AIRBUS 340-500 and 340-300

[FA Mikey]

Right Here

But the company said the availability of financing is jeopardized by its level of indebtedness -- it had $16.3 billion in net debt at the end of 2006 -- and by historically weak revenues, high fuel prices and low credit ratings.

"Additional reductions in AMR's or American's credit ratings could further increase its borrowing or other costs and further restrict the availability of future financing," the company said.

I see nothing about the CEO claiming a liquidity problem as you stated. Its says AMR should have sufficient liquidity to fund operations for the foreseeable future. AMR also has over 5 billion in unrestricted cash and growing. Also paying down long term debt.

AA over pays into its pension plans. If there was a true coming liquidity problem, they would be hoarding cash, which they are not doing.

 

[TechBoy]

Back to the topic at hand, it strikes me that US has decided to take a shot at getting a China route. They have certainly been told by the experts that CO is the likely winner of the frequencies, but that they have a real chance if they can put together a credible bid. Any credible bid requires appropriate aircraft on the the property, not promised in the future. So US is taking a bit of a risk in acquiring planes to support a bid that has a 20-30% chance of success. But China flights are so profitable that it is probably worth the risk.

The other factor to consider is the shortage of widebodies in the US fleet right now. And the widebodies that they do have, have very short legs. So even if US does not get the China frequencies, they may have profitable routes to put the new planes on. Either more Europe routes/frequencies from PHL or opening up some Europe from PHX. I suspect that US could find profitable uses for 2-5 new widebodies without too much difficulty.

 

[PHL]

Not to split hairs, but AMR reported for 2006 $121M cash and $4.6B in securities/investments that could be liquidated if needed, although that value is quite variable. Not exactly the same as having $5B in "cash".

"AMR, which has a fully drawn $740 million credit facility, said its sources of funding are more restricted now than in the past."

This is akin to a consumer maxing out his credit cards and having fewer lenders/options to choose from for more financing.

Point being, AMR is showing signs of being top heavy and will need to do some cutting or selling to be able to continue paying it's obligations. That's not the sign of a perfectly healthy carrier.

 

[FWAAA]

Right Here

But the company said the availability of financing is jeopardized by its level of indebtedness -- it had $16.3 billion in net debt at the end of 2006 -- and by historically weak revenues, high fuel prices and low credit ratings.

"Additional reductions in AMR's or American's credit ratings could further increase its borrowing or other costs and further restrict the availability of future financing," the company said.

The Reuters story you linked read the AMR 10-K and its Item 1A Risk Factors (which are written every year to sound very scary, the better to avoid sharelholder lawsuits) and acted like they were news. The AMR 10-K has read the same way for five years now. A complete nonstory (at least for anyone who has ever read a 10-K or is familiar with the purposes of Item 1A).

On top of that, the Reuters reporter took the 2005 net debt figure of $16.3 billion and incorrectly reported it as the 2006 net debt figure - the accurate number is down to $13.6 billion, a huge year over year improvement.

The correct numbers can be read in this press release:

http://www.aa.com/content/amrcorp/pressRel...17_4q2006.jhtml

Or in the AMR 10-K, which is here:

http://www.shareholder.com/aa/EdgarDetail....8&SID=07-00

If you want accurate financials, the best place to go are the financial statements themselves, not some regurgitated incorrect version reported by some idiot at Reuters.

 

[FWAAA]

Not to split hairs, but AMR reported for 2006 $121M cash and $4.6B in securities/investments that could be liquidated if needed, although that value is quite variable. Not exactly the same as having $5B in "cash".

"AMR, which has a fully drawn $740 million credit facility, said its sources of funding are more restricted now than in the past."

This is akin to a consumer maxing out his credit cards and having fewer lenders/options to choose from for more financing.

Point being, AMR is showing signs of being top heavy and will need to do some cutting or selling to be able to continue paying it's obligations. That's not the sign of a perfectly healthy carrier.

Sorry, but IMO, that's kinda pedantic. On 12/31/06, when the snapshot of the balance sheet occurred, AMR had nearly all of its cash invested in various short term securities like corporate and bank notes, 80% of which had maturities of one year or less. The value of which is "quite variable?" I seriously doubt that. That said, the value of those ivestments is not guaranteed. Of course we don't know how that money is ivested today (or on any date since 12/31/06, for that matter). Might have been converted to cash the next business day. Might not.

In any event, AMR's cash management policies have appeared to work. In 2006, AMR earned $279 million of interest income on its cash and short term investments, significantly offsetting its interest expense on its short and long term debt.

AMR needs to cut or sell something to keep paying its bills? I disagree (unless you're talking about selling new common stock). Its net debt declined last year by $2.7 billion. Any other airline achieve the same result (other than by Ch 11 discharge)?

Net debt will likely decline by a greater amount this year thru cash generated by operations and sale of new stock. Last year, AMR generated $1.9 billion of positive cash from operations. Not too many other airlines did that, other than Southwest. Recently, UAL did pay down a billion of its $3 billion exit financing and refinanced the rest. Encouraging news for UAL.

Additionally, in the past eight months, AMR cleared $900 million from the sale of new common stock and will likely sell some more later this year.

You're right - AMR is not a "perfectly healthy carrier." But I've looked over the financials of the other legacies and I couldn't describe any of them as "perfectly healthy."

 

[phasersonstun2]

Fourteen frequencies open, The US can name a new carrier for 7, but is not required to.

Why award it to an airline that already flies to China? The US is not looking be fair and give every airline the chance to fly. Its down to who can maximize the opportunity best.

The US will give the route to a new entrant only if they have their s**t together. US will have to show it has done all of the proper steps for cultivating the Asian market, as well as all of the necessary political massaging.

