Aircraft Retirements

[eolesen]

Read an interesting article today from an aviation expert as to how this industry will look after all this and based on what he said AA might be in better shape than most by just being who they have been over the last few years.

Funny, most of the articles I've been reading are exactly the opposite, and are pessimistic on AAL. AAL did more stock buy-backs than anyone else, and as of 12/31/2019 was sitting on around $24B in long term debt compared to $14B for UAL, $11.6B for DAL.

 

[jimntx]

- as far as i know, the airlines did not get 'bailed out' in 2008-2009 during the great financial crisis. so, no 'bailout' money to use on stock buy-backs.

the airlines were helped after 9-11.

as far as the airlines not surviving - more than once, trump and pence have stated that the govt. won't allow airlines to collapse, numerous politicians have stated that a stimulus #4 and #5 (if necessary) will happen in a heartbeat to help the economy and yesterday, the secretary of the treasury was asked about the airlines.

mnuchin's reply was: "the airlines can't collapse because it's a national security issue".

all this tells me that aa and just about everyone else will be around. the question of lay-offs and pay/benefit cuts will hopefully be solved by a future stimulus, if needed.

the banks and auto-makers didn't lose any sleep over getting funds in 2008-2009 and i won't lose any sleep because someone begrudges me working for an airline. the airlines were paying $140/bbl oil in 2008..no one gave a damn (especially shell, exxon, bp and chevon shareholders) that we couldn't get raises or steady our balance sheets due to high oil for over a decade.

How precious! I find that level of naivete refreshing in someone your age. I wouldn't take any stock hints from Mnuchin if I were you. Also, I wouldn't put any money on a company that is "too big to fail." Before you start touting AA as being in the right place at the right time, go and read the article about WeWorks where the company that was going to buy them outright decided to walk away from a $3 Billion deal. Out of the clear blue sky, no warning. Not even a hint.

Also, airlines used in the impersonal (such as "the airlines can't collapse" does not mean a thing until you are talking about specific airlines. It would be entirely possible that Mnuchin and company decided to save UAL, SWA, and DAL, but not AAL. In that he could still say the airlines can't collapse, [but AAL can].

 

[La Li Lu Le Lo]

If the airlines collect millions of dollars in financial help then layoff a bunch of people, I don't think what "the deal is about" is going to matter much to the public. The airline's bottoms are still red from their using the last batch of recovery money to buy back a bunch of stock--even Wall Street did not approve of that move. The public just didn't buy the "oh it was just a coincidence that the airline management's compensation was primarily, if not completely, in the form of stock" alibi.

And from what active flight attendants are telling me about working on empty airplanes and cancellations, the airlines may not survive until September. Friend of mine worked an STL-DFW-CUN day with 4 passengers on the CUN leg (the money shot). Their flight back was cancelled so they had to deadhead back to DFW. Flight back to STL cancelled. The crew ended up spending 40 hours in a Ft. Worth hotel before deadheading back to STL She said it was pretty much typical of her schedules lately.

As far as I am concerned the thieving government is "GIVING" back a SMALL portion of what they have TAKEN from the airlines.

The government is doing you no favors. Look at it this way, you can't have your cash cow starving to death just because the grass died. You go through expense until the grass comes back so you can milk it again for profit later. Give a little get a lot, get what I am saying?

Just remember the government can't GIVE you ANYTHING they have not TAKEN first.

 

[La Li Lu Le Lo]

How precious! I find that level of naivete refreshing in someone your age. I wouldn't take any stock hints from Mnuchin if I were you. Also, I wouldn't put any money on a company that is "too big to fail." Before you start touting AA as being in the right place at the right time, go and read the article about WeWorks where the company that was going to buy them outright decided to walk away from a $3 Billion deal. Out of the clear blue sky, no warning. Not even a hint.

Also, airlines used in the impersonal (such as "the airlines can't collapse" does not mean a thing until you are talking about specific airlines. It would be entirely possible that Mnuchin and company decided to save UAL, SWA, and DAL, but not AAL. In that he could still say the airlines can't collapse, [but AAL can].

Your tone is a bit condescending.

Perhaps you are not aware of it or perhaps that was your goal.

Either way let's all be a bit more respectful than normal during this difficult and uncertain time.

 

[La Li Lu Le Lo]

Read an interesting article today from an aviation expert as to how this industry will look after all this and based on what he said AA might be in better shape than most by just being who they have been over the last few years.
He makes the comment that the premium passenger will be the last to come back because they will be less likely to travel as much due to teleconferencing
That leisure travel will come back quicker.
More people will look for price over product and that narrow body long hauls will be more common.
So Doug and his boys may accidentally have stumbled right into this and come out stronger.
Imagine that

Did the "expert" have any verifiable credentials.

I only ask because over the years I have found many of these so called "experts" were anything but.

Not trying to be confrontational but did you actually see what the "experts" qualifications were or did the article just claim he was an expert without offering anything to substantiate the claim?

 

[V.O. Reason]

Did the "expert" have any verifiable credentials.

I only ask because over the years I have found many of these so called "experts" were anything but.

Not trying to be confrontational but did you actually see what the "experts" qualifications were or did the article just claim he was an expert without offering anything to substantiate the claim?

No but he’s been writing and watching this industry for 13 years.
He didn’t mention AA by name so you understand his article was just in general as to how the industry will look.
Also I did notice that Warren Buffet unloaded a bunch of Delta and SW stock yesterday but not AA.
Not sure that means anything but interesting

 

[swamt]

If the airlines collect millions of dollars in financial help then layoff a bunch of people, I don't think what "the deal is about" is going to matter much to the public. The airline's bottoms are still red from their using the last batch of recovery money to buy back a bunch of stock--even Wall Street did not approve of that move. The public just didn't buy the "oh it was just a coincidence that the airline management's compensation was primarily, if not completely, in the form of stock" alibi.

