Jetwire Setting Us Up For Concessions?

[TWU informer]

ONEFLYER

There are a couple more assumptions that go along with this idea.

The primary one being that AA can't sell their assets for what the cost.

Ideally what AA would want to do would be to sell assets, pay down their debt, but due to the depressed state of the industry and the condition of AA's assets they can't do that. AA's S80s are essentially worthless, with Boing and Airbus giving out incredible financing deals, anyone looking for aircraft would just buy new. Other assets such as terminals are unique and not easily sold for full value.

Therefore, since AA can't sell their assets for enough to pay down the debt associated with the asset, they should attempt to maximize those assets to the fullest extinct possible.

So, let me get this straight, AA wants to sell the assets, and at the same time grow the airline?

Sounds like an oxy-moron to me.

I am more confused about your ideas now.

How do you sell assets and not "shrink"? It sounds like you believe that ideally AA would like to off sell assets, shrink the airline, and pay down debt.

But yet, you argued against that and instead argue in favor of growth.
I don't get it...

 

[Oneflyer]

So, let me get this straight, AA wants to sell the assets, and at the same time grow the airline?

I meant AA can not sell its assets, so its not an option. Sorry for the confusion.

 

[TWU informer]

I meant AA can not sell its assets, so its not an option. Sorry for the confusion.

[post="308021"][/post]​

You did indeed made that clear, that the current industry status would not allow such a move.

But they would sell assets if they could?

Seems they did sell the F100's and now have maintenance agreement to further profit from that sell.

 

[Oneflyer]

But they would sell assets if they could?

I think so. They've already sold several non-core assets like Orbitz and AA have attempted to sell Executive airlines (the SJU part of Eagle) and have shopped around AMR Investments. In my opinion, if they could sell a 100 S80s at a really good price, I think they would go for it. Six months ago, I don't think so, but with fuel this high, I think they would. Its just not possible though, if someone wanted a lot of old planes and was willing to pay for them GE would have reposessed USAir's planes and sold them.

 

[Bob Owens]

I think so. They've already sold several non-core assets like Orbitz and AA have attempted to sell Executive airlines (the SJU part of Eagle) and have shopped around AMR Investments. In my opinion, if they could sell a 100 S80s at a really good price, I think they would go for it. Six months ago, I don't think so, but with fuel this high, I think they would. Its just not possible though, if someone wanted a lot of old planes and was willing to pay for them GE would have reposessed USAir's planes and sold them.

[post="308047"][/post]​

So in other word they could sell them, they just cant get the price they want.

 

[peasant]

Really, I'd like to know one airline that has shrunk its way to profitability.

[post="307961"][/post]​

British Airways after 9/11

Cathay Pacific in 1998/99

LH and AF/KLM also took out huge amount of costs. It is odd, it is the Asian and EU airlines that seem to be able to adjust, and the US airlines that are stuck in dinosaur mode.

 

[eolesen]

Cathay's "shrink" was pre-emptive on HKG's transfer of control to China more than anything else... They grew Dragonair (their mainland subsidiary) at CX's expense.

Also... many of the Asian and EU airlines engage in large scale outsourcing of everything, including flight crews. Some are on the verge of being virtual airlines, whereas the airline is nothing more than the marketing name and a handful of managers.

 

[Wretched Wrench]

Really, I'd like to know one airline that has shrunk its way to profitability.

[post="307961"][/post]​

Continental?

 

[peasant]

Cathay's "shrink" was pre-emptive on HKG's transfer of control to China more than anything else... They grew Dragonair (their mainland subsidiary) at CX's expense.

Also... many of the Asian and EU airlines engage in large scale outsourcing of everything, including flight crews. Some are on the verge of being virtual airlines, whereas the airline is nothing more than the marketing name and a handful of managers.

[post="308653"][/post]​

You make my point - that it is the US airlines that are stuck in dinosaur mode, where airlines in the rest of the world have been more innovative. For example - outsourcing flight crew (or rather, bringing in flight crew on short term contracts, alongside a traditional seniority system) makes sense. They don't outsource cabin crew, because that is a source of competitive advantage.

Most US airlines are "virtual" in the sense that very few have equity to own aircraft anymore - one could argue that you have basically become brand names and operators of assets for the big leasing companies and banks...