Is financing for AA's 320s locked in?

[Bob Owens]

You've got just about every independent & outside financial or industry analyst saying AMR is screwed in their present form. At some point you have to consider the fact that maybe, just maybe, management isn't lying about the state of the company.

Because they go by what AA puts out. Because AA is showing a loss. The fact is these people get limited information, SEC filings. However Banks who are lending them Capital have access to more info than analysts and they havent been spooked.

The only "lie" was the commitment to shared sacrifice. You have no argument from me on the way the privileged have treated themselves at the trough, but it's a completely separate issue from the fact that AMR is unsustainable in its present form.

There have been plenty of other lies as well. One thats handy is the 'White Spaces".

Bluntly, AMR's dead without some radical change. No way around that one. Maybe not today, maybe not next year, but certainly before I'm old enough to start drawing my pension.

No dissagreement there. AA needs to switch stragies and invest in their workers, it is after all a service company.

Waiting for everyone else as a strategy hasn't worked out so well for management, and I really don't think it is going to work for you guys either.

Agreed again, we need to push for a release.

 

[WorldTraveler]

Please tell us how you came to that figure.

How much cash did UAL, Delta and USAIR have when they filed?

I've heard that number before and never really got a straight answer as to why if it was $1billion in 2003 its $3 billion today when the carrier is much smaller.

I am quite sure UAL and DAL had DIP financing.... I think US had it one time but not the other but I'm not entirely sure.
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The reason why AMR would need more today is quite simply because the economy is as bad if not worse as it was then - and AA will now be the only major airline in BK - if they file.
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The competitive threats to AA will be - and already are - enormous - and so will be the associated losses. The fact that AMR is expected to lose a billion dollars while others will make money shows the gap in profitability that AA must overcome. Some of that might be labor cost driven but as I have pointed out multiple times, there is far more to AA's revenue production issues than the company and other people here want to acknowledge.
In the absence of being able to correct those revenue production problems - and the associated inefficiencies that are created as AA is forced to operate a smaller than desired airline, employees almost always bear the lion's share of the cuts in BK... because that is the fastest way to quickly reduce costs and get finances back in balance. AA will worry about their revenue production issues later - some of which are related to their overