$16.4 Billion in 3Q05 to $10.7 Billion in 3Q08.
Those are Tom Hortons figures from the Flagship News. $5.7 billion in three years. So in three years they eliminated a third of their debt, not bad. On average nearly $2billion a year.
You're quoting the
net debt numbers, which are total debt less unrestricted cash. The steep decline noted by Horton doesn't mean the debt was paid down - an increase in unrestricted cash (from sale of new stock, sale of assets, etc) can cause the net debt figure to decline.
I was incorrect - AMR's total debt at the end of 2005 was, infact, $20.1 billion. I didn't think it hit that high.
That said, AMR has reduced its debt since 2003. How much?
Total debt at the end of 2005 was $20.1 billion and has been reduced to $15.4 billion at the end of the third quarter of this year. That's a reduction of $4.7 billion. Impressive, to be sure. Most of it was required debt repayment and some of it was paid prior to maturity (early payoff).
So during 2006, 2007 and the first nine months of 2008, AMR paid down $4.7 billion, or about $1.6 billion a year. How did AMR do it? Well, AMR has sold about $2 billion in new stock since the concessions and has sold assets like Hotwire, Orbitz and American Beacon. That cash, plus cash generated by flying, has helped AMR build up its cash balance and pay down $4.7 billion of debt.
Bob Owens said:
You want a link to the Flagship News? You could probably find the same figures in the SEC filings for those years if you dont trust my word. The thread was geared towards workers at AA, all they need to do is look at the bottom of Page 2. As for outsiders such as yourself I really dont care if you take me seriously or not. Apparently all this must be at least a little abrasive to the skin on your nose since you've resorted to snide comments. You seem to do that a lot when you cant factually discredit your opponent. You're getting more like Eolsen every day.
As a non-employee, I have no access to Flagship News. Years ago, it was available to the public. And I'm not your opponent. I'd like to see you get more money. I'd also like to see you (and others here) understand the numbers and to avoid mixing and matching different concepts. Perhaps that's an unreasonable expectation.
Bob Owens said:
Revenue is a reliable and fair figure we can use to measure worker productivity. I've never seen profit used to measure productivity, probably because profits are easily manipulated through the use of accounting practices and other decisions that have absolutely nothing to do with the productivity of the workforce. If a company decides to channel revenue towards paying down debt instead of using it to show a profit they can easily do so, that changes the profits but it doesnt change the productivity of the workers. Profitabilty is a measure of managements competance not worker productivity. Poor management could have the most productive workers in the world and still lose money.
About the bolded portion, we've been over this fundamental accounting concept before, but here it is again one more time:
Paying down debt (scheduled or early) doesn't directly affect the profit or loss equation. Just liike borrowing money doesn't directly affect the profit or loss number. However, by pre-paying some higher-interest debt (as AMR has done the last three years), interest expense was reduced. Just like you probably pay down your highest interest debt first, so do companies.
Profits (or loss) are determined by subtracting expenses from revenue. Net borrowings or debt repayments are not included in revenue or expenses. I implore you to learn this concept so that you can discuss finances in a more intelligent manner. Saying things like the bolded portion reveals (to the company and your co-workers) a level of ignorance that is simply astounding considering that you used to serve as the TREASURER of your local. It's difficult to discuss concepts and ideas when you lack an understanding of (and an apparent refusal to learn) the facts.
Chuck Schalk said:
just to name a few.....
How did AA pay down 11 billion in debt in 5 years? Where did that money come from?
wake up and expose the allusion! Look behind what they say and go with facts.
AA didn't pay down $11 billion in debt. How AMR paid down the $4.7 billion is explained above.
See what I mean, Bob, how the ignorance is a problem? Your faulty numbers, helped along, of course, by Horton's mistake in giving the employees probably more info than many are equipped to digest, has led your former local president down the path of ignorance.
Yes, net debt is down substantially, as is total debt. Well, until the third quarter. In the third quarter financials, AMR disclosed that it borrowed at least $755 million:
Balance Sheet Update
AMR took numerous steps to bolster its liquidity in the third quarter. It raised approximately $300 million through the sale of equity, raised approximately $500 million from aircraft mortgage transactions, closed the sale of American Beacon Advisors for total consideration of $480 million, and drew its $255 million revolving credit facility.
AMR ended the third quarter of 2008 with $5.1 billion in cash and short-term investments, including a restricted balance of $456 million. At the end of the third quarter of 2007 AMR had $5.8 billion in cash and short-term investments, including a restricted balance of $447 million.
AMR's Total Debt, which it defines as the aggregate of its long-term debt, capital lease obligations, the principal amount of airport facility tax-exempt bonds, and the present value of aircraft operating lease obligations, was $15.4 billion at the end of the third quarter of 2008, compared to $16.6 billion at the end of the third quarter of 2007. AMR's Net Debt, which it defines as Total Debt less unrestricted cash and short-term investments, was $10.7 billion at the end of the third quarter of 2008, compared to $11.2 billion at the end of the third quarter of 2007.
http://phx.corporate-ir.net/phoenix.zhtml?...&id=1212522