I think looking at the June cash burns to project forward is a bit disingenuous since that was by far the best post-covid month. The situation in Q3 is significantly worse than in June. A better metric to compare across airlines is the guided Q3 burn rate. AA still appears to be significantly higher than DL and UA in that regard, on the order of ~$10M-$15M per day. That translates into approximately $900M - $1.3B in additional cash burn over its competitors in Q3.


Looking at Q2 includes April/early May, which is arguably more disingenuous. The two worst financial months in aviation history by a long shot.

TWFlyGuy wrote:
The problem with the AA strategy at this point honestly is that they assumed we'd have functional political leaders and this would go away sooner. They had the least international exposure so it made sense but now may not. The new hot spots are their points of strength (TX, FL, NC). So, they may be in for some pain going forward.


Vasu mentioned those locations are still seeing significantly more bookings than the rest of the network.


When he said that vs today and go forward are different times...
 
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Midwestindy
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Re: AA Q2 results

Thu Jul 23, 2020 2:47 pm

TWFlyGuy wrote:
Midwestindy wrote:
DoctorVenkman wrote:
I think looking at the June cash burns to project forward is a bit disingenuous since that was by far the best post-covid month. The situation in Q3 is significantly worse than in June. A better metric to compare across airlines is the guided Q3 burn rate. AA still appears to be significantly higher than DL and UA in that regard, on the order of ~$10M-$15M per day. That translates into approximately $900M - $1.3B in additional cash burn over its competitors in Q3.


Looking at Q2 includes April/early May, which is arguably more disingenuous. The two worst financial months in aviation history by a long shot.

TWFlyGuy wrote:
The problem with the AA strategy at this point honestly is that they assumed we'd have functional political leaders and this would go away sooner. They had the least international exposure so it made sense but now may not. The new hot spots are their points of strength (TX, FL, NC). So, they may be in for some pain going forward.


Vasu mentioned those locations are still seeing significantly more bookings than the rest of the network.


When he said that vs today and go forward are different times...


I meant that he said it today in the call
Status for 2019/2020: AAdvantage Platinum, Delta Gold, Southwest A-List
 
alasizon
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Re: AA Q2 results

Thu Jul 23, 2020 2:56 pm

Midwestindy wrote:
AMALH747430 wrote:
Brickell305 wrote:
Their average cash burn for Q2 seems high IMO @ $55M. IIRC, it was $40M for DL and $30M for UA.


Their throwing caution to the wind attitude is coming back to bite them. DL and UA have been much more proactive about matching demand to supply in order to control cash burn.

https://seekingalpha.com/article/435956 ... uptcy-risk


You realize that is full Q2 right? April/May, AA didn't run a large schedule.


I'm pretty sure you know this but AA was still running a sizeable schedule in April (particularly the front half) and was cancelling a lot of flights each day which in turn drove costs up. It also was the lowest booking month so that reduced the revenue coming in.

MrPeanut wrote:
DoctorVenkman wrote:
I think looking at the June cash burns to project forward is a bit disingenuous since that was by far the best post-covid month. The situation in Q3 is significantly worse than in June. A better metric to compare across airlines is the guided Q3 burn rate. AA still appears to be significantly higher than DL and UA in that regard, on the order of ~$10M-$15M per day. That translates into approximately $900M - $1.3B in additional cash burn over its competitors in Q3.


Agreed the guided Q3 burn rate is better to use, especially considering June/July may be the best months over the Q2/Q3 time frame. Traffic is definitely going to be worse in September, and most likely August than it was in June/July.


AA's cash burn should be higher than that of DL due to the size difference in staff headcount and overall interest expenditures. AA started with almost 40,000 more team members than DL did and that drives a big amount of spending. I personally think AA is still higher overall by the realm of $2-4m even once you remove the added staff and associated overhead costs plus interest expenses so there is still room to improve.
Airport (noun) - A construction site which airplanes tend to frequent
 
gen2stew
Posts: 172
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Re: AA Q2 results

Thu Jul 23, 2020 3:04 pm

HPRamper wrote:
TWFlyGuy wrote:
Did
He very well should thank us, his old team at HP, for making it possible for him and AA being where they are today - without AWA, US would have liquidated and AA would have long ago had their lunch eaten by the other big 3 and declared BK or been absorbed.


