Rummor Control:

[MCI transplant]

<_< -------- "Recalls", none! But it would add to AA's financial position in regards to new contracts.

 

[FWAAA]

<_< -------- "Recalls", none! But it would add to AA's financial position in regards to new contracts.

It has nothing to do with "adding to AA's financial position in regards to new contracts" or with AMT recalls.

Similarly, here's a story that has nothing to do with AMT recalls:

AA MD-82 strikes flock of birds during takeoff on Monday evening, returns to DFW, sweep of runway reveals more than 20 dead birds and plenty of dents in airplane:

http://finance.yahoo.com/news/Plane-returns-to-Dallas-apf-3915437034.html?x=0&.v=1

 

[MCI transplant]

It has nothing to do with "adding to AA's financial position in regards to new contracts" or with AMT recalls.

Similarly, here's a story that has nothing to do with AMT recalls:

AA MD-82 strikes flock of birds during takeoff on Monday evening, returns to DFW, sweep of runway reveals more than 20 dead birds and plenty of dents in airplane:

http://finance.yahoo.com/news/Plane-returns-to-Dallas-apf-3915437034.html?x=0&.v=1

<_< ------- "Nothing to do with AA's financial position"? -------- That may be your opinion. Mine is whatever adds to AA's bottom line has everything to do with these negotiations!!------- But than again, my opinion don't count!!! And unless your on AA management's negotiating committee, neither should yours!!! -------- As for your MD82, probably an early retirement. Or if it's a lease Aircraft, AA will have to send it to TUL to be repaired by those same AMT's your trying to shaft!!!! ------ If I remember correctly, the structural tolerances are called out in the SRM, at a specific max. depth of the dent, in addition to the number, and proximity of dents to one another.------- And if the damage is concentrated in the nose of the Aircraft, and skin replacement is required, that Aircraft may be down for quit a while due to the accessibility issues of trying to work in the lower 41, or FWD of it.

 

[TWU informer]

For some reason this information reads as if management defenders have the ultimate shovel out attempting to bury this issue.

 

[eolesen]

What's there to bury, Dave? AA's flipping airplanes like a real estate investor flips houses.

They've done sale/leaseback transactions for at least 30 years, so it's not like there's suddenly some new source of income discovered that can support "restore and more"...

 

[FWAAA]

Trying to bury it? Try to keep up.

I posted about this months ago when Bob Owens was prattling on about AA paying $80 million per copy for the new 738s. Back when Horton told the world that each delivery was a "cash positive" event.

It doesn't involve squeezing more money from customers (which might support higher wages) nor does it involve cutting non-wage costs (which also might support higher wages).

If you hock your watch for the purchase price right after you buy it, does that mean you have the means to increase your kids' allowance? Your income didn't go up and your expenses didn't go down. The only change is that your debt level increased, offset by a corresponding increase in your bank balance.

Contrary to the opinion of the retired mechanic from MCI, these transactions don't add anything to AA's "bottom line."

 

[TWU informer]

Trying to bury it? Try to keep up.

I posted about this months ago when Bob Owens was prattling on about AA paying $80 million per copy for the new 738s. Back when Horton told the world that each delivery was a "cash positive" event.

It doesn't involve squeezing more money from customers (which might support higher wages) nor does it involve cutting non-wage costs (which also might support higher wages).

If you hock your watch for the purchase price right after you buy it, does that mean you have the means to increase your kids' allowance? Your income didn't go up and your expenses didn't go down. The only change is that your debt level increased, offset by a corresponding increase in your bank balance.

Contrary to the opinion of the retired mechanic from MCI, these transactions don't add anything to AA's "bottom line."

Sorry, second and third job is what is required to "keep up", so I cannot afford to read every thread and every post like most of you can.

Thanks for clarification, one of you could have just linked back to previous answers and it would not have appeared you were shoveling.

 

[AV1]

Trying to bury it? Try to keep up.

I posted about this months ago when Bob Owens was prattling on about AA paying $80 million per copy for the new 738s. Back when Horton told the world that each delivery was a "cash positive" event.

