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LAXintl
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AA invest $200mil in GOL, expand partnership

Wed Sep 15, 2021 3:53 pm

Building on their existing codeshare relationship, AA will invest US$200 million for a 5.2% stake in GOL and receive a board seat.

As part of the investment, the carriers will expand commercial relationships including deeper loyalty partnerships.

AA press release
https://news.aa.com/news/news-details/2 ... fault.aspx

=

This follows AA announcing its intent to purchase a stake Chile’s JetSmart ULCC in July
Last edited by LAXintl on Wed Sep 15, 2021 4:03 pm, edited 1 time in total.
 
dcajet
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Re: AA invest $200mil in GOL, expand partnerhip

Wed Sep 15, 2021 3:57 pm

Another notch in GOL's bedpost... They certainly have jumped from relationship to relationship. Hopefully this one will prove fruitful...
 
Airlines0613
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Re: AA invest $200mil in GOL, expand partnership

Wed Sep 15, 2021 4:19 pm

Umm... why is AA investing in other airlines when it can't even support itself without government aid. I get the partnership would be great for both of them, but if AA can invest $200 Million on an airline, then it doesn't need government aid.
 
sagechan
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Re: AA invest $200mil in GOL, expand partnership

Wed Sep 15, 2021 5:20 pm

Airlines0613 wrote:
Umm... why is AA investing in other airlines when it can't even support itself without government aid. I get the partnership would be great for both of them, but if AA can invest $200 Million on an airline, then it doesn't need government aid.

Because there wasnt anything attached to the CARES and follow up money to block such an strategic decision. Only strings were related to employee retention, domestic network and some equity market actions, plus AA already repaid the debt portion of their package.
 
LCDFlight
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Re: AA invest $200mil in GOL, expand partnership

Wed Sep 15, 2021 5:51 pm

Airlines0613 wrote:
Umm... why is AA investing in other airlines when it can't even support itself without government aid. I get the partnership would be great for both of them, but if AA can invest $200 Million on an airline, then it doesn't need government aid.


Exactly LOL, how generous of us to fund this junket for AA.

When we blur the lines between real capitalism and state capitalism, as AA has, the endgame can be devastating for executives and shareholders.
 
NLINK
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Re: AA invest $200mil in GOL, expand partnership

Wed Sep 15, 2021 6:11 pm

If we have another set back due to COVID-19 American Airlines should be eligible for zero US taxpayers dollars after this.
 
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jscottwomack
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Re: AA invest $200mil in GOL, expand partnership

Wed Sep 15, 2021 6:28 pm

Airlines0613 wrote:
Umm... why is AA investing in other airlines when it can't even support itself without government aid. I get the partnership would be great for both of them, but if AA can invest $200 Million on an airline, then it doesn't need government aid.


The "Aid" AA received was to keep employees on the payroll during covid. If the employees were laid off, they would get unemployment benefits. It was a program to keep people off unemployment. Many industries received Pandemic Employee Assistance to prevent layoffs. The "Aid" you bring up was only for wages for people who would otherwise be laid off. The program kept unemployment numbers in the low teens vs what could have been well over 25% unemployment and pushed the economy back to Great Depression numbers.
 
MIflyer12
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Re: AA invest $200mil in GOL, expand partnership

Wed Sep 15, 2021 7:08 pm

You're getting off-topic.

The proposed equity stake is under 20.0% so it will be listed on the books as an minority equity investment subject to periodic re-evalution for value, instead of GOL's quarterly losses going right to AA's income statement.

Time will tell if this continues the pattern of U.S. carriers whizzing away money on Latin American carriers. (See: Delta/LATAM, Delta/GOL, Delta/Aeromexico, United/Avianca.)
 
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OA412
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Re: AA invest $200mil in GOL, expand partnership

Wed Sep 15, 2021 8:04 pm

The topic is AA investing in GOL. Please stick to that rather than derailing this topic and turning it into another AA v. DL fight. Thanks!
 
MohawkWeekend
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Re: AA invest $200mil in GOL, expand partnership

Wed Sep 15, 2021 8:10 pm

AA is using borrowed money for this investment. They also used this borrowed money to pay off the portion of the CARES Act funds that weren't an outright grant. The true risk is on the whoever lent them the money.

American Air Reportedly Set to Issue $10 Billion of Debt MAR 10, 2021 10:14 AM EST
American Airlines is set to issue $10 billion of debt, a media report says. Bond yields in the offering may range 5.75% to 6%.
https://www.thestreet.com/investing/ame ... llion-debt
 
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TWA302
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Re: AA invest $200mil in GOL, expand partnership

Wed Sep 15, 2021 8:17 pm

Airlines0613 wrote:
Umm... why is AA investing in other airlines when it can't even support itself without government aid. I get the partnership would be great for both of them, but if AA can invest $200 Million on an airline, then it doesn't need government aid.



What better way to use taxpayer dollars? :duck: I mean seems like a 'good investment' for them. :rotfl:
 
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Rajahdhani
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Re: AA invest $200mil in GOL, expand partnership

Wed Sep 15, 2021 8:37 pm

Congratulations to both AA and GOL!

