Dont call me Shirley
Veteran
Anything to this?
http://aa.mediaroom.com/index.php?s=43&item=3285
http://aa.mediaroom.com/index.php?s=43&item=3285
Eagle spin off?
- Thread starter Dont call me Shirley
- Start date
will fix for food
Veteran
- Aug 20, 2002
- 664
- 50
As of now, yes.
I can't wait to see the documents submitted to the SEC.
Who's going to be correct? The A/A employees who said Eagle was an albatross around their neck or the Eagle employees who said Eagle was the only thing making A/A profiteable?
I suspect the answer was somewhere in the middle myself.
Frank Szabo
Veteran
The take from "selling" Eaglet will be a good way for the Centrepork infestation to pay themselves some large cash bonuses "for a job well done", just before AMR's bankruptcy filing ...
will fix for food
Veteran
- Aug 20, 2002
- 664
- 50
They aren't selling it. They are spinning it off.
Frank Szabo
Veteran
Kindly notice the word "selling" was in quotes, intended as a generic term for the extraction of money from the corporation by Centrepork.
Yes, understood re: "spinning off" - issue additional stock of which the Centrepork infestation gets a good deal of (and immediately sells as with their yearly April failure awards, as good as cash) for a job well done.
Byhaps this is why the delay re: a contract starts to makes sense - gotta give the big boys time to get post BK DIP financing in line, as they seem to have done with Boeing and Scarebus on their "record" order and probably other avenues as well. All that remains is a further dog and pony show with negotiations where, perhaps, we actually get some temporary gains only to have them dashed by a BK filing or, as in the case of 2003, the threat of a filing with the darlings WE ARE PAYING TO REPRESENT US leading the charge to "save jobs" (and dues income) as was done previously.
Remember - after the divestiture of Eaglet, all of the corporate airline holdings will be in one pile - much easier to zero the stock and issue new shares.
It won't be immediate as that would be too obvious - even though they weren't tweaked too much, the alterations to the Chapter 11 Rules of October 2005 were designed to cut back on the corporate abuse of the BK system, ie, using it for strategic purposes rather than necessity.
That's only an opinion - the scenario could have many branches and twists we aren't aware of, but seems reasonable considering the "qualities" of those "managing" and "helping" us. Regardless, get ready for a wild ride.
When was AA profitable?
I think Eagles problem will be staffing. Is it worth using up two pilots in an airplane with less than 100 seats?
The five year reprieve that the airlines got when they raised mandatory Retirement to 65 is over. The amount of people getting their Air Transport certs has plummetted over the years. The majors will suck every pilot they can from the Regionals.
While I put nothing beyond them I dont see any more BKs. I think they got what they wanted-Lower labor costs. As far as we go I think the finance guys in the company feel that with 54% over 50 we arent a flight risk. That we will stay till retirement no matter how bad they make it, however, how do they get fresh blood? In Line Maint we dont have people who come to work sporting an oxygen bottle and a walker, yet. We can see where Jet Blue has raised top pay to $40/hr. Why? Because people at Jet Blue dont have many years invested there, they are more willing to walk away, they cant keep people, so they on their own brought top pay to $40/hr. We earn over $6/hr less. While turnover may be acceptable in some areas two places where an airline does not want turnover is flight and MX. Airlines invest a lot of money in training and it takes a while to become proficient. The ops guys have a little different view. They are the ones who realize that their is a lot more to the equation than numbers on a page. Sure the flight risk of a 50 and over work force in the short term is small, but so is the chance that the companys bottom line at the end of the day will benefit from screwing them over. Cancellations and delays are expensive, so is farming out work when you have guys on the clock who are capable of doing it. Another big issue is attrition, how do you replace the guys as they retire? From looking at the TA I feel that the companys plan was to cannabalize OH to maintain its line operation by giving the guys a big incentive to go to the line and removing the benefits of working in OH ($2.55 line premium and elimination of the 1/7th rule for example). They would get a few extra years squeezing out of a defeated workforce before having to pony up. Jet Blue, UAL, USAIR, none of them have a reserve of A&Ps on payroll that they can tap and most of the guys who were riffed simply arent coming back, even in this economy.
