Amr Debt And Bankruptcy

[jimntx]

Though the total debt load of AMR needs to be reduced somewhat, don't assume that the goal is to be debt-free. I know that we as individuals are harangued in the media almost daily about "get rid of credit card debt/pay off your mortgage early/drive your car 2 years longer."

However, what is true for individuals is not necessarily true for corporations. Being debt-free for a corporation means losing some MAJOR tax advantages. And, as long as the debt is secured debt, the financial markets are available to the company. The problems arise when you need financing, but you have nothing left to put up as collateral. I'm not sure we are there quite yet--close, but not yet there.

Oh, and having $3 billion in the bank is a definite plus. (I agree that we are hoarding cash right now in case some attractive assets should become available in the open market. Can you say slots at DCA and LGA, children? That's right. I knew you could.)

 

[Hopeful]

Though the total debt load of AMR needs to be reduced somewhat, don't assume that the goal is to be debt-free. I know that we as individuals are harangued in the media almost daily about "get rid of credit card debt/pay off your mortgage early/drive your car 2 years longer."

However, what is true for individuals is not necessarily true for corporations. Being debt-free for a corporation means losing some MAJOR tax advantages. And, as long as the debt is secured debt, the financial markets are available to the company. The problems arise when you need financing, but you have nothing left to put up as collateral. I'm not sure we are there quite yet--close, but not yet there.

Oh, and having $3 billion in the bank is a definite plus. (I agree that we are hoarding cash right now in case some attractive assets should become available in the open market. Can you say slots at DCA and LGA, children? That's right. I knew you could.)

[post="253627"][/post]​

You're right about the disadvantage of being 100% debt free. But the amount of debt AMR currently has is not a plus for Wall Street and, as you said, for financing.
Just think what raising ticket prices would do for the bottom line.

As far as the DCA and LGA slots that may become available and I assume you mean with the demise of USAir, and that is a good point.

But how will you feel if AMR does purchase the assets of another carrier after all we've given back?

Will you say "It's good for AMR and hence good for the employees?

Will you say that down the road, if AA needs new airplanes and that will be good for the employees as well?


The bottom line is we as AMR employees will NEVER recoup what we gave up. NEVER!

So AMR can horde all the cash they want and save it for a rainy day fire sale of failed carriers, and WE will never benefit by it. Unless the "be lucky to have a job"
mantra is etched in our minds.

 

[mweiss]

One of the ironies of finance is that the best time to have debt is when you don't need it. This is as true for individuals as it is for corporations.

 

[Winglet]

If AMRs stradegy is to wait for US Air to fail, that's not much of a business plan.

AMR will be in Chapter 11 by this time next year. I can't see ANY original or innovative thinking going on at Centerpoint . . . . just withering away of the airline.

 

[MCI transplant]

<_< Hopeful----- Like I said before, "You need a new handle!" "Hopeful", your not!! The bottom line here is there will always be people like you saying " the sky is falling!" Well the sky's not falling!!Believe it or not, there is life out there after a.a.! If this job is upsetting you so much? Quit!!!If not, then there comes a time when your just going to have to tell the company, "That's it! That's my bottom line! No more!" And if that means shutting them down, so be it!!!!! The trick of all this is personaly deciding what your bottom line is! When is it not worth it anymore? This has to come from you, and you alone!

 

[Resman1]

I think AMR will be in Chapter 11 sometime in 2006. It's all about oil prices, OPEC has said they wouldn't be surprised if oil hits 80.00 a barrell. If that happens all the legacy carriers will be in Chapter 11. There is no way a profit can be made with oil at the level, unless we all work for free.

 

[FWAAA]

If AMRs stradegy is to wait for US Air to fail, that's not much of a business plan.

AMR will be in Chapter 11 by this time next year. I can't see ANY original or innovative thinking going on at Centerpoint . . . . just withering away of the airline.

[post="253639"][/post]​

With the tremendous domestic overcapacity plaguing the US airline industry, waiting (and hoping) for a prompt liquidation of USAir and UAL is the only thing they can do at this point.

B6 is even likely to report a loss in Q1 as its yields and RASM have fallen faster than any other airline (other than USAir). In 2004, both fell about 7% at B6.

I could buy it if everyone alleged that the management at one or two airlines was completely stupid and lacking a plan; but when nearly every airline is ailing, it stretches credibility to blame the management at every one of them.

I've said it before and I'll say it again: With LCCs adding lots of capacity and the loser legacy airlines not removing enough capacity, fares will be driven down below the level permitting any of them to cover their expenses.

