AA and US merger?

[WorldTraveler]

And that comes from your statement that "it doesn't change the fact that AA has far more aggressive plans to dump its fleet than any other carrier has had." No one else that I've seen has put a number or even qualifier to how many planes AA will actually get rid of while in BK. I know that I certainly haven't.

It doesn't take that much a an EETC/lease payment reduction when averaged across the entire fleet of 800 or so airplanes (including Eagle) to make a sizable reduction in expenses. $1,000 average per plane would be $800,000 per month or nearly $10 million a year. $5,000/month/plane average would be $48 million million/year. Etc. I feel pretty confident that the EETC holders, especially, would not rather accept those cuts on 20 year old planes than take possession of 20 year old planes, when the EETC/lease payments for that plane are in the $60,000 to $80,000 per month and up range.

Throw in parking some planes for a $60,000-$70,000 per month saving at least and as the saying in Washington goes, pretty soon you're talking about real money. And that's just one of the potential cost savings available in bankruptcy before even talking about the employees.

Jim

except you can't seem to understand - or accept - that if these planes are really that worthless, the values AA had for leases would be reflected in the value that could be used for collateral.
Aircraft values decline and that is exactly why there is the opportunity to renegotiate aircraft related debt as well as leases... but there is the assumption that AA/AMR is in a position that other carriers have not been w/ regard to reducing aircraft costs.
They certainly will do so TO A DEGREE... but remember that aircraft values declined substantially post 9/11 worldwide... there have been alot fewer planes delivered in the past few years.... aircraft values are not as soft as they used to be.... and to compound it, AA has plans to reduce huge portions of its older aircraft fleet - the very ones where they will have the greatest ability to reduce aircraft values.
Why would an aircraft company agreed to dramatically reduced costs to AA if AA wants to get rid of that asset in a couple years anway? NO other carrier has reduced costs in BK and then turned around and replaced the majority of the fleet. If leasing and financing companies agree to reduce AA's aircraft expenses, they want to keep some of those older aircraft in service. If they have to take a haircut and still get the plane back in a couple years, they'll take the plane back now and remarket it where there is potential to make more money long term - or AA can keep the aircraft but won't be able to reduce the amount saved.
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Once again, we'll say how it all plays out but I will bet EITHER AA won't be taking its 460 aircraft order quite as fast as they previously thought (and there is concern that the creditors will want to load up the balance sheet that heavily that quickly anyway) OR AA will not get the level of reductions some here think they will get.
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They will get lower costs in return for making a commitment to keeping those assets for a longer period of time or they will not be able to reduce the payments to as great of a degree.
The people on the other side of the desk are smart enough to figure out that in some deals you just walk away - and in their case they'll take their aircraft with them.

 

[BoeingBoy]

I don't know if you're purposely twisting what I've said or just lack understanding. I've never said that AA is in some unique position and will be able to reduce lease/EETC payments more than any other carrier in the history of aviation, other than just by virtue of the size of it's fleet - The more planes that can have the lease/EETC payments reduced, the more total savings available. But AA is not at a disadvantage for reducing those payments either.

I assume AA's leases/EETC's run the gamut from those entered into when a plane was new to when a plane was older, so the lease/EETC payments would reflect that range - some having pretty high lease/EETC payments varying to some having low lease/EETC payments. The amount of the lease/EETC payment on a particular plane (or group of planes) would determine how much the payments could be reduced. There is no absolute amount that all lease/EETC payments could all be reduced, although there is a rough percentage.

It's you that have been all over the place. From arguing that AA has far more aggressive plans to dump it's fleet to arguing that AA can't do much about it's fleet costs.

Jim

 

[WorldTraveler]

ef

I don't know if you're purposely twisting what I've said or just lack understanding. I've never said that AA is in some unique position and will be able to reduce lease/EETC payments more than any other carrier in the history of aviation, other than just by virtue of the size of it's fleet - The more planes that can have the lease/EETC payments reduced, the more total savings available. But AA is not at a disadvantage for reducing those payments either.

