AMR Stock Climbing

[Bagbelt]

Depends on what comes out of the new "open skies" agreement, I would imagine. Though foreign ownership rules are supposedly not changing. Deutche post bought out airborne express, but still can't fly their planes directly. An outfit called abx does, so I don't know if they are a majority silent partner.

 

[FWAAA]

Didnt AMR buy back something like $1 billion worth of stock a few years back?

It would be nice to see exactly what "Institutions" own the bulk of AMR stock.

If AMR only has 165 million shares out there, times $17/share, that means that the whole company could be bought for $2.8 billion. Controlling interest could be bought for a little over $1.4 billion. Is AMR going to be purchased by Brittish?

Could have bought the whole company (AMR) in the spring of 2003 for less than $250 million. Just think, for about half of the mechanics' yearly concessions, the AA mechanics could have bought the entire company. Assuming that they could have turned it around as well as Arpey has, the mechanics' investment would have paid off in spades.

Instead, you complain that the stock has to hit $300 for the mechanics to break even.

As an aside, due to the decline in the price of B6 and the increase in value of AMR, the market cap of AMR now exceeds the market cap of JetBlew. B)

Yes, during the 1990s, AMR bought back close to $2 billion of its stock, in part to avoid dilution due to the stock options granted the pilots. Another reason for stock buybacks was the uneven tax effect between dividends and capital gains. Buying back the stock meant that investors' tax rates were no more than 15% while dividends would be taxed as high as 39.5%. Any wonder why so many companies (other than utilities) never declared dividends?

Until Bush (43) took office in 2001, no board of directors in their right mind would declare dividends (or increase them) as long as stock could be bought back instead. Now, with lower rates on dividends, many companies are starting dividends for the first time (like Microsoft a couple years ago).

 

[Bob Owens]

Could have bought the whole company (AMR) in the spring of 2003 for less than $250 million. Just think, for about half of the mechanics' yearly concessions, the AA mechanics could have bought the entire company. Assuming that they could have turned it around as well as Arpey has, the mechanics' investment would have paid off in spades.

Instead, you complain that the stock has to hit $300 for the mechanics to break even.

As an aside, due to the decline in the price of B6 and the increase in value of AMR, the market cap of AMR now exceeds the market cap of JetBlew. B)

Yes, during the 1990s, AMR bought back close to $2 billion of its stock, in part to avoid dilution due to the stock options granted the pilots. Another reason for stock buybacks was the uneven tax effect between dividends and capital gains. Buying back the stock meant that investors' tax rates were no more than 15% while dividends would be taxed as high as 39.5%. Any wonder why so many companies (other than utilities) never declared dividends?

Until Bush (43) took office in 2001, no board of directors in their right mind would declare dividends (or increase them) as long as stock could be bought back instead. Now, with lower rates on dividends, many companies are starting dividends for the first time (like Microsoft a couple years ago).

So which Institutions own AMR?

 

[FWAAA]

So which Institutions own AMR?

http://moneycentral.msn.com/investor/invsu....asp?Symbol=AMR

From this link, you can see institutional ownership, mutual fund ownership (which is a subset of institutional ownership) and 5% owners as of 9/30/05.

One note about institutional ownership: this includes owners like me who hold their shares in street name (by their broker) rather than in individual name. Given that MSN shows that 99.99% of AMR is institutionally owned, almost nobody holds their stock in their own name anymore.

According to this link, the Ohio State Teachers retirement fund owns 3.5 million shares. So unionized teachers are profiting on the backs of the unionized AMR workers' concessions. B)

 

[mjk]

So much for Bob Owens conspiracy theory number 485.

 

[eolesen]

The whole company could be bought for $2.8 billion.

Sure, if you want to take on the $20B+ in mostly secured debt that comes along with the company.

 

[Bob Owens]

Sure, if you want to take on the $20B+ in mostly secured debt that comes along with the company.

20B in Debt and around the same in annual revenue. Not to mention the net worth of all their assets.

I keep hearing that "$20 B in debt" as if its a big deal. Let me ask you something; "When you bought your house how much was your debt compared to annual earnings?"

When I took out the loan for my home I borrowed $100k, however over the 30 year term of the loan I was scheduled to pay them around $300K back, so, I could have claimed that I had $300k in debt with only a $50,000 in revenue per year.

So lets compare the debt to revenue that AA has to what I had. AA 20/18, me 30/5. Who would you say had a heavier debt load? AA takes in 90% of what they owe on an annual basis while I only took in 16% of what I owed, and AA, since its a corporation and therefore immortal can stay in debt and expect earnings forever but I have to eliminate debt and put money away for that period of time where I will no longer be fit to work.

So AAs $20B in debt really doesnt mean much to me, its a big number meant to impress and frighten but only when the other big numbers are absent.The fact is even with $20b in debt AA is doing much much better than most of its employees.

 

[eolesen]

20B in Debt and around the same in annual revenue.

It would be great if we could take all of our revenue and apply it towards our debt, except that we only have less than 10% left over after paying salaries, fuel, and other operating expenses.

Not to mention the net worth of all their assets.

Except that the net worth of all the assets are securing the debt. AMR owns pretty much nothing free and clear, aside perhaps from the Eagle brand name and what used to be AMR Investments.

I keep hearing that "$20 B in debt" as if its a big deal. Let me ask you something; "When you bought your house how much was your debt compared to annual earnings?"

It is a big deal, Bob. How long would you survive with your annual income in credit card debt? Because that's pretty much the situation that AMR is in.

Your mortgage comparison sounds great, except that residential real estate usually appreciates in value over time. The value of the secured assets like aircraft, spares, and ground equipment goes down over time.

What little real estate AMR "owns" are buildings like HDQ and the maintenance bases. They don't appreciate in value at nearly the same rate that residential real estate does, and the maintenance bases are pretty much usesless to anyone except for an airline or MRO operation.

 

[Bob Owens]

Former ModerAAtor' date='Nov 23 2005, 06:10 PM'
It would be great if we could take all of our revenue and apply it towards our debt, except that we only have less than 10% left over after paying salaries, fuel, and other operating expenses.

How many of us have 10% left over after paying living expenses? Not too many around here thats for sure.I'm actually in the negative.

Except that the net worth of all the assets are securing the debt. AMR owns pretty much nothing free and clear, aside perhaps from the Eagle brand name and what used to be AMR Investments.

Once again, for most, the house secures the debt. Most people have very little net worth. Not only that but unlike a corporation we cant write off all our improvements, expenses and depreciatuion, real or imagined, against our revenue.

It is a big deal, Bob. How long would you survive with your annual income in credit card debt? Because that's pretty much the situation that AMR is in.

Thats pretty much the situation that most of my peers are in.

Your mortgage comparison sounds great, except that residential real estate usually appreciates in value over time. The value of the secured assets like aircraft, spares, and ground equipment goes down over time.

One thing that they do have is the ability to keep that assett, even though it has diminished in value, while writing off the full cost of it against their income.

What little real estate AMR "owns" are buildings like HDQ and the maintenance bases. They don't appreciate in value at nearly the same rate that residential real estate does, and the maintenance bases are pretty much usesless to anyone except for an airline or MRO operation.

The fact is that as human beings we have a finite period in which to earn money, and if we are to retire someday and not spend our final days in poverty after a lifetime of labor we must earn a good wage, enough where we can put some of it away, while we are working.

Corporations are immortal, they can be killed but they could potentially live on forever so as long as they are generating enough income to cover their expenses they are ok. AMRs debt to equity ratio is probably at lot better than most of its employees and its income to debt most certainly is.