If waiting for the overcapacity to be eliminated isn't a viable plan, then what is?

AMR won't file Ch 11 simply because of its debt load.

If it files, it will be for the same reason it almost filed in 2003: If it runs out of cash. AMR was actually cash positive from operations last year.

mweiss: I know the above is an oversimplified executive summary of what is ailing AA, UA, DL, CO, NW, and US.

 

[Buck]

I think AMR will be in Chapter 11 sometime in 2006. It's all about oil prices, OPEC has said they wouldn't be surprised if oil hits 80.00 a barrell. If that happens all the legacy carriers will be in Chapter 11. There is no way a profit can be made with oil at the level, unless we all work for free.

[post="253643"][/post]​

Free, are you crazy?

How are we going to pay dues to the TWU if we work for free?

 

[mweiss]

mweiss: I know the above is an oversimplified executive summary of what is ailing AA, UA, DL, CO, NW, and US.

[post="253644"][/post]​

OK, OK...I'll leave you alone.

It's not really a stretch to say that the legacies' management is at fault. The reason they all are failing is that they all had the same fundamental business plan at their core.

 

[jimntx]

If AMRs stradegy is to wait for US Air to fail, that's not much of a business plan.

AMR will be in Chapter 11 by this time next year. I can't see ANY original or innovative thinking going on at Centerpoint . . . . just withering away of the airline.

[post="253639"][/post]​

No one ever said that waiting for US Air to fail is/was AMR's business plan. You are the one who translated availability of slots at DCA and LGA into failure of US Air. Another possibility is that UAIR might sell some of these in order not to fail. Lord knows, such a sale would raise a pot load of cash.

By the way, it is Centerport, not Centerpoint.

 

[eolesen]

But how will you feel if AMR does purchase the assets of another carrier after all we've given back?

Will you say "It's good for AMR and hence good for the employees?

[post="253632"][/post]​

I will say it might be good for AMR and the employees, assuming we only purchase assets, i.e. slots and real estate, and not assume the liabilities, i.e. leased/mortgaged aircraft and employees.

If DCA/LGA slots and DCA/BOS/LGA gates become available, we'd be foolish not to try and get our hands on them or at least be part of the bidding process and drive up the price for Jetblue.

Likewise, in a worst case scenario, if UAL's Pacific routes became available, we'd be foolish not to try and pick those up. But we don't need their aircraft.

 

[Bagbelt]

If I had a dollar for every time I've been told we are going bk, or the pension is going to be gone in Jan., no wait Feb., no wait March. Or how "they" have all this planned out, I could bail out AMR. I'm sorry the good times are gone. But I talk to people who are looking at other jobs and they seem amazed that all these other great companies pay less and charge more for benefits, or the flag waving politicians of either stripe watch as every last job in the U.S. that's worth anything is flushed. Unless you can get on with the state, forget double time or 12 sick days a year. Until enough people get motivated and start understanding just what a union is supposed to be, and that it may require personal sacrifice to improve our situation, not just blaming everyone else, nothing will change.

 

[Hopeful]

<_< Hopeful----- Like I said before, "You need a new handle!" "Hopeful", your not!! The bottom line here is there will always be people like you saying " the sky is falling!" Well the sky's not falling!!Believe it or not, there is life out there after a.a.! If this job is upsetting you so much? Quit!!!If not, then there comes a time when your just going to have to tell the company, "That's it! That's my bottom line! No more!" And if that means shutting them down, so be it!!!!! The trick of all this is personaly deciding what your bottom line is! When is it not worth it anymore? This has to come from you, and you alone!

[post="253640"][/post]​

This is not just about the sky falling. It's about AA not being done with us in terms of concessions. That's what I state here. Everyone has their own slant on things with respect to this company. That is what this forum is for. Like most people here, I have been in this business for many years. Like everyone else I have experienced enough to know that things just aren't looking too good.

 

[MCI transplant]

This is not just about the sky falling. It's about AA not being done with us in terms of concessions. That's what I state here. Everyone has their own slant on things with respect to this company. That is what this forum is for. Like most people here, I have been in this business for many years. Like everyone else I have experienced enough to know that things just aren't looking too good.

[post="253749"][/post]​

<_< Well, Good for you!!! So what are you going to do about it?????

 

[Hopeful]

<_< Well, Good for you!!! So what are you going to do about it?????

[post="253766"][/post]​

I am going to stay in this forum and complain.....so GET USED TO IT!