PhatSappy
Advanced
- Oct 31, 2010
- 162
- 16
Indeed. Let's look for this on the SEC website. I would almost bet a spinoff of overhaul is next in line.
Ok kids, you better look into a better way to earn. Sorry to disappoint but better now than wasting another 5 years of so if you are under 50.
The upgrades are filling the docks in TULE. You know the routine, OSMs and then Parts Washers/Aircraft Cleaners and transfers under Art. 12. , but we are short of people.
Well the language in the TA as far as allowing the company to spin off up to 25% of the value of the MX operation in any given year along with keeping system protection at 1998 seems to point that way as far as intent. If you figure that around 500 a year attrit out and we currently have around 2000 without system protection, Tulsa currently has 3600 Title 1 mechanics. In three years the company would have enough unprotected people where they could sell off even Tulsa and not be restricted by system protection. Thats assuming that every worker in Tulsa would be willing to bump the system and stay with AA. Many would not bump the system, many cant and would stay on with who ever purchased the base.
I could see the business arguement of building a base in DFW then using that as a means of getting a sweetheart deal at AFW as well. Put two neighboring municipalities in competetion with each other. If they can get a good deal at DFW it just makes sense to have a base where pretty much every plane they have can be sent in on a Revenue flight. Using up crews, landing fees and burning fuel to ferry aircraft, isnt very efficient. AFW would still be a ferry but you could put the crew in a cab and send them back to DFW for another flight.
will fix for food
Veteran
- Aug 20, 2002
- 664
- 50
I don't know what paper this was from:
AMR's Results Good News For the Shorts
AMR Corp (AMR), the parent of American Airlines, reported dismal second-quarter results Tuesday, as the rapid escalation in fuel prices pushed it into a deep loss during the period. Though revenue rose 8% from the same period a year ago the company reported a net loss of $286 million, or $0.85 per share, which compares to a net loss of $0.03 per share last year. Due largely to its fuel-inefficient fleet, the carrier paid nearly 31% more in fuel costs from last year’s quarter, amounting to an incremental $500 million-plus headwind. American’s mainline load factor fell 0.3 percentage points from the year ago period, suggesting that demand is not keeping up with capacity additions. We maintain our bearish stance on AMR and the airline group, in general.
The company also announced a landmark deal with Boeing (BA) and Airbus (EADSY.PK) to begin replacing its aging fleet of narrowbodies, which still consist of a plethora of 20-year-old MD-80s. The first of the 460 narrowbodies it ordered will be delivered beginning in 2013 and should offer some improvement in maintenance and fuel expenses. AMR believes it will have the youngest and most fuel-efficient fleet among its US airline peers by the 2016-2017 timeframe. We’re not sure, however, that the carrier is strong enough to survive that long.
Although its liquidity position is adequate, the purchase of these aircraft will represent a substantial drain on free cash flow in coming years, even with the lucrative financing packages offered by Boeing and Airbus. We think such an ominous cash flow outlook is the key reason behind the carrier’s decision to spin off its regional carrier, Eagle, to shareholders of AMR. We believe that such a move, however, will only hurt AMR in the long-run, as Eagle will then serve the benefits of its existing shareholders. In doing so, it will dictate better terms for itself under capacity purchase agreements than it would have under the AMR umbrella, thereby putting additional pressure on the parent’s results.
We don’t think the diversification of AMR's regional fleet by potentially picking up other carriers to fly regional routes in its network—like Republic (RJET) or SkyWest (SKYW) will result in any immediate positive. We also view this as a red flag, as it would appear that there is no available buyer of Eagle to provide the parent with a cash infusion to finance its massive fleet renewal program. It would appear that a sum-of-the parts analysis is no longer valid in estimating AMR’s intrinsic value, which would suggest to us, that the carrier’s stock has further room to fall.
