AAL Downgrades and 1Q20 Earnings

[ALUS78]

Earnings will be be released in a few days...

Two comments from industry analysts directly address bankruptcy risk.

JP Morgan Chase, downgraded both AAL stock and AAL's credit:



Wolfe Research, downgraded AAL stock:



The concern that's being echoed by several others isn't that AAL will leave this crisis with a lot of debt, but whether or not they'll be able to pay it off with an airline that's 20-30% smaller and generating less revenue.

More on earnings when they're released.

So you think the debtors will say F U pay me, or work something out?.Debt is reworked all the time

 

[eolesen]

Can debt be restructured? Sure. If there's something to secure it, and that's going to be just about every airline's problem. A glut of airplanes are heading into storage, which means valuations will be lower than they would have been three months ago.

 

[ALUS78]

Can debt be restructured? Sure. If there's something to secure it, and that's going to be just about every airline's problem. A glut of airplanes are heading into storage, which means valuations will be lower than they would have been three months ago.

Curious what do you think the odds of any of the big 4 liquidating???

 

[jimntx]

you guys are arguing in generalities, me and a few others were musing in the month march, about the immediate SHORT TERM.

when it was presented that the govt. is/was on record as saying the airline industry won't be allowed to fail....your counter to that was pan am..

"Those who cannot remember the past are condemned to repeat it.’ (George Santayana-1905). In a 1948 speech to the House of Commons, Winston Churchill changed the quote slightly when he said (paraphrased), "Those who fail to learn from history are condemned to repeat it."

Not judgin. Just sayin.

 

[jimntx]

Curious what do you think the odds of any of the big 4 liquidating???

Your guess is as good as anyone else's. There has been more than 1 airline whose fate was liquidation, and not all of them were airlines that we loved to hate--such as Spirit. Think, Eastern, Braniff. In my growing up years both of those were considered to be top-rated airlines. Then there are the one's like Northwest which were "liquidated" by acquisition. Particularly if this virus business continues much longer, I'm not sure any airline is safe. It just boggles my mind that AA admitted to burning through $80million/day in first quarter, but could say with a straight face that they expected daily cash burn to be much better in the 2nd quarter--only $50million or so. Only???!!! Does AA have a rich uncle?

Whether you are conserving cash by parking a bunch of planes or severely cutting the flight schedules to minimize the number of empty ones being flown, either strategy has this central flaw--THERE AIN'T NO REVENUE COMING IN! Seems to me that at some point income must be greater than expenses. My backward, conservative bank absolutely insists that before I can write checks on my account to pay bills there must be sufficient funds in the account to cover every penny of those checks.

 

[dfw gen]

Your guess is as good as anyone else's. There has been more than 1 airline whose fate was liquidation, and not all of them were airlines that we loved to hate--such as Spirit. Think, Eastern, Braniff. In my growing up years both of those were considered to be top-rated airlines. Then there are the one's like Northwest which were "liquidated" by acquisition. Particularly if this virus business continues much longer, I'm not sure any airline is safe. It just boggles my mind that AA admitted to burning through $80million/day in first quarter, but could say with a straight face that they expected daily cash burn to be much better in the 2nd quarter--only $50million or so. Only???!!! Does AA have a rich uncle?

Whether you are conserving cash by parking a bunch of planes or severely cutting the flight schedules to minimize the number of empty ones being flown, either strategy has this central flaw--THERE AIN'T NO REVENUE COMING IN! Seems to me that at some point income must be greater than expenses. My backward, conservative bank absolutely insists that before I can write checks on my account to pay bills there must be sufficient funds in the account to cover every penny of those checks.

lol. that is a good one, it goes with "we will never lose money again!"

 

[eolesen]

Curious what do you think the odds of any of the big 4 liquidating???

10%. If demand stays at zero for another 60 days, 50%.

There's zero cash coming in right now. That's not sustainable for any airline, and nobody's going to loan money to a company with no income...

Even the government has limits...

 

[Talos]

Curious what do you think the odds of any of the big 4 liquidating???

Hopefully the medical field starts coming up with answers soon. This is so severe that all airlines could be in bankruptcy. could have more consolidation, and maybe even a new way the government handles passenger aviation like Bob Crandall was saying. One thing looks certain in that the workers will take the worst of it.

 

[V.O. Reason]

Warren Buffet dumped all his airline stocks.
Not just AA but all of his airline investments.
He says the industry has to much uncertainty.
He did say he thinks it will return but he’s just not confident when that will happen.
This is going to get ugly I envision all airlines going into bankruptcy if they don’t get more help in the fall.
Damn I wish I was able to retire

 

[robbedagain]

Warren Buffet dumped all his airline stocks.
Not just AA but all of his airline investments.
He says the industry has to much uncertainty.
He did say he thinks it will return but he’s just not confident when that will happen.
This is going to get ugly I envision all airlines going into bankruptcy if they don’t get more help in the fall.
Damn I wish I was able to retire

I read buffet did. He is accurate. Also Etihad and Emirates both stated they dont expect pre virus levels for 3 yrs. Which is on par with what DL stated. Now AA is going to block some seats n potentially curb nonrev travel. Even if there a vaccine come say January middle flu season n this virus were to be more severe Im curious to see if they wld shut down airspace for up to a month? If so wld it help or hurt? So many unknowns

 

[ALUS78]

lol. that is a good one, it goes with "we will never lose money again!"

Do you think anyone could see this happen? You might hate the guy,but you can't hold him or anyone to this

 

[ALUS78]

10%. If demand stays at zero for another 60 days, 50%.

There's zero cash coming in right now. That's not sustainable for any airline, and nobody's going to loan money to a company with no income...

Even the government has limits...

There's probably still close to zero cash coming in but in the last week I saw almost double in passenger booking then say 3 weeks ago. Is it a light at the end of the tunnel,maybe a dim one but check AAportal daily for passenger bookings

 

[jimntx]

There's probably still close to zero cash coming in but in the last week I saw almost double in passenger booking then say 3 weeks ago. Is it a light at the end of the tunnel,maybe a dim one but check AAportal daily for passenger bookings

I think the thing to watch over the next 3-4 weeks is vacation bookings. I don't see business travel suddenly picking up in the summer months. The Summer time drop in business travel bookings has always been "covered" by vacation business. Parents may be a bit skittish about possibly exposing their children to Covid-19. Also, imagine how long the lines will be at Disney World if they try to maintain the 6 ft. social distance.

 

[dfw gen]

Do you think anyone could see this happen? You might hate the guy,but you can't hold him or anyone to this

Its the arrogance of this management team, to justify the looting of the airline. Coupled with the fact that they screwed us for 5 of the most profitable period on aviation. Because they could. Now we are all in this together? Lol.Hate him? I dont hate anybody. Will i take pay cuts to bail out their next round of stock buy backs and bonuses? They claimed all along they learned a lot in the last take over. They learned alright. Should we give anything back to share the pain and share the gain? Hell no.

 

[dfw gen]

Its the arrogance of this management team, to justify the looting of the airline. Coupled with the fact that they screwed us for 5 of the most profitable period on aviation. Because they could. Now we are all in this together? Lol.Hate him? I dont hate anybody. Will i take pay cuts to bail out their next round of stock buy backs and bonuses? They claimed all along they learned a lot in the last take over. They learned alright. Should we give anything back to share the pain and share the gain? Hell no.

When this is all over they will congratulate themselves pat themselves on the back, generously bonus themselves. Meanwhile we will languish in bankruptcy imposed contracts or association assisted contracts just to hear "we cant afford that" " we need to be resposible to all parties and stakeholders" while the drag their feet..again.