Here's to hoping for a prosperous and mutually fulfilling/beneficial relationship.

I wonder how/if this affects how GOL expands, or what services AA can offer to Brazil?
 
n9801f
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Re: AA invest $200mil in GOL, expand partnership

Wed Sep 15, 2021 8:53 pm

Despite poor optics/timing vis-a-vis recent US aid to airlines, I see great business wisdom behind this.

American is the #1 US carrier to Brazil, where it's necessary to use a feed partner to reach many secondary markets. This plugs the hole left by LATAM neatly.

The amount invested seems small to me compared with American's stakes in Brazil. Additionally this protects an established geography rather than try to develop new markets.

To the extent that this ensures viability of American's US-Brazil operations, it might reward all American's stakeholders in the long run.
 
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OzarkD9S
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Re: AA invest $200mil in GOL, expand partnership

Wed Sep 15, 2021 10:19 pm

n9801f wrote:

Despite poor optics/timing vis-a-vis recent US aid to airlines, I see great business wisdom behind this.

American is the #1 US carrier to Brazil, where it's necessary to use a feed partner to reach many secondary markets. This plugs the hole left by LATAM neatly.

The amount invested seems small to me compared with American's stakes in Brazil. Additionally this protects an established geography rather than try to develop new markets.

To the extent that this ensures viability of American's US-Brazil operations, it might reward all American's stakeholders in the long run.


Didn't AA recently announce a code-share agreement with SKY Airlines in Chile/Peru? This goes a decent way forward with replacing LATAM, which AA themselves said wasn't as lucrative as we imagined. Plus AA didn't have to write off $2 Billion like DL did with LA.
 
Airlines0613
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Re: AA invest $200mil in GOL, expand partnership

Wed Sep 15, 2021 10:22 pm

jscottwomack wrote:
Airlines0613 wrote:
Umm... why is AA investing in other airlines when it can't even support itself without government aid. I get the partnership would be great for both of them, but if AA can invest $200 Million on an airline, then it doesn't need government aid.


The "Aid" AA received was to keep employees on the payroll during covid. If the employees were laid off, they would get unemployment benefits. It was a program to keep people off unemployment. Many industries received Pandemic Employee Assistance to prevent layoffs. The "Aid" you bring up was only for wages for people who would otherwise be laid off. The program kept unemployment numbers in the low teens vs what could have been well over 25% unemployment and pushed the economy back to Great Depression numbers.

I get that but don't forget that the "aid" is what has allowed AA to run its large schedule. If it weren't for the CARES Act, yes many would be unemployed, but AA would also be in a much worse position.
 
n9801f
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Re: AA invest $200mil in GOL, expand partnership

Wed Sep 15, 2021 10:57 pm

OzarkD9S wrote:
Didn't AA recently announce a code-share agreement with SKY Airlines in Chile/Peru? This goes a decent way forward with replacing LATAM, which AA themselves said wasn't as lucrative as we imagined.

I don't recall seeing any news about American and SKY Airline. But here's an American Press Release announcing a letter of intent to form a partnership with JetSMART. https://news.aa.com/news/news-details/2 ... fault.aspx

The JetSMART routemap shows an extensive route network in Chile and Argentina.

Argentina, Brazil, and Chile may comprise 2/3 or so of South American GDP. https://en.wikipedia.org/wiki/List_of_L ... P_(nominal)

So to your point, the combination of Gol and JetSMART could give American partner coverage in key areas of South America.
 
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Rajahdhani
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Re: AA invest $200mil in GOL, expand partnership

Wed Sep 15, 2021 11:27 pm

OzarkD9S wrote:
n9801f wrote:

Despite poor optics/timing vis-a-vis recent US aid to airlines, I see great business wisdom behind this.

American is the #1 US carrier to Brazil, where it's necessary to use a feed partner to reach many secondary markets. This plugs the hole left by LATAM neatly.

The amount invested seems small to me compared with American's stakes in Brazil. Additionally this protects an established geography rather than try to develop new markets.

To the extent that this ensures viability of American's US-Brazil operations, it might reward all American's stakeholders in the long run.

Didn't AA recently announce a code-share agreement with SKY Airlines in Chile/Peru? This goes a decent way forward with replacing LATAM, which AA themselves said wasn't as lucrative as we imagined.


Both H2/SKU (Sky Airlines), and G3/GOL are proudly branded as LCCs.

AA's other major partnership news this year has been:

https://news.aa.com/news/news-details/2021/JetBlue-and-American-Airlines-Partnership-Makes-it-Easier-Than-Ever-for-Customers-to-Return-to-Travel-with-Largest-Schedule-More-Benefits-and-a-Seamless-Travel-Experience-NET-ALP-07/default.aspx
"The Northeast Alliance Will Offer Customers More Than 700 Daily Flights from New York and Boston This Winter — More Than Any Other Carrier
Largest International Network from New York with Service to 47 International Destinations, Plus Lie-Flat Seats on All Transcontinental Routes in 2022
Four All-New JetBlue Cities on Sale Today, Along with Five New LaGuardia Markets.