Thank you. Thank you for devaluing AAdvantage program, thank you for a lavatories so small that water splashes out of the microscopic sink, thank you for seats that are miserable to sit on for more than a few minutes, thank you for removing IFE, thank you for all the mistakes,bumbles, and costly re-do's because team Tempe can't run large airline, thank you for a downgradeld travel experience.

Indeed, THANK YOU America WORST.
I don't know why blessings wear disguises. If I were a blessing, I'd run around nude!
 
Brickell305
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Re: AA Q2 results

Thu Jul 23, 2020 3:20 pm

alasizon wrote:
Midwestindy wrote:
AMALH747430 wrote:

Their throwing caution to the wind attitude is coming back to bite them. DL and UA have been much more proactive about matching demand to supply in order to control cash burn.

https://seekingalpha.com/article/435956 ... uptcy-risk


You realize that is full Q2 right? April/May, AA didn't run a large schedule.


I'm pretty sure you know this but AA was still running a sizeable schedule in April (particularly the front half) and was cancelling a lot of flights each day which in turn drove costs up. It also was the lowest booking month so that reduced the revenue coming in.

MrPeanut wrote:
DoctorVenkman wrote:
I think looking at the June cash burns to project forward is a bit disingenuous since that was by far the best post-covid month. The situation in Q3 is significantly worse than in June. A better metric to compare across airlines is the guided Q3 burn rate. AA still appears to be significantly higher than DL and UA in that regard, on the order of ~$10M-$15M per day. That translates into approximately $900M - $1.3B in additional cash burn over its competitors in Q3.


Agreed the guided Q3 burn rate is better to use, especially considering June/July may be the best months over the Q2/Q3 time frame. Traffic is definitely going to be worse in September, and most likely August than it was in June/July.


AA's cash burn should be higher than that of DL due to the size difference in staff headcount and overall interest expenditures. AA started with almost 40,000 more team members than DL did and that drives a big amount of spending. I personally think AA is still higher overall by the realm of $2-4m even once you remove the added staff and associated overhead costs plus interest expenses so there is still room to improve.

Shouldn't all airlines who took CARES money be essentially cash neutral on staff as the gov't is funding salaries/wages through September?
 
CriticalPoint
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Re: AA Q2 results

Thu Jul 23, 2020 3:22 pm

Brickell305 wrote:
alasizon wrote:
Midwestindy wrote:

You realize that is full Q2 right? April/May, AA didn't run a large schedule.


I'm pretty sure you know this but AA was still running a sizeable schedule in April (particularly the front half) and was cancelling a lot of flights each day which in turn drove costs up. It also was the lowest booking month so that reduced the revenue coming in.

MrPeanut wrote:

Agreed the guided Q3 burn rate is better to use, especially considering June/July may be the best months over the Q2/Q3 time frame. Traffic is definitely going to be worse in September, and most likely August than it was in June/July.


AA's cash burn should be higher than that of DL due to the size difference in staff headcount and overall interest expenditures. AA started with almost 40,000 more team members than DL did and that drives a big amount of spending. I personally think AA is still higher overall by the realm of $2-4m even once you remove the added staff and associated overhead costs plus interest expenses so there is still room to improve.

Shouldn't all airlines who took CARES money be essentially cash neutral on staff as the gov't is funding salaries/wages through September?


No CARES only covered about 70% of employee costs.
 
alasizon
Posts: 2598
Joined: Sat Apr 28, 2007 8:57 pm

Re: AA Q2 results

Thu Jul 23, 2020 3:25 pm

Brickell305 wrote:
alasizon wrote:
Midwestindy wrote:

You realize that is full Q2 right? April/May, AA didn't run a large schedule.


I'm pretty sure you know this but AA was still running a sizeable schedule in April (particularly the front half) and was cancelling a lot of flights each day which in turn drove costs up. It also was the lowest booking month so that reduced the revenue coming in.

MrPeanut wrote:

Agreed the guided Q3 burn rate is better to use, especially considering June/July may be the best months over the Q2/Q3 time frame. Traffic is definitely going to be worse in September, and most likely August than it was in June/July.


AA's cash burn should be higher than that of DL due to the size difference in staff headcount and overall interest expenditures. AA started with almost 40,000 more team members than DL did and that drives a big amount of spending. I personally think AA is still higher overall by the realm of $2-4m even once you remove the added staff and associated overhead costs plus interest expenses so there is still room to improve.

Shouldn't all airlines who took CARES money be essentially cash neutral on staff as the gov't is funding salaries/wages through September?


The payroll support program is not 100% coverage for staffing, despite many thinking it is due to the way it was hyped. As I recall, the actual amount was around 60-70% of the 2019 Q2 + Q3 salaries only for staff. Associated overhead (i.e. benefits) is not covered so carriers are still on the hook for that. While 60-70% is a decent chunk, it still leaves a good amount of cash outflow the responsibility of the airline.
Airport (noun) - A construction site which airplanes tend to frequent
 
MIflyer12
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Re: AA Q2 results

Thu Jul 23, 2020 3:28 pm

Brickell305 wrote:
Shouldn't all airlines who took CARES money be essentially cash neutral on staff as the gov't is funding salaries/wages through September?


No. The Feds didn't cover 100% of wages. You can see this on UA's income statement plainly, where the Special Charges (credit) is much smaller than Salaries & Related Costs. On the other hand, voluntary furloughs would have cut wage expense.
 
MKIAZ
Posts: 279
Joined: Thu May 01, 2014 5:24 am

Re: AA Q2 results

Thu Jul 23, 2020 3:30 pm

gen2stew wrote:
Boof02671 wrote:
And he opened up the call thanking the whole America West team and before the Q and A had to issue a mea culpa.


How the BOD hasn't sacked him yet is a question people both in and out of the company ask multiple times daily. That Freudian slip is a dead giveaway as to what he has and wants to turn a once good airline into. Sad and disgusting. The DL people were so smart to say "bless your heart, NO".


Who would want to take over right now? For better or worse he owns it now. It's hard to imagine a BK scenario in AAL's future. I believe that's when he would be replaced.
 
onwFan
Posts: 447
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Re: AA Q2 results

Thu Jul 23, 2020 3:33 pm

Am I mistaken (or) Is it true that AA’s loss is smaller than DL’s for Q2 even after excluding special items (like investment/fleet writedowns)?

$2.7B vs $3.9B.
Last edited by onwFan on Thu Jul 23, 2020 3:39 pm, edited 1 time in total.
 
HPRamper
Posts: 5022
Joined: Sat May 14, 2005 4:22 am

Re: AA Q2 results

Thu Jul 23, 2020 3:35 pm

gen2stew wrote:
HPRamper wrote:
TWFlyGuy wrote:
Did
He very well should thank us, his old team at HP, for making it possible for him and AA being where they are today - without AWA, US would have liquidated and AA would have long ago had their lunch eaten by the other big 3 and declared BK or been absorbed.


Thank you. Thank you for devaluing AAdvantage program, thank you for a lavatories so small that water splashes out of the microscopic sink, thank you for seats that are miserable to sit on for more than a few minutes, thank you for removing IFE, thank you for all the mistakes,bumbles, and costly re-do's because team Tempe can't run large airline, thank you for a downgradeld travel experience.

Indeed, THANK YOU America WORST.

So silly. You must prefer a bloated airline with a bad,outdated business model to go out of business rather than do what it needs to do to regain financial viability. It's ok though, the AA glory days live on in your memory.
 
alasizon
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Joined: Sat Apr 28, 2007 8:57 pm

Re: AA Q2 results

Thu Jul 23, 2020 3:37 pm

MIflyer12 wrote:
Brickell305 wrote:
Shouldn't all airlines who took CARES money be essentially cash neutral on staff as the gov't is funding salaries/wages through September?


No. The Feds didn't cover 100% of wages. You can see this on UA's income statement plainly, where the Special Charges (credit) is much smaller than Salaries & Related Costs. On the other hand, voluntary furloughs would have cut wage expense.


Since we are talking AA, their results show a 2.5B expenditure on staffing and overhead for the quarter while PSP only covered 1.8 of that, plus there was an additional 252m according to their notes related specifically to medical and salary requirements for those who took the first round of early retirement back in April.
Airport (noun) - A construction site which airplanes tend to frequent
 
usflyer msp
Posts: 3805
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Re: AA Q2 results

Thu Jul 23, 2020 3:44 pm

gen2stew wrote:
HPRamper wrote:
TWFlyGuy wrote:
Did
He very well should thank us, his old team at HP, for making it possible for him and AA being where they are today - without AWA, US would have liquidated and AA would have long ago had their lunch eaten by the other big 3 and declared BK or been absorbed.


Thank you. Thank you for devaluing AAdvantage program, thank you for a lavatories so small that water splashes out of the microscopic sink, thank you for seats that are miserable to sit on for more than a few minutes, thank you for removing IFE, thank you for all the mistakes,bumbles, and costly re-do's because team Tempe can't run large airline, thank you for a downgradeld travel experience.

