robbedagain
Veteran
- Oct 13, 2003
- 11,125
- 2,676
feud btwn the fas i think its time we call it family feud! 
welcom to the happiest airline in town!!
welcom to the happiest airline in town!! The new fAAmily is feuding already!
- Thread starter overhauler
- Start date
Jacobin777
Senior
700UW said:
Even if there is absolutely no labor strife, etc., it still doesn't really negate my arguments about costs, profits, etc.
Doesn't US have a $1+ billion bond debt coming due soon? If that is indeed true(I've read it in a few places but I can't say I'm 100% sure of this), guess where its coming from. <_<
edit:I can't seem to find it and so far ostensibly it seems they have been able to refinace $1.1 billion in debt which was due this year but $600 million is due in 2014 (which of course will get transferred to the new AA Group).
Anyway, if someone here doesn't think Parker & Co aren't going to "enrich themselves on the back of the hard workers of AA" better think twice:
Parker's compensation:
2008:$3,724,745 2009:$2,578,501 2010:$2,757,981 2011:$3,824,762 2012:$5,491,616
Don't forget, this is just US Airways which had smaller revenues/profits than AA...now that AA will be the largers carrier in the world his compensation will increase.
Also, lets not forget the fact that he will be Chairman/CEO AND on the Board of Directors...
WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
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- Banned
- #48
I'll help you out, Jacobin.
US has $1.9 billion in debt due in 2014. Page 77 of their 2013 10K
Jacobin777
Senior
Bob Owens said:
That was with their stand alone plan(I would like to see a source for the numbers however). Now they have a huge uptick in costs so we'll see what happens.
WorldTraveler said:
Thanks for the info. I guess the numbers are worse than I thought. :mellow: <_<
Add to this:
"The conversion of some or all of US Airways Group’s 7.25% convertible senior notes due 2014 will dilute the ownership interests of existing stockholders."*
Add to this:
"W. Douglas Parker, US Airways Group’s current chief executive officer, who will serve as chief executive officer of the combined company and will serve as chairman of the combined company following the end of Mr. Horton’s term, (iii) two independent directors designated by AMR, (iv) three independent directors designated by US Airways Group".*
*-source:US Airways 10k filings.
The idiotic unions @AA were so desperate to get rid of Horton, they let a smaller carrier not only "take over" the larger carrier but the smaller carrier will have the majority of management as well as having more board directors compared to the larger carrier. Yes, the "take over" rate favored AA in terms of stock ownership but that really doesn't make a difference as far as US Management is concerned.
I have to admit, Parker pulled off a good one and it was handed to him courtesy of the unions!
I definitely need some popcorn.
Chuck Schalk
Veteran
- Nov 17, 2006
- 1,042
- 1,149
Laura Glading was pushing for the merger and now she is against it? What kind of flip flop logic happened?
Jacobin777
Senior
700UW said:
Who said "losses"?
AA didn't need US one bit, US needed AA-thus why Parker & Co. went behind the backs of AA management to deal with the unions directly.
WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,662
- Banned
- #56
Jacobin,
Glad to shine the light on yet one more aspect of this merger.
We can debate about market size and strength or what labor will get or not get out of this merger, but above everything, no one should doubt that this merger is about one thing: a relative small but powerful group of people doing all they can to maximize their ability to recover their loans to AA and US.
US has repaid very little of the debt it came out of BK with. They have figured out how to run a very profitable airline but they are still deeply indebted and the debt repayments in 2014 represent obligations that have just been kicked down the road.
Those debts due in 2014 will be refinanced but they will be part of the new AA’s debt structure.
AMR has not “lost” much debt in BK either. They were heavily in debt going into BK and will be coming out as well.
Add on that new AA is engaging in an aggressive fleet renewal plan that will add debt far faster than it can be paid down, they will have pension obligations to pay that they didn’t plan on paying going into BK, and the merger itself will cost hundreds of millions of dollars, and the line of people looking for money from new AA is and will be very long.
