AMR Sees Over $5.5B Cash, Short-Term Invest At End Of 2Q

[WorldTraveler]

No merger is necessary. The TWU will sell itself out first.

Yes, you’re right. Foreign ownership is indeed a huge step. But unless the UK would like to pull out of the EU, foreign ownership is exactly what the EU wants from the US – on a reciprocal basis. And LHR is very much a part of the debate. You see, BA’s wishes regarding LHR were easy enough for the British to maintain for decades but now that the entire EU stands to benefit from an agreement that reigns in BA at LHR, the pressure is even greater. BA has acted like it can hold out as a near monopoly for decades but it is getting increasingly isolated on its own little island.

I’m not holding my breath for an EU-US Open Skies agreement but it will happen soon. And when it does and when other US airlines have meaningful access to LHR, BA and AA can do anything they want.

 

[eolesen]

Well, your view of EU/British politics is interestingly optimistic.


There's good reason why the Pound Sterling still exists as a standalone currency, and the Euro isn't accepted in most of the UK, so I'd say that the EU needs the UK more than the UK needs the EU right now. That leads me to believe that whatever happens with regard to EU-US open skies will no doubt not apply to the UK -if- it ever comes to fruition.

 

[Bob Owens]

Well, your view of EU/British politics is interestingly optimistic.
There's good reason why the Pound Sterling still exists as a standalone currency, and the Euro isn't accepted in most of the UK, so I'd say that the EU needs the UK more than the UK needs the EU right now. That leads me to believe that whatever happens with regard to EU-US open skies will no doubt not apply to the UK -if- it ever comes to fruition.

Well they dont accept US Dollars in the UK either, so does that mean that we need the UK more than they need us?

Seems that the EU is doing pretty well.

One of the things you have to remember is that England does more commerce with Europe than they do with the US, at least as far as people moving between them, and they would probably stand to lose more by alienating themselves within the EU even further (what with the Pound and Iraq) than by standing with a few US carriers and BA.

 

[B.N.]

Well they dont accept US Dollars in the UK either, so does that mean that we need the UK more than they need us?

Actually, everywhere I have ever gone (I am in USAF, flying C-5s, so a lot of places) the US dollar is accepted, without exception (in my travels). Ive got a bunch of Euros, which would get me laughed at if I tried to use here.

 

[aafsc]

That would be the greatest thing that ever happened to AA and its NATIVES...

After all, all Carl would do is pocket the 5.5 billion, sell some nice assets and then put AMR into bankruptcy and say goodbye. Then maybe the NATIVES would understand what happened to TWA.

Pi$$ed off because we nAAtives didn't suffer the same fate as you? Again, you expect AA and the "nAAtives" to pay the price for what Ichan did to you. By the way, who was responsible for bringing Ichan to TWA? If I remember correctly, it was the TWA UNIONS. Also, I am glad you dropped the medical; this way AA can save money. As far as passes, active airline employees are having a hard time getting on. In fact, I'm taking a trip soon and I went ahead and bought a full fare ticket.

<_< ---- There's a problem there twaoakc! :unsure: As much as I'd like to say "turn around is far play", We'd all go down with them!!!! So let's just leave it to speculation!!!! But I do believe it would take their arrogance down a few notches!!!

Arrogance? It is your sense of entitlement that is the problem.

 

[aafsc]

Well, when you demand (and get) at least $1.8 billion in wage concessions from your employees plus a couple hundred million in lease and loan concessions from your financiers, and you borrow a couple more billion, and sell a half billion or so in new stock (all of which AA has done since May, 2003), then cash finally starts to pile up. Like it is right now. Fare hikes are finally sticking, causing revenue to balloon as well.

The big factor is depreciation and the accrual system of accounting. When AA paid billions for new airplanes, it didn't write off the whole amount in year one. And that makes sense since new 777s and 738s tend to last 30+ years, so they should be written off a little each year. For AA, it writes off a little over a billion a year in depreciation and amortization - last year $1.164 billion. That's a GAAP expense, reducing net income, but it's an expense that doesn't require cash out now (since the cash for the 777s and 738s was spent in 1999-2003). That's the big difference.

Yes, AA has reported net losses, but it became cash flow positive the moment the concessions became effective in May, 2003. So far, the employees concessions have added at least $5.4 billion (probably more) to the bottom line. The concessions have helped pay the higher fuel bills.

Hey, if you borrow tons of money, and spend it on depreciable assets, then your business could report net losses while piling up cash. But that may not be your best strategy.

Other non-cash write downs included items such as asset impairments. AA had to write down it's "goodwill" asset of about 1.3 billion because it was deemed impaired. Also, the value of some aircraft dropped way below it's book value and had to be written down. Other items include things like aircraft groundings (whether owned or leased), facility exit cost (res centers, city ticket offices, and the like) and employee separation costs.