New early out offer coming?

[dfw gen]

Not sure why any of you think that an early out will help anyone avoid bankruptcy.

The problem at AA or any of the other airlines right now doesn't appear to be headcount.

The problem is whether or not the growing piles of debt can be serviced while business travel is non-existent and international traffic is a fraction of what it was 18 months ago.




Huh. Every time I can think of over the past 50 years that airlines have managed to have been profitable for a few years, some outside event happens that "nobody could have imagined" and traffic dries up. 9/11, SARS, terrorism, a global economic meltdown in 2008....

Yeah, this is bad, but if the airlines could have cut staff last March to what was actually needed to keep the operation running, I suspect they'd be approaching cashflow neutral by now. That's how all those earlier events were survivable.

These days the kinder and gentler business model.....lol. as long as they can get subsidized they are kinder and gentler.

 

[swamt]

Agree 100% i have started a second career part time, not sure if ill be successful enough to make it work. If they actually came out with an early out where i can seperate with some cushion i woukd feel confortable tryin

I too started another "side job" on my own. The pandemic did help fire off my side job and now it seems to still be pretty steady and going as well as I wanted it too, so not to get too busy if I were called back to work and could still continue the same pace and keep up the same.
I hope you make it successful enough to work if an EO package makes it your way, also hope it is something you enjoy doing.
My early time that I am shooting for is 58, was 55 at one time but I still think that may be a bit too early but who knows for sure until I edge nearer to that year.
Taking this current leave has been a "test" if ya will on what retirement would look like, how much $$$ is really needed, and how much can we really get by on on a monthly basis.
I wish you and anyone else the best of luck trying to get yourselves in order to try an EO package should they come. I always enjoy hearing successful stories of early retirements going as good or even better than expected. IF anything good came out of this pandemic, it's the fact that a bunch of folks at least got a trial period on what it might look like in early retirement. I have heard a many folks on these leaves will not be coming back even if called back early as they are now more "comfortable" in going since a lot of us has been able to try it out first. If somehow SWA could extend our long term leaves over say one more year to year and a half I would strongly consider looking at not coming back after a second 18 month extension on leaves, but I don't think that will happen.
Good luck to ya dfw gen, hope you pull it off...

 

[swamt]

Not sure why any of you think that an early out will help anyone avoid bankruptcy.

The problem at AA or any of the other airlines right now doesn't appear to be headcount.

The problem is whether or not the growing piles of debt can be serviced while business travel is non-existent and international traffic is a fraction of what it was 18 months ago.




Huh. Every time I can think of over the past 50 years that airlines have managed to have been profitable for a few years, some outside event happens that "nobody could have imagined" and traffic dries up. 9/11, SARS, terrorism, a global economic meltdown in 2008....

Yeah, this is bad, but if the airlines could have cut staff last March to what was actually needed to keep the operation running, I suspect they'd be approaching cashflow neutral by now. That's how all those earlier events were survivable.

E, not sure why you started this post as you did. No one hear, that I have read, is saying the EO's will save a company to avoid BK. Matter fact some are even saying BK is more than likely with or without EO's. Most, as I have read are concerned about taking the EO's and then getting screwed afterwards should the co. file for BK and they not follow thru with original agreements on the EO's.
I also disagree with your statement about headcount, headcount is ONE of the many factors that is at the top of problems for the airlines being overstaffed. It may not be the #1 but it is within the 3-5 top reasons. Some others are, and I do agree with you here, DEBT is a biggie for most, as well as international flights gone, passengers not returning to 2019 levels until at least 2023-2024 and maybe 2025, who really knows. Another big factor looming out there is IF this administration forces the domestic covid negative testing for airlines. There are just numerous top reasons with headcounts being one of them...

 

[wings396]

Headcount is a major issue as far as I'm concerned. A lot of people on the payroll, and not enough work to use many of them productively. The whole PSP is nothing more than a bandaid, and at some point it's going to come off. We all know that traffic isn't going to rebound for quite a while, and expecting the Government to keep throwing money at the airlines is wishful thinking. Furloughs are inevitable, and it's just a matter of time before the hammer drops. Those of us who were furloughed in the past, got some severance package, and the 26 weeks of unemployment. Once that ran out, we were on our own until recalled or able to find another job.

 

[dfw gen]

Headcount is a major issue as far as I'm concerned. A lot of people on the payroll, and not enough work to use many of them productively. The whole PSP is nothing more than a bandaid, and at some point it's going to come off. We all know that traffic isn't going to rebound for quite a while, and expecting the Government to keep throwing money at the airlines is wishful thinking. Furloughs are inevitable, and it's just a matter of time before the hammer drops. Those of us who were furloughed in the past, got some severance package, and the 26 weeks of unemployment. Once that ran out, we were on our own until recalled or able to find another job.

Agree. If they would come out with a veop that doesnt defer everything for a year and an rhra that is not a notional account. They would get a lot more takers, dont see a lot taking it this time

 

[eolesen]

OK, fair point on having too many employees, but the reason why I say it's not a problem is because the airlines who were going to do layoffs already did them in October/November. Some people came back with the latest PSP, but I'd be surprised if it was north of 50%... plus the dollars received relative to the number of employees who had to be carried is cashflow positive.

It's also something that airlines have the power to say no to going forward. As long as it remains cash positive to carry people on the Fed's nickel, they'll keep doing it and the unions know that. The trick will be getting Congress to Just Say No to another airline specific PSP....


Debt, you could also argue that's a choice, but its mainly due to revenue falling off a cliff and having to maintain liquidity...

 

[swamt]

OK, fair point on having too many employees, but the reason why I say it's not a problem is because the airlines who were going to do layoffs already did them in October/November. Some people came back with the latest PSP, but I'd be surprised if it was north of 50%... plus the dollars received relative to the number of employees who had to be carried is cashflow positive.

