Debt Load

[AMFAMAN]

Well, perhaps you haven't heard about it yet, but starting with the April schedule, something's finally being done about the arrival issue. AA has been testing a new way of staggering arrivals and departures in STL since November, and arrival holds virtually disappeared. With the new method of scheduling, bag mishandlings are down, and departure delays have shrunk as well.

Wasn't that suppose to happen with the depeaking. At first they sent arrivals to the on a first come first serve basis to gates that could handle that type of plane. It worked great for awhile with barely a wait time. Now were back to the old way of waiting for your assigned gate you had prior to landing. Even with the new terminal, 15-20 minutes is about an average wait time and I've seen over an hour on a clear day with open gates surrounding the gate they are waiting for. And BTW...we are using all the gates that were shutdown just a few months ago.

 

[eolesen]

Wasn't that suppose to happen with the depeaking. At first they sent arrivals to the on a first come first serve basis to gates that could handle that type of plane.

Yes and no. Depeaking smoothed out the simultaneous arrivals and departures so that it was a steady flow during the day, but the schedulers were still leaving aircraft sitting on the gate for an hour at a time, and there was very little time during the day when a gate was unoccupied.

This is a slight step back from that mentality. Ground times for turns and thru flights have been reduced to 35-45 minutes. Sounds worse, but the gate crew size goes up to six plus a CC, which actually has allowed more flights to actually get some resemblence of a cabin BOW accomplished, even though the scheduled ground time is shorter.

It also seems to be helping as far as the gate changes go. We measured STL for October, and they had something like 70 gate changes during the month where the change was more than one gate away from the planned gate. In November, there were just two. That's huge when you consider the customer inconvenience of having to walk halfway across the airport, not to mention the problem of a couple carts of bags showing up halfway across the airport because someone didn't find out about the gate change in time.

 

[AMFAMAN]

This is a slight step back from that mentality. Ground times for turns and thru flights have been reduced to 35-45 minutes. Sounds worse, but the gate crew size goes up to six plus a CC, which actually has allowed more flights to actually get some resemblence of a cabin BOW accomplished, even though the scheduled ground time is shorter.

A 35-45 minute turn will never happen at DFW...here's why.

A full flight and most of them are pretty close these days takes at least 15 minutes to offload passengers. If you need to wait for a wheelchair, I've seen 30-45 minutes for that many times.
Next, since we have cut many of our class 2 stations to midnights only, crews are told to write up all the items going into DfW. Problem is we have cut the manpower for maintenance to about 6 guys for 18 gates. Yes it's a pick a number situation and boarding is often held up to complete maintenance.
Next, it takes a good 15 minutes to board up the passengers, this leaves between 5 -15 minutes to clean a cabin if all goes well. The more we convince passengers to bring their own food, the worse the cabin looks.

I could go on about not being able to get fuel taxi loads for planes going to pads or the hangar for over an hour but why bother. <_<

 

[FWAAA]

How did I know this post would get you going?
No thats under YOUR definition. Under my definition of excess cash its cash not needed for the operation. $1 billion in cash to satisfy a bank loan is excess cash as far as I'm concerned, along with the other $2.8 billion. Do you want to quibble about the $200,000,000?

So you contend that the entire $3.8 billion of cash is excess cash? Seriously - you don't know jack about the cash needs of running a business; I'm not saying that because I desire to insult you - it's just plain frickin obvious from drivel like the above. AA management doesn't mind that $1 billion unrestricted cash covenant - it's really one of the easier to satisfy.

Uncertainty is another word for risk, which is the business of business. Its absurd to think that AMR would have a hard time getting needed capital when you consider that USAIR, UAL and others seem to be getting what they need, after going BK.

Why not just get the loan if the opportunity comes up like everyone else does? By the way I already mentioned that.

You assume that AA could just borrow money anytime it wants. I can understand if Arpey and Beer refuse to risk continued operation on such uninformed assumptions.

Then raise the price of tickets or better yet simply add a "fuel surcharge", this way they can say the price is the same, like everyone else does.

