AAL DEBT LOAD-Debt to Equity Ratio

Rusty Hilock

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May 21, 2018
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The current management at AA is operating the Airline on CREDIT. They are using the Billions of profit to buy back stock for themselves and then Borrow Money to operate the Airline. The current Debt is approx. 25 BILLION DOLLARS and Climbing.
To make matters worse 12 billion of the debt has to be repaid by 2021 and 1 Billion is due for Pension Payments in the next 18 months. All this debt is coming due at the same time Fuel Prices are INCREASING.
This is the "Perfect Storm" for ANOTHER Chapter 11 in the next 3 years.
The May DFW Crew News one of the pilots asked Robert Isom this very question about the debt and he basically danced all around it for 5 minutes without directly answering it.
As a TWU member everyone seems to be looking at the big fire down the street called the JCBA while the next street over the AA house is burning down to the ground in DEBT.
All I'm doing with this posting is pulling the Fire Alarm because I don't have any way to put out the DEBT Fire.

Please compare our Debt to Equity Ratio with Delta.

https://www.fool.com/investing/gene...ican-airlines-making-a-9-billion-mistake.aspx


https://marketrealist.com/2017/07/why-investors-should-be-concerned-about-american-airlines-
debt



https://www.fool.com/investing/2018/03/12/american-airlines-is-still-wasting-investors-money.aspx


https://www.fool.com/investing/2018/05/02/rising-costs-hit-american-airlines-group-inc-again.aspx
 
The current management at AA is operating the Airline on CREDIT. They are using the Billions of profit to buy back stock for themselves and then Borrow Money to operate the Airline. The current Debt is approx. 25 BILLION DOLLARS and Climbing.
To make matters worse 12 billion of the debt has to be repaid by 2021 and 1 Billion is due for Pension Payments in the next 18 months. All this debt is coming due at the same time Fuel Prices are INCREASING.
This is the "Perfect Storm" for ANOTHER Chapter 11 in the next 3 years.
The May DFW Crew News one of the pilots asked Robert Isom this very question about the debt and he basically danced all around it for 5 minutes without directly answering it.
As a TWU member everyone seems to be looking at the big fire down the street called the JCBA while the next street over the AA house is burning down to the ground in DEBT.
All I'm doing with this posting is pulling the Fire Alarm because I don't have any way to put out the DEBT Fire.

Please compare our Debt to Equity Ratio with Delta.

https://www.fool.com/investing/gene...ican-airlines-making-a-9-billion-mistake.aspx


https://marketrealist.com/2017/07/why-investors-should-be-concerned-about-american-airlines-
debt



https://www.fool.com/investing/2018/03/12/american-airlines-is-still-wasting-investors-money.aspx


https://www.fool.com/investing/2018/05/02/rising-costs-hit-american-airlines-group-inc-again.aspx

Take deep breaths.

The debt is mostly due to new aircraft and some loans they took at cheap rates. It isn't operating debt which is when you borrow because expenses are higher than revenues. (see post 9/11 to 2012).

So no bankruptcy anytime soon.
 
Take deep breaths.

The debt is mostly due to new aircraft and some loans they took at cheap rates. It isn't operating debt which is when you borrow because expenses are higher than revenues. (see post 9/11 to 2012).

So no bankruptcy anytime soon.
No bankruptcy, however it makes it easier to make excuses why they can't pay as much, and contracts take forever.
 
WHY IT MATTERS:
"In general, a high debt-to-equity ratio indicates that a company may not be able to generate enough cash to satisfy its debt obligations. However, low debt-to-equity ratios may also indicate that a company is not taking advantage of the increased profits that financial leverage may bring.

Capital-intensive industries tend to have higher debt-to-equity ratios than low-capital industries because capital-intensive industries must purchase more property, plants and equipment to operate. This is why comparison of debt-to-equity ratios is generally most meaningful among companies within the same industry, and the definition of a "high" or "low" ratio should be made within this context.

Lenders and investors usually prefer low debt-to-equity ratios because their interests are better protected in the event of a business decline. Thus, firms with high debt-to-equity ratios may not be able to attract additional capital."

Please compare AAL to DAL.
 
Take deep breaths.

The debt is mostly due to new aircraft and some loans they took at cheap rates. It isn't operating debt which is when you borrow because expenses are higher than revenues. (see post 9/11 to 2012).

So no bankruptcy anytime soon.

Depends what your definition of '"soon" is.
 
unless delta gets free airplanes, looks like it put pen to paper on $12 billion for 100 airbuses. will it pay $12 billion? no, but they aren't free.

delta also has to purchase aircraft to replace 30+ year old planes.

i saw the pilot question isom. as a baggage handler, i was unclear on a few things.

1) if the pilot was so worried about debt, why not propose to give something back to the company. your out of contract raise?

2) eventually, aal will be able to triple the dividend, at say, 400 million shares outstanding. .30 cents a quarter will cost aa $120 million a quarter/$480 million a year. less than double the cost of .10 cents a share for 760 million shares outstanding. this is needed, because delta is valued higher than aal...would you prefer dl paying you $1.20 year in dividends or aal's .40 cent a year dividend.

with aal at 400 million shares, it will cost delta nearly double to pay the same dividend.

if delta's market cap is apprx. $40 billion, all things being equal, aal stock is looking to be $100 a share with 400 million shares outstanding to have the same market cap. that is, when aa starts paying down it's debt, as isom and kerr have said that CAPEX is drawing down. aa has renewed it's fleet.

this is what aa leadership is looking at, planned for and building.

when aal does hit $100 share, isom should now question that pilot and ask him if he likes aal at $100 a share. i bet he will.
 
when aal does hit $100 share, isom should now question that pilot and ask him if he likes aal at $100 a share. i bet he will.


