AA in discussions with Citi to boost cash balance

[FWAAA]

According to the Financial Times, AA and Citi are discussing ways to increase AA's cash, perhaps thru an advance sale of AAdvantage miles:

http://www.reuters.com/article/marketsNews...20090403?rpc=44

http://finance.yahoo.com/news/American-Air...b-14839138.html

Citi pays AA about $1.0 billion each year for miles and thus, AA could probably borrow a couple billion dollars by pre-selling 2009-10 miles to Citi in exchange for upfront cash, similar to DL's deals with AMEX prior to (and subsequent to) its bankruptcy. Of course, that just means AA would take in less cash in coming months from mileage sales, since Citi would have already bought them. Kind of like eating next week's lunches this week. What will you eat next week?

 

[jimntx]

Well, that's how they schedule flight attendants and pilots--i.e., today's need is more important than tomorrow; this month is more important than next month. Why shouldn't we finance the company the same way?

 

[Bob Owens]

According to the Financial Times, AA and Citi are discussing ways to increase AA's cash, Of course, that just means AA would take in less cash in coming months from mileage sales, since Citi would have already bought them. Kind of like eating next week's lunches this week. What will you eat next week?

Thats how the employees have been living the last six years.

 

[FA Mikey]

Great for AA. Its good to know one of the biggest banks can find the funds to build up AA's balance sheet. Its a shame with all the money they have taken from the tax payers, they are doing so little for the small business people and the working folk.