Huge American cash burn

[iflyjetz]

Unfortunately, I have to agree that AMR is being vectored to final approach for rwy (ch) 11. However, rumors are that CAL is lining up on final in front of AMR. CAL was highly leveraged prior to 9/11, and in spite of a lower cash burn rate, there is very little pad in CAL's finances.
I recently read an internal e-mail from a Delta employee who stated that CAL had taken out a $200 million loan on spare parts, which, from the tone of the e-mail, are now unusable by CAL because they are collateral for the loan. The e-mail implied that this was CAL's last step before it's game over. The e-mail also indicated that AMR's cash burn was very high. Delta was in better shape, with more cash reserves and lower burn rate, but would be forced to declare chapter 11 by the end of 2003 unless conditions began to improve. The e-mail assessed NWA to be in the best shape due to a very large cash position and low cash burn rate.
RASMs are in the toilet in spite of ASM reductions. In spite of CASM reductions, falling RASMs negate many cost savings at the airlines. Hang on folks, unless the economy turns around quickly, we're not close to the bottom yet.
And for AMR employees, don't go around with blinders thinking that chap 11 can't happen to you.
Bottom line ... this industry is coyote ugly and getting uglier every day.

I'm calling 1-800-TRUCKMASTERS tomorrow to start planning for my next career.

 

[UnitedChicago]

You all are sounding like the UA board 3 months ago. Don't forget about the lobbying power at NWA, DAL, and UA. NWA, DAL, and AA pushed hard for the ATSB to reject the UA loan.

Don't think that if AA is begging for a hand out or asking for a loan within a program that has now concluded - the government won't hear loud voices by UA, NWA, and DAL saying it's completely unfair.

You should review Senator McCain's stance. AA has much work to do before the government would consider even introducing legislation to help.

 

[grndproxwarning]

[blockquote]
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On 1/13/2003 1252 PM eolesen wrote:

Anyone who thinks that a Republican administration is going to jump in and start rescuing airlines beyond what has already been done should immediatly proceed to their supervisor, and request to have a non-random drug test. Immediately.

Based on the Democrats who have already announced intention to run in 2004, Bush will be re-elected hands down, assuming he doesn't get caught playing doctor with a White House intern pregnant on the steps of the Lincoln Memorial...

Would there be some chaos? Absolutely. But you'd also see the surviving carriers throwing extra capacity into the harder hit profitable markets overnight. Some places would simply be relegated to the second or third tier markets that they really are.

But I'd be willing to bet that after about a month or two of reasjustment, you'd never know the failed carriers were gone.


E
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Your the one that should have a non-random..
Wait till AA post their 4th quarter results..
not a big deal,but watch your spelling, reasjustment..
ps. if you want the connection between Bush and Enron
go to www.corpwatch.org.Then type in Enron and Bush.

 

[AAquila]

The economy drives the Political climate, so King George II's winning 2004 is not a sure thing. Right now paranoia rules, Americans will soon awaken though and realize that there are worse things than a stained dress on Pennsylvania Avenue .

When them Dems return airline regulation will too.

 

[Rational Thought]

[blockquote]
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On 1/13/2003 3:40:16 PM 767jetz wrote:

The last thing we as an industry need is another large group of employees getting the shaft and dragging average wages down further. This unfortunately is the goal of the current administration. (And I'm saying this as a registered Republican.) Lower wages means less dues money to organized labor, less $ going to the PAC, and less $ for GW's opponents.

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[/blockquote]

I know we all try and blame things on "the government", but rarely is that the case. First, it is better when the government doesn't become involved in the private sector. What makes an airline more important than a hospital or an insurance company or a high-tech firm or a department store chain? Nothing really. And if the government does become involved and starts saving companies, you create a moral hazard and society pays for bad decisions and inefficient businesses. Worse, it distorts the incentives within the market. Just look at what is happening to France Telecom and the entire German economy.

Second, letting the free market function is the usually the best decision for the government. How does some government administrator really know what is "best" for the economy? They don't.

So, what the current administration is doing is exactly what every administration should do (Republican or Democrat), nothing. The airline industry will adjust, just like the shoe manufacturing, steel, and textile industry have in the past and how the technology sector is doing right now...and it's ugly. In the end, the economy is better for it.

You just don't like the current policy because of self-interest. Which is undertandable. But it is wrong. Just like the guy working at webvan didn't like getting fired or the HP employee who took a paycut, they probably don't like the current economy either...but no one is going to save them.

The problems the airlines face is fairly easy to diagnose...a leftward shift in the demand curve. The challenge is finding a solution to it. And based on the sticky labor costs, it wont be easy or happen soon enough.

