Airlines/Liquididity.Strongest..to..Weakest

[Maark767]

Actually, you couldn't be more wrong... It is posts and posters such as this that believes anything they read by the clueless... UAL actually has dozens of a/c that they own outright, such as the 737s that they want to get rid of, that they may be able to sell if they so choose. Also they have their FF program worth between 4-7 billion... If they just spun off the FF program alone they will have almost 8 billion in cash... They also have their maint.. facility they are thinking about selling... Burning furniture isn't a good thing, but UAL has options my friend, carriers like US, does not.. Do a little research b/f your next post please.. Thanks...

Oh it's just that easy... they start selling FF program and main. facility.... you can say goodbye , thats the begining of the end.

 

[bigdawg52]

Oh it's just that easy... they start selling FF program and main. facility.... you can say goodbye , thats the begining of the end.

Just clicking on this discussion, so let me know if I am wrong about this. AA has their FF program, which last I heard was worth around 860 million. AE which I also read from another site, has two bidders, worth roughly 600 million.
That would give us roughly, 5.9 billion in cash, less the 500 million in restricted cash. Am I correct or am I out of wack on this :blink:

 

[FWAAA]

Just clicking on this discussion, so let me know if I am wrong about this. AA has their FF program, which last I heard was worth around 860 million. AE which I also read from another site, has two bidders, worth roughly 600 million.
That would give us roughly, 5.9 billion in cash, less the 500 million in restricted cash. Am I correct or am I out of wack on this :blink:

On 3/31/08, AMR had $4.9 billion of cash, including $400 million restricted, or $4.5 billion unrestricted cash.

Your pro-former cash numbers are in the ballpark except that we don't yet know how much cash has been burned (or hopefully, Generated) from operations this quarter.

I'd hope that AAdvantage is worth more than $860 million.

 

[FA Mikey]

I really doubt that MP is worth anywhere near $4 billion to $7 billion.

My guess? MP might bring a few hundred million. Not a billion, and certainly not $4 or $7 billion.

The million dollar question is what is a reward program worth when the airline you have the rewards built on is teetering on insolvency. It applies equally to AA and all the other carriers with grand visions of billions of dollars or worth in their FF programs.

 

[Hi-C-Camp]

I really doubt that MP is worth anywhere near $4 billion to $7 billion.

The only other legacy that tried really hard to avoid Ch 11 was Delta. It sold ASA for a few hundred million, but it was too little, too late. It borrowed about $500 million from AMEX (accelerated sale of frequent flyer miles) but that wasn't enough. If frequent flyer plans were really worth billions to outside buyers, I'm convinced that Delta would have sold its Skymiles program and avoided Ch 11.

My guess? MP might bring a few hundred million. Not a billion, and certainly not $4 or $7 billion.

But I've been wrong before.

The good news is that if MP is worth $4 billion to $7 billion, then what's AAdvantage worth? $8 billion to $12 billion? AA doesn't have to sell it all - just sell a minority stake to the public in an IPO and AA can avoid bankruptcy PLUS grant all labor groups their wage wish lists.

Well, I am sure you doubt alot... But fact is, when UAL was talking about spinning off MP and MNTC divisions, MP was valued at minimum 4B and max 7B.. I remember AMR releasing a statement saying there FF program was worth about 2.5B ... Just because you are cluttered with a plethera of S80 a/c doesnt mean that you have a more valuable or lucrative mileage program - FF program... My question is, if AMR is in such a wonderful position right now, why is everyone talking about how they will be the most likely to enter chapter 7????

 

[FrugalFlyerv2.0]

The million dollar question is what is a reward program worth when the airline you have the rewards built on is teetering on insolvency. It applies equally to AA and all the other carriers with grand visions of billions of dollars or worth in their FF programs.

People point to is the fact that AC sold a portion of Aeroplan for tons of cash (was it approx. 25%? for approx $250 million? - I don't exactly remember so feel free to correct me). It is forgotten that in the Great White North AC only has to worry about Westjet. Westjet is a LCC (quite a formidable competitor), however there is no other Canadian "Legacy" carrier. Sure there are charter carriers, but no trans-border, trans-Atlantic or trans-Pacific competition from another Canadian carrier, hence the value of Aeroplan.

The investor which bought Aeroplan was more or less 100% assured that AC would be around for quite a while. In the United States there are more than 1 "legacy" carriers and more than 1 LCC's - so if somebody buys AAdvantage or Mileage Plus - there is no guarantee that it will such a secure investment like Aeroplan was & is.

 

[Hi-C-Camp]

People point to is the fact that AC sold a portion of Aeroplan for tons of cash (was it approx. 25%? for approx $250 million? - I don't exactly remember so feel free to correct me). It is forgotten that in the Great White North AC only has to worry about Westjet. Westjet is a LCC (quite a formidable competitor), however there is no other Canadian "Legacy" carrier. Sure there are charter carriers, but no trans-border, trans-Atlantic or trans-Pacific competition from another Canadian carrier, hence the value of Aeroplan.

