USAirways quietly Becomes creditor of AMR

[FWAAA]

I think your right. It's pretty much going to happen guys, rather in or out of BK is the question. This latest action by Parker was position move. This gives them a seat as a creditor, now they are involved as well as informed on future moves by AA in BK. Parker has also offered to keep AA's HQ in FW as well as the name. How could any one deny him a merger. The only reason AA does not want a merger to happen while they are in BK is because US management team will prevail at the helm. This is the only thing that neither side is willing to admitt until it becomes reality.

No, buying some unsecured debt does not give US "a seat" at anything, nor will US get any more info about "future moves by AA in BK" than any other unsecured creditor. Some have mistakenly thought that US is now a member of the Official Unsecured Creditor Committee and that's not accurate. US is no more a member of the UCC as I am.

How could anyone deny him a merger? Easy, if the US plan is shown to transfer more of AA's value to US shareholders and less to AA's creditors than AA's POR.

US is the airline in dire need of a lifeline while AA is the one in Ch 11, trimming its costs to enable something AA hasn't seen in a long time - and that's organic growth. Notice how WN grew so much over the years? That's because WN had low costs and lower cost carriers tend to grow while higher cost carriers retreat and contract. jetBlue grew and grew at AA's expense because of its bargain basement startup costs. Now it's AA's turn to grow, which airlines can only do if they have lower costs than others (or supply superior service).

On a second note, the TWU better start focussing on integration discussions between them and the IAM.

That's putting the cart before the horse. Like picking out drapes, carpet and furniture for a house on which you made an offer, but on which others are making offers. Integration discussions can wait until the merger is a certainty, not while it's still just Doug Parker's fantasy.

 

[signals]

As long as it is legal, what's the problem?

I have to wonder what labor thinks about a merger that they were on board with?

 

[damajagua]

Usairways is desperate.

 

[amt66]

Labor as in the workers aren't onboard with anything it was a desperate attempt by our union leadership to save face!

 

[luvthe9]

Absent a merger with AA, LCC is toast.

This is do or die for Dougie and Co.

No harm, no foul, he's just acting out his last desperate act for a long term presence. Can't fault a guy for that.

Why are the AA pilots so weak, why aren't you guys trying to derail this merge we don't want it either, you MIA update from Scott Lovine (think that was his name) just reeks of desperation, just curious.

 

[amt66]

The AA pilots are weak because they are still trying to recover from Horton bending them over and sticking a silver suppository in their arse!!!!

 

[700UW]

Lets see US is making money, AA Is in chapter 11 and losing money, who needs the lifeline?

AA is going to have to seek outside funding to emerge from chapter 11.

 

[Mr Red]

Lets see US is making money, AA Is in chapter 11 and losing money, who needs the lifeline?

AA is going to have to seek outside funding to emerge from chapter 11.

With over 5 BILLION in bank and growing,I don't think so!

 

[700UW]

You seem to forget AA is going to have to use that $5 billion to pay the creditors who are owed money, guess you forgot that fact?

It cost a lot of money to be in chapter 11 and then emerge.

Lets look at some facts:

From 2000 to 2010, AMR suffered almost $11.5 billion in net losses -- it made profits only in 2000, 2006 and 2007 -- because it had to keep prices competitive even while its costs were so much higher than rivals.

[background=rgb(255, 255, 255)]

As of Sept. 30, the company had $10.9 billion in debt, which consists of $4.6 billion in secured variable and fixed-rate debt maturing through 2023. The interest rates on that debt vary from 1% to 13%. AMR also owes $2 billion on enhanced equipment trust certificates with maturities through 2021 that are priced from 5.1% to 12% per annum. There are $1.6 billion in revenue bonds maturing through 2036 that carry interest rates from 6% to 8.5%. AMR has $1 billion outstanding on 7.5% senior secured notes due 2016 with U.S. Bank NA as the trustee and Wilmington Trust Co. as the collateral trustee.

The company also has $460 million in 6.25% senior unsecured convertible notes due 2014. Wilmington Trust is the trustee on the unsecured notes as well. In addition, AMR owes $214 million on debentures priced at 9% to 10.2% that are due 2021, and $173 million in 7.88% to 10.55% notes due 2039.

Disputes with debtholders are likely. In fact, one early battleground may be AMR's $1 billion worth of 7.5% senior secured notes. Derchin says they are securitized by AMR's airport slots in London, Tokyo and Beijing, even though it's not clear that those are lienable assets because they are owned by municipal governments, not the company.
Then there's AMR's roughly $7.9 billion in unfunded pension liabilities. AMR has four benefit plans for 130,000 participants.

[/background]​

 

[FA Mikey]

Lets see US is making money, AA Is in chapter 11 and losing money, who needs the lifeline?

AA is going to have to seek outside funding to emerge from chapter 11.

usair sought chapter 11 two times, AA is in no need of exit financing

 

[700UW]

AA has $10.9 Billion in debt, watch and see.

 

[FWAAA]

You seem to forget AA is going to have to use that $5 billion to pay the creditors who are owed money, guess you forgot that fact?

It cost a lot of money to be in chapter 11 and then emerge.

What percentage of US creditors were paid in cash and not in new stock?

I seriously doubt that AA's plan will consist of cash payments to the unsecured creditors. They'll get the new AMR stock and perhaps some cash. Generally, the only debt that gets paid in cash at the conclusion of the Ch 11 case is the Debtor in Possession lender, and since AA didn't seek DIP financing . . . .

In any case, even if AA should "need to obtain exit financing," we all know that Doug Parker is the only person capable of attracting the interest of those on Wall St. He has a special unique gift not shared by any other corporate executive.

 

[700UW]

All I have to say is $10.9 billion in debt, plus $38 Billion of aircraft on order.

So thats $48.9 billion in debt they will have, are you doing some kind of fuzzy math to say that $5 billion will cover $48.9 billion in debt they will have?

And I never said a word about Parker, I am not a fan of his.

 

[FWAAA]

AA has $10.9 Billion in debt, watch and see.

Bankruptcy isn't about paying back the old debts in cash, it's about renegotiating the secured debt and keeping it, as well as discharging the unsecured debt and paying those creditors in newly issued stock of the debtor. Were you not paying any attention to the various bankruptcies over the past decade? Apparently your expertise is in labor negotiations in bankruptcy, not the reduction in debt part of bankruptcy.

 

[700UW]

You seem to forget the secured creditors want cash, not stock and the $38 billion for new aircraft wont be paid for in stock, neither will the bondholders and the underfunded pension. Loans want cash not stock.

Plus they are still going to need cash to operate and pay the bills.