All things considered, our thesis remains the same: First, AMR is still flying an inefficient fleet, and it will take years and billions of dollars to right this ship. Second, the firm has a massive underfunded pension plan that represents a hit to equity holders and comparatively bloats its cost structure relative to other majors that have shed pension obligations under Chapter 11. Third, its hedges are inefficient against a fuel spike in coming periods. And finally, its debt load is absolutely massive and growing. As of the end of the second quarter, the firm’s total debt less unrestricted cash was $11.9 billion compared to $11 billion at the end of the second quarter.
AMR's Results Good News For the Shorts
AMR Corp (AMR), the parent of American Airlines, reported dismal second-quarter results Tuesday, as the rapid escalation in fuel prices pushed it into a deep loss during the period. Though revenue rose 8% from the same period a year ago the company reported a net loss of $286 million, or $0.85 per share, which compares to a net loss of $0.03 per share last year. Due largely to its fuel-inefficient fleet, the carrier paid nearly 31% more in fuel costs from last year’s quarter, amounting to an incremental $500 million-plus headwind. American’s mainline load factor fell 0.3 percentage points from the year ago period, suggesting that demand is not keeping up with capacity additions. We maintain our bearish stance on AMR and the airline group, in general.
The company also announced a landmark deal with Boeing (BA) and Airbus (EADSY.PK) to begin replacing its aging fleet of narrowbodies, which still consist of a plethora of 20-year-old MD-80s. The first of the 460 narrowbodies it ordered will be delivered beginning in 2013 and should offer some improvement in maintenance and fuel expenses. AMR believes it will have the youngest and most fuel-efficient fleet among its US airline peers by the 2016-2017 timeframe. We’re not sure, however, that the carrier is strong enough to survive that long.
Although its liquidity position is adequate, the purchase of these aircraft will represent a substantial drain on free cash flow in coming years, even with the lucrative financing packages offered by Boeing and Airbus. We think such an ominous cash flow outlook is the key reason behind the carrier’s decision to spin off its regional carrier, Eagle, to shareholders of AMR. We believe that such a move, however, will only hurt AMR in the long-run, as Eagle will then serve the benefits of its existing shareholders. In doing so, it will dictate better terms for itself under capacity purchase agreements than it would have under the AMR umbrella, thereby putting additional pressure on the parent’s results.
We don’t think the diversification of AMR's regional fleet by potentially picking up other carriers to fly regional routes in its network—like Republic (RJET) or SkyWest (SKYW) will result in any immediate positive. We also view this as a red flag, as it would appear that there is no available buyer of Eagle to provide the parent with a cash infusion to finance its massive fleet renewal program. It would appear that a sum-of-the parts analysis is no longer valid in estimating AMR’s intrinsic value, which would suggest to us, that the carrier’s stock has further room to fall.
All things considered, our thesis remains the same: First, AMR is still flying an inefficient fleet, and it will take years and billions of dollars to right this ship. Second, the firm has a massive underfunded pension plan that represents a hit to equity holders and comparatively bloats its cost structure relative to other majors that have shed pension obligations under Chapter 11. Third, its hedges are inefficient against a fuel spike in coming periods. And finally, its debt load is absolutely massive and growing. As of the end of the second quarter, the firm’s total debt less unrestricted cash was $11.9 billion compared to $11 billion at the end of the second quarter.
Almost sounds like the US Government?
Big assumption is that other carriers will want to puchase capacity on routes they dont want to fly themselves. If it was a given that eagle could get a better deal selling their capacity then the buyers would be in a bidding war for it, but it doesnt look like anybody is interested in buying it.
I think that AMR was using Eagle as a means to displace money from AA. A friend of the family wanted to fly from an Eagle city on the East Coast to PHX. He said he asked for a breakdown of the charges and it was nearly double for the short hour long Eagle leg than it was for the NY -PHX legs, so he asked if he could buy just the NY-PHX legs at that price and bus down to NY, they said no, that rate was only available as a connecting flight. So for the flight Eagle generated a lot more money than the AA legs did even though he was really looking to buy the NY-DFW-PHX flight. He would never consider paying that much if NY was his destination. The price was so close he decided to take Eagle.