Not if its costing a couple of hundred million a year and means the difference between posting a profit or a loss.

AA has raised ticket prices at every opportunity. Yield is way up, as is average fare. Given that every airline (including WN) is selling tickets for less than cost - it's plainly obvious that the domestic overcapacity is currently preventing ticket price hikes sufficient to eliminate the operating losses.

The banks need to lend money, if they sit on it there is a cost factor for them too, it might only be as low as 1.5% but it still costs them. Remember my mortgage example? The banks want to lend money. How come AA is the only carrier, especially when you consider the fact, as you even admit, that financially they are one of the strongest, that has to hold such a large amount of untouchable, unuseable cash? I'll admit its a great deal for the Bank, AMR sits on a billion and pays the bank interest on it, if the bank should need the money they could simply say to AMR that they no longer need to have that extra billion on hand and AMR could boast about how they lowered their debt.

Rarely do we see such an uninformed opinion online anywhere. Every airline's loans contain minimum cash covenants. Have you read the terms of UAL's recent $3 billion exit financing package? Much more onerous than AA's loans.

So what I'm saying is the airlines went into this downturn with the objective of exploiting it to crush us. Call it what you like.

Paranoia?

No they saved it by reducing pay and benifits below those of even the LCCs like SWA and by paying out 900 million, each year or $2.7 billion over the three years, in interest. So in order to avoid paying the "parasites" $600 million they paid out $2.7 billion in intrest.

AA would have paid that interest regardless of whether it filed for Ch 11. Bankruptcy doesn't mean you don't pay interest.

I figured a 10% intrest rate would be conservative, are business rates typically much lower?

Yes, they are. I'm not paying anyone 10% on any of my debt - I hope to hell that you aren't either. This past year I refinanced my mortgage for 30 years at 5.15% with no points.

UAL is paying a little less than 9% on its $3 billion exit financing - and it's paying high-risk rates.

The reason I rubbed your face in this absurd assumption is because you had posted that AA paid $957 million of interest on its $20 billion of debt - which works out to just over 4.5%; so why would you think that AA is paying 10% on any of its borrowings?

AA's debt is varied, but its only bank loan is the $1 billion that replaced the previous $843 million bank loan that was in place when the concessions were signed. That's the loan that requires that AA keep the $1 billion of unrestricted cash. The rest of AA's debt is primarily long term bonds, short term bonds and convertible debt.

Debt load? Define what you mean by debt load. Do you mean that if AMR were to decide to pay off all the money it borrowed it would have to come up with $20 billion? Or are you claiming that the Interest that AMR is paying on its debt is lower than the rates at which the Fed lends money to the banks. If AMR only paid $900 million for $20 billion in loans they are getting a great deal, 4.5%. That doesnt sound like the banks were holding all the cards. When I got 8% for my mortgage of $100,000 I thought I got a great deal, and the bank had almost zero risk because the house was worth over $150,000 at the time.

Yes, AA's principal owed is about $20 billion. The $20 billion figure is not some "total of the payments" that you mentioned - it is the principal balance. And yes, I think $957 million of interest on $20 billion of debt is a great deal - an average interest rate of about 4.5%.

And how much of that $157 million was earned off funds that were for the pension? Paying out $900 million to earn $157 million is not a good deal. Sitting on $1 billion in cash that you cant use is not a good deal.

Zero, as the pension funds are not co-mingled with AA's money. Earnings on the pension funds accrue to the pension funds, not AA. AA didn't pay out $957 million to earn $157 million; it paid out $957 million to avoid default on its debt. It paid its bills. AA likely paid about $50 million on that $1 billion with which you seem obsessed.

More BS. AA paid out over $900 million in interest last year. Nearly $1billion in interest and posted a loss for the year. The banks made over $1billion thanks to AAs operations but the employees are being told they have to put out more because the company is losing money. Nearly $1 billion in interest to the banks, much of that interest being paid on excess cash being carried by the company for what ifs and maybes.

More BS? Nope - just the facts from someone who understands that businesses like AA need cash to survive.

