AA and Labor Negotiations-2020

[jimntx]

And sometimes companies go into bankruptcy to rework debt, but they don't come out. Money lenders look at the company's fiscal behavior and say "Nuh uh", I ain't lendin' those jokers a dime. They are real good at borrowin' money, but payin' it back? Not so much. Eastern, Braniff, Pan Am, TWA, and so on and so forth. Not judgin', just sayin'.

 

[Talos]

And sometimes companies go into bankruptcy to rework debt, but they don't come out. Money lenders look at the company's fiscal behavior and say "Nuh uh", I ain't lendin' those jokers a dime. They are real good at borrowin' money, but payin' it back? Not so much. Eastern, Braniff, Pan Am, TWA, and so on and so forth. Not judgin', just sayin'.

Good point. Bankruptcy is also when these executive teams that have a bad record of paying back debt get relieved of their duties and new management comes in that are more adept at handling debt. Creditors will have a large say in a bankruptcy if AA files. I don't see them wanting this management team.

 

[jimntx]

As a retiree from American I don't want to see it go into BK again (as E pointed out--he and I have monthly pension payments from the AA pension plan which I would NOT like to see turned over to the PBGC. But as I understand it, the current problem is not the debt per se. It's the unsecured debt load.Normally, a lot of an airline's debt is secured with the airline's hardware (airplanes, gates at all the best airports, etc). AA has a bunch of recently acquired airplanes that are not yet paid for, and the current situation is not likely to get better any time soon with airplanes taking off with practically no passengers inside of them. Caveat: Don't put too much stock in what I post. I was a flight attendant last--paid to be cute, not smart.

 

[swamt]

The Fort Worth Star Telegram is painting a different picture in today’s newspaper saying American can avoid bankruptcy and will be a smaller airline.

Yea, I agree. I also found this article this morn that now "investors" are thinking AA will file for BK for 2nd time in a decade. Not necessarily go away. I also don't see AA coming out this time as well as last time. They will come out in third, or maybe even below SWA on the list of size. I also predict Parker won't be the CEO rebuilding the once again "new" American Airlines...

https://finance.yahoo.com/m/ffa90b0...tner/feed_headline/us_yahoo/auddev&yptr=yahoo

 

[Talos]

we all know what happens to employees in a typical bankruptcy. Hopefully the medical side of things improves at some point this summer. Lots of factors with what happens from here
Such as government positions on airlines and the lost job potential. I doubt management wants bankruptcy. I think they want to get through this and rebuild. Since this was caused by a medical disaster I think they will have more options than if they caused this themselves.

 

[swamt]

I’ve read similar stories maybe even from this same writer.
Truth is nobody knows where this mess will end for any of the airlines.
I think AA will most likely try and get through this but like the others much smaller, which unfortunately means layoffs.
If the travel doesn’t return mid next year than bankruptcy is very likely.
Either way it’s going to be very difficult for all involved

The troubling thing is the amount of debt aa carries. I read an article that 40 billion in debt will be difficult to service as a 30% smaller airline without a bankruptcy. Spmething that makes sense to me but Who knows? Time will tell

12 billion was used for stock buy back program. The rest was used for new headquarters. airplanes facilities equipment etc. Mostly pissed away. Aa had like 25 billion in debt before this started. The next bankruptcy im pretty sure they will dump the pensions.

I say all 3 of ya are correct.
No one knows where this mess will all end up, but, past practices, we do have a really good idea.
I too read anywhere from 34-36-40 Billion on AA's debt. and you are correct it would be hard if not impossible to service such a debt load as AA gets smaller and smaller without filing thru the BK courts.
I too also think the pensions will be next to the top of the list if/when AA files this time around. With pensions reaching "critical status" for 3 years straight it would be a no brainer for AA to dump them on the gov. as they were headed that way anyway and now this crisis on top of the pensions already in "critical status" for the two years prior to COVID-19.

 

[swamt]

the scam-demic are those who took leaves with 25% pay and receiving unemployment...now, a senator says they should get a 'bonus' to come back to work and get off unemployment??

what about the a$$holes who show up to work 40 hours a week during a pandemic and have to deal with potential exposure?

Yup! I know of guys doing it. But hey, they paid into it with their own hard earned money, so why not? Talked to a guy that took the 25% pay to stay home, received the stimulus check for 2400+500 for his child= $2900, then filed and receives a little over 500 bucks per week from TWC Unemployment. So lets talley it all up: 25% pay at approx 2500+2900+2000= $7400 for the month. A reg check for the month would be around 8800 for 40 hrs week straight time. Stop 401K temporarily, and you bank more because he is no longer driving 2 hours worth of fuel for approx 22 days each month, plus the few bucks every day for coffee, and lunches. He says it pays to just stay home and make more money. Not a scam, he paid into the unemployment for years, it was the co's offer to reduce his hours to help out the co. and of course everyone got a piece of the stimulus pie, so no scam all earned.
I wouldn't call him a scammer, I would call him the smart one. Look at all the guys still working 160 hours per month at work while he is at home doing whatever he pleases for approx 1400 less but no cost driving in, coffee every day, lunch every day. He made more staying home getting his long over do "honey do list completed, then of course the "honey" thanked him a many times over, and got paid to do so.

 

[CremaDiLimone]

not a scam? you and i paid into this as well..and i'm not counting the stimulus check, which i did not receive.

you're forgetting the additional $600 a week from the feds. that additional $600 a week is good until july 31.

so, 25% of pay + state unemployment + $600 more from feds. in my state, comes out to 25% of pay + $484 from state + $600 from feds. a week.

the way it was explained to us - take a VOLUNTARY leave for 'safety' reasons and the company won't contest an unemployment claim. the assumption made was that since it's a voluntary leave, no unemployment will be paid to you. WRONG. as it turned out, everyone should have taken a leave and filed.

so, those that took a leave are safe at home or working a 2nd cash job, earning more than i am, as i'm working 40 hours a week and dealing with potential exposure virus at work.

not a scam?

give them a bonus also when they come back to work and off unemployment.

 

[ALUS78]

And sometimes companies go into bankruptcy to rework debt, but they don't come out. Money lenders look at the company's fiscal behavior and say "Nuh uh", I ain't lendin' those jokers a dime. They are real good at borrowin' money, but payin' it back? Not so much. Eastern, Braniff, Pan Am, TWA, and so on and so forth. Not judgin', just sayin'.

I'm not familiar with braniff but the others struggled for years and years

 

[Talos]

I'm not familiar with braniff but the others struggled for years and years

Eastern was a victim of Lorenzo. PanAm had no domestic route system. TWA had Icahn, and Braniff got hammered by Crandall .

 

[BigTex]

Employees do not pay into unemployment. Unemployment is paid by the employer through an unemployment tax

 

[CremaDiLimone]

the fed $600 weekly 'bonus' to bridge the gap between average weekly salaries and average unemployment weekly payouts.

i believe those are our tax dollars.

 

[wings396]

Eastern was a victim of Lorenzo. PanAm had no domestic route system. TWA had Icahn, and Braniff got hammered by Crandall .

Braniff actually did themselves in by a massive overexpansion. When they started to bleed cash, they started to offer ridiculous fares in order to raise money quickly. Given that this was dragging all of their competitors into the red, Crandall decided to drop the hammer on them in any fashion that he could.

 

[texasreb]

Braniff actually did themselves in by a massive overexpansion. When they started to bleed cash, they started to offer ridiculous fares in order to raise money quickly. Given that this was dragging all of their competitors into the red, Crandall decided to drop the hammer on them in any fashion that he could.

It wasn't just Crandall. Upstart Southwest Airlines took Braniff to the woodshed also.

 

[eolesen]

Braniff is an interesting comparison not only because of their explosive expansion and their overall debt load from fleet acquisitions, but also because they'd just finished a brand new headquarters at the edge of DFW, which is across the street from AA's west side hangars (Braniff Place became GTE Place which became Verizon Place, and is now the Thryv Conference Center).

In 1981's annual report, Braniff listed $668M in long term debt and $180M in airplane orders. Adjusted for inflation, that would be ~$2.5B in debt today.

AA's 10x bigger in terms of fleet size, ASM's, etc. than BN was in 1982, but they also have more than 10x that level of debt.

Time to go re-read "Splash of Colors" by John Nance. Great recap of the Braniff collapse... It's out of print but used copies are available on Amazon, or you can check out your local library...