Indeed, THANK YOU America WORST.


We get it. You hate Doug Parker. I'm not going to argue about it because your ilk are often irrational and stuck in the past. I will say that you all look at PMAA with rose colored glasses. PMAA was no prize. It's cost structure and route network were problematic, there is a reason why 2 of the 3 most profitable hubs are ex-US.

Getting back on topic, I think AA did as well as could be expected this quarter. There is room for improvement and they are making deals and seeing themselves up for long-term success. I know many of the business travelers still on the road are choosing AA and WN over DL and UA because they are the carriers with an actually useful schedule, especially to secondary and tertiary markets.
 
alasizon
Posts: 2598
Joined: Sat Apr 28, 2007 8:57 pm

Re: AA Q2 results

Thu Jul 23, 2020 3:46 pm

onwFan wrote:
Am I mistaken (or) Is it true that AA’s loss is smaller than DL’s for Q2 even after excluding special items (like investment/fleet writedowns)?

$2.7B vs $3.9B.


My rough math says DL had a $3.7B operating loss after you remove the restructuring and PSP adjustments. AA had a 3.9B loss after you remove special items.

That being said, if you leave the PSP portion in there, then yes AA had a better quarter than DL by a few hundred million.
Airport (noun) - A construction site which airplanes tend to frequent
 
sagechan
Posts: 352
Joined: Sat Jul 04, 2015 6:14 pm

Re: AA Q2 results

Thu Jul 23, 2020 3:51 pm

In the end all the US3 needed up withing the ballpark of each other when you factor in differences in starting points (AA's higher labor size and cost, DL's investment strategy, UA's higher exposure to international.) All reduced cash burn significantly with different strategies.

Had the US managed the virus on a equivalent basis to say Europe, AA would probably be better positioned to benefit from partial return of flying now. Since we didnt, I think AA is at higher risk moving into the end of CARES support.

AA didn't hit Vasu's proverbial home run, but did get a base hit instead of striking out. 3Q will be key for AA. They have 2-3 years before debt maturities hit that is the impending time bomb for them.
717, 733, 734, 738, 739, 744, 752, 763, 772, 77W, 789, A319, A320, A321, A332, A333, A359, MD88, CRJ, CR7, CR9, DH1, DH2, DH3, S340, ER4, E170, E175, E190/CO, NW, US, AC, NH, AA, UA, DL, WN, WS, SK, VY, LA, QF, AR, AV, MH, KA, AS
 
panamair
Posts: 4331
Joined: Fri Oct 12, 2001 2:24 am

Re: AA Q2 results

Thu Jul 23, 2020 3:51 pm

onwFan wrote:
Am I mistaken (or) Is it true that AA’s loss is smaller than DL’s for Q2 even after excluding special items (like investment/fleet writedowns)?

$2.7B vs $3.9B.


The $2.7B you have for AA is the GAAP pre-tax Loss. If you look at Adjusted (Non-GAAP) losses (i.e., taking out the investment and fleet restructuring),

Adjusted Pre-Tax Loss:
AA: $4.3B
DL: $3.9B

Adjusted Net Loss:
AA: $3.4B
DL: $2.8B

All ugly all around no matter how you look at it...
 
panamair
Posts: 4331
Joined: Fri Oct 12, 2001 2:24 am

Re: AA Q2 results

Thu Jul 23, 2020 3:55 pm

The revenue breakdown by geographic region for the quarter was also interesting:

Domestic:
AA: $1.026 billion
DL: $564m
UA: $542m

Atlantic:
DL: $64m
UA: $57m
AA: $42m

Pacific:
UA: $34m
DL: $32m
AA: $6m

Latin:
UA: $48m
AA: $34m
DL: $18m

- Latin is interesting in that UA collected more revenue than the regional heavyweight AA; probably due to UA's strength in Mexico which was less 'shut down' than the rest of Latin America
- Domestic is of course due to the amount of capacity put out by AA, so revenue was almost twice that of DL and UA
- Surprised to see DL come so close to UA in the Pacific but DL did say that the Pacific was recovering the fastest for them in the international area
 
codc10
Posts: 2876
Joined: Sat Jul 08, 2000 7:18 am

Re: AA Q2 results

Thu Jul 23, 2020 4:06 pm

usflyer msp wrote:
Getting back on topic, I think AA did as well as could be expected this quarter. There is room for improvement and they are making deals and seeing themselves up for long-term success. I know many of the business travelers still on the road are choosing AA and WN over DL and UA because they are the carriers with an actually useful schedule, especially to secondary and tertiary markets.