As a result of the partnership, so far this year customers have gained access to 57 new markets and more than 110 codeshare routes from Boston and New York, connecting the Northeast to almost 150 worldwide destinations, including 10 new international routes American previously announced. These routes, made possible by the Northeast Alliance, include new service from New York John F. Kennedy International Airport (JFK) to Tel Aviv, Israel (TLV), which launched in May; JFK service to Athens, Greece (ATH), which launched in June and JFK service to Delhi, India (DEL), which will launch Oct. 31, 2021.

In 2022, travel between all transcontinental markets operated by the Northeast Alliance will offer lie-flat seats with JetBlue Mint® and American’s state-of-the-art A321T fleet. This includes routes between:
Los Angeles International Airport (LAX) and Boston (BOS), Newark (EWR) and JFK
Orange County’s John Wayne Airport (SNA) and JFK
San Diego International Airport (SAN) and BOS and JFK
San Francisco International Airport (SFO) and BOS, EWR and JFK
Seattle–Tacoma International Airport (SEA) and BOS and JFK
Starting this fall, AAdvantage® Elite and TrueBlue Mosaic Members Will Enjoy the First Phase of Reciprocal Benefits".


...and Alaska Airlines joining OneWorld this year:

https://www.businessinsider.com/alaska-airlines-joins-oneworld-alliance-what-it-means-for-flyers-2021-4
"Alaska Airlines in March became the 14th and newest member of the Oneworld airline alliance, joining the likes of American Airlines, Qatar Airways, British Airways in the global partnership.".


I can't suggest that either GOL, or Sky Airlines need join OneWorld, however - AA certainly seems to be quite a nexus for LCCs to interact, all which may now have a lesser need to operate/launch long-haul/wide-body services, if/when AA can partner with access to the U.S., or to other partners.

Are there issues that I am glossing over, or perhaps potential unintended consequences of such an investment/business strategy?

OzarkD9S wrote:
Plus AA didn't have to write off $2 Billion like DL did with LA.


Backing to the actual amount of $200 Million, let's consider DL's position...

https://www.forbes.com/sites/willhorton1/2020/04/23/virgin-atlantic-owes-delta-200-million-wont-receive-cash-from-us-shareholder/?sh=1611819a30d2
"But Delta will not be providing Virgin Atlantic any financial assistance. It is Delta expecting cash: Virgin has to pay Delta $200 million related to their joint-venture, the airlines agreed earlier this year. Delta CEO Ed Bastian said he would strategically work with Virgin and the other airlines Delta has invested in, but Delta won’t provide cash. Delta reported a first quarter loss of $534 million.

The $200m Virgin Atlantic owes Delta stems from them combining their joint-venture into the larger Delta-Air France-KLM JV, which resulted in a change of performance.

“Certain measurement thresholds were reset from the previous joint venture with Virgin Atlantic, reducing the value Delta would have received over the original term,” Delta said. “To compensate Delta for this reduced value, we entered into a transition agreement with Virgin Atlantic.” Delta did not specify when the $200m would be due, but it was listed as an outstanding invoice as of March 31.".


This is what was owed to DL, by VS, and regardless of a person's biases towards/against DL, we can admit that they were in a rather difficult position at the time, with both AM and LATAM in the middle of their bankruptcies/markdowns.

How things have changed, no?

Today, we can celebrate a $200 Million USD investment!
Last edited by Rajahdhani on Wed Sep 15, 2021 11:29 pm, edited 1 time in total.
 
phatfarmlines
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Re: AA invest $200mil in GOL, expand partnership

Wed Sep 15, 2021 11:44 pm

n9801f wrote:
Despite poor optics/timing vis-a-vis recent US aid to airlines, I see great business wisdom behind this.


Is it really though? Is this the right time to play strategic "long games" in alliances, especially since US-Brazil isn't going to go gangbusters anytime soon? Should that money be saved instead?

And should another package be debated on the Capitol floors, I can see senators and representatives asking about the merits of AA's action.
 
usflyer msp
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Re: AA invest $200mil in GOL, expand partnership

Thu Sep 16, 2021 12:34 am

Rajahdhani wrote:
OzarkD9S wrote:
n9801f wrote:

Despite poor optics/timing vis-a-vis recent US aid to airlines, I see great business wisdom behind this.

American is the #1 US carrier to Brazil, where it's necessary to use a feed partner to reach many secondary markets. This plugs the hole left by LATAM neatly.

The amount invested seems small to me compared with American's stakes in Brazil. Additionally this protects an established geography rather than try to develop new markets.

To the extent that this ensures viability of American's US-Brazil operations, it might reward all American's stakeholders in the long run.

Didn't AA recently announce a code-share agreement with SKY Airlines in Chile/Peru? This goes a decent way forward with replacing LATAM, which AA themselves said wasn't as lucrative as we imagined.


Both H2/SKU (Sky Airlines), and G3/GOL are proudly branded as LCCs.