The investor which bought Aeroplan was more or less 100% assured that AC would be around for quite a while. In the United States there are more than 1 "legacy" carriers and more than 1 LCC's - so if somebody buys AAdvantage or Mileage Plus - there is no guarantee that it will such a secure investment like Aeroplan was & is.

Kind of like how Alitalia is the only Italian carrier and they are assured to be around.. Or wait maybe like VARIG the Brazilian flagship... Please ... Another flawed OPINION...

 

[FrugalFlyerv2.0]

Kind of like how Alitalia is the only Italian carrier and they are assured to be around.. Or wait maybe like VARIG the Brazilian flagship... Please ... Another flawed OPINION...

Yeah, and comparing AC to AZ or RG - that's BRILLIANT!!!!

 

[Hi-C-Camp]

Yeah, and comparing AC to AZ or RG - that's BRILLIANT!!!!

Well it is what it is... Your opinion, that b/c they are the "only" boorder crossing canadian carrier makes their FF plan more valuable is just that ... an opinion at best..

 

[767jetz]

If UA goes, it'll likely be a Chapter 7. There's nothing left to mortgage and Tilton's management team is even more clueless than DAL, AA, NWA, and LCC combined.

Just to be clear, I don't want to see anyone go bankrupt. Least of all AA or UA. But the article in question gave AA a 1 in 2 chance of filing for BK and UA a 1 in 4 chance. Thye seem to think AA is twice as likely as UA to go down that road.

And as for UA's ability to raise capital, besides the FF program and maintenance facility that UA could sell off or borrow against, which was shopped last year and found to be worth betwen $5 and $9 BILLION, UA has about $3BILLION in unencumbered assets to borrow against, and no pension obligations.

I think the #1 reason AA is at greater risk is their pension liabilities and the the amount of revolving debt that must be serviced in the near term.

 

[NewHampshire Black Bears]

Just to be clear, I don't want to see anyone go bankrupt. Least of all AA or UA. But the article in question gave AA a 1 in 2 chance of filing for BK and UA a 1 in 4 chance. Thye seem to think AA is twice as likely as UA to go down that road.

And as for UA's ability to raise capital, besides the FF program and maintenance facility that UA could sell off or borrow against, which was shopped last year and found to be worth betwen $5 and $9 BILLION, UA has about $3BILLION in unencumbered assets to borrow against, and no pension obligations.

I think the #1 reason AA is at greater risk is their pension liabilities and the the amount of revolving debt that must be serviced in the near term.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

767jetz,

You make valid points about why AA is a 2-1 shot to "go in"

But keep in mind, the "Aviation Bookies" who put out these Odds, are NOT at the Poker table Playing.

AA is AT the TABLE,................UAL is at the table etc..etc.

Are the "bookies" usually MORE Right than Wrong, ??...............Sure,..that's why they stay in Business.
But (the "bookies") will openly admit that they lose one every once in a while !

I'm not predicting that any carrier is going to "roll over" tomorrow,..............BUT if one, possibly two..DO,(and AA isn't one of them) you'll see the Odds DECREASE as to the chances of AA "going in".

 

[LGA Fleet Service]

My question is, if AMR is in such a wonderful position right now, why is everyone talking about how they will be the most likely to enter chapter 7????

I've read many an article talking about chapter 11, but chapter 7? Come now.

 

[Hi-C-Camp]

I've read many an article talking about chapter 11, but chapter 7? Come now.

I am sorry LGA, that was my mistake. I meant chapter 11...

 

[Maark767]

Just to be clear, I don't want to see anyone go bankrupt. Least of all AA or UA. But the article in question gave AA a 1 in 2 chance of filing for BK and UA a 1 in 4 chance. Thye seem to think AA is twice as likely as UA to go down that road.

And as for UA's ability to raise capital, besides the FF program and maintenance facility that UA could sell off or borrow against, which was shopped last year and found to be worth betwen $5 and $9 BILLION, UA has about $3BILLION in unencumbered assets to borrow against, and no pension obligations.

I think the #1 reason AA is at greater risk is their pension liabilities and the the amount of revolving debt that must be serviced in the near term.

If AA was planning on filing BK, why are the pension payments made every quarter . AA has contribute almost 1 billion to it's pension plan over the last 4 to 5 years. Also have you seen how much the debt has decreased over the last 4 years as well. It just seems that AA is positioning it's self to stay out of BK. Looks like AA will ride out this fuel crisis.

 

[BigBangTheory]

Looks like AA will ride out this fuel crisis.

AA also hedged when oil was at $70. I don't know how big the hedge was but, it has to help.