It doesn't involve squeezing more money from customers (which might support higher wages) nor does it involve cutting non-wage costs (which also might support higher wages).

If you hock your watch for the purchase price right after you buy it, does that mean you have the means to increase your kids' allowance? Your income didn't go up and your expenses didn't go down. The only change is that your debt level increased, offset by a corresponding increase in your bank balance.

Contrary to the opinion of the retired mechanic from MCI, these transactions don't add anything to AA's "bottom line."

It doesn't add anything to the bottom line? I agree with you that this does nothing to add or detract from negotiations but disagree with your other statement. Why would a company purchase new planes only to sell them back and then subsequently lease them without any benefit. If I bought my home and then sold it back to the builder and then leased it, does this make sense? There does have to be a reason, accounting, financial or other that this benefits the company. Only reselling the planes to receive "cash positive" balances and more debt seems like desparation or some other problem. I admit I didn't go to Kellogg Graduate School of Management but believe there is some added here for the benefit of the company or the successful business I created with my family just doesn't understand these concepts. What is the benefit, I don't know nor does anyone else unless they work at headquarters.

 

[eolesen]

To put it in more accessible terms... it's like taking out a home equity loan. You might have made a cash downpayment, but if the house appraises for more than the value you paid for it, there are ways to take cash out for whatever purpose you want to.

I don't know all the tax benefits of having a lease vs. mortgage, but there are some clear benefits with regard to risk management in that you can renegotiate lease rates and return dates if the need arises, but you can also reject the lease in a bankruptcy proceeding. If you have questionable credit, leasing is a way to mitigate paying higher interest rates to own the asset, especially if it is a high value asset that can be repo'd and placed with another airline (and right now, the 738 is still in demand)...

Post de-regulation, AA has leased about 50% of the fleet. Widebodies were mostly owned (makes it easier to operate internationally without routing restrictions), and narrowbodies were mostly leased.

 

[Bob Owens]

To put it in more accessible terms... it's like taking out a home equity loan. You might have made a cash downpayment, but if the house appraises for more than the value you paid for it, there are ways to take cash out for whatever purpose you want to.

I don't know all the tax benefits of having a lease vs. mortgage, but there are some clear benefits with regard to risk management in that you can renegotiate lease rates and return dates if the need arises, but you can also reject the lease in a bankruptcy proceeding. If you have questionable credit, leasing is a way to mitigate paying higher interest rates to own the asset, especially if it is a high value asset that can be repo'd and placed with another airline (and right now, the 738 is still in demand)...

Post de-regulation, AA has leased about 50% of the fleet. Widebodies were mostly owned (makes it easier to operate internationally without routing restrictions), and narrowbodies were mostly leased.

To me it sounds like a scam for the banks.

I buy an airplane, spend a million or so on fees, sell it back , they pay a million or so on Fees for the same plane if its not sold t0 the same bank, then I lease it.

So if you buy it from the bank then lease it from the bank the bank gets the fees for the exchange and they still own the plane and dont have to fight other creditors if the airline goes belly up.

 

[Bob Owens]

That's pretty much what AA is doing, but the numbers from your friend's sister are a little exaggerated. It's probably more like AA buys each new 738 for $35 million to $40 million and makes a down payment (deposit) of perhaps $5 million. Upon delivery, AA pays the remaining $30 million to $35 million and sells the plane to the leasing company for the initial purchase price ($35 million to $40 million). AA isn't really making "profits" on the deal, but Horton did say last year that the delivery of each new 738 was a "cash positive event." That just means that the sale of the 738 to the leasing company brings in more cash than the remaining purchase price (AA is financing the down payment) because of AA's very favorable pricing terms with Boeing.

Still sounds like a shell game to me.