AA's other major partnership news this year has been:

https://news.aa.com/news/news-details/2021/JetBlue-and-American-Airlines-Partnership-Makes-it-Easier-Than-Ever-for-Customers-to-Return-to-Travel-with-Largest-Schedule-More-Benefits-and-a-Seamless-Travel-Experience-NET-ALP-07/default.aspx
"The Northeast Alliance Will Offer Customers More Than 700 Daily Flights from New York and Boston This Winter — More Than Any Other Carrier
Largest International Network from New York with Service to 47 International Destinations, Plus Lie-Flat Seats on All Transcontinental Routes in 2022
Four All-New JetBlue Cities on Sale Today, Along with Five New LaGuardia Markets.

As a result of the partnership, so far this year customers have gained access to 57 new markets and more than 110 codeshare routes from Boston and New York, connecting the Northeast to almost 150 worldwide destinations, including 10 new international routes American previously announced. These routes, made possible by the Northeast Alliance, include new service from New York John F. Kennedy International Airport (JFK) to Tel Aviv, Israel (TLV), which launched in May; JFK service to Athens, Greece (ATH), which launched in June and JFK service to Delhi, India (DEL), which will launch Oct. 31, 2021.

In 2022, travel between all transcontinental markets operated by the Northeast Alliance will offer lie-flat seats with JetBlue Mint® and American’s state-of-the-art A321T fleet. This includes routes between:
Los Angeles International Airport (LAX) and Boston (BOS), Newark (EWR) and JFK
Orange County’s John Wayne Airport (SNA) and JFK
San Diego International Airport (SAN) and BOS and JFK
San Francisco International Airport (SFO) and BOS, EWR and JFK
Seattle–Tacoma International Airport (SEA) and BOS and JFK
Starting this fall, AAdvantage® Elite and TrueBlue Mosaic Members Will Enjoy the First Phase of Reciprocal Benefits".


...and Alaska Airlines joining OneWorld this year:

https://www.businessinsider.com/alaska-airlines-joins-oneworld-alliance-what-it-means-for-flyers-2021-4
"Alaska Airlines in March became the 14th and newest member of the Oneworld airline alliance, joining the likes of American Airlines, Qatar Airways, British Airways in the global partnership.".


I can't suggest that either GOL, or Sky Airlines need join OneWorld, however - AA certainly seems to be quite a nexus for LCCs to interact, all which may now have a lesser need to operate/launch long-haul/wide-body services, if/when AA can partner with access to the U.S., or to other partners.

Are there issues that I am glossing over, or perhaps potential unintended consequences of such an investment/business strategy?

OzarkD9S wrote:
Plus AA didn't have to write off $2 Billion like DL did with LA.


Backing to the actual amount of $200 Million, let's consider DL's position...

https://www.forbes.com/sites/willhorton1/2020/04/23/virgin-atlantic-owes-delta-200-million-wont-receive-cash-from-us-shareholder/?sh=1611819a30d2
"But Delta will not be providing Virgin Atlantic any financial assistance. It is Delta expecting cash: Virgin has to pay Delta $200 million related to their joint-venture, the airlines agreed earlier this year. Delta CEO Ed Bastian said he would strategically work with Virgin and the other airlines Delta has invested in, but Delta won’t provide cash. Delta reported a first quarter loss of $534 million.

The $200m Virgin Atlantic owes Delta stems from them combining their joint-venture into the larger Delta-Air France-KLM JV, which resulted in a change of performance.

“Certain measurement thresholds were reset from the previous joint venture with Virgin Atlantic, reducing the value Delta would have received over the original term,” Delta said. “To compensate Delta for this reduced value, we entered into a transition agreement with Virgin Atlantic.” Delta did not specify when the $200m would be due, but it was listed as an outstanding invoice as of March 31.".


This is what was owed to DL, by VS, and regardless of a person's biases towards/against DL, we can admit that they were in a rather difficult position at the time, with both AM and LATAM in the middle of their bankruptcies/markdowns.

How things have changed, no?

Today, we can celebrate a $200 Million USD investment!


AA has not announced anything with Sky Airline. They did announce a partnership with JetSmart in Argentina, Chile and Peru but no further details have been released on it.
 
MohawkWeekend
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Re: AA invest $200mil in GOL, expand partnership

Thu Sep 16, 2021 1:12 am

American has the largest debt load of any US carrier. By a lot. They need as much revenue as possible to keep making those debt payments. Recall how they added so much capacity ahead of the other carriers. This investment has that potential too.

Note how often they talk about reducing debt in their last quarters Earnings Report. I don't think they have an option - they are betting the farm on growth. COVID-19 Delta and rising fuel prices are making that window tight.
 
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Rajahdhani
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Re: AA invest $200mil in GOL, expand partnership

Thu Sep 16, 2021 3:03 am

usflyer msp wrote:
AA has not announced anything with Sky Airline. They did announce a partnership with JetSmart in Argentina, Chile and Peru but no further details have been released on it.


Thank you so much, for the accurate correction. I admittedly confused the two, and to clarify:

https://www.airliners.net/forum/posting.php?mode=quote&f=3&p=22956671
"American proposes acquiring a minority ownership stake in JetSMART allowing the carrier to rapidly grow its low-cost network in South America.
Customers would be able to earn and redeem AAdvantage miles on JetSMART flights.
Broad connectivity and robust loyalty program would create a compelling customer offering in Latin America.
Proposed codeshare agreement between the two airlines would create more options for customers traveling between the United States and South America."


