Why do you continue to peddle this "analysis?"
For starters, $1 billion in cash - for a company as large as AMR - is not that much. Second, $1 billion in cash was not then, nor is it now, really in "cash." In accounting and finance lingo, people use "cash" as a general term referring almost always to cash and cash-equivalents or cash and short-term investments. In either case, the reality is that no company ever holds that much in cash - AMR didn't then, and doesn't now - as that would be horrible cash management. Those cash equivalents are not nearly as liquid as real cash, and thus the risk for any company - including AMR - goes up when their cash and cash-equivalents balances gets too low. And, finally, what's important is not how much cash AMR had or has, but how much cash they have to disburse. $1 billion may be a lot of money to you or me, but for a $20-30 billion corporation that may have, say, a $700 million loan repayment, or $300 million pension contribution, etc. in a few days, that $1 billion is nowhere near enough.
Secondly, AMR has not been borrowing and paying interest on money they "can't use" just for fun. AMR has had to maintain cash balances to manage risk from another oil shock, or terrorist attack, etc. - just as all their peers have. Look at what other major U.S. airlines, and indeed major U.S. companies in general, have been doing in the last 10 years - they are collectively holding more cash than at any time in decades. AMR was making the prudent financial decision to horde cash, just as was every other company. And the covenants AMR had to agree to in order to get that cash were not "feigned" or faked - they were real stipulations of legally-binding contracts that AMR had to abide by. You may think that's made up - but the lawyers for the lenders wouldn't when they came in to file liens against AMR.
And as for now, the $4 billion in cash and cash-equivalents AMR is holding is, again, needed to keep the company operating and mitigate financial risk. It also gives AMR - and, in the long-run, AMR's creditors, including the unions - more flexibility to restructure as they want rather than with the pressure of DIP financiers, as all of AMR's peers had to contend with. Getting a DIP financier to put up $1 billion+ would have brought yet another, and needless to say very large, chair to the table. I would think the unions would be happy about that.
Well obviously that's the objective - I don't think the company has made any secret of that. You seem to have this grand conspiracy theory about how AMR is concocting some fake crisis, but you seem to be the only one with that view. On the contrary, I think AMR has made it quite clear to everyone that this process is intended to fundamentally restructure the business - in every way possible. I don't know anybody inside or outside the company who doesn't know exactly what that means: it means getting concessions from the unions, from the lenders, from the leasing companies and property holders (who were among the first to feel the impact), and on and on. The unions are one component of this - albeit a large one - but merely one component.
Aren't we long past the point of even having the moral and philosophical debate about the intent of the law, the morality of the process, the fairness of the deal? I view bankruptcy as a failure as much as you do, and I find the pain and dislocation it is sure to inflict just as unfortunate as you do. But wake up to reality! Every one of AMR's peers have now used this process at least once - and none of them seemed to care about the "intent" of the law, as you define it. The truth is that if a company is beyond the point of no return where they can no longer continue as a solvent, going, concern, and if they decide to seek bankruptcy protection, they would be stupid at that point not to fully restructure the business to the maximum extent possible - and that means lots of pain for lots of people. That's what it meant at Continental (twice), Delta, Northwest, United and USAirways (twice), and I don't understand why AMR would be any different.
Again - it's the definition of moral hazard: if every other airline has done this, does AMR have any reasonable financial justification for not doing the same if their ultimate objective is to be competitive long-term with those same competitors?