Whats the matter cant come up with anything substantial to debate so you resort to petty attacks? Why not attack what I said about having to sit on $1billion in cash?

I did counter what you said about your uninformed views of the $1 billion minimum cash covenant. I simply expected that a former union local treasurer would possess a greater understanding of this subject than your posts display, that's all. Not meant to be a petty attack - I'm truly serious: How did you get to be a treaurer of any organization while lacking such basic understanding of this subject?

You know, you really should send an employee suggestion to AA informing them how stupid they are for not paying off that $1 billion bank loan. Seriously. It's not like AA will need that cash this year.

 

[FWAAA]

This is a term that we see the company and FWAAA throwing out.

What exactly is debt load? Is it the principle that you borrowed? NO, its the amount, usually in a percentage, of how much of your income is used to pay bills, in this case debt. In reality they are misusing the term. This misuse inflates our perception of what AMR actually borrowed to stay afloat. A debt load of $20 billion does not mean that AMR borrowed $20 billion. It means that if AMR only makes their minimum periodic payments over the life of the loans they have they will pay out $20 billion. What difference does that make? A BIG ONE!!!

More uninformed opinion. AA owes about $20 billion of debt; this means actual principal balance, not the sum of the payments.

Terms such as "debt load" are one of the reasons why we cant trust management or our unions who go around repeating these figures. They are misleading. We see "debt" and think one thing, however the added term "load" changes the definion.

Ya know - I'm the first to agree with you that your union isn't worth jack. A couple weeks ago I posted how my wrench-turning friends at GM (assembly-line employees) have spent the last 20-25 years making at least 50% more than you guys. I don't understand why you all keep paying dues. Yes, the guys at GM are about to see the concession train, too, but for the last quarter century they have out-earned airline mechanics by a large margin. And those guys don't have any federal licensing requirements or expensive training requirements like A&P mechanics do.

But constantly claiming that management and the union are continually lying about each and every thing they say makes you sound very similar to a boy crying wolf; keep it up and nobody will believe you even if you do catch them lying.

 

[AMFAMAN]

I don't understand why you all keep paying dues.

It's a condition of employment, we have no choice but to.

 

[Bob Owens]

Another thing on this $4 billion in extra Debt the company is carrying, and likely paying hundreds of millions of dollars in interest on.

So far the possible excuses for carrying this extra debt have been;
AA might not be able to borrow it later if they need it.
AA might want to have it on hand in case there is an opportunity to pick up some good deals.

Well I've heard of setting up a line of credit but never setting up a line of debt.

As AMR lays out nearly $1 billion a year in interest, a sizable percentage of which covers this luxury of carrying an extra $4 billion in debt we have pilots trying to sqeeze out a few measly millions in fuel savings. As if thats going to save the company. The fact is all their efforts at fuel savings are being pissed away by intrest payments on the extra debt that AA is carrying "just in case".

 

[Bob Owens]

So you contend that the entire $3.8 billion of cash is excess cash? Seriously - you don't know jack about the cash needs of running a business; I'm not saying that because I desire to insult you - it's just plain frickin obvious from drivel like the above. AA management doesn't mind that $1 billion unrestricted cash covenant - it's really one of the easier to satisfy.

There you go again, why not stick to the facts instead of insults? I can understand the need for keeping extra operating cash due to the ever changing flow rates of cash. At any given time the company could have millions owed to them while other bills and operating costs need to be paid now. But having to keep $1 billion sitting aound is a lot of money, even for a company the size of AA. Its 5% of their Yearly gross. Keeping $4 billion of borrowed money on hand to make up for flow equates to keeping 20%. Its an expensive luxury.

You assume that AA could just borrow money anytime it wants. I can understand if Arpey and Beer refuse to risk continued operation on such uninformed assumptions.

Thats a pretty safe assumption when you factor in that bankrupt carriers that dont have a billion in cash sitting around are able to get loans.Ever hear of a line of credit? I'm sure you have. You set it up ahead of time, what you are talking about is a line of debt. In a line of credit you pay for the money you actually need and use when you use it, with this set up AMR is paying for money, some of which it cant use and the rest of which it does not need at this time and may not ever need.