So, once more - thank you for the correction, and here's to hoping that I get to fly both, Sky and JetSmart.
 
MKIAZ
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Re: AA invest $200mil in GOL, expand partnership

Thu Sep 16, 2021 4:00 am

MohawkWeekend wrote:
American has the largest debt load of any US carrier. By a lot. They need as much revenue as possible to keep making those debt payments. Recall how they added so much capacity ahead of the other carriers. This investment has that potential too.

Note how often they talk about reducing debt in their last quarters Earnings Report. I don't think they have an option - they are betting the farm on growth. COVID-19 Delta and rising fuel prices are making that window tight.


Agreed. And not only do they have the highest debt load they also have the highest cost structure. It's either going to be a *very* long slog to repay debt, even assuming covid ends tomorrow. The billion dollar question is what happens to corporate travel going forward. I'm inclined to think once covid is over (assuming it ever *is* over and doesn't replace the flu as just a normal thing going forward) it will come back to around 50%. I don't know enough to know if AA could be profitable at 50% or not - but it can't be good. A leisure heavy travel market greatly benefits WN/B6/NK/F9. Add to that B6 moving in on the insanely profitable NYC-LON market just like they did on the transcon mint market a few years back. And when is international *really* coming back to 100%?

I just don't see any bright spots for them. At some point you have to ask yourself if a BK to bring costs down and get rid of debt is the only way to be competitive again.
 
BoeingGuy
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Re: AA invest $200mil in GOL, expand partnership

Thu Sep 16, 2021 4:59 am

I wonder it GOL and JetSmart will join oneworld as a result of the partnerships with AA.
 
usflyer msp
Posts: 4352
Joined: Tue May 23, 2000 11:50 am

Re: AA invest $200mil in GOL, expand partnership

Thu Sep 16, 2021 5:15 am

BoeingGuy wrote:
I wonder it GOL and JetSmart will join oneworld as a result of the partnerships with AA.


JetSmart is a ULCC so that is a no.
GOL could possibly be a OW Connect member but not a full member.
 
usflyer msp
Posts: 4352
Joined: Tue May 23, 2000 11:50 am

Re: AA invest $200mil in GOL, expand partnership

Thu Sep 16, 2021 5:23 am

MKIAZ wrote:
MohawkWeekend wrote:
American has the largest debt load of any US carrier. By a lot. They need as much revenue as possible to keep making those debt payments. Recall how they added so much capacity ahead of the other carriers. This investment has that potential too.

Note how often they talk about reducing debt in their last quarters Earnings Report. I don't think they have an option - they are betting the farm on growth. COVID-19 Delta and rising fuel prices are making that window tight.


Agreed. And not only do they have the highest debt load they also have the highest cost structure. It's either going to be a *very* long slog to repay debt, even assuming covid ends tomorrow. The billion dollar question is what happens to corporate travel going forward. I'm inclined to think once covid is over (assuming it ever *is* over and doesn't replace the flu as just a normal thing going forward) it will come back to around 50%. I don't know enough to know if AA could be profitable at 50% or not - but it can't be good. A leisure heavy travel market greatly benefits WN/B6/NK/F9. Add to that B6 moving in on the insanely profitable NYC-LON market just like they did on the transcon mint market a few years back. And when is international *really* coming back to 100%?

I just don't see any bright spots for them. At some point you have to ask yourself if a BK to bring costs down and get rid of debt is the only way to be competitive again.


AA's debt is the most overwrought issues in anet. Yes, they have alot of debt but all but the most recent tranche of loans are at record low interest rates. It is not all that concerning.

AA grew back faster during COViD because, with the government covering payroll, very low fuel costs and most other costs being fixed, they really didn't have anything to lose. I have noted that many of the business travelers that were still traveling at the height of the pandemic switched to AA because they were the only carrier with decent schedule options. We'll see if they remain but there be may be sing term gains on AA's part from their strategy.
 
sxf24
Posts: 1346
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Re: AA invest $200mil in GOL, expand partnership

Thu Sep 16, 2021 2:22 pm

When people attack AA's debt load, they need to remember that AA is much farther along in refleeting than any other US airline. Debt levels at every other carrier are expected to rise as they take delivery of a significant number of aircraft over coming years while AA's deliveries are ramping down.
 
Aliqiout
Posts: 560
Joined: Wed Oct 05, 2016 6:10 pm

Re: AA invest $200mil in GOL, expand partnership

Thu Sep 16, 2021 2:33 pm

Rajahdhani wrote:
OzarkD9S wrote:
n9801f wrote:

Despite poor optics/timing vis-a-vis recent US aid to airlines, I see great business wisdom behind this.

American is the #1 US carrier to Brazil, where it's necessary to use a feed partner to reach many secondary markets. This plugs the hole left by LATAM neatly.

