Federal Bailout $$ Billions, for the Airlines, with 'Conditions' ?

[1AA]

https://www.dailymail.co.uk/news/ar...s-earn-millions-dollars-year-25B-bailout.html

 

[jimntx]

when no one is flying, no airline can come up with a successful plan. the only plan is to get aid from the govt. and pay them pay back incrementally.

that is everyone's plan. united can't survive without the aid, just like everyone else. if united gets aid, so will aa and dl.

Too bad this argument didn't apply to you and me when those massive tax cuts were awarded to the richest 10% of citizens of the U.S. Did you know in advance that you weren't getting a dime back via the tax cuts. I certainly didn't.

 

[V.O. Reason]

AA is seeking the largest bailout of the Big Four -- they're "only" getting $8.85B right now, and they have to repay $1.7B of that, and giving up around 3-5% ownership stake to the Feds in the form of warrants.

My guess is that's enough operating cash for about 14-16 weeks. But hey, the government is here to save y'all.

WN is only asking for $3.3B. United and Delta haven't said exactly how much, but it's estimated around $5-7B each plus 2-4% in terms of warrants.

Dude what are you talking about 14 to 16 weeks
Do you not read the information that the company put out?
Hey I get it they are not totally trustworthy but the money will help maintain the operations until September.
AA had more on hand cash before all of this which factors in and they also had secured loans prior to this deal.
Plus they said there is likely to be another loan they will use.

 

[CremaDiLimone]

i don't know, i tried to be civil and presented an argument...he calls people 'skippy' when he gets annoyed.

he said something about pan am and the spirit of the workforce would matter and banks looking at debt..and this operation has absolutely nothing to do with all that.

the u.s. treasury doesn't care what your debt load is.

i don't argue with him that the morale at aa is nowhere near dl or southwest, but i stated that had nothing to do with the cares act.

as it turns out, we should be ok until oct. with the economic and transport status quo, no one will be ok in oct. i believe that if necessary, there will be another operation to aid the airlines into the winter, given the obvious factors, plus the presidential election.

aa tells us that we are immediately receiving $4.1 billion in payroll 'grants' and another $1.7 billion loan from the u.s. treasury.

aa says they will apply for another $4.75 billion loan from the u.s. treasury.

 

[T5towbar]

UA took aprox. 5 billion in loans, but our bosses sent another letter tonite saying that things aren't looking great and who knows when travel will get back to some semblance of normalcy. The loan does not or will not cover the full costs of payroll till Sept. 30. (I think the cash burn is nearly a billion a month - that is not good with nearly enough revenue to cover this) The schedule for May; June; and July looks horrible I don't know if another round of loans or grants will happen, but one thing is certain: there will be massive layoffs, and those that do survive will see cuts in pay. That is certain. There is no way around this situation. Our bosses in this letter are upfront with us, and are pretty much telegraphing what is about to happen. Imagine tens of thousands of furloughed airline employees before the holidays.

A lot of lifestyles are starting to change, and it seems not for the better until a vaccine is found, and people are willing and able to use any discretionary funds to spend.

This is a challenge that no one has foreseen, and it looks like a very miserable summer season coming up.

God help us all.............

 

[Kev3188]

DL has been telegraphing the same message. It’s gonna be brutal.

I hope you’re feeling better!

 

[eolesen]

WN took a total of 3.3B.
UA took $3.5B and $1.5B as a loan, total $5.0B
DL took $3.8B and $1.6B as a loan, total $5.4B
AA took $7.1B and $1.7B as a loan, total $8.8B

Grants were based on documented payroll costs, and on the surface, AA's appear to be about double that of their two largest competitors. If that's not a warning to the AA folks that y'all are in trouble come October, I don't know what is...

The messaging from DL and UA is definitely transparent, and it's something that those employees are used to by now. My guess is they're hoping more people leave before 10/1 so that the involuntary actions are minimal. Existing buyout incentives have moved some folks to leave already, and I personally know others who plan to bail as soon as they secure something. Hiring's frozen at most companies as long as lockdowns continue, but should resume before Memorial Day.

 

[eolesen]

the u.s. treasury doesn't care what your debt load is.
<snip>
aa says they will apply for another $4.75 billion loan from the u.s. treasury.

Keep telling yourself that. Remember the ATSB? They denied over half the loan applications received from airlines, and most of those are now defunct.

