What will be AA's move if DL/NW merge?

[FA Mikey]

There seem to be quite a few people around these days who are going to be deeply disappointed if we "fail to fail." I guess if we don't go into BK, they will have to take up drinking to ease their frustrations.

That is one of the truest statements I have ever read on this board. So many seem to be waiting with bated breath just to say, see I told you we would fail. Then what? Few have a plan B or any type of savings. I have talked to quite a few people who think they are safe with there 15 year old degree and no work experience in that field.

 

[local 12 proud]

So mikey, Whats your score other than handing out pop?

El Chicos is hiring! 🙄

 

[FA Mikey]

So mikey, Whats your score other than handing out pop?

El Chicos is hiring! 🙄

My score?

 

[FWAAA]

That is one of the truest statements I have ever read on this board. So many seem to be waiting with bated breath just to say, see I told you we would fail. Then what? Few have a plan B or any type of savings. I have talked to quite a few people who think they are safe with there 15 year old degree and no work experience in that field.

Exactly. Here's one of the very consistent "AA's gonna fail" posts:

http://www.usaviation.com/forums/index.php...st&p=595974

 

[NewHampshire Black Bears]

First, you would have to ask yourself, who has the a/c that we might need--such as, 737s, 787 (orders), 777s. The answer is no one who isn't already in merger talks. If we had really wanted to merge with someone, NWA would have been the perfect candidate. It would have saved us having to bid on routes to the Orient.

UAL is out of the question--too big, too much route overlap. CO's a/c are fully utilized in their own routes--both domestic and International. LCC has way too many unresolved merger problems from their last mating dance to even consider.

I agree that I think AA will sit this one out. However, Alaska and/or Frontier are possibilities for the future--how near or far into the future, I wouldn't even hazard a guess.

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jimntx,

YOU my friend, just ANSWERED the $50,000 question.
(I'll get back to that in a moment)

First though, ..I've got to agree w/eolesen..(thats NOT always so easy to do), but I do NOT see a BK in AA's future.

Now back to jimntx, and the $50,000 question.

No one on these boards, has LUSTED over NW, more than FWAAA, and ME.

But, after CAREFUL reconsideration, I now feel that the Prudent thing to do, is to NOT waste time, screwing with NW/DL, .........or going through the BK process,.............................BUT, to "BUY"(yes AA has the do-ra-mi)........yes BUY Continental. for the very reasons that jimntx questions.

Doing so, would enable AA to be #2(for the time being) to NW/DL.
YES, the feds would make AA sh!t Can a ton of IAH..Domestic routes(key word..DOMESTIC)
You KNOW, there is NO WAY.....EL-CHIMPO(bush) would not let 2 texas carriers do the deal, if he was convinced that both wanted it.

I'd gladly trade a #1 spot to DL(being so from ATL)....for a #2, being "KING" in NYC !!!!

Plus we all know that AA and CO have...."dated" 🙄 🙄

 

[Bagbelt]

Bankruptcy is not an admission of failure, it is a tool of last resort which will certainly be used in the event of a strike. Money in the bank means nothing if your liabilities are greater. Especially with fleet renewal on the agenda. AA should persue the BA merger again.

 

[FWAAA]

First though, ..I've got to agree w/eolesen..(thats NOT always so easy to do), but I do NOT see a BK in AA's future.

I agree, unless AA experiences a crippling strike (as mentioned by Bagbelt above).

Now back to jimntx, and the $50,000 question.

No one on these boards, has LUSTED over NW, more than FWAAA, and ME.

But, after CAREFUL reconsideration, I now feel that the Prudent thing to do, is to NOT waste time, screwing with NW/DL, .........or going through the BK process,.............................BUT, to "BUY"(yes AA has the do-ra-mi)........yes BUY Continental. for the very reasons that jimntx questions.

Doing so, would enable AA to be #2(for the time being) to NW/DL.
YES, the feds would make AA sh!t Can a ton of IAH..Domestic routes(key word..DOMESTIC)
You KNOW, there is NO WAY.....EL-CHIMPO(bush) would not let 2 texas carriers do the deal, if he was convinced that both wanted it.

I'd gladly trade a #1 spot to DL(being so from ATL)....for a #2, being "KING" in NYC !!!!

Plus we all know that AA and CO have...."dated" 🙄 🙄

Now that NW looks to be off the market, I'm still excited about the possibility of CO. AA/CO would own four daily China nonstops (as of next March) plus HKG. Dunno if it would make sense to move the EWR China/HKG flights to JFK, but I think it would.

But I'm guessing that CO and UA hook up. Maybe UA/CO would have to divest some scarce rescources (like a China flight or two or some NRT slots, etc) that AA could pick up.

If AA sits on the sidelines this round, maybe it can pick up the pieces in a few years when DL/NW fails (thanks to crappy management).

 

[jimntx]

If AA sits on the sidelines this round, maybe it can pick up the pieces in a few years when DL/NW fails (thanks to crappy management).

The only problem with that strategy is that it neither realistic nor proactive. (The following is a paid announcement from Jim's intuition)...