OK AA buys the plane for $40 million, they put down $5 million, then on delivery pay the rest off. So AA spent $40 million, but they have a $40 million assett. Now they sell the plane and get $40 million in cash, but this income is not from ticket sales. So they have the $40 million that they most likely borrowed and are paying interest on to the banks, now they sell the plane to a leasing company, likely owned by a Bank that would likely have to approve the sale, and sign a 20 year lease for lets say $3 million a year, adding $60 million in liability. So they are paying interest for the original $40 million plus paying lease payments for the same plane to the banks. The banks get to collect interest for the purchase of a plane thats owned by the banks that they are also getting lease payments on. The company gets a $40 million increase in costs for the year of the transaction plus a $60 million addition to their long term liabilities. So before putting in the sale price the plane will cost them $100 million on the books. The $40 million they paid this year plus the $60 million long term liability for the lease back.

So yes it may be Cash positive in that the company gets more cash now but it probably adds more to AA debts and costs, figures they use in Negotiations to try and claim they dont have the money to pay us.

 

[TWU informer]

Still sounds like a shell game to me.

OK AA buys the plane for $40 million, they put down $5 million, then on delivery pay the rest off. So AA spent $40 million, but they have a $40 million assett. Now they sell the plane and get $40 million in cash, but this income is not from ticket sales. So they have the $40 million that they most likely borrowed and are paying interest on to the banks, now they sell the plane to a leasing company, likely owned by a Bank that would likely have to approve the sale, and sign a 20 year lease for lets say $3 million a year, adding $60 million in liability. So they are paying interest for the original $40 million plus paying lease payments for the same plane to the banks. The banks get to collect interest for the purchase of a plane thats owned by the banks that they are also getting lease payments on. The company gets a $40 million increase in costs for the year of the transaction plus a $60 million addition to their long term liabilities. So before putting in the sale price the plane will cost them $100 million on the books. The $40 million they paid this year plus the $60 million long term liability for the lease back.

So yes it may be Cash positive in that the company gets more cash now but it probably adds more to AA debts and costs, figures they use in Negotiations to try and claim they dont have the money to pay us.

Is that a factual scenario or speculation?

 

[Bob Owens]

Is that a factual scenario or speculation?

Speculation, the airlines dont release such info, if they did we would know how full of crap they are.


On another note;
http://money.msn.com/exchange-traded-fund/article.aspx?post=5b56a9de-9ae8-4f72-abb8-f8c35a8e4a07
In other words more skilled workers needed.

 

[TWU informer]

Speculation, the airlines dont release such info, if they did we would know how full of crap they are.


On another note;
http://money.msn.com/exchange-traded-fund/article.aspx?post=5b56a9de-9ae8-4f72-abb8-f8c35a8e4a07
In other words more skilled workers needed.

Do you spend the week in arguements with AA Management using facts or speculation?

When you make statements here like:
"So yes it may be Cash positive in that the company gets more cash now but it probably adds more to AA debts and costs, figures they use in Negotiations to try and claim they dont have the money to pay us."

And then admit that your complete scenario leading up to that statement is speculation, it makes me wonder what is actually taking place and being said in negotiations. I would hope that negotiations are based more on facts and less on this type of speculation. I have no doubt that you are up against liars and manipulators, but sometimes your post make me go "huh".

Also, this type of unknown spending and cash flow is exactly why I suggested the profit sharing formula be modified to pay out on the same "success" formula management uses for bonuses. Using the management formula we get shared gain regardless of profit/loss which may be negatively impacted by such manipulation. I would love to see the management response to the suggestion that our profit sharing plan be based on their own success measuring tools. And there would be no argument that it isn't a FAIR measurement, at least not from those that having been reaping the benefits of the formula for years now.

 

[eolesen]

In other words more skilled workers needed.

Yes, but if you read the text, the majority of those skilled workers won't be in the US, unless you are considering the guys like 787 who are building new airframes, components and engines:

Higher fuel prices and tighter environmental regulations are pushing airlines to retire their planes at an earlier age. For example, Boeing projects that 94% of the planes operated by European airlines in 2030 will have entered service after 2011.

About 40% of new deliveries over the next twenty years will be replacement aircraft. The biggest growth in new orders will come from low-cost carriers in Southeast and South Asia.