Frank Szabo
Veteran
@ 1005 25JUL2011
AMR
$4.24
- $.11
AMR
$4.24
- $.11
Analysts get gloomier on AMR
- Thread starter AANOTOK
- Start date
Super FLUF
Senior
- Jun 10, 2011
- 313
- 206
4.15 -0.21 (-4.82%)
Everyone give a round of "golf clapping" to the gang that couldn't shoot straight over at Centreport.
Outstanding job! Someone should get a bone-us for this!
WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,662
- Banned
- #64
If a stock drops below $1/share and the company cannot bring its value back up the stock is delisted from the NYSE. If the value drops that low, the chances of a BK grow significantly since the argument that you are wiping out stockholder value becomes fairly meaningless.
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AMR's market cap (the value of all common stock outstanding) is current about $1.4B which means that at $1/share, the value of AMR as a corporation drops to less than $400 million.
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Fixating on stock prices right now is not entirely helpful since the entire global economy is on pins and needles pending the outcome of the federal debt talks in Washington.
Since airlines are ALWAYS one of the most vulnerable sectors of the market, they will feel the pain first - if you are going to lose money in your portfolio throw out the least profitable sector first. Since airlines face their own unique challenges with higher taxes and fuel prices right now, their outlook is poor.
Most airlines are losing value.
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Given the weakness of the sector overall, it comes down to individual stocks and companies... in a downturn it will be the weakest that will fail first... the real question is how long ANY airline can endure if the economy remains sluggish and fuel remains high.
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AMR is clearly losing more money than other airlines but they also have reasonably decent amounts of cash to cover losses in the near term.
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The percent of stock held short provides some indication of future expectations about stock movement and the security of the stock.
Based on that statistic, about 17% of AMR's shares are held short, 14% of UAL, 4% of LUV, and 2% of DAL.
Even at 17%, AMR's short activity does not indicate that the market expects an imminent BK.
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Thus, continuing to focus on stock prices in a rather turbulent sector and on AMR as one of the more vulnerable companies in the industry isn't necessarily going to do much - unless the point is to believe that AMR at some point will file for BK.
As has been discussed before, AMR doesn't have a whole lot of unsecured stock, has pledged most assets as collateral on existing debt, and has just signed essentially BK proof contracts for its new aircraft order - which means the real benefit of BK - if it comes - is that AMR can move forward with labor cuts.
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If the point is to predict when labor cost cuts will come, then watching the stock decline might be worthwhile.
.
AMR's market cap (the value of all common stock outstanding) is current about $1.4B which means that at $1/share, the value of AMR as a corporation drops to less than $400 million.
.
Fixating on stock prices right now is not entirely helpful since the entire global economy is on pins and needles pending the outcome of the federal debt talks in Washington.
Since airlines are ALWAYS one of the most vulnerable sectors of the market, they will feel the pain first - if you are going to lose money in your portfolio throw out the least profitable sector first. Since airlines face their own unique challenges with higher taxes and fuel prices right now, their outlook is poor.
Most airlines are losing value.
.
Given the weakness of the sector overall, it comes down to individual stocks and companies... in a downturn it will be the weakest that will fail first... the real question is how long ANY airline can endure if the economy remains sluggish and fuel remains high.
.
AMR is clearly losing more money than other airlines but they also have reasonably decent amounts of cash to cover losses in the near term.
.
The percent of stock held short provides some indication of future expectations about stock movement and the security of the stock.
Based on that statistic, about 17% of AMR's shares are held short, 14% of UAL, 4% of LUV, and 2% of DAL.
Even at 17%, AMR's short activity does not indicate that the market expects an imminent BK.
.
Thus, continuing to focus on stock prices in a rather turbulent sector and on AMR as one of the more vulnerable companies in the industry isn't necessarily going to do much - unless the point is to believe that AMR at some point will file for BK.
As has been discussed before, AMR doesn't have a whole lot of unsecured stock, has pledged most assets as collateral on existing debt, and has just signed essentially BK proof contracts for its new aircraft order - which means the real benefit of BK - if it comes - is that AMR can move forward with labor cuts.
.
If the point is to predict when labor cost cuts will come, then watching the stock decline might be worthwhile.
Super FLUF
Senior
- Jun 10, 2011
- 313
- 206
Supposedly.
If I were in contract negotiations with 3 large labor groups, I would be reporting losses as well.
I predict a miracle in AA's future. After all of the labor contracts are settled, then, the "miracle" will happen - AA will start making money. Lots of it. The analysts will be "amazed", and will heap praise on the "superb management" that was able to right the ship even with thousands of greedy labor bricks trying to run the company into the ground.
I've seen this movie before, and it is all too predictable how it ends.
WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,662
- Banned
- #66
Perhaps you want to switch theaters and look for the titles that include stories of companies that got too far beyond the eight ball that they could not recover.... there are more of those stories in the airline industry than the dramatic recoveries.
AMR may well recover but pretending that they are just making this stuff up to gouge labor and then will return to ^just the way it was before^ is not supported by the most recent DOT data that shows that competitors continue to grow in key historically strong AA markets - and they are getting good revenues too.
AA has historically done a very good job of commanding premiums in key global and local markets.... the number of those markets where AA continues to do that are shrinking and AA is having to work harder and harder to keep from falling behind in the markets where they still have that advantage.
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It would be very foolish to assume that AA will just click their fingers after labor contract settlements and return to life the way it has been for years for AA.
AMR may well recover but pretending that they are just making this stuff up to gouge labor and then will return to ^just the way it was before^ is not supported by the most recent DOT data that shows that competitors continue to grow in key historically strong AA markets - and they are getting good revenues too.
AA has historically done a very good job of commanding premiums in key global and local markets.... the number of those markets where AA continues to do that are shrinking and AA is having to work harder and harder to keep from falling behind in the markets where they still have that advantage.
.
It would be very foolish to assume that AA will just click their fingers after labor contract settlements and return to life the way it has been for years for AA.
Excellent. Another "the losses aren't real and are manufactured by greedy bastard management solely so they can cry poor mouth to the unions" believer. Uh-huh.
That would happen only if fuel drops by half or the three unions agree to concessions on the order of another $1.62 billion per year. You're remembering the old days, like the mid-1990s, when WN was a small regional low-cost carrier and before jetBlue and Virgin America had begun flying. And before every one of AA's other competitors had filed at least one Ch 11 bankruptcy petition.
So have I, and the names were Eastern, Pan Am and TWA.
eolesen
Veteran
- Jul 23, 2003
- 15,959
- 9,374
It's easier to focus on stock price than it is to realize that "restore and more" is turning out to be as successful a slogan as "hope and change" has.
I know, we hate labor, and you already did your part eight years ago. There's no need for you to do anything else.
If AA imploded, don't be so sure that all the airplanes and jobs stay in North America. Every airline in the US has been waiting for another one to fail so that the excess 10-15% of capacity in the market goes away. Heck, it might be the watershed event that convinces WN to move over to DFW...
I know, we hate labor, and you already did your part eight years ago. There's no need for you to do anything else.
If AA imploded, don't be so sure that all the airplanes and jobs stay in North America. Every airline in the US has been waiting for another one to fail so that the excess 10-15% of capacity in the market goes away. Heck, it might be the watershed event that convinces WN to move over to DFW...
Hackman
Veteran
- Sep 30, 2003
- 3,997
- 892
- Banned
- #69
Yeah, that "restore and more" only applies to the Centerpork crowd and the rest of the worthy 1000 that saved AA from bankruptcy, not the unwashed masses, we get it. I guess if the billions in 2003 major concessions wasn't enough (along with the former 20 years of twu concessions) AA will have to see the BK judge to get the rest, don't really care about the threats anymore.
If there is a 10-15 percent excess capacity they might want to send that to ORD today, there were 52 non-revs trying to fly to DFW this afternoon on the oversold 4:30pm flight, hopefully they packed a lunch, looks like it's gonna be a long night. Pretty much the story around the system, good luck using flight privileges on the oversold flights, such fun.... Who really cares anyway, their just lowly non-revs, but those paying OS flyers gotta be pissed. Packed flights and still losing hundreds of millions a quarter, go figure. Those damn high labor costs again.
Can't wait to fly a WN 777 to LHR or NRT from DFW, such fun it will be. Free peanuts and soda for all. Should be able to pick up some cheap new airplanes and routes after the AA bankruptcy. Not really sure about that ugly WN paint job on a shiny AA 777, but I'm sure it will grow on me.
It's not labor or management, it's the law.
The laws protect your neighbors to shop for the lowest online fares and they also protect bankrupted airline companies to resurrect.
Your salaries will always be lower and your careers always in peril.
From those of us leaving, we had a great ride.
Even Harry Potter knows when it's time to call it quits.
The laws protect your neighbors to shop for the lowest online fares and they also protect bankrupted airline companies to resurrect.
Your salaries will always be lower and your careers always in peril.
From those of us leaving, we had a great ride.
Even Harry Potter knows when it's time to call it quits.
- Aug 20, 2002
- 7,319
- 1,555
Good thing AMR did not purchase Eastern and Pan Am.....
- Aug 20, 2002
- 7,319
- 1,555
So not being an economist, just raise fares and react to the public, might be a little churn in the industry....
strikeforce
Veteran
- Jan 18, 2011
- 1,224
- 253
the point is management is running the business irresponsibly and fiscally reckless, and lenders are just as irresponsible by placing AMR into further debt knowing full well the company will have difficulty paying it back. Then, after lending AMR billions, the banks will downgrade AMR's credit rating further into junk status and charge AMR a higher interest for additional credit, which banks will welcome with open arms. Bottom line, this is a vicious cycle BANKS play with consumers and corporations. Credit cards ruin families and irresponsible lending to companies ruin those companies. Where's the due-diligence by the lenders and management???? For banks, it's all about making money, and not making sure people and companies are ABLE to pay. It's legalized loan sharking. You can't dispute this. That's why this country is in deep trouble.