"Many" and "business travelers" cannot rationally appear in the same sentence these days. By most estimates, business travel is down 96% year-over-year across the domestic industry, and during the summer, business traffic is an even smaller proportion of pax than the rest of the year. During the call today, Raja noted that corporate traffic ex-DFW is "up 300%" from "less-than-single-digit" levels earlier this summer... guess what? That's still firmly within the single-digits. Substantially ALL traffic right now is leisure/VFR, and the numbers bear that out.

Reading the various forums, I get a kick out of anyone complaining that schedules "aren't useful for business travelers." Of course they aren't. Any airline chasing business travelers RIGHT NOW is bonkers.
 
Miamiairport
Posts: 667
Joined: Tue Apr 10, 2018 8:14 pm

Re: AA Q2 results

Thu Jul 23, 2020 4:15 pm

Well Q2 might not be much of a trend predictor for 2H 2021. Starting in May travel began to return and AA in particular benefited from strong demand (albeit probably low yield) for FL. Then the tidal wave hit again. I've been traveling every week since this all began and the MIA airport looks far less crowded, more like what it looked like in mid May. Now other areas aren't getting hit as hard but big destinations like CA and NY are.

Add to that there seems to be very little appetite to extend the CARES $600 Unemployment Insurance. Maybe there will be a last minute reprieve but who knows. Again I don't have empirical proof but I've talked to others that have been flying and we contend that lots of people were taking that unemployment windfall and spending it, including on travel. For lots of lower end wage earners between the Federal portion and what the state provides many of them saw a sizable pay increase. Yes they should be saving that money but this America in 2020.

Offsetting this all of course will be staff reductions coming and cuts again. Time will tell where this all ends.
 
usflyer msp
Posts: 3805
Joined: Tue May 23, 2000 11:50 am

Re: AA Q2 results

Thu Jul 23, 2020 4:18 pm

codc10 wrote:
usflyer msp wrote:
Getting back on topic, I think AA did as well as could be expected this quarter. There is room for improvement and they are making deals and seeing themselves up for long-term success. I know many of the business travelers still on the road are choosing AA and WN over DL and UA because they are the carriers with an actually useful schedule, especially to secondary and tertiary markets.


"Many" and "business travelers" cannot rationally appear in the same sentence these days. By most estimates, business travel is down 96% year-over-year across the domestic industry, and during the summer, business traffic is an even smaller proportion of pax than the rest of the year. During the call today, Raja noted that corporate traffic ex-DFW is "up 300%" from "less-than-single-digit" levels earlier this summer... guess what? That's still firmly within the single-digits. Substantially ALL traffic right now is leisure/VFR, and the numbers bear that out.

Reading the various forums, I get a kick out of anyone complaining that schedules "aren't useful for business travelers." Of course they aren't. Any airline chasing business travelers RIGHT NOW is bonkers.


No, I meant what I said. I recognize that business travel is way down but many of the few business travelers still on the road are choosing to fly AA and WN due to their more robust schedule. The odds are good that they will continue to fly AA once things are closer to normal.
 
gen2stew
Posts: 172
Joined: Mon Dec 12, 2011 10:15 pm

Re: AA Q2 results

Thu Jul 23, 2020 4:28 pm

At least AA had glory days. HP had...?
I don't know why blessings wear disguises. If I were a blessing, I'd run around nude!
 
MIflyer12
Posts: 8088
Joined: Mon Feb 18, 2013 11:58 pm

Re: AA Q2 results

Thu Jul 23, 2020 4:35 pm

Midwestindy wrote:
DoctorVenkman wrote:
I think looking at the June cash burns to project forward is a bit disingenuous since that was by far the best post-covid month. The situation in Q3 is significantly worse than in June. A better metric to compare across airlines is the guided Q3 burn rate. AA still appears to be significantly higher than DL and UA in that regard, on the order of ~$10M-$15M per day. That translates into approximately $900M - $1.3B in additional cash burn over its competitors in Q3.


Looking at Q2 includes April/early May, which is arguably more disingenuous. The two worst financial months in aviation history by a long shot.


