AMR chief says...

[WorldTraveler]

The real question is whether those companies learn from their mistakes and repeat the trip to BK... while AA employees "gave" once a decade ago, remember that the number of two timers in BK that succeeded is pretty small.

With all due respect, if AA had actually filed BK 10 years ago instead of doing about 60% of the cuts they could have rec'd in BK, you would not be in the position you are in now. Remember also that because of the way BK laws work, AA got the majority of the cuts in its 2003 restructuring from labor while other parties have to participate this time around. Problem is this is #2 for employees and the cumulative effect of AA's two "asks" is a lot greater than if AA had taken all they needed 10 years ago instead of dragging the process out over a decade.

 

[eolesen]

And like everyone says they cant own more than 25% equity in a US airline.

Uh, wrong. Foreign equity can go up to 49%. Voting control can't exceed 25%. SAS learned that the hard way when they stepped up to bail out CO's first bankruptcy.

It is because the Unsecured Creditors Committee requires the agreements to approve a POR, not because the LAW requires it. Why are there so many uninformed and thick skulled humans in this profession?

Despite the multitude of claims to the contrary, there is no hard and fast requirement for labor agreements to be resolved.

Not knowing where your labor costs may be in 12-18 months probably won't help rally the UCC around a POR, but it is certainly possible that a company could exit bankruptcy without resolved contracts. Especially if there's investors who are willing to take a bet on the current management team.

Has anyone considered that AMR may already have some degree of confidence that TPG is willing to bet on the standalone plan?

With the exception of AA and F9 (who is making significant improvements in its own finances), the US airline industry is financially stable and relatively healthy.
With the exception of UA, US airlines are flying fuller planes with a better operation than has ever existed before.

I guess that means VX is stable and healthy? How about Comair or Pinnacle? Great Lakes? Mesa?

Most carriers are indeed holding their own right now. But it's not just AA and F9 who are at risk.

 

[Jacobin777]

Uh, wrong. Foreign equity can go up to 49%. Voting control can't exceed 25%. SAS learned that the hard way when they stepped up to bail out CO's first bankruptcy.

Your facts are off, its still 25%(24.99 actually):

"Walsh made no mention of how big a stake BA parent IAG might consider, though U.S. law limits foreign ownership of U.S. airlines to a stake no greater than 24.99%."

http://travel.usatod...rlines/818964/1

Just as important:

"In May 2003, the Bush Administration proposed amending the legislation that currently restricts foreign ownership of U.S. airlines, raising the allowable percentage of total foreign ownership of voting stock in U.S. airlines from 25 to 49 percent."

http://www.gao.gov/products/GAO-04-34R

Another quote:

"By law, no more than 25% of a U.S. airline may be owned by foreign interests and must be under the "actual control" of U.S. citizens"

http://en.wikipedia....ica#cite_note-5

Yet another quote:

"We approach with an open mind the expected European proposal to change U.S. laws that limit foreign ownership of U.S. carriers to 25 percent of voting stock and prohibit “actual control” by foreign citizens."

http://aviationblog....s-is-open.html/

 

[FWAAA]

Your facts are off, its still 25%(24.99 actually):

Wrong. eolesen was correct. Foreigners can own up to 25% of the voting stock and up to 49% of the equity of a US carrier.

The cites you provided prove that eolesen is correct, as most mention the 25% limit on voting equity. Perhaps you're unaware of the difference? For example, BA could own just under 25% of the voting stock of AA but it could also own non-voting stock such that its ownership of AA was no more than 49% of the total equity.

 

[eolesen]

Well, I'll see your blog posts with the DOT's rules...

http://ostpxweb.dot.gov/aviation/certific/Certificated%20packet2.pdf

The important stuff is on page 13.

"the Department has approved up to 49% total equity ownership (comprised of
both voting and non-voting), but by statute foreigners cannot own, individually or in the
aggregate, in excess of 25% of the voting stock"

Since there's an open skies agreement with the UK and ES, DOT's past practice would permit 49% equity.

For a current example of non-voting stock and investment by non-US citizens, go read the docket on Virgin America's ownership...

 

[FWAAA]

I'm guessing that Jacob is not well-acquainted with the distinctions between voting and nonvoting stock.

When you correct someone, you look foolish when your citations actually prove that the other person was, in fact, correct.

 

[WorldTraveler]

I guess that means VX is stable and healthy? How about Comair or Pinnacle? Great Lakes? Mesa?

Most carriers are indeed holding their own right now. But it's not just AA and F9 who are at risk.

The context was largely large jet carriers but if you want to expand it, regional carriers operate for the benefit of network carriers so I'm not sure there is any reason to believe the financial issues those regional carriers face have any real impact on the industry which has more than enough regional carrier capacity to fill whatever gaps are left.
Since Comair is wholly owned, we have no idea how well or poorly they really are doing.

VX is clearly an exception in that they seem to have no shortage of cash to continue expanding despite losing money since the day they operated their first flight.
There are alot of people whose fears that VX exist for the purposes of inflicting harm on Virgin's primary LHR competitors might have some truth.

But VX doesn't appear to be going anywhere despite their losses which only puts pressure on legacy US carriers.