AMR on Moody's DEFAULT LIST

[FA Mikey]

Try not to confuse it with facts or logic. Like AMR is buying airplanes and retiring others. That the so called gas guzzlers (laughable because its all relative) are all paid for. What they lose in fuel can be off set in other savings. Like you said they have cash and assets to sell. They also have a profitable lucrative strong hold in Central and South America, where UAL could not compete.

Looks like AMR is going to drop 9% of its flying this year based on market demand. Other carriers are in a more difficult position like United. Its is going to be dropping 15% of its Pacific flying already in this quarter. More bad news to follow soon, looks like a bad thing to have all your eggs in a Pacific basket these days.

 

[FA Mikey]

UAL HAS to cut 15% of its international flying, AMR cutting 2%. I wonder who is in a stronger position. UAl or the airline you wished you worked for?

 

[NewHampshire Black Bears]

OK,....time for my $.02(s)

I KNOW that Hopeful/F A Mikey, and FWAAA will understand this.

AA Will NOT declare BK !!!!!!!
AA will close MCI before BK
AA will close mainline stations before BK
AA will layoff BIG TIME before BK
AA will PARK a shet load of gas guzzlers before they go BK

(Hey, how am I doin' ???)

OH, and BEFORE any of you, other than the above mentioned gentlemen, start telling me that I'm NUTS, consider this;

My above opinion is EXACTLY what the "Great One"...(uncle) Bobby CRANDALL said he would do, and he said it DAM* near "20" YEARS AGO.--------"International/Transcons/point to point in the hubs, plus a LOAD of A/E"...RLC !!!!

A/E may not be worth much for SALE, but they SURE are a HEL* of an asset to have, should the time come to "rearrange" things

HEL*, for an example, on a route like ORD/BDL(the Insurance capital of the world), AA has been flying A/E there for Years now.(Anyone Think that AMR could'nt pull Mainline a/c out of say AUS, or BWI, or FLL etc, etc, etc ??

F A Mikey is right(Again) when he talks about the VERY LUCRITIVE $$$$ MIA Hub.
So as jimntx asked...way earlier in this thread, "their IS a "game plan"....loooong before BK, or shutting the doors.

WAKE up PEOPLE !!!!!(For GOD sake)
(Geezz)

How SOON we FORGET the early 80's,.......and THAT was before we had any INTERNATIONAL Flts.

 

[Ralph]

Ladies and Gentlemen, let's remember that the purpose of the forums here at USAviation.com is provide a place to discuss aviation issues. If your purpose in being here is to try to start arguments with other members, please be aware that your posts will be deleted and you will be given time off. Thank you.

 

[eolesen]

AA Will NOT declare BK !!!!!!!
AA will close MCI before BK
AA will close mainline stations before BK
AA will layoff BIG TIME before BK
AA will PARK a shet load of gas guzzlers before they go BK

(Hey, how am I doin' ???)

Bears, you need a drug tap. Can't send you to MedicAAl, but they sell them at Walgreens...

AA very well may have no choice but to declare bankruptcy. And, they'll wait to close stations & bases until after it's done, so that they can arbrogate the leases without penalty. Likewise, they'll wait to furlough/layoff until they can get a waiver of the severance provisions in the union contracts.

And, as much as it galls me to say it, poprocks is right about the number of leased MD80s. They can't be unloaded without a filing.

OH, and BEFORE any of you, other than the above mentioned gentlemen, start telling me that I'm NUTS, consider this;

My above opinion is EXACTLY what the "Great One"...(uncle) Bobby CRANDALL said he would do, and he said it DAM* near "20" YEARS AGO.--------"International/Transcons/point to point in the hubs, plus a LOAD of A/E"...RLC !!!!

I respect Bob for the day and age he led AA. But even he'd have a hard time today, Bears.

And, he wasn't always right. He still isn't always right for that matter. Take a look at Pogo...

A/E may not be worth much for SALE, but they SURE are a HEL* of an asset to have, should the time come to "rearrange" things

HEL*, for an example, on a route like ORD/BDL(the Insurance capital of the world), AA has been flying A/E there for Years now.(Anyone Think that AMR could'nt pull Mainline a/c out of say AUS, or BWI, or FLL etc, etc, etc ??

Eagle's becoming an albatros. Nobody would buy them at this point, and they've got nothing of value in an asset sale except perhaps the 25 CR7's, and those are getting a little long in the tooth.

If Eagle were flying E170 or E190's, perhaps they'd be an asset.

 

[Hopeful]

Bankruptcy or not...........AA EXECS WILL GET THEIR $$$$$$$$$$$$$$$$$

 

[FA Mikey]

We saw it in the previous airline bankruptcy's. Current and former executives didnt lose there retirements, medical coverage, and company paid office's. But funny how the hourly guys all lost most of theirs.

 

[Hopeful]

We saw it in the previous airline bankruptcy's. Current and former executives didnt lose there retirements, medical coverage, and company paid office's. But funny how the hourly guys all lost most of theirs.

I guess Horton forgot to mention that at the JP MORGAN conference when complaining about high labor costs.

 

[NewHampshire Black Bears]

Bears, you need a drug tap. Can't send you to MedicAAl, but they sell them at Walgreens...

AA very well may have no choice but to declare bankruptcy. And, they'll wait to close stations & bases until after it's done, so that they can arbrogate the leases without penalty. Likewise, they'll wait to furlough/layoff until they can get a waiver of the severance provisions in the union contracts.

And, as much as it galls me to say it, poprocks is right about the number of leased MD80s. They can't be unloaded without a filing.



I respect Bob for the day and age he led AA. But even he'd have a hard time today, Bears.

And, he wasn't always right. He still isn't always right for that matter. Take a look at Pogo...



Eagle's becoming an albatros. Nobody would buy them at this point, and they've got nothing of value in an asset sale except perhaps the 25 CR7's, and those are getting a little long in the tooth.

If Eagle were flying E170 or E190's, perhaps they'd be an asset.

Well E, at least I agree with you on the...E-Jets

 

[FWAAA]

Ch 11 is usually the ticket to rejecting leases on unwanted assets, but it is possible to trim the fleet of unwanted leases airplanes without filing for bankruptcy protection.

In 2008, AA paid $33 million in conjunction with the early termination of some AB6 leases. Dunno if that covered all of the leased AB6s or whether there will be another special charge for this year also.

So it is possible for AA to buy out the leases of the MD-80s, although with over 170 leased airplanes (107 operating leases and 64 capital leases), I suspect AA would have to spend significantly more than $33 million to rid itself of the leased MD-80s. AA still has a lot of leverage with the lessors - they realize that a Ch 11 filing gives them nothing for the leased MD-80s except the return of scrap value aluminum. On the other hand, a negotiated payment for a fraction of the future lease payments is better than the nothing. My prediction is that AA does just that: pays off the lessors so the MD-80s can be parked.

Although lots of posters here have predicted Ch 11 for AMR for more than 7 years now, it hasn't yet happened. Arpey didn't pull the trigger even when oil went to $147/bbl last summer (some here predicted Ch 11 at $100/bbl to $120/bbl).

Big changes now, though. Unit Revenue appears to be dropping at most other airlines as well as at AA. Costs are still high, but airlines' big problem again is lack of revenue.

Another factor are the pensions. The pensions have required $2 billion in contributions since 2002 but as I have pointed out repeatedly (confirmed by James Beer at a quarterly conference), the pensions have not required as much cash outlay as have Defined Contribution retirement plans at other airlines, like WN. So the pensions have stayed. In 2009, AA has no required contributions to the pensions but in 2010 and beyond, AA will face huge mandatory contributions unless the equity markets recover much of their 2008-09 meltdown losses.

Eagle? I think it's still a great asset, but not one anyone would pay big money to own. Like a trusted old used car that the owner values highly yet if totaled, is worth nothing in the eyes of the insurance companies. Eagle still provides valuable feed and has lotsa revenue yet I don't think anyone is stupid enough to pay big money for it like investors did for XJT as CO's pensions sold it in a series of public offerings. Simply put, AMR missed the boat by several years if it wanted to sell Eagle for a couple billion.

Bottom line? If AA can keep its cash balance up this year, then it won't file. But if its cash balance keeps dropping, I'd look for a filing next winter.

 

[The Goose]

Ch 11 is usually the ticket to rejecting leases on unwanted assets, but it is possible to trim the fleet of unwanted leases airplanes without filing for bankruptcy protection.

In 2008, AA paid $33 million in conjunction with the early termination of some AB6 leases. Dunno if that covered all of the leased AB6s or whether there will be another special charge for this year also.

So it is possible for AA to buy out the leases of the MD-80s, although with over 170 leased airplanes (107 operating leases and 64 capital leases), I suspect AA would have to spend significantly more than $33 million to rid itself of the leased MD-80s. AA still has a lot of leverage with the lessors - they realize that a Ch 11 filing gives them nothing for the leased MD-80s except the return of scrap value aluminum. On the other hand, a negotiated payment for a fraction of the future lease payments is better than the nothing. My prediction is that AA does just that: pays off the lessors so the MD-80s can be parked.

Although lots of posters here have predicted Ch 11 for AMR for more than 7 years now, it hasn't yet happened. Arpey didn't pull the trigger even when oil went to $147/bbl last summer (some here predicted Ch 11 at $100/bbl to $120/bbl).

Big changes now, though. Unit Revenue appears to be dropping at most other airlines as well as at AA. Costs are still high, but airlines' big problem again is lack of revenue.

Another factor are the pensions. The pensions have required $2 billion in contributions since 2002 but as I have pointed out repeatedly (confirmed by James Beer at a quarterly conference), the pensions have not required as much cash outlay as have Defined Contribution retirement plans at other airlines, like WN. So the pensions have stayed. In 2009, AA has no required contributions to the pensions but in 2010 and beyond, AA will face huge mandatory contributions unless the equity markets recover much of their 2008-09 meltdown losses.

Eagle? I think it's still a great asset, but not one anyone would pay big money to own. Like a trusted old used car that the owner values highly yet if totaled, is worth nothing in the eyes of the insurance companies. Eagle still provides valuable feed and has lotsa revenue yet I don't think anyone is stupid enough to pay big money for it like investors did for XJT as CO's pensions sold it in a series of public offerings. Simply put, AMR missed the boat by several years if it wanted to sell Eagle for a couple billion.

Bottom line? If AA can keep its cash balance up this year, then it won't file. But if its cash balance keeps dropping, I'd look for a filing next winter.

Re: the S80s - I'll hazard a guess they'll become as the old cat in the folk song; ie, it kept coming back no matter what was done.

It took AMR quite a while to finally get rid of the 72s and I can't see why it would take any less time with the 80s considering the wait for their replacements.

 

[FWAAA]

Goose: Excellent points and I agree. MD-80s looked awful in 2006-08 because of fuel prices (and to a lesser extent, maintenance costs). They look a lot less awful in today and as long as fuel stays about where it is now, the rush to replace the MD-80s has subsided.

Of course, Bears and I were only talking about the MD-80s because the now-disappeared UA FA rabble-rouser was insisting the MD-80s were sending AA to the bankruptcy window.

In related news, Delta announced yesterday that its inherited DC-9s will be around a few more years as well.

 

[FA Mikey]

In related news, Delta announced yesterday that its inherited DC-9s will be around a few more years as well.

WHAT! Doesnt that mean they are headed straight to bankruptcy. Oh Delta say it isnt so.

 

[Delta Technician]

Ch 11 is usually the ticket to rejecting leases on unwanted assets, but it is possible to trim the fleet of unwanted leases airplanes without filing for bankruptcy protection.

In 2008, AA paid $33 million in conjunction with the early termination of some AB6 leases. Dunno if that covered all of the leased AB6s or whether there will be another special charge for this year also.

So it is possible for AA to buy out the leases of the MD-80s, although with over 170 leased airplanes (107 operating leases and 64 capital leases), I suspect AA would have to spend significantly more than $33 million to rid itself of the leased MD-80s. AA still has a lot of leverage with the lessors - they realize that a Ch 11 filing gives them nothing for the leased MD-80s except the return of scrap value aluminum. On the other hand, a negotiated payment for a fraction of the future lease payments is better than the nothing. My prediction is that AA does just that: pays off the lessors so the MD-80s can be parked.

Although lots of posters here have predicted Ch 11 for AMR for more than 7 years now, it hasn't yet happened. Arpey didn't pull the trigger even when oil went to $147/bbl last summer (some here predicted Ch 11 at $100/bbl to $120/bbl).

Big changes now, though. Unit Revenue appears to be dropping at most other airlines as well as at AA. Costs are still high, but airlines' big problem again is lack of revenue.

Another factor are the pensions. The pensions have required $2 billion in contributions since 2002 but as I have pointed out repeatedly (confirmed by James Beer at a quarterly conference), the pensions have not required as much cash outlay as have Defined Contribution retirement plans at other airlines, like WN. So the pensions have stayed. In 2009, AA has no required contributions to the pensions but in 2010 and beyond, AA will face huge mandatory contributions unless the equity markets recover much of their 2008-09 meltdown losses.

Eagle? I think it's still a great asset, but not one anyone would pay big money to own. Like a trusted old used car that the owner values highly yet if totaled, is worth nothing in the eyes of the insurance companies. Eagle still provides valuable feed and has lotsa revenue yet I don't think anyone is stupid enough to pay big money for it like investors did for XJT as CO's pensions sold it in a series of public offerings. Simply put, AMR missed the boat by several years if it wanted to sell Eagle for a couple billion.

Bottom line? If AA can keep its cash balance up this year, then it won't file. But if its cash balance keeps dropping, I'd look for a filing next winter.

I have never posted over here and seldom even read in the AA forum. This is a fantastic post! It is filled with fact, oppinion and different scenarios which cause people to really think things through. I was really surprised to see AMR on Moody's list as I have always though of AA as a money making machine and I really haven't followed y'alls finances.
I will say this. You don't want to go through bankruptcy at this time. Besides the fact that Delta had a lot of financial backing it is demeaning and can way heavily on employee morale. One thing to consider is with the economy the way it is, debt holding corporations and banks may not back you with cash as much now so raising money with assets as FWAAA said would most likely have to be a must and to do that you would have to have buyers. The economic downturn may make those assets worth much less.
I had two choices in airlines when I entered the airline scene over 24 years ago. AA was on of them. I could never have guessed in a million years the airline industry would be in such turmoil back then.
Best of luck to y'all.

 

[Delta Technician]

WHAT! Doesnt that mean they are headed straight to bankruptcy. Oh Delta say it isnt so.

And then there are posts which make absolutely no sense at all. Please explain or have another drink <_<