LOL!!! Only if Dow Jones hits 60,000





Is Donald Trump attempting another takeover of AAL as he did in 1989? The highest AMR stock ever was happened in October 1989 when DT attempted a takeover of AA. This brief time period was the only time in AA history that the Stock was over $100 / share. [$104.75 / share] I remember this very well at AA and for years after we had dumpsters with Trump Shuttle painted on the sides of them.

http://articles.latimes.com/1989-10-10/business/fi-192_1_airline-stocks
 
The current management at AA is operating the Airline on CREDIT. They are using the Billions of profit to buy back stock for themselves and then Borrow Money to operate the Airline. The current Debt is approx. 25 BILLION DOLLARS and Climbing.
To make matters worse 12 billion of the debt has to be repaid by 2021 and 1 Billion is due for Pension Payments in the next 18 months. All this debt is coming due at the same time Fuel Prices are INCREASING.
This is the "Perfect Storm" for ANOTHER Chapter 11 in the next 3 years.
The May DFW Crew News one of the pilots asked Robert Isom this very question about the debt and he basically danced all around it for 5 minutes without directly answering it.
As a TWU member everyone seems to be looking at the big fire down the street called the JCBA while the next street over the AA house is burning down to the ground in DEBT.
All I'm doing with this posting is pulling the Fire Alarm because I don't have any way to put out the DEBT Fire.

Please compare our Debt to Equity Ratio with Delta.

https://www.fool.com/investing/gene...ican-airlines-making-a-9-billion-mistake.aspx


https://marketrealist.com/2017/07/why-investors-should-be-concerned-about-american-airlines-
debt



https://www.fool.com/investing/2018/03/12/american-airlines-is-still-wasting-investors-money.aspx


https://www.fool.com/investing/2018/05/02/rising-costs-hit-american-airlines-group-inc-again.aspx


You’ve posted 3 Motley Fool contributions all written by the same “value investor” Adam Levine- Weinberg.

Did you note his bio and the positions he holds to ascertain how credible he should be considered?

E2BDD1E3-C761-410B-9E2A-3169D35C3FF7.png
 
Adam Levine - Weinberg

A2B3F237-63C7-4CFA-B277-0F15446BDF9B.jpeg

Motley Fool Blogger.

The Motley Fool Blog Network was a stock analysis and news site that provided a platform for non-Motley Fool staff writers to submit articles. They received compensation ranging from $50–$100 for each article submitted and additional compensation for how many recommendations or "editors picks" they received.[29] Eventually the company merged the Blog Network with its primary site, syndicating bloggers' articles alongside those written by in-house staff and making the beta.fool.com blogging platform defunct. In July 2014, after Yahoo announced its new Yahoo Finance Contributors platform,[30] Motley Fool was negatively impacted, as a significant percentage of traffic to its website relied on syndication of articles via Yahoo Finance. This led the company to sever relationships with the majority of its freelance contributors and former bloggers.”
 
Adam Levine - Weinberg

View attachment 12833

Motley Fool Blogger.

The Motley Fool Blog Network was a stock analysis and news site that provided a platform for non-Motley Fool staff writers to submit articles. They received compensation ranging from $50–$100 for each article submitted and additional compensation for how many recommendations or "editors picks" they received.[29] Eventually the company merged the Blog Network with its primary site, syndicating bloggers' articles alongside those written by in-house staff and making the beta.fool.com blogging platform defunct. In July 2014, after Yahoo announced its new Yahoo Finance Contributors platform,[30] Motley Fool was negatively impacted, as a significant percentage of traffic to its website relied on syndication of articles via Yahoo Finance. This led the company to sever relationships with the majority of its freelance contributors and former bloggers.”

Do you work for a Political Party? Same ol' trick of discrediting the messenger although the message has merit.

I could bring you Jamie Baker who ACCURATELY Predicted the 1st AA Chapter 11 months before it happened.
 
Do you work for a Political Party? Same ol' trick of discrediting the messenger although the message has merit.

I could bring you Jamie Baker who ACCURATELY Predicted the 1st AA Chapter 11 months before it happened.

Baker would be very credible as would Hunter Keay. I used to enjoy Bill Swelbar. Even Cranky Flyer would be more credible than this kid honestly.

I bet he was only able to grow his first facial hair last year?

https://www.nasdaq.com/symbol/aal/call-transcripts
 
unless delta gets free airplanes, looks like it put pen to paper on $12 billion for 100 airbuses. will it pay $12 billion? no, but they aren't free.

delta also has to purchase aircraft to replace 30+ year old planes.

i saw the pilot question isom. as a baggage handler, i was unclear on a few things.

1) if the pilot was so worried about debt, why not propose to give something back to the company. your out of contract raise?

2) eventually, aal will be able to triple the dividend, at say, 400 million shares outstanding. .30 cents a quarter will cost aa $120 million a quarter/$480 million a year. less than double the cost of .10 cents a share for 760 million shares outstanding. this is needed, because delta is valued higher than aal...would you prefer dl paying you $1.20 year in dividends or aal's .40 cent a year dividend.

with aal at 400 million shares, it will cost delta nearly double to pay the same dividend.

if delta's market cap is apprx. $40 billion, all things being equal, aal stock is looking to be $100 a share with 400 million shares outstanding to have the same market cap. that is, when aa starts paying down it's debt, as isom and kerr have said that CAPEX is drawing down. aa has renewed it's fleet.

this is what aa leadership is looking at, planned for and building.

when aal does hit $100 share, isom should now question that pilot and ask him if he likes aal at $100 a share. i bet he will.
That's impressive Crema and way over my head...