The amount invested seems small to me compared with American's stakes in Brazil. Additionally this protects an established geography rather than try to develop new markets.

To the extent that this ensures viability of American's US-Brazil operations, it might reward all American's stakeholders in the long run.

Didn't AA recently announce a code-share agreement with SKY Airlines in Chile/Peru? This goes a decent way forward with replacing LATAM, which AA themselves said wasn't as lucrative as we imagined.


Both H2/SKU (Sky Airlines), and G3/GOL are proudly branded as LCCs.

AA's other major partnership news this year has been:

https://news.aa.com/news/news-details/2021/JetBlue-and-American-Airlines-Partnership-Makes-it-Easier-Than-Ever-for-Customers-to-Return-to-Travel-with-Largest-Schedule-More-Benefits-and-a-Seamless-Travel-Experience-NET-ALP-07/default.aspx
"The Northeast Alliance Will Offer Customers More Than 700 Daily Flights from New York and Boston This Winter — More Than Any Other Carrier
Largest International Network from New York with Service to 47 International Destinations, Plus Lie-Flat Seats on All Transcontinental Routes in 2022
Four All-New JetBlue Cities on Sale Today, Along with Five New LaGuardia Markets.

As a result of the partnership, so far this year customers have gained access to 57 new markets and more than 110 codeshare routes from Boston and New York, connecting the Northeast to almost 150 worldwide destinations, including 10 new international routes American previously announced. These routes, made possible by the Northeast Alliance, include new service from New York John F. Kennedy International Airport (JFK) to Tel Aviv, Israel (TLV), which launched in May; JFK service to Athens, Greece (ATH), which launched in June and JFK service to Delhi, India (DEL), which will launch Oct. 31, 2021.

In 2022, travel between all transcontinental markets operated by the Northeast Alliance will offer lie-flat seats with JetBlue Mint® and American’s state-of-the-art A321T fleet. This includes routes between:
Los Angeles International Airport (LAX) and Boston (BOS), Newark (EWR) and JFK
Orange County’s John Wayne Airport (SNA) and JFK
San Diego International Airport (SAN) and BOS and JFK
San Francisco International Airport (SFO) and BOS, EWR and JFK
Seattle–Tacoma International Airport (SEA) and BOS and JFK
Starting this fall, AAdvantage® Elite and TrueBlue Mosaic Members Will Enjoy the First Phase of Reciprocal Benefits".


...and Alaska Airlines joining OneWorld this year:

https://www.businessinsider.com/alaska-airlines-joins-oneworld-alliance-what-it-means-for-flyers-2021-4
"Alaska Airlines in March became the 14th and newest member of the Oneworld airline alliance, joining the likes of American Airlines, Qatar Airways, British Airways in the global partnership.".


I can't suggest that either GOL, or Sky Airlines need join OneWorld, however - AA certainly seems to be quite a nexus for LCCs to interact, all which may now have a lesser need to operate/launch long-haul/wide-body services, if/when AA can partner with access to the U.S., or to other partners.

Are there issues that I am glossing over, or perhaps potential unintended consequences of such an investment/business strategy?

OzarkD9S wrote:
Plus AA didn't have to write off $2 Billion like DL did with LA.


Backing to the actual amount of $200 Million, let's consider DL's position...

https://www.forbes.com/sites/willhorton1/2020/04/23/virgin-atlantic-owes-delta-200-million-wont-receive-cash-from-us-shareholder/?sh=1611819a30d2
"But Delta will not be providing Virgin Atlantic any financial assistance. It is Delta expecting cash: Virgin has to pay Delta $200 million related to their joint-venture, the airlines agreed earlier this year. Delta CEO Ed Bastian said he would strategically work with Virgin and the other airlines Delta has invested in, but Delta won’t provide cash. Delta reported a first quarter loss of $534 million.

The $200m Virgin Atlantic owes Delta stems from them combining their joint-venture into the larger Delta-Air France-KLM JV, which resulted in a change of performance.

“Certain measurement thresholds were reset from the previous joint venture with Virgin Atlantic, reducing the value Delta would have received over the original term,” Delta said. “To compensate Delta for this reduced value, we entered into a transition agreement with Virgin Atlantic.” Delta did not specify when the $200m would be due, but it was listed as an outstanding invoice as of March 31.".


This is what was owed to DL, by VS, and regardless of a person's biases towards/against DL, we can admit that they were in a rather difficult position at the time, with both AM and LATAM in the middle of their bankruptcies/markdowns.

How things have changed, no?

Today, we can celebrate a $200 Million USD investment!

AS (a legacy, not a LCC) was partners with quite a few Oneworld carriers before joining Oneworld, and AA inherited the AS partnership when the took over BN in 1982.

B6 also had a previous partnership with AA.

GOL is an obvious reaction to loosing LAN.

There is nothing startlingly new here, and as of now these AA partnerships don't help AA, B6, and GOL interact at all.
 
MohawkWeekend
Posts: 1060
Joined: Tue Jan 08, 2019 2:06 pm

Re: AA invest $200mil in GOL, expand partnership

Thu Sep 16, 2021 2:51 pm

sxf24 wrote:
When people attack AA's debt load, they need to remember that AA is much farther along in refleeting than any other US airline. Debt levels at every other carrier are expected to rise as they take delivery of a significant number of aircraft over coming years while AA's deliveries are ramping down.