If you ask me, we sat on the sidelines with a pile of cash waiting for US Airways to fail. Then we sat on the sidelines with that same pile of cash waiting for UAL to fail, then NW. Score so far: Other airlines 3, AA 0 (but with a big pile of cash). I heard from several AMR management types that "there is no way that (fill in the blank with the name of your favorite bankrupt airline) will come out of BK. The Ch. 11 is going to be converted to Ch. 7 any day now. Then we will move in and pick up the best pieces." Have any of you seen any of those pieces? I haven't.

I'm not betting that DL's management is going to fail, or rather that DL itself is going to fail. I think LCC has proved beyond the shadow of a doubt that an airline can survive crappy management.

 

[swdriver]

I think LCC has proved beyond the shadow of a doubt that an airline can survive crappy management.



What is LCC?

 

[jimntx]

LCC is the stock symbol for the "new" US Airways. It's supposed to mean Low Cost Carrier.

 

[Skymess]

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But, after CAREFUL reconsideration, I now feel that the Prudent thing to do, is to NOT waste time, screwing with NW/DL, .........or going through the BK process,.............................BUT, to "BUY"(yes AA has the do-ra-mi)........yes BUY Continental. for the very reasons that jimntx questions.

Buy Continental? Really? We have THAT much money? Even if we did, it would never happen. Continental is a kick a**, solvent, airline and that would be a smart move so that would mean that our joke of a management team would NEVER do it. Dream on dreamer.

 

[eolesen]

I heard from several AMR management types that "there is no way that (fill in the blank with the name of your favorite bankrupt airline) will come out of BK. The Ch. 11 is going to be converted to Ch. 7 any day now. Then we will move in and pick up the best pieces." Have any of you seen any of those pieces? I haven't.

I'm not betting that DL's management is going to fail, or rather that DL itself is going to fail. I think LCC has proved beyond the shadow of a doubt that an airline can survive crappy management.

True to a point, Jim. What the US, DL, and UA bankruptcies proved is that there were stupid people willing to invest in a crappy business plan, and they're not exactly reaping the rewards they thought they would.

Nobody wanted to invest in AQ, aside from their cargo operation, and nobody has stepped forward to invest in F9. What happens if Mesa collapses will be the real test of how tight things have become with the TPG's of the world.

Horton mentioned on the AMR call last week that unsecured debt markets are essentially closed to airlines. They have a convertible debt option coming up at some point during 2Q, and it's likely that they will have to dip into cash to pay it out, to the tune of about $400M. Not exactly a big deal because it is exchanging cash for existing long term debt, but it speaks miles to the financing situation right now that AMR might be unable to refinance that instrument.

And it's not just airlines --- Sears was put on notice last week that Bank of America wasn't going to renew a $1B revolving line of credit. Likewise for Talbots and E*Trade. E*Trade just announced that they're not even going to bother trying to get a replacement line of credit because there's nobody interested...

It's likely that two years from now, things will be eased up as far as investors go, but only if oil falls. And that's becoming less and less likely. Maybe if the Green River Basin starts being harvested for oil shale (which can be used to produce Jet-A but not gasoline), it could be a different story, but that too will take time...

Existing investors put more money into both Eos and Virgin America, but that was probably to try and protect what they'd already thrown away. Skybus's investers didn't have the stomach for more investment, which is why they closed up shop. Personally, I think refinancing Eos and VX is pissing in the wind at this point in time, but only time will tell. Neither one of them reports their financials because they're privately held, but they can't be doing well at all. Likewise with Spirit, who is also privately held.


So... it's a lot uglier right now than it was during the last round of bankruptcies. I wouldn't use past practice as an indicator right now of what could happen if one or more carriers fall into bankrupcy.

 

[jimntx]

And why would UAL be interested in doing that? Makes no sense at all.

AA is more likely to be filing for BK soon to shed some pensions while CAL and UAL merge.

I believe AA will be sitting this one out.

Hey, Fly. Where are you? No response to the fact that we ended the qtr with a $328 million loss, but with $4.9B in cash and $75 million in payments TO the pension plan since the first of the year.

Now, let's see. UAUA ended the qtr with a $500 million loss even though you have lower salaries, no pension, newer a/c. What happened? How can this be? Do you think a healthy company like CAL is still going to be interested in merging with such an operation?

Care to make any more prognostications about the future of AA?

 

[Hi-C-Camp]

Hey, Fly. Where are you? No response to the fact that we ended the qtr with a $328 million loss, but with $4.9B in cash and $75 million in payments TO the pension plan since the first of the year.

Now, let's see. UAUA ended the qtr with a $500 million loss even though you have lower salaries, no pension, newer a/c. What happened? How can this be? Do you think a healthy company like CAL is still going to be interested in merging with such an operation?

Care to make any more prognostications about the future of AA?

Well Jim, UALs loss is VERY unacceptable, with that being said, lets wait till the second quarter and see what AMRs loss is, and I think you better go back and read about how much cash on hand you have, b/c its not 4.9b... We are all in trouble, lets face facts...

 

[FWAAA]

Well Jim, UALs loss is VERY unacceptable, with that being said, lets wait till the second quarter and see what AMRs loss is, and I think you better go back and read about how much cash on hand you have, b/c its not 4.9b... We are all in trouble, lets face facts...

The $4.9 billion mentioned by Jim includes the restricted cash; AMR's unrestricted cash and short-term investments was $4.5 billion on 3/31.