Every airline's loans contain minimum cash covenants.

Sure, the set up has worked so well at AMR and pretty much every airline is doing pretty good at busting down their labor costs.The fact is these covenants create a crisis where otherwise there wouldnt be, and the crisis is a good tool to bust down labor costs.

$1 billion to borrow $843million! So if you drop below give them back their $843 million and live off the $157 million till you find another lender.

In 2003 the company was claiming they were about to hit the $1 billion mark,which for all intensive purposes was like running out of cash, at least thats what they told us, however they only owed $843 million, so they could have simply paid them back the $843M and stretch the remaining $157M out for two months until the busy summer season. Then they could, as they did, borrow more money or raise cash without ever defaulting.

Have you read the terms of UAL's recent $3 billion exit financing package? Much more onerous than AA's loans.
Paranoia?

No, do you have a link?
They should be more onerous, UAL went BK. From what I've been told AMR agreed to the $1 billion covenant way before March of 2003.UAL would have probably had more onerous terms than AMR even prior to 9-11.

AA would have paid that interest regardless of whether it filed for Ch 11. Bankruptcy doesn't mean you don't pay interest.

It also doesnt mean your labor contracts are voided but it can, it all depends on what the BK judge decides.

Yes, they are. I'm not paying anyone 10% on any of my debt - I hope to hell that you aren't either. This past year I refinanced my mortgage for 30 years at 5.15% with no points.

Well if they are then its because the banks dont consider the airlines to be much of a risk. Higher risk, higher rates. If the airlines were really in such bad shape then you would expect that they would get charged very high rates. You got a 5.15% because your house is collateral for the loan and your income and debt load indicate that you are not likely to default.

UAL is paying a little less than 9% on its $3 billion exit financing - and it's paying high-risk rates.

Well 9% doesnt seem that high. Is that all the banks are getting? Or are they getting shares of the new UAL stock to go along with the loan at 9%? Do you know what rate AMR is paying?

The reason I rubbed your face in this absurd assumption is because you had posted that AA paid $957 million of interest on its $20 billion of debt - which works out to just over 4.5%; so why would you think that AA is paying 10% on any of its borrowings?

I think I answered that already. If AMR was really at such a great risk then the banks would be charging high rates like at least 10%. AMR is likely paying all sorts of different rates, perhaps one rate for Boeing planes, another for cash, and other rates for Terminal projects etc. Of all these rates I doubt that any are around 4.5%.

AA's debt is varied, but its only bank loan is the $1 billion that replaced the previous $843 million bank loan that was in place when the concessions were signed.
That's the loan that requires that AA keep the $1 billion of unrestricted cash.

So in order to borrow $843 million they have to sit on $1 billion?

If you have $1 billion why borrow and pay intrest on $843 million especially if it ties up the $1 billion?

At the end of the deal they end up with $157 million less to use plus the intrest they have to pay. In this case it brought them $157 million closer to filing for BK. Its not like money is not coming in, it may be going out faster than its coming in but if they lose $100 million this year it would take them nearly 10 more years at that rate before they run out.

The rest of AA's debt is primarily long term bonds, short term bonds and convertible debt.

Long term bonds, like for the terminals they are building all over the country right? What is convertible debt? Would the debt for these bonds be listed as the price they were sold at or the price they mature at?

Yes, AA's principal owed is about $20 billion. The $20 billion figure is not some "total of the payments" that you mentioned - it is the principal balance.

Ok, where can I find that figure? After all you are making these claims from behind an alias. This gives you the ability, if you were so inclined, to lie in order to try and make a more convincing arguement.

Why use the term "debt load" when that term refers to payments vs income and not principal? Why not just say "debt"?

Zero, as the pension funds are not co-mingled with AA's money. Earnings on the pension funds accrue to the pension funds, not AA.