There are two central questions re: reaction to COVID and resulting cash burn:

1. Which carrier(s) was slow to make cuts in April/May?

2. Which carrier failed to cut costs & cash burn deeply?

One needs at least two bits of info to answer those questions:

1. What was avg cash burn for 2Q?

2. What was end of June (or better, current) cash burn rate?

Aspirations of a 3Q rate aren't comparable. They aren't even necessarily helpful because cash burn is a function of revenue (itself a function of passenger count, fares, cargo, credit cards) as much as costs.
 
OB1504
Posts: 3964
Joined: Tue Jul 27, 2004 5:10 am

Re: AA Q2 results

Thu Jul 23, 2020 5:15 pm

HPRamper wrote:
gen2stew wrote:
HPRamper wrote:


Thank you. Thank you for devaluing AAdvantage program, thank you for a lavatories so small that water splashes out of the microscopic sink, thank you for seats that are miserable to sit on for more than a few minutes, thank you for removing IFE, thank you for all the mistakes,bumbles, and costly re-do's because team Tempe can't run large airline, thank you for a downgradeld travel experience.

Indeed, THANK YOU America WORST.

So silly. You must prefer a bloated airline with a bad,outdated business model to go out of business rather than do what it needs to do to regain financial viability. It's ok though, the AA glory days live on in your memory.


Delta has proven that you can make money while running an airline people like to fly on.

I fly Delta when I‘m willing to pay more for a consistently pleasant experience. I fly Spirit when I want my plane tickets to be cheaper than a nice dinner for two. Modern day American has been pushing the limits of how much they can cheapen/degrade the product before they won’t be able to command a fare premium anymore. It’s the worst of both worlds and Doug Parker thinks passengers are idiots and he can get them to pay legacy fares for a ULCC product. He doesn’t know how to make money offering a better product.

Given the disparity between the widebodies and the Oasis garbage, they may as well spin off the long haul flying into its own brand.
 
codc10
Posts: 2876
Joined: Sat Jul 08, 2000 7:18 am

Re: AA Q2 results

Thu Jul 23, 2020 5:51 pm

usflyer msp wrote:
codc10 wrote:
usflyer msp wrote:
Getting back on topic, I think AA did as well as could be expected this quarter. There is room for improvement and they are making deals and seeing themselves up for long-term success. I know many of the business travelers still on the road are choosing AA and WN over DL and UA because they are the carriers with an actually useful schedule, especially to secondary and tertiary markets.


"Many" and "business travelers" cannot rationally appear in the same sentence these days. By most estimates, business travel is down 96% year-over-year across the domestic industry, and during the summer, business traffic is an even smaller proportion of pax than the rest of the year. During the call today, Raja noted that corporate traffic ex-DFW is "up 300%" from "less-than-single-digit" levels earlier this summer... guess what? That's still firmly within the single-digits. Substantially ALL traffic right now is leisure/VFR, and the numbers bear that out.

Reading the various forums, I get a kick out of anyone complaining that schedules "aren't useful for business travelers." Of course they aren't. Any airline chasing business travelers RIGHT NOW is bonkers.


No, I meant what I said. I recognize that business travel is way down but many of the few business travelers still on the road are choosing to fly AA and WN due to their more robust schedule. The odds are good that they will continue to fly AA once things are closer to normal.


"Way down" does not even approach scratching the surface. Generally, "business travel" is a euphemism for high-revenue, flexible or premium cabin tickets. With cancellation/change policies waived on all tickets, there is no reason to pay a premium for such fares, and PRASM numbers bear this out. Again, the only thing that matters right now is reducing cash burn, not chasing a segment that no longer exists.

For all intents and purposes, there is no business travel right now, as such. What's more lucrative currently, to the extent one can even call it lucrative, is passengers purchasing extra economy or premium cabin seats for "social distancing."
 
ordbosewr
Posts: 612
Joined: Thu Jun 09, 2011 8:30 pm

Re: AA Q2 results

Thu Jul 23, 2020 6:16 pm

codc10 wrote:
usflyer msp wrote:
codc10 wrote:

"Many" and "business travelers" cannot rationally appear in the same sentence these days. By most estimates, business travel is down 96% year-over-year across the domestic industry, and during the summer, business traffic is an even smaller proportion of pax than the rest of the year. During the call today, Raja noted that corporate traffic ex-DFW is "up 300%" from "less-than-single-digit" levels earlier this summer... guess what? That's still firmly within the single-digits. Substantially ALL traffic right now is leisure/VFR, and the numbers bear that out.