But those other airlines can hold off adding debt during what may be an extended period of time until revenue returns to normal. AA doesn't have that luxury.
Trust me those bond traders are watching cash on hand
From Fitch - AA bond $750,000,000 1 year bond issued June 16, 2021 Matures June 1, 2022

16-Jun-2021
CCC
Affirmed
Long Term Rating


Maturity Date: 01-Jun-2022
Currency: USD
Amount: 750,000,000
Coupon Rate: 5%
Placement: 144A
 
kiowa
Posts: 898
Joined: Wed Jun 08, 2011 12:37 am

Re: AA invest $200mil in GOL, expand partnership

Thu Sep 16, 2021 3:33 pm

Airlines0613 wrote:
Umm... why is AA investing in other airlines when it can't even support itself without government aid. I get the partnership would be great for both of them, but if AA can invest $200 Million on an airline, then it doesn't need government aid.


I am surprised that the US government allows this before bailout payback.
 
usflyer msp
Posts: 4352
Joined: Tue May 23, 2000 11:50 am

Re: AA invest $200mil in GOL, expand partnership

Thu Sep 16, 2021 4:56 pm

kiowa wrote:
Airlines0613 wrote:
Umm... why is AA investing in other airlines when it can't even support itself without government aid. I get the partnership would be great for both of them, but if AA can invest $200 Million on an airline, then it doesn't need government aid.


I am surprised that the US government allows this before bailout payback.


AA did payback the CARES Act loans.
The other funds were grants, which cannot be paid back.
 
sxf24
Posts: 1346
Joined: Wed Aug 15, 2007 12:22 pm

Re: AA invest $200mil in GOL, expand partnership

Thu Sep 16, 2021 4:58 pm

MohawkWeekend wrote:
sxf24 wrote:
When people attack AA's debt load, they need to remember that AA is much farther along in refleeting than any other US airline. Debt levels at every other carrier are expected to rise as they take delivery of a significant number of aircraft over coming years while AA's deliveries are ramping down.



But those other airlines can hold off adding debt during what may be an extended period of time until revenue returns to normal. AA doesn't have that luxury.
Trust me those bond traders are watching cash on hand
From Fitch - AA bond $750,000,000 1 year bond issued June 16, 2021 Matures June 1, 2022

16-Jun-2021
CCC
Affirmed
Long Term Rating


Maturity Date: 01-Jun-2022
Currency: USD
Amount: 750,000,000
Coupon Rate: 5%
Placement: 144A


How are airlines going to buy hundreds of airplanes in 2022-24 without taking on debt?
 
MohawkWeekend
Posts: 1060
Joined: Tue Jan 08, 2019 2:06 pm

Re: AA invest $200mil in GOL, expand partnership

Thu Sep 16, 2021 6:48 pm

Not every airline is in the same boat
Southwest Airlines Co LT-Debt-to-Total-Asset : 0.28 (As of Jun. 2021)
Spirit Airlines LT-Debt-to-Total-Asset : 0.51 (As of Jun. 2021)
American Airlines Group LT-Debt-to-Total-Asset : 0.61 (As of Jun. 2021)

LT (long term) Debt to Total Assets is a measurement representing the percentage of a corporation's assets that are financed with loans and financial obligations lasting more than one year. The ratio provides a general measure of the financial position of a company, including its ability to meet financial requirements for outstanding loans. It is calculated as a company's Long-Term Debt & Capital Lease Obligation divide by its Total Assets.
 
MohawkWeekend
Posts: 1060
Joined: Tue Jan 08, 2019 2:06 pm

Re: AA invest $200mil in GOL, expand partnership

Thu Sep 16, 2021 6:53 pm

I should add that American's approach is not indicative of something wrong. But companies with a lot of debt have to be sure they can make the payments.
 
LipeGIG
Posts: 5065
Joined: Tue May 03, 2005 7:33 am

Re: AA invest $200mil in GOL, expand partnership

Sun Sep 19, 2021 2:19 pm

Interesting.

I believe AA focused in a few ponts:
* First, giving the current BRL/USD rate, the investment most probably will be a very good one - there's no way the rate will remain at 5.30 per USD 1 for ever. BRL will appreciate once political situation is cleared in Brazil and shall go towards 4.00 per USD 1, so here, a potential 20-30% valuation.
* Second, defensive move - AA probably is looking closer what is going to happen with AD/LA never end merger attempts and the consequences if that happens - DL will be lose their connectivity and will have no player for them to look as G3 is now "locked"
* Third, AA is the number 1 on US-Brazil as we all know, but as all others, can't manage to work anything out of GIG/GRU. G3 position at BSB, SSA, FOR and POA provide interesting possibilities.
* And to finish, i see a great move as the press release call for a more lucrative Frequent Flyer ( i expect AA to introduce Rewards Networks/AA Dining to Brazil as well as other perks we count with in the USA that are not available in Latin America ).
 
airlinepeanuts
Posts: 202
Joined: Fri Mar 13, 2015 4:16 pm

Re: AA invest $200mil in GOL, expand partnership

Sun Sep 19, 2021 5:24 pm

Is there anywhere indicating that this is a one time lump sum payment? Or is it financed and paid over time?
 