US should make an effort to secure the assets for Asian rim as soon as possible, since one of the major criteria is to have the equipment already in place to do the route, not a promise to get aircraft IF it gets the authority.

 

[NewHampshire Black Bears]

Jesus,
I'm laughing my balls off, at the MERE thought of US flying to China.

This is (really) A JOKE....right ??

Lets see,

Parker just got out of "the can",
US(not HP) has NEVER even operated to HNL,
Neither one(US or HP) flys to Tokyo(like AA/UA/DL/CO and NW does)
NO a/c that could even make it from PHL/HNL(MAYBE the A330)
One(supposed) company, with 2 groups of pilots, plus 2 contracts(ditto for F/A's...FSC..and AMT's
PHL, which is ONLY 50 miles(as the crow flys) to EWR, where your passengers CAN get China non stops(CO)

PHL, which is ONLY 100 miles(as the crow flys) to IAD, where your passengers can get China Non-stops(UA),

And US thinks that the FEDS are going to AWARD a VALUABLE China route to YOU ??

Gimme a F**KING break, will ya :down: :blink:



NH/BB's

 

[Bear96]

Hmmm . . . the AA'ers here are getting very nervous.

 

[PHL]

Would US likely keep the seating config of the AC A345s (225Y/42J)? The J cabin is already equipped with lie-flat seats.

http://www.airliners.net/open.file/0609264/M/

Could it be a simple matter of reupholstering from the AC green to the US color scheme?

 

[Rico]

A340's for PHL-PVG eh...?

Hmmm, well it's a good thing US already has a station in ANC for the fuel stops.

 

[TechBoy]

A340's for PHL-PVG eh...?

Hmmm, well it's a good thing US already has a station in ANC for the fuel stops.

Let's see, the A345 has a range of 8670nm and PHL-PVG is 6452nm, so your point is . . . ?

 

[BoeingBoy]

The only problem I can see with the 345 is availability, assuming that you'd want at least 3 airplanes capable of serving the route on a daily basis. AC has 2 - with only about 2 dozen operating worldwide, who else is getting rid of them?

Jim

 

[donttouchthebeauty]

A shot yes, great one, No. If they get the AC and don't get the service, its a big expense for US flying and new AC type.

The DOT didn't frown, they refused an amendment to the original application. AA then pulled its application without prejudice, before the award. It cannot be held against them. With AA be careful not to confuse a stumble with a calculated maneuver. I cant say either way what happened. One way or the other they always come out smelling like a rose.

Please, not according to the article i read the other day with the need of new investments due to an aging fleet of 365 super 80s, my guess is they will take it from you f/a mikey, AA isnt smeeling like a rose, actually they are now the odd man out with CO... It should be interesting, I hope USAir wins the route.

 

[donttouchthebeauty]

Jesus,
I'm laughing my balls off, at the MERE thought of US flying to China.

This is (really) A JOKE....right ??

Lets see,

Parker just got out of "the can",
US(not HP) has NEVER even operated to HNL,
Neither one(US or HP) flys to Tokyo(like AA/UA/DL/CO and NW does)
NO a/c that could even make it from PHL/HNL(MAYBE the A330)
One(supposed) company, with 2 groups of pilots, plus 2 contracts(ditto for F/A's...FSC..and AMT's
PHL, which is ONLY 50 miles(as the crow flys) to EWR, where your passengers CAN get China non stops(CO)

ARE YOU SERIOUS???? You make yourself sound ridiculous, so PHL is miles from EWR lets say, well you are saying AA should do JFK to Beiging or shanghai well lets see how many other carriers do that from NYC AREA, looks like CO is banging at your back door with less than 25 miles from gate to gate in NEWARK, your comment makes no sense, look at ORD with several carriers doing the same route, and you are saying PHL is too close but JFK and EWR arent, - come on
PHL, which is ONLY 100 miles(as the crow flys) to IAD, where your passengers can get China Non-stops(UA),

And US thinks that the FEDS are going to AWARD a VALUABLE China route to YOU ??

Gimme a F**KING break, will ya :down: :blink:
NH/BB's

 

[PHL]

Parker just got out of "the can",
US(not HP) has NEVER even operated to HNL,
Neither one(US or HP) flys to Tokyo(like AA/UA/DL/CO and NW does)
NO a/c that could even make it from PHL/HNL(MAYBE the A330)
One(supposed) company, with 2 groups of pilots, plus 2 contracts(ditto for F/A's...FSC..and AMT's
PHL, which is ONLY 50 miles(as the crow flys) to EWR, where your passengers CAN get China non stops(CO)

PHL, which is ONLY 100 miles(as the crow flys) to IAD, where your passengers can get China Non-stops..

Some of these points are kind of irrelevant in the application process.

Parker's DUI was bad press, but hardly the reason to penzlize and entire airline or even city(PHL) for it.

It doesn't matter that EWR and IAD are 50-100 miles away. Shangai isn't served nonstop from either of those places. It's only served from JFK on China Eastern. And even if US were hoping for HKG, that wouldn't matter either. That's like saying USAirways shouldn't be flying to any places in Europe because other airlines 50-100 miles away already serve it.

Why should it matter whether US has ever flown to HNL?? What does that have to do with a China application?

US' application approval would obviously be dependent on having the necessary aircraft to make the trip, although them not having them in the fleet at the moment of application shouldn't matter.

The pilot and F/A contract issue also is not important in the application approval process. They will look more at the airline's overall health (which is very good, especially considering where it came from just 2 years ago), and the benefit to the region the route would serve. PHL is the 4th largest metro area with a very good O&D potential of leisure and business travellers.