Well thats not what happened during the 90s. As I recall management was taking money out of the pension fund because earnings were higher than expected. In fact I brought this up on another thread some time ago and someone, perhaps it was you, replied that AMR HAD to take that money out.

AA didn't pay out $957 million to earn $157 million; it paid out $957 million to avoid default on its debt. It paid its bills. AA likely paid about $50 million on that $1 billion with which you seem obsessed.

$1 billion or $843 million? If they paid out $50 million for $843M then they were paying 3% less than UAL is paying for $3billion, and they went BK!

More BS? Nope - just the facts from someone who understands that businesses like AA need cash to survive.

Of course they do, but hard times require cutting things a little closer, even at 6% sitting on $4 billion is costing AMR $240 million a year.

I did counter what you said about your uninformed views of the $1 billion minimum cash covenant.

Not really.

I simply expected that a former union local treasurer would possess a greater understanding of this subject than your posts display, that's all. Not meant to be a petty attack - I'm truly serious: How did you get to be a treaurer of any organization while lacking such basic understanding of this subject?

A basic understanding of corporate financing? Well anyway you have not disproved anything I've said. If during better times AMR was OK having a much smaller amount of cash then why , when times are hard would they spend $240 million a year to sit on cash? How much did AMR lose last year? If AMR did not have the expense of sitting on that extra $4 billion in debt is it possible that they would have made a profit in 2006?

 

[eolesen]

Bob, for what it's worth, the Wall Street financial analysts (i.e. Gary Chase, Jamie Baker, Mike Linenberg) seem to think it's a wise move to sit on the cash as well.

I don't have an MBA, and I'm sure that any one of those three has probably forgotten more about corporate finance than I'll even know, so if they're willing to upgrade AMR's prospects based on the cash level, it's probably worth taking note of.

I'm sure you pay good money to get the advise of a physician or specialist when you need one, rather than watch a couple episodes of E.R. or read a couple pages out of Web MD so that you can do a self-diagnosis.

So, why is it whenever corporate finance is concerned, you don't want to listen to the people who have spent decades making that their specialty??....

 

[Bob Owens]

Bob, for what it's worth, the Wall Street financial analysts (i.e. Gary Chase, Jamie Baker, Mike Linenberg) seem to think it's a wise move to sit on the cash as well.

I don't have an MBA, and I'm sure that any one of those three has probably forgotten more about corporate finance than I'll even know, so if they're willing to upgrade AMR's prospects based on the cash level, it's probably worth taking note of.

I'm sure you pay good money to get the advise of a physician or specialist when you need one, rather than watch a couple episodes of E.R. or read a couple pages out of Web MD so that you can do a self-diagnosis.

So, why is it whenever corporate finance is concerned, you don't want to listen to the people who have spent decades making that their specialty??....

And if I was only concerned about stock performance I would rely more heavily on the opinions of Chase, Baker etc.

In response to your Doctor analogy, I certainly would not bring a sick pet lamb to the butcher to find out how treat its illness.

These financial analysts are giving information taylored to investors, not employees. Whats good for the stockholders is not always good for the workers. In fact these people look at anything that means less for the workers as good news. In fact if the company could eliminate American workers entirely, ship it out to Mexico, they would be cheering and saying what a great move it is for AMR. It would not be so good for the workers though.

Last year AA lost money, but the stock went up. Why? Because investors seemed to think that despite posted losses that AMR would increase in value. So the obvious figures in front of us, the losses, which the company continues to use to gain concessions dont really seem that important to the investors. The experts you refer to are the ones saying to "buy".

So there may be plenty of specialists available to offer investors valid advice, however that advice may not be be exactly what workers need to know before they sell their labor at discount prices far into the future. For workers, using their advice is like dumping the lamb on the counter at the butchers and saying do what you think is best. The carcass will end up hanging in the store window. What was best for the butcher and his customers is not what is best for the lamb. Cheap meat is good for the butcher and his customers but its not good for the lamb.