 

[AgMedallion]

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On 1/14/2003 1:46:18 PM AAquila wrote:
Americans will soon awaken though and realize that there are worse things than a stained dress on Pennsylvania Avenue .
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[/blockquote]

You mean like doing virtually NOTHING about terrorism for 8 years. except maybe firing million dollar missiles into empty $10 tents? Like turning down the chance to have UBL handed over to us by Sudan when they offered? The stains on Monica's dress are the LEAST important characteristics of BJ Bill's horrendous reign.

 

[KCFlyer]

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On 1/14/2003 1:46:18 PM AAquila wrote:

When them Dems return airline regulation will too.
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[/blockquote]

I thought it was the Dems who approved deregulation in the first place.

 

[autofixer]

[blockquote]
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On 1/14/2003 1:46:18 PM AAquila wrote:

The economy drives the Political climate, so King George II's winning 2004 is not a sure thing. Right now paranoia rules, Americans will soon awaken though and realize that there are worse things than a stained dress on Pennsylvania Avenue .


When them Dems return airline regulation will too.
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[/blockquote]
Regulation? Do you honestly think the public will let that ever happen again? NO WAY EVER! Not as long as there are Southwest, AirTran or JetBlue around! You are nuts!

 

[Borescope]

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On 1/11/2003 742 PM kiowa wrote:

Carty said this week that American Airlines (employees of course) had to cut $4 billion out of it's budget this year just to break even. That equates to over $10.9 million per day cash burn! That is also considerably more than UAL's before they declared bankruptcy.
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When UA filed BK their attys told the court that their cash burn was upwards of 22 mil a day.
The money we gave up will last the company 4 to 5 days a month. Good luck AA - you may be next.

 

[Wild Onion]

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On 1/15/2003 1143 AM WingNaPrayer wrote:

Wow, in looking at my last receipt from just a week ago, I paid 37.50 in excess taxes for all that airport security crap. Tickets, ergo customers, are funding the majority of the TSA, not the airlines.

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That's only partially true. There is an equilibrium price for which the flying public is willing to purchase a ticket. That price does not change no matter if $10.00 is going to AA or the TSA.

Bottom line, that $10.00 extra is $10.00 that could be collected as much needed revenue.

Ture, the customers are funding the TSA, but I'd much rather they were funding AA 🙂

 

[767jetz]

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On 1/14/2003 3:22:04 PM Rational Thought wrote:

"What makes an airline more important than a hospital or an insurance company or a high-tech firm or a department store chain? Nothing really."



-- What makes the airline industry less important than the farming industry, less important than Chrysler, or less important than the many other industries that get help from the government? Please don't preach down to us from your soapbox. The government most certainly does picks and choose who they will help, and politics and votes are their #1 motivator.




"You just don't like the current policy because of self-interest. Which is undertandable. But it is wrong. "



-- Actually, you are wrong, my friend. Of course I don't like to take a pay cut. No one does. That's obvious. I am actually still doing fine and have adjusted accordingly. My biggest problem is the fact that the airline industry is taxed more than any other. All the security costs being imposed on our companies are not passed on to the consumers. So in order to afford the security taxes and charges, the companies have to take $ away from the employees. Isn't airport security a matter of national security? Why then are the employees being asked to shoulder this burden? We are funding the war on terrorism, and it's simply not right!

 

[WingNaPrayer]

Wow, in looking at my last receipt from just a week ago, I paid 37.50 in excess taxes for all that airport security crap. Tickets, ergo customers, are funding the majority of the TSA, not the airlines.[BR][BR]Previously, airlines used to contract with private security for airport screeners, etc., and we all remember too well the mess that was blamed on that "cheapest bidder" debacle!

 

[spacewaitress]

[blockquote]
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On 1/15/2003 12:33:01 PM Wild Onion wrote:
but I'd much rather they were funding AA 🙂

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Actually, AA is funded through the contributions of its members.

 

[Rational Thought]

[blockquote]
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On 1/15/2003 11:38:43 AM 767jetz wrote:

What makes the airline industry less important than the farming industry, less important than Chrysler, or less important than the many other industries that get help from the government? Please don't preach down to us from your soapbox. The government most certainly does picks and choose who they will help, and politics and votes are their #1 motivator.
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You were the one preaching about the fact that this administration is doing or not doing something. Not I. The government may be involved in the private sector, and there are occassions that merit it (no property rights, high transaction costs, public good), but on the whole it is wrong. I don't think the Chrysler bail out was correct, nor are farm subsidies appropriate. But an airline is not an auto company (they actually make money) and the government has already offered loan gaurantees and 5 billion of my tax dollars to the airline industry, so I see no reason to further involve my tax dollars in a structurally unprofitable business. The airlines problems are labor costs.

Now, if AMR relocated to Iowa, put a hub in Des Moines and all its maintenance bases around the state, you might get subsidies.

 

[kiowa]

[blockquote]
The airlines problems are labor costs.



No - the airline problems are very inexpensive tickets and competing with the bus service. Same fares as 20 years ago??? almost. Are fuel prices the same as 20 years ago??