If what we saw Treasury do on grants is any indicator, the decision on loans will be risk based like we saw with ATSB. Nobody considers approving a loan without taking existing debt load into consideration. The higher the debt, the higher the security that would be required, i.e. more warrants and further dilution of existing stock.

 

[jimntx]

Now, E. There you go again tryin' to confuse these nice folks with facts.

 

[Kev3188]

WN took a total of 3.3B.
UA took $3.5B and $1.5B as a loan, total $5.0B
DL took $3.8B and $1.6B as a loan, total $5.4B
AA took $7.1B and $1.7B as a loan, total $8.8B

Grants were based on documented payroll costs, and on the surface, AA's appear to be about double that of their two largest competitors. If that's not a warning to the AA folks that y'all are in trouble come October, I don't know what is...

The messaging from DL and UA is definitely transparent, and it's something that those employees are used to by now. My guess is they're hoping more people leave before 10/1 so that the involuntary actions are minimal. Existing buyout incentives have moved some folks to leave already, and I personally know others who plan to bail as soon as they secure something. Hiring's frozen at most companies as long as lockdowns continue, but should resume before Memorial Day.

It’s obviously anecdotal, but in my experience, AA employees seem to be in the most denial about the gravity that of all this. I’m not singling anyone here out; I’m talking about friends I speak to, social media feeds, etc.

For DL, the company is absolutely still imploring people to take leaves- and that’s after ~35k have already opted for one in some form.

 

[CremaDiLimone]

some people just can't say they were wrong. picking a fight just because they believe there are idiots on the other side of the keyboard.

pan am. esprit de corps. commercial banks and debt/interest rates. ALL WRONG. nothing to do with what was debated and what were the factors for aid for the airlines. i talked about the short-term viability of the industry. it's been wrapped up.

the short term viability of the airline industry to oct. 1. the whole. including debt-laden aa. as it turns out, what has occurred is what was presented...the govt. came through, the airlines accepted and no lay-offs for the time being.

that is what i argued.

Now, E. There you go again tryin' to confuse these nice folks with facts.

you seem like a likeable guy, jim. you bring up 'facts'. let's talk facts. believe it or not, i actually work for aa.

the company told us on monday that:

$4.1 billion in payroll grants
$1.7 billion loan

all immediate.

going forward, $4.75 billion loan application from the govt.

that's from the company. the numbers don't add up to the facts that you are praising. those were imaginary numbers, jim.

deutsche bank analyst:

“Grants and loans should provide sufficient support for the industry through the end of September,” he wrote in a note published Wednesday.

from the start, that's all what was argued from my side.

here's more on the rates being paid back on grants & loans - nothing about borrowing money from GE capital at 8%, because aa is debt-laden. grants & loans from the u.s. govt., for the industry.

“The equity dilution risk is more moderate than we had previously believed,” Bernstein analyst David Vernon wrote in a note published Tuesday. Cowen analyst Helane Becker concurred, writing that the grant amounts are lower than anticipated, likely because the bailout program was oversubscribed with a high participation rate.

Each airline will receive grants worth 76% of their payrolls, based on labor costs for the second and third quarters of 2019.

Thirty percent of the grants will be debt payable over 10 years at low interest rates: 1% above Libor (a short-term benchmark rate) for the first five years and 2% above Libor in the next five years. The Treasury department will receive 10% of the loan portion of the grants as warrants, pegged at strike prices from April 9.

 

[CremaDiLimone]

Do you not read the information that the company put out?
Hey I get it they are not totally trustworthy but the money will help maintain the operations until September.
AA had more on hand cash before all of this which factors in and they also had secured loans prior to this deal.
Plus they said there is likely to be another loan they will use.

i'm done with this nonsense.

 

[eolesen]

It’s obviously anecdotal, but in my experience, AA employees seem to be in the most denial about the gravity that of all this. I’m not singling anyone here out; I’m talking about friends I speak to, social media feeds, etc.

It’s not just you. I’m seeing the same types of gaslit reactions from all the people are used to work with at AA.

 

[jimntx]

Well, I hope no one gets so excited about being right that they wet their pants. It's not like Dougie turns to airlineforums.com when he needs advice.

 

[A&P]

A lot can happen in 5 months. I am going to remain optimistic.