New AA will be a deeply indebted company but the consolation is that UA is too. It is all the more frightening from a banker’s point of view that UA’s costs are the highest in the industry followed by AA’s – and new AA won’t move in that relative ranking. AA and UA are both competitive targets not only because their costs make it easy for competitors to win in the marketplace.
In contrast, AS, B6, DL, and WN all have lower costs AND lower debt levels and each is managing their business to not only limit additional debt but pay down what they already have. AA and UA are vulnerable financially to companies that can win in the marketplace and in the finance markets.
The bankers and finance people who are trying to maximize their own recovery from AA and US know full well that they might get what they want or be creating the best company with respect to the capacity to repay debt. But they are pragmatic enough to support what maximizes the possibility of debt repayment and no one should have any doubt that the merger is first and foremost about maximizing recovery for AA and US’ lenders.
Glad to shine the light on yet one more aspect of this merger.
We can debate about market size and strength or what labor will get or not get out of this merger, but above everything, no one should doubt that this merger is about one thing: a relative small but powerful group of people doing all they can to maximize their ability to recover their loans to AA and US.
US has repaid very little of the debt it came out of BK with. They have figured out how to run a very profitable airline but they are still deeply indebted and the debt repayments in 2014 represent obligations that have just been kicked down the road.
Those debts due in 2014 will be refinanced but they will be part of the new AA’s debt structure.
AMR has not “lost” much debt in BK either. They were heavily in debt going into BK and will be coming out as well.
Add on that new AA is engaging in an aggressive fleet renewal plan that will add debt far faster than it can be paid down, they will have pension obligations to pay that they didn’t plan on paying going into BK, and the merger itself will cost hundreds of millions of dollars, and the line of people looking for money from new AA is and will be very long.
New AA will be a deeply indebted company but the consolation is that UA is too. It is all the more frightening from a banker’s point of view that UA’s costs are the highest in the industry followed by AA’s – and new AA won’t move in that relative ranking. AA and UA are both competitive targets not only because their costs make it easy for competitors to win in the marketplace.
In contrast, AS, B6, DL, and WN all have lower costs AND lower debt levels and each is managing their business to not only limit additional debt but pay down what they already have. AA and UA are vulnerable financially to companies that can win in the marketplace and in the finance markets.
The bankers and finance people who are trying to maximize their own recovery from AA and US know full well that they might get what they want or be creating the best company with respect to the capacity to repay debt. But they are pragmatic enough to support what maximizes the possibility of debt repayment and no one should have any doubt that the merger is first and foremost about maximizing recovery for AA and US’ lenders.
AA had a cost problem but has nearly completed a successful reorganization through chapter 11 to bring costs in line.700UW said:
US on other hand HAS a revenue problem, largely a product of the markets they serve that are generally produce lower revenues (and lucrative premium O&D traffic) than AA's hubs, ie MIA.
US is profitable under a low revenue and low cost model. Put another way, 72% of the equity in the combined carrier is for legacy AA, remaining 28% for US. So at a time when AA is in the toilet, it is worth nearly 3x that of US at a (near) record high market capitalization.
Again I think all the proponents of this merger will quickly realize in 12-18 months what a disaster it is and the so called "synergies" will not materialize, certainly at the level DP and his team have been touting.
Josh
robbedagain
Veteran
- Oct 13, 2003
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Sounds likethe disastrous ua/co merger they still have not had hardly any synergies and co n ua I dont think had much complimentary routes josh exactly how is aa worth 3 times us when aa is not yet on the nyse or nasdaq us has had some of the highest since emerging from ch 11 yrs ago
wt.... as has a much much lower cost than us but thats bec of their route structure and w dl piling it on in sea it will remain to be seen how as holds up b6 has lower costs than wn bec wn has highest paid labor but only 1 aircraft type plus their spending big money to convert the 717s to dl standards
wt.... as has a much much lower cost than us but thats bec of their route structure and w dl piling it on in sea it will remain to be seen how as holds up b6 has lower costs than wn bec wn has highest paid labor but only 1 aircraft type plus their spending big money to convert the 717s to dl standards