I assume AA's leases/EETC's run the gamut from those entered into when a plane was new to when a plane was older, so the lease/EETC payments would reflect that range - some having pretty high lease/EETC payments varying to some having low lease/EETC payments. The amount of the lease/EETC payment on a particular plane (or group of planes) would determine how much the payments could be reduced. There is no absolute amount that all lease/EETC payments could all be reduced, although there is a rough percentage.

It's you that have been all over the place. From arguing that AA has far more aggressive plans to dump it's fleet to arguing that AA can't do much about it's fleet costs.

Jim

I think we're doing more arguing than coming to a solution... but it is YOU who has tried to say that I have said that AA can't reduce its fleet costs.... every airline has and I expect that AA will as well.
Where I think alot of people will be surprised is that AA WILLL NOT walk out of BK having positioned itself to get rid of the majority of its 757 and M80 fleets by 2017 when the meganarrowbodyorder is supposed to be largely delivered for reasons including:
1. AMR's creditors will be more than concerned w/ AA loading up the balance sheet that just got cleaned up with $25B in new aircraft related debt when other carriers will have far more but will still be able to make money with their older aircraft. Why should they take on a risk for a bunch of new aircraft when other carriers can manage to make money with their older fleet?
2. AMR's leasing companies and debt holders are not going to take substantial cuts in what is owned them on a short term basis ... there is no reason for them to renegotiate if they are going to get the airplanes back in a couple years anyway. They'll take the aircraft back NOW if they have to cut to the bone for AA to survive.
3. There is a cumulative amount of claims that a company can sustain and still reorganize. If claims exceed the equity that the company can issue and support by a certain margin at the time it exits, then the company will be sold. If the intention is to make AMR look pretty for a takeover by US or someone else, then they could cut deeper but then they will expect to gain recovery in the sale of the airline. One way or the other, the creditors are not going to just roll over and accept minimal payment on their claims and then sell the company for a bargain.
4. Finally, remember that AMR did do some debt restructuring out of court in 2003. How much of it was aircraft related, I don't know but they did find lenders willing to participate in the same debt for equity process...
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Will AMR reduce its aircraft costs? Sure. but if they intend to get rid of most of the aircraft that supposedly have reduced the most in value within a couple years after exiting anyway, then they really won't save much anyway, will they?
Since they have until the end of January to settle their leases, the first signs of what will happen won't likely come before then.
We'll see what they choose to give up - but they've already said they intend to reduce the size of their current fleet and not retain some of the aircraft they have so there will be cuts made.
And once again remember the aircraft lending community is fairly small... they do talk and they will work to protect their interests.

 

[FA Mikey]

AA will take on the new fleet as planned or faster. Like JB they will use the new AC and the maintenance holiday and warranty advantage to help save more $$. I have no doubt those savings coupled with the low price or lease rates will save the company a bundle.

 

[Buck]

BB and WT

 

[WorldTraveler]

yeah, arguing for arguments sake gets rather old rather quickly and other people can see through it... esp. since "the other guy" has used the same tactic in other threads and has also shown an inability to recognize there is a balance that exists in all of life - thus swinging from one extreme to the other is obviously not reality.
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Mikey,
AA can say all they want about how much the new fleet will save operational costs but they made those decisions when AA was controlling its own destiny. Perhaps part of the reason AA mgmt is trying so hard to convince everyone the deal is still on is because there are people who are genuinly asking if it makes as much sense as AA tried to make it to replace 2/3 of its fleet over a 5 year period - all the way pleading they can't pay their bills and need to cut costs from other suppliers.
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When you consider that AA mgmt really does not control its own destiny, then the necessity to "sell" is all the more necessary, esp. since sticking to the fleet plan might well mean they can't ditch certain parts of the company as quickly as they thought they could.
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And then you have this nasty reality that AA has to be out of BK by mid 2013 or it loses control of its destiny and that is just when the new orders start arriving..
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BK is never convenient but I think we'll see that these well laid plans won't work out quite the way management is saying they will... and they might be forced to be flying around quite a few "older generation" aircraft in five years after all.