TYCOON
Posts: 510
Joined: Sun Feb 18, 2007 8:20 pm

Re: AA invest $200mil in GOL, expand partnership

Sun Sep 19, 2021 6:21 pm

Does this impact the agreements between AF-KLM and Gol? They have co branding on Gol planes and the Gol lounges in select Brazilian airports. Did AFKL have a small equity investment in Gol?
 
hohd
Posts: 1057
Joined: Sat May 17, 2008 1:03 am

Re: AA invest $200mil in GOL, expand partnership

Mon Sep 20, 2021 2:52 pm

AA is forced to defend Brazil by investing in GOL otherwise DL or UA will be after GOL. They almost have no choice.

After the generous aid/loan package that AA and other airlines in US received, the Big 3 should stop complaining about Emirates or Qatar or some other airline getting their govt financing.
 
sxf24
Posts: 1346
Joined: Wed Aug 15, 2007 12:22 pm

Re: AA invest $200mil in GOL, expand partnership

Mon Sep 20, 2021 3:18 pm

airlinepeanuts wrote:
Is there anywhere indicating that this is a one time lump sum payment? Or is it financed and paid over time?


It’s for purchase of shares, so a one time lump sum.
 
sxf24
Posts: 1346
Joined: Wed Aug 15, 2007 12:22 pm

Re: AA invest $200mil in GOL, expand partnership

Mon Sep 20, 2021 3:19 pm

hohd wrote:
AA is forced to defend Brazil by investing in GOL otherwise DL or UA will be after GOL. They almost have no choice.

After the generous aid/loan package that AA and other airlines in US received, the Big 3 should stop complaining about Emirates or Qatar or some other airline getting their govt financing.


There’s no way DL or UA could get approval to partner with GOL. They currently hold investments in the number 3 and 2 domestic Brazilian airlines.
 
MIflyer12
Posts: 10169
Joined: Mon Feb 18, 2013 11:58 pm

Re: AA invest $200mil in GOL, expand partnership

Mon Sep 20, 2021 3:28 pm

hohd wrote:

After the generous aid/loan package that AA and other airlines in US received, the Big 3 should stop complaining about Emirates or Qatar or some other airline getting their govt financing.


There's a difference between pandemic support to avoid domestic industry implosion and subsidies flowing in good times.
 
Nola
Posts: 393
Joined: Thu May 29, 2014 1:40 am

Re: AA invest $200mil in GOL, expand partnership

Mon Sep 20, 2021 5:56 pm

sxf24 wrote:
hohd wrote:
AA is forced to defend Brazil by investing in GOL otherwise DL or UA will be after GOL. They almost have no choice.

After the generous aid/loan package that AA and other airlines in US received, the Big 3 should stop complaining about Emirates or Qatar or some other airline getting their govt financing.


There’s no way DL or UA could get approval to partner with GOL. They currently hold investments in the number 3 and 2 domestic Brazilian airlines.


Didn't DL have an investment in GOL that it unloaded after making a deal with Latam?

Musical chairs....
 
LipeGIG
Posts: 5065
Joined: Tue May 03, 2005 7:33 am

Re: AA invest $200mil in GOL, expand partnership

Tue Sep 21, 2021 2:36 am

hohd wrote:
AA is forced to defend Brazil by investing in GOL otherwise DL or UA will be after GOL. They almost have no choice.

After the generous aid/loan package that AA and other airlines in US received, the Big 3 should stop complaining about Emirates or Qatar or some other airline getting their govt financing.

Not a bad strategy as i pointed out - it may become a very profitable investment for AA in just 1-2 years.
 
n9801f
Posts: 462
Joined: Tue Apr 13, 2004 8:29 am

Re: AA invest $200mil in GOL, expand partnership

Tue Sep 21, 2021 3:11 am

Nola wrote:
Musical chairs....

To the classic tune "The Gol from Ipanema"?
 
Lootess
Posts: 729
Joined: Sun May 13, 2018 6:15 am

Re: AA invest $200mil in GOL, expand partnership

Tue Sep 21, 2021 10:10 pm

Nola wrote:
sxf24 wrote:
hohd wrote:
AA is forced to defend Brazil by investing in GOL otherwise DL or UA will be after GOL. They almost have no choice.

After the generous aid/loan package that AA and other airlines in US received, the Big 3 should stop complaining about Emirates or Qatar or some other airline getting their govt financing.


There’s no way DL or UA could get approval to partner with GOL. They currently hold investments in the number 3 and 2 domestic Brazilian airlines.


Didn't DL have an investment in GOL that it unloaded after making a deal with Latam?

Musical chairs....


Yes, Delta had a $56 million equity investment, and guaranteed GOL a $300 million loan (which was executed, I don't recall if they made the full payment back in the middle of the pandemic).

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