And from what active flight attendants are telling me about working on empty airplanes and cancellations, the airlines may not survive until September. Friend of mine worked an STL-DFW-CUN day with 4 passengers on the CUN leg (the money shot). Their flight back was cancelled so they had to deadhead back to DFW. Flight back to STL cancelled. The crew ended up spending 40 hours in a Ft. Worth hotel before deadheading back to STL She said it was pretty much typical of her schedules lately.

OUCH!!!
Read an article this morning that we flew 56 flights last week completely emptied, no passengers. Therefore, no baggage so we beat the two bags DFWgen just reported. 🙂

 

[Duke787]

Maybe just maybe AA owing $24B is a good thing. AA paying that back is a steady cash stream for lenders when airline travel bounces back. If AA goes under that’s $24B the lenders never fully recover. I believe most of our planes are leased and gates are rented. Looks like there will be a lot of planes and gates available for the immediate future.

what will happen with MAX will be interesting.

 

[eolesen]

When travel bounces back?.......

A two week shutdown might have had a simple recovery. 45 days? No way.

Companies are figuring out how to survive without airlines right now.

Who here really thinks that genie goes back in the bottle six months from now? Same thing with telecommuting... Corporate office based cultures in every major city have been shattered, and all of the naysayers who said WFH couldn’t be successful are going to be proven wrong for the most part. And if you can make telecommuting work, clearly you can make telesupport for clients work.

If travel is down >30%, there will be a huge day of reckoning. Having $24B in debt won’t be a selling point.

 

[JREwing]

I suspect it will take years to fully recover from this, and the international market is worse yet. It may take over a year before our country and others will even except foreigners into their respective countries.

 

[CremaDiLimone]

How precious! I find that level of naivete refreshing in someone your age. I wouldn't take any stock hints from Mnuchin if I were you. Also, I wouldn't put any money on a company that is "too big to fail." Before you start touting AA as being in the right place at the right time, go and read the article about WeWorks where the company that was going to buy them outright decided to walk away from a $3 Billion deal. Out of the clear blue sky, no warning. Not even a hint.

Also, airlines used in the impersonal (such as "the airlines can't collapse" does not mean a thing until you are talking about specific airlines. It would be entirely possible that Mnuchin and company decided to save UAL, SWA, and DAL, but not AAL. In that he could still say the airlines can't collapse, [but AAL can].

maybe i'm naive..but, if the govt. is willingly on the hook for aa's $12 billion in grants and loans and then allows it to go belly-up by cutting off the $$...

the media that complains knows the routine. if the govt. says they won't allow an industry to collapse, then it won't collapse.

 

[eolesen]

In the context of everything else, that $12B is nothing.

Less than half a million people work in the airline industry, and unlike banking and auto/medical/pharma manufacturing, those jobs can’t be exported.

Go back to 1991/1992 for your history lesson this time, not 2001. Pan Am and Eastern died, along with Midway 1.0 and some smaller carriers, and it didn’t hurt tourism or business traffic.

The next six months are going to prove which airlines are able to adapt to new normal, and have employees willing to help their companies survive. Some of them are already ready for this, others aren’t, and then there’s the “full pay to the last day” crowd which still permeates AA.

When October comes, don’t be surprised if what was a unified airline industry suddenly fractures into a faction of survivors lobbying against continued subsidies and another who still needs life support.

That split will give Congress cover to pull the plug on further support.

 

[CremaDiLimone]

you're comparing 1991 to 2020? comparing apples to oranges for your historical model?

i know you run the airline industry, but the secretary of the treasury publicly stated that the airline industry will not collapse. he said it's a national security issue and you say 1991 midway and pan am. ok.

how do you change trump's mind? with examples of 1991 midway, eastern and pan am? at the time, i believe there were enough seats from other airlines to pick up the slack. that is not the issue today.

you call anyone who disagrees with you 'skippy'. what would trump and mnuchin call you for your 1991 midway model?

trump and govt. don't want the airlines to fail. the democrats will pick up their dusty union card and also point to the high number of urban airline employees/perceived dem voters and they don't want to the airlines to fail (with conditions for highly paid execs and stock buybacks).

your october scenario of the airline doomsday clock striking 12 is right before elections and yes, maybe you're right. politicians up for election 30 days later will pull the plug on a few hundred thousand jobs.

looks like you'll need to move heaven and earth to have washington walk away from the airlines. something that you seem to want to happen.

 

[La Li Lu Le Lo]

When travel bounces back?.......

A two week shutdown might have had a simple recovery. 45 days? No way.

Companies are figuring out how to survive without airlines right now.

Who here really thinks that genie goes back in the bottle six months from now? Same thing with telecommuting... Corporate office based cultures in every major city have been shattered, and all of the naysayers who said WFH couldn’t be successful are going to be proven wrong for the most part. And if you can make telecommuting work, clearly you can make telesupport for clients work.

If travel is down >30%, there will be a huge day of reckoning. Having $24B in debt won’t be a selling point.

Not everyone has the self discipline or atmosphere to work from home.

That being said I have worked from home for years with no issues. I do hope that companies become more open to it but we shall see. Honestly I think it is a win for everyone. I save money in fuel and parking cost. I gain the commute time back as personal time.

The company has to pay for less office space, less furniture, and less utility usage.

 

[La Li Lu Le Lo]

When October comes, don’t be surprised if what was a unified airline industry suddenly fractures into a faction of survivors lobbying against continued subsidies and another who still needs life support.

They eat their own.