It's also something that airlines have the power to say no to going forward. As long as it remains cash positive to carry people on the Fed's nickel, they'll keep doing it and the unions know that. The trick will be getting Congress to Just Say No to another airline specific PSP....


Debt, you could also argue that's a choice, but its mainly due to revenue falling off a cliff and having to maintain liquidity...

Debt at all the airlines are for all different reasons.
AA's debt has been focussed around execs and officers in the past but now has sort of reverted to survival reasons.
Another airlines debt is from packing away said monies for a rebound rebuild. We went from 4.5 Billion in debt to now approaching 10 Billion with most in cash and grants for the purpose of rebuilding, expanding, increasing fleet, ect...

Wings is correct above, the band aids are coming off soon or at least maybe after this third (and final IMO) round of PSP, IF, it even gets approved all the way thru.
I hope that it is once again just for the mere fact folks will have, yet again, and even longer time to better prepare themselves. And I don't mind the gov help as long as it saved jobs in the long run, meaning, if they do a third PSP, it will trickle down the numbers at the end of said PSP as the last one just did too. AA's numbers dropped thousands from the first layoff when they were announcing a second round if third PSP is not approved, and IF it is, those numbers should drop even further. Don't mind the gov band aid as long as it does improve the numbers down the road.

 

[CremaDiLimone]

Debt at all the airlines are for all different reasons.
AA's debt has been focussed around execs and officers in the past but now has sort of reverted to survival reasons.
Another airlines debt is from packing away said monies for a rebound rebuild. We went from 4.5 Billion in debt to now approaching 10 Billion with most in cash and grants for the purpose of rebuilding, expanding, increasing fleet, ect...

i don't know..

aa has the youngest fleet out there. i can see the argument about the billions spent on HQ. what i'm getting from your post is that southwest has debt for good reasons and aa has debt because of executives?

this year, aa has a debt payment of over $700 million that it has to make, company has $15 billion in equity. aa is ok for the time being..

aa stock broke $22 a share today and even with more shares outstanding, the company is now worth more during a virus pandemic than it was in 2018-2019.

wall street says full steam ahead.

 

[CremaDiLimone]

BK is coming if AA doesn't make some tough decisions soon. The right thing to do would be offer Early Outs people will actually take. My guess is they'll take the easy way out and just drop the hammer on furloughs.

i believe the offer was competitive with others..maybe the best. if united offered 18 months pay AND insurance money, then united may have had the best offer.

a positive 'loophole' was compensation for sk time.

for fleet, company offers an unfair value of $9/hr for every hour of sk time. if the employee leaving decided to put sk time money in the insurance fund, then it's $18/hr for every hour. since that money is tax-free, it comes to apprx. $23/hr for every hour.

most knew about this, some didn't.

again, i encounter co-workers terrified of retirement. it's their prerogative, but, it's sad to see. guys in their early 70s hanging around. ridiculous.

 

[swamt]

i don't know..

aa has the youngest fleet out there. i can see the argument about the billions spent on HQ. what i'm getting from your post is that southwest has debt for good reasons and aa has debt because of executives?

this year, aa has a debt payment of over $700 million that it has to make, company has $15 billion in equity. aa is ok for the time being..

aa stock broke $22 a share today and even with more shares outstanding, the company is now worth more during a virus pandemic than it was in 2018-2019.

wall street says full steam ahead.

If that's how you wanna look at it, then so be it. Just pointing out that AA was building the execs and officers pockets more rather than putting their money back for the down turn of the industry (the bad times) as most all the other airlines did. This where AA is in the worse spot as far as debt, loan fees charged and the amount they can borrow and at what cost and for how long, it's all about the ratings financially.
Debt cannot be avoided with such large companies, but wasteful, stupid and reckless debt can be.

 

[Rogallo]

IGM!

 

[swamt]

Exactly. They will everytime.

 

[CremaDiLimone]

If that's how you wanna look at it, then so be it. Just pointing out that AA was building the execs and officers pockets more rather than putting their money back for the down turn of the industry (the bad times) as most all the other airlines did. This where AA is in the worse spot as far as debt, loan fees charged and the amount they can borrow and at what cost and for how long, it's all about the ratings financially.
Debt cannot be avoided with such large companies, but wasteful, stupid and reckless debt can be.

who could have foreseen the pandemic?

aa always had the largest amount of cash-on-hand - more than any other airline, the famous '$7 billion threshold'. this down-turn would have needed a $25-$30 billion rainy-day fund and no corporation would hold such reserves for a black swan event - the shareholders would mutiny.

to top it off, the airlines exist for everyone else to make money off, so - no airline would ever have such cash. if you do a remarkable job and climb out of the debt hole, it's time to renew the fleet for a cool $28 billion.

if you said the company should have better weighed and measured rewarding the shareholders/paying down debt between 2014-2019, i'd agree with you - and i'm not sure how vital it was to upgrade HQ along with the goofy gigglesnort hotel for employees.

as far as the amount of cash needed to borrow and rates - this is where the govt. stepped up and helped.

 

[CremaDiLimone]

i heard yesterday that everyone on leave will have to come back by june - and those who took the latest buy-out with an april 1 separation date will have stay on until june.

not sure if that's all the buy-out takers, or, a percentage of those leaving.

adding flights and more pax flying, looks like the buy-out window with the insurance money has closed.

 

[keepourpensions]

i heard yesterday that everyone on leave will have to come back by june - and those who took the latest buy-out with an april 1 separation date will have stay on until june.

not sure if that's all the buy-out takers, or, a percentage of those leaving.

adding flights and more pax flying, looks like the buy-out window with the insurance money has closed.

What is your source?