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- Jul 23, 2003
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Earnings will be be released in a few days...
Two comments from industry analysts directly address bankruptcy risk.
JP Morgan Chase, downgraded both AAL stock and AAL's credit:
Wolfe Research, downgraded AAL stock:
The concern that's being echoed by several others isn't that AAL will leave this crisis with a lot of debt, but whether or not they'll be able to pay it off with an airline that's 20-30% smaller and generating less revenue.
More on earnings when they're released.
Two comments from industry analysts directly address bankruptcy risk.
JP Morgan Chase, downgraded both AAL stock and AAL's credit:
"In our opinion, the margin for error for American management to navigate this crisis outside of the courts is growing uncomfortably thin (and dependent on factors outside of management control, i.e. duration of the virus, traffic recovery cadence, further government support) that we really don’t think we’re left with a choice but to downgrade our credit opinion on American as well, to Underweight (from our prior Neutral on the credit side)."
Wolfe Research, downgraded AAL stock:
"... We believe AAL can manage through this crisis without triggering a BK scenario, but we wonder if ongoing losses simply become too exhausting to bear. We also believe further federal assistance shouldn’t be assumed even if the government gets an equity stake in the near-term. UAL, in December 2002, failed after receiving a grant, returning to the government for help, and seeing its request denied (they filed for Ch. 11 one week later). Cabotage laws mean the U.S. government can let major U.S. airlines fail knowing the lost capacity can’t be filled by foreign airlines (unlike, say, jobs at an auto manufacturer, by contrast) and that those jobs and assets will likely wind up at competitor airlines in relatively short order."
The concern that's being echoed by several others isn't that AAL will leave this crisis with a lot of debt, but whether or not they'll be able to pay it off with an airline that's 20-30% smaller and generating less revenue.
More on earnings when they're released.