 

[wings396]

For a Delta Dude, you sure are spending a LOT of time on the AA & US boards..
Everything is A-OK in ATL, so no need to be so concerned about what is going on here.
Not to mention that you have turned it into a pissing match over A/C leasing/purchasing issues...

 

[BoeingBoy]

I'll drop it other than to add that AA has already filed to drop 48 mortgaged/leased planes. I will say that these are the "easy to decide" ones, being in storage. Also the MDW facilities and the MCI hanger.

Jim

 

[xUT]

For a Delta Dude, you sure are spending a LOT of time on the AA & US boards..
Everything is A-OK in ATL, so no need to be so concerned about what is going on here.
Not to mention that you have turned it into a pissing match over A/C leasing/purchasing issues...

Don't worry, WT was a regular at the UA thread but it died in BK.
When Delta went BK, WT was no where to be found.
B)

 

[WorldTraveler]

Don't worry, WT was a regular at the UA thread but it died in BK.
When Delta went BK, WT was no where to be found.
B)

controversy sells... esp. when it is about labor related issues. that's why the US and AA boards are the most active.
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Actually, I was quite active during DL's filing... you can go back and read the threads... I also said that DL would successfully organize and acquire an airline with a major presence in the Pacific.... guess I got that one right. Now DL is humming along quite fine - merger complete - investing in key strategic airlines and in its own product.
Not much controversial about what is happening at DL.
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we can all see what changes take place w/ AA's fleet... there will be changes.
It may well be that what AA wants more than reduce its fleet costs is overall to alter the dates when its planes leave the fleet so that they mesh w/ the arrival of the new fleet.... other carriers did not try to accomplish that but were more interested in cutting fleet costs for the long term.

We will see....

 

[Silver Meteor]

Don't worry, WT was a regular at the UA thread but it died in BK.
When Delta went BK, WT was no where to be found.
B)

This quote about WT is totally wrong.

When Delta went into BK, I did a Google search to try and find more info about what this bankruptcy is going to do to Delta. The Google search led me to that "other" airline forum web site. WT was the key person all over that web site during Delta's BK. As I mentioned once before, I learned a lot from his posts. Got a lot of insight.

As far as WT and other people now at the AA site, let's face it, that is where the action is right now. Delta is becoming a non-event these days. United is starting to become a non-event. AA is what is happening right now. How it will play out is anybody's guess.

WT was all over that other board while Delta was in BK....and now AA is where the action is for everybody.

 

[trenchworker]

Hard for me to believe that knowing you and today's technology we don't have some proof.
LOL

I too saw the text msg of a US Air 737 in front of a hangar sent on Saturday morning (can't tell dfw or dwh) from another employee and 6-8 suited men exit and are immediately picked up.
So that just tells me that at least there is conversation at the corporate level.

 

[BoeingBoy]

I too saw the text msg of a US Air 737 in front of a hangar

US is getting rid of the 737's - the last of the West's are gone and only a few East -300's remain. Could have been a delivery flight with the suits to handle the paperwork. Also, some outfit has at least 1 ex-US 737 that kept the livery with just the name painted out. A pic of it has been posted somewhere.

Jim

 

[AAviator]

US is getting rid of the 737's - the last of the West's are gone and only a few East -300's remain. Could have been a delivery flight with the suits to handle the paperwork. Also, some outfit has at least 1 ex-US 737 that kept the livery with just the name painted out. A pic of it has been posted somewhere.

Jim

http://flightaware.com/

Should be easy to chase down. Plug in the N Number.


Suits for the suggested/supposed transaction wouldn't be flying in a 737......

 

[BoeingBoy]

I found the pic and it's operated by HeavyLift out of the UAE. As of last December when the pic was taken it had already had a cargo door mod.

Jim