Reading the various forums, I get a kick out of anyone complaining that schedules "aren't useful for business travelers." Of course they aren't. Any airline chasing business travelers RIGHT NOW is bonkers.


No, I meant what I said. I recognize that business travel is way down but many of the few business travelers still on the road are choosing to fly AA and WN due to their more robust schedule. The odds are good that they will continue to fly AA once things are closer to normal.


"Way down" does not even approach scratching the surface. Generally, "business travel" is a euphemism for high-revenue, flexible or premium cabin tickets. With cancellation/change policies waived on all tickets, there is no reason to pay a premium for such fares, and PRASM numbers bear this out. Again, the only thing that matters right now is reducing cash burn, not chasing a segment that no longer exists.

For all intents and purposes, there is no business travel right now, as such. What's more lucrative currently, to the extent one can even call it lucrative, is passengers purchasing extra economy or premium cabin seats for "social distancing."


I actually view business travel as those that are booked close-in and are generally not looking at weekend. ie a Monday to Thursday or similar experience. Why do I say this, my company, does not allow many to travel on refundable tickets or premium cabins. We just can't.
So while I can be a business traveler, by your definition I am not.
However, I pay a fare premium, because I book my ticket usually less than 2 weeks out and I am always schedule dependent. I live in central NJ, so EWR is my 'home' airport, but I have been known to fly out of PHL if it works better for my needs. That means I look at UA non-stop and AA non-stop (unless going to hub of another airline then I add them too). My company has contracts will all major carriers so I can fly anyone and stay "in policy" but sometimes that non-stop is too expensive and they make me take a stop to reduce the fare.

The last point you made I have been saying for a long time. There is NO business travel right now (or very very little). My company is limiting who and where we can go. All internal meetings must be no travel, the only travel happening is for clients that actually want us on-site, which is not many.
I do not think this is coming back before a vaccine or treatment is in place, I agree with everyone who is saying this.

It is going to be an ugly 2nd half of 2020 and ugly 1st half of 2021.
My saying has already been, when is 2020 going to be done, I can't take it much more.
 
Miamiairport
Posts: 667
Joined: Tue Apr 10, 2018 8:14 pm

Re: AA Q2 results

Thu Jul 23, 2020 6:41 pm

There's next to nil business travelers to chase. AA doesn't do a very good job it seems of upselling the premium cabins. Really an extra $100 to $150 here and there will do more for the bottom line that giving it away to upgraders and dead heading crew. Most domestic routes no longer serve meals so no cost there and on some flights good luck getting an alcoholic drink out of the FA. I've also noticed that most of the time FAs only do one F drink service if they do a service (and thanks to them for doing so) unlike the "old days" when the F FA would usually come around repeatedly. So less money spent on free booze.
 
F9Animal
Posts: 4424
Joined: Thu Dec 16, 2004 7:13 am

Re: AA Q2 results

Thu Jul 23, 2020 7:20 pm

spinotter wrote:
gen2stew wrote:
Boof02671 wrote:
And he opened up the call thanking the whole America West team and before the Q and A had to issue a mea culpa.


How the BOD hasn't sacked him yet is a question people both in and out of the company ask multiple times daily. That Freudian slip is a dead giveaway as to what he has and wants to turn a once good airline into. Sad and disgusting. The DL people were so smart to say "bless your heart, NO".


I have no personal opinion about Parker's role at AA, but I do wonder whether American Airlines would have survived without the merger with US, and if so, how its current incarnation would have differed from what we see now, especially considering the DL-NW and UA-CO combinations. The slip mentioning HP instead of AA is remarkable after so many years.

Now that we have all of the US3 quarterly results, what does everyone think about the various strategies employed (percentage of flights brought back, hub usage, seat blocking, etc.) and their financial repercussions?


I do have an opinion of Parker, and it's a positive one. I was with US Airways during their bankruptcy. All of us got outsourced to the cheapest vendor and lost our jobs. When America West came in a few days before we were going to be replaced, he stopped the process from happening. He sent an exec to SEA from America West, and delivered the news that our jobs were safe.

I left shortly after everything was combined. And we know legacy AA was in some very deep trouble a few years later.

Did Parker make mistakes? Of course, he is only human. Is Parker dumb? Nope, I will argue with anyone that thinks he is. Is AA in a pickle? Sure is, and so is every other airline right now. Can he lead AA back to health? You bet he can. It's not gonna be easy no matter who is at the controls.
I Am A Different Animal!!
 
aaway
Posts: 1449
Joined: Tue Oct 21, 2003 2:07 am

Re: AA Q2 results

Thu Jul 23, 2020 10:22 pm

I too have an opinion of the current management that I'll save for perhaps a more appropriate forum or time. This thread has begun to devolve along predictable factions.

spinotter wrote:
I have no personal opinion about Parker's role at AA, but I do wonder whether American Airlines would have survived without the merger with US, and if so, how its current incarnation would have differed from what we see now, especially considering the DL-NW and UA-CO combinations. The slip mentioning HP instead of AA is remarkable after so many years.


I recently had a brief exchange with an industry blogger that tangentially touched on AA's viability post-bk. I suggested that a theoretical stand-alone AA would've have fared better from the BK period. The exchange prompted me to go back and look at the financials immediately before & immediately after the formal merger date. While the merger itself was purposely crafted to have been non-financial transaction (i.e., non-remunerative), there was a financial cost for merging.

Rolling US into the reorganized entity that came into existence on 09Dec2013 increased balance sheet indebtedness by close to $6B as the new entity assumed the L-US debt. Approximately one year later, the term sheet deals between Parker and LAA unions (APA & APFA) were formalized. Going into 2015, these bargaining agreements increased labor costs by nearly $1B over previous fiscal year labor costs.

Needless to say most of the effort to restructure the finances of L-AA were lost as a result of merging. Mentioning this as an aside - beside timing, a big advantage that DL-NW had over the other combos is the fact that both had reorganized & recapitalized balance sheets going into a merger.

A reorganized L-AA, absent a merger, would've have survived post-BK. While much of the going forward strategy had been tipped (fleet renewal, network focus, cabin/onboard service revamps, etc.) there is only rumor & speculation as to how AA was preparing to address a mid-term future beyond the BK period.

OB1504 wrote:
HPRamper wrote:
So silly. You must prefer a bloated airline with a bad,outdated business model to go out of business rather than do what it needs to do to regain financial viability. It's ok though, the AA glory days live on in your memory.


Delta has proven that you can make money while running an airline people like to fly on....

....Given the disparity between the widebodies and the Oasis garbage, they may as well spin off the long haul flying into its own brand.


As to the initial comment, I think Horton had realized that the environment had inexorably changed, hence, as an example, the initial densification of cabins during his tenure. Hell, the BK labor contracts were a reflection of the new operating environment. Granted, labor was also being used to bridge the short-to-mid term future of AA.

As to the second comment, in essence the current carrier is operating an airline-within-an-airline-in-all-but-name concept. It's alienated a wide swath of what had been loyal AA fliers and it's manifested in the revenue & yield metrics.
"The greatest mistake you can make in life is to continually be afraid you will make one." - Elbert Hubbard
 
aaway
Posts: 1449
Joined: Tue Oct 21, 2003 2:07 am

Re: AA Q2 results

Thu Jul 23, 2020 10:31 pm

Boof02671 wrote:
And he opened up the call thanking the whole America West team and before the Q and A had to issue a mea culpa.


Perhaps it wasn't really a faux pas. From my contacts, most of the management staff that's been walked to the exits had been long-tenured pre-merger AA employees
"The greatest mistake you can make in life is to continually be afraid you will make one." - Elbert Hubbard
 
Miamiairport
Posts: 667
Joined: Tue Apr 10, 2018 8:14 pm

Re: AA Q2 results

Thu Jul 23, 2020 10:49 pm

I remember when AA decided to "rebrand" after going into Chapter 11. I was even approached by a recruiter to work with marketing developing budgets. Pre merger AA management decided to make changes and enhance the brand, including a new livery. AVOD in narrow bodies, better F catering, improvements in ACs. Then the merger happened.

To be fair by then ULCCs were growing by leaps and bounds and infringing upon legacies. For the exception of WN all 3 legacies decided to chase the ULCC customer with BE fares. Even B6 with originally started out as a cut above WN threw in the BE towel. Also to be fair, Parker and group have made enhancements to those flyers willing shell out of big bucks (yes with COVID 19 turning that on it's head). Ultimately a reorganized AA that did not merge with USAir or do so on their own terms would have faced a changing world. Maybe one day analysts will look back on the US3 and decide their chasing ULCC type of traffic wasn't worth it given their inherently higher cost structure.

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