Here is a link for info about Arpey's conference with Merril Lynch
http://news.moneycentral.msn.com/ticker/ar...&Symbol=AMR
It looks to me that we have over 5 billion in cash 425 restricted
and over 5billion in unencumbered assets, with the above post of 30%hedged fuel for 2009 at 78 a barrel
Here is Arpey's conference from JetNet:
Highlights: Arpey's Address to Merrill Lynch Investors
Addressing industry analysts and investors at the Merrill Lynch 2008 Global Transportation Conference, CEO Gerard Arpey said American Airlines is moving aggressively to restructure its business to reflect new realities and to better position the company to weather the current crisis created by skyrocketing fuel prices and a soft economy.
--------------------------------------------------------------------------------
The seriousness of today's industry problems, Arpey said, take root in many years of continuous downward pressure on air fares caused by:
Chronic overcapacity
Growth of low-cost carriers
Almost complete price transparency
Instant product spoilage
"In the early part of this decade we were similarly challenged by a disconnect between our revenues and costs that threatened our very future. We did not shy away from the challenge, because we were determined then - as we are now - to retain control of our destiny."
"The industry as it is constituted today was simply not built to withstand oil prices of $125 a barrel or more, and the challenge is made more difficult by the lack of momentum in the U.S. economy. Our customers must ultimately compensate us for the costs we incur flying them around the United States and the world."Since 2002 the airlines annual expenses have been reduced by approximately $6 billion.
The 2008 fuel bill is expected to be about $7.5 billion higher in 2008 than in 2002, negating all progress made during the last several years, and forcing American to once again to take a hard look at all activities and make some tough choices.
Some of those choices involve new fees for things like checking bags and changing reservations, and assistance in making reservations.
Recent fee increases are the latest phase of "unbundling" the product. Customers pay for the services and features they truly value - and, customers who don't need or value a certain service or feature don't have to pay for it.
American has led or matched fare increases both domestically and internationally this year, and have also revised capacity plans to eliminate a lot of unprofitable flying and improve the supply and demand equilibrium. Today, American is 36 percent hedged at $70 per barrel ($2.38 per gallon) for anticipated second quarter fuel consumption and 33 percent hedged at $78 per barrel ($2.55 per gallon) for anticipated full year consumption. American's fourth quarter domestic schedule will be roughly 11 to 12 percent smaller than last year, grounding 40 to 45 American Airlines jets, 35 to 40 regional jets, plus Saab turbo-props, totaling over one hundred aircraft.
--------------------------------------------------------------------------------
"We would much rather grow than shrink. But given the environment we are in, we believe these steps are absolutely necessary if we are going to close the gap between our revenues and our costs."Removing capacity, however, puts upward pressure on unit costs. So it is imperative to continue to lower expenses, which includes:
Replacing the MD80 with more efficient Boeing 7373s. American will take delivery of 70 current generation 737 aircraft over the next two years, and evaluate whether to move at an even brisker pace.
Consider accelerating retirement schedule of A300 fleet.
American expects to end the second quarter with more than $5 billion in cash and short term investments, as well as approximately $5 billion in unencumbered assets and other sources of liquidity."There is a temptation to conclude that our efforts to bring our company back from the brink in 2003 and 2004 have been for naught. The reality is just the opposite, however, as the current crisis - and our ability to navigate our way through it - underscores the importance of the strides we have made to put our company on a sounder financial footing."
--------------------------------------------------------------------------------
"Our stronger financial foundation has both increased our strategic flexibility and enabled us to fulfill the obligations we have to our employees and retirees."
Since 2002 American has contributed more than $2 billion dollars to its employee defined benefit pension plans.
Pension funding status improved from 78 percent in 2003 to approximately 96 percent in 2007.
Front line employees have realized over $400 million dollars in value from the 38 million stock options they received in 2003.
Every other legacy competitor has used bankruptcy - some more than once - to lower their labor costs relative to American, by:
Eliminating or freezing defined benefit pension plans
Eviscerating retiree medical plans
Eliminating restrictive work rules
Outsourcing work to cut costs
On top of that, every new entrant carrier has a built-in labor cost advantage from day one.
--------------------------------------------------------------------------------
"The market eventually dictates what a company can or must pay for all goods and services. That includes jet fuel, as well as wages and benefits. While we cannot expect our employees to absorb the brunt of record fuel prices - our customers must ultimately do that - we are ever mindful that we have to remain competitive to protect everyone's long-term future. Because if we're not competitive, we're really not protecting anybody's interest in the long run. In fact, we are jeopardizing their long-term future and their retirement." "Fuel prices at today's level are a fundamental game changer. But the airline business has always been about change. And for more than 80 years, American Airlines has reflected, adapted to, and helped shape the changes that have transformed the air travel business from a technological oddity, to a luxury for the few, to an indispensible economic catalyst, and a fact of life for millions and millions of people in the United States and around the world.
"As always, we are facing up to our challenges directly, tackling them head on, and we remain confident in our ability to work our way through this difficult period, and toward a brighter future for our company."
---Gerard Arpey, CEO
if in fact they EVER do,...(a journey known ALL to WELL, to carriers like DELTA...ua, and us...)