The fact is management, along with the corrupt unions on the property that they own, are running around pushing this JLT program, which is really just a means of gaining more concessions without opening up the contracts, concessions without reciprocity for the workers. So holding on to a lot of cash may be good for the stock price, the extra debt may be used to help the stock grow faster sometime in the future,like when they dump it, and it may be used to maintain the impression of crisis as a means to scare the lambs into the slaughterhouse. From where workers are sitting the extra debt is being used to drive down not only present compensation but also future compensation. Its being used to give the company productivity improvements today, without opening up the contract which will leave workers with less to bargain with when the contracts do open up.

From Wall Streets perspective having workers donate productivity improvements is great news, in fact any concession is great news, but its not great for the workers.

So Wall Street might like the idea of AMR holding on to $4 billion in extra debt because that debt and the losses carrying that debt causes are being used as leverage to drive in further concessions. The $4 billion could be eliminated tomorrow, leaving AMR in the black, with the added concessions which are permanent. The intrest could be looked at as a small temporary expense to gain permanant concessions.

So from an investors point of view the $4billion in debt thats being held as cash would be a good thing as far as the price of my stock. Its certainly better than if AMR had used the $4 billion to pay wages and benifits, from the stockholders point of view, because this added debt has to be serviced by future earnings.In that case the company would actually be worth $4 billion less.In fact the $4billion in cash means that AMRs net debt is only at the most around $16 billion, much less than what the much smaller UAL just exited BK with.

The $ 4billion is part of the $20 billion that AMR is telling their employees they owe, which is factual, but misleading because once management feels they have gained all the extra concessions they can get they can get rid of that $4 billion.

While the company and the TWU run around touting AMRs debt they leave out AMRs net worth. If they do cite net worth they cite AAs net worth. However when you consider that AA is being used to prop up the earnings and growth of AE thats also misleading for the worker.

The fact is that what we need to see is not what is put out. What we need to know is not only the worst case scenarios that are reported to the SEC but what possible opportunities lie for the company from an employees perspective in the future. Unfortunately there are no specialists out there for that line of work. Sorry but Jim Littles degree from Columbia State University doesnt cut it.

 

[FWAAA]

Of course they do, but hard times require cutting things a little closer, even at 6% sitting on $4 billion is costing AMR $240 million a year.

A basic understanding of corporate financing? Well anyway you have not disproved anything I've said. If during better times AMR was OK having a much smaller amount of cash then why , when times are hard would they spend $240 million a year to sit on cash? How much did AMR lose last year? If AMR did not have the expense of sitting on that extra $4 billion in debt is it possible that they would have made a profit in 2006?

No, Mr Owens, you just don't understand it. Your post is not unlike me asking "Why does AA perform all that heavy maintenance on its airplanes? Wouldn't it be cheaper to fly them until they fall apart? Seems to me that all that heavy maintenance is just wasted money."

You'd call me a dumbass if that were my view, wouldn't you? And rightly so, because if I subscribed to such an uninformed viewpoint, I'd have earned that label.

AA didn't spend anywhere near $240 million for interest on that $3.8 billion of cash. AA earned $157 million in interest income last year, and that is likely almost as much as the interest paid on the $3.8 billion of cash. That's what effective cash management can do for you.

Ever received an offer from your credit card company for something like 1.9% for the life of the balance? I've got a couple of those right now. Wanna know what I did with the money? Invested it. I've done a little better than 1.9%.

I doubt AA did has achieved the same results on its cash balance, but to assert that AA would likely have been profitable last year if only it reduced its cash balance to near zero is just so far out of touch with reality that I feel compelled to point it out for you.

It's not like your (or mine) "free" checking account where you earn zero interest in exchange for free checking; AA actively invests its cash to minimize the net cost of carrying that cash. $157 million of interest income is impressive, especially since AA's cash balance grew during the year (it didn't start 2005 with $3.8 billion of unrestricted cash).

You obsess over the minimum unrestricted cash requirement of $1 billion; do you really think AA's management finds that requirement burdensome? The fact that management has worked hard to increase the cash balance by $2.8 billion over that minimum amount should tell you something.

Sure, AA told you repeatedly that it was in danger of falling below that minimum in early 2003; had it done so, it would have been in default on most (if not all) of its debt and would have had to file for Ch 11. Maybe it should have. Maybe I should have bought more Google back in 2004 at their IPO. Crying about it now isn't going to make anything better.

Fuel is likely to cost a billion dollars more this year than last. AA has about $1.2 billion of principal to pay this year on maturing debt. And you have doubts about the wisdom of sitting on a growing pile of cash? Sounds like someone pines for bad news if you ask me.

 

[FWAAA]

Ok, where can I find that figure? After all you are making these claims from behind an alias. This gives you the ability, if you were so inclined, to lie in order to try and make a more convincing arguement.

Why use the term "debt load" when that term refers to payments vs income and not principal? Why not just say "debt"?

Here's the total debt, as of 9/30/05:

Accounts payable					$  1,101	   $ 1,003
  Accrued liabilities				  1,957		 2,026
  Air traffic liability				3,851		 3,183
  Current maturities of 
	long-term debt					   790		   659
  Current obligations under 
	capital leases					   170		   147
	Total current liabilities		  7,869		 7,018

Long-term debt, less 
  current maturities				  12,292		12,436
Obligations under capital leases, less   939		 1,088
  current obligations								 
Pension and postretirement benefits	4,799		 4,743
Other liabilities, deferred gains and  4,266		 4,069
  deferred credits

http://www.shareholder.com/aa/EdgarDetail....05-65&SID=05-00

Notice the "air traffic liability" figure of $3.8 billion? That represents tickets puchased for flights not yet flown and AAdvantage miles sold to Citibank and other partners. Might be a good idea to keep cash on hand with which to satisfy that liability. Maybe you know better.

$7.8 billion of current liabilities (those are debts due within a year - or by 9/30/06, since this is from the 9/30/05 balance sheet) plus $12.3 billion of long-term debt (bank loan plus bonds and notes) plus $4.8 billion of pension and post-retirement benefits plus $900 million of capital lease obligations (principal equivalent of those lease obligations) plus almost $4.3 billion of other liabilities. Totals $30.165 billion of total liabilities. Long term debt plus current liabilities alone equal $20.161 billion.

The article posted by the OP used the term "debt load" yet didn't quote anyone at AA as having used the term. Dunno if anyone at AA used the term. Couldn't care less. Obsess all you want about terminology. Doesn't change the fact that AA owes well over $20 billion. And AA's cash balance has nothing to do with losses.

You know, Mr Owens, I don't have to lie. The 10-Q ably proves the amount of debt to my satisfaction. Probably not to yours, but that's a lone voice in the wind. The rest of the world knows the facts. Alias? You and Ken are the only ones posting under their real names. Like I've said before - I don't work for AMR or any of its subs.

 

[Connected1]

FWAAA - Technically, that is not the "debt" to which the company refers. "Debt" is the sum of on-balance long term financings (commonly referred to as "long term debt" on the balance sheet) and the present value of the payments associated with off-balance sheet debt such as operating leases. It's all in the 10-K, you just have to do the math yourself due to the way the FASB accounting rules work.

The remainder of the "debt" on the balance sheet are run-of-the-mill short and long term liabilities that aren't necessarily the result of borrowing activity.

 

[Kev3188]

actually has allowed more flights to actually get some resemblence of a cabin BOW accomplished, even though the scheduled ground time is shorter.

I'm guessing that BOW means a turn clean, but what does the acronym stand for?

 

[FWAAA]

FWAAA - Technically, that is not the "debt" to which the company refers. "Debt" is the sum of on-balance long term financings (commonly referred to as "long term debt" on the balance sheet) and the present value of the payments associated with off-balance sheet debt such as operating leases. It's all in the 10-K, you just have to do the math yourself due to the way the FASB accounting rules work.

The remainder of the "debt" on the balance sheet are run-of-the-mill short and long term liabilities that aren't necessarily the result of borrowing activity.

You are absolutely correct. Just trying to keep things a little more . . . uhh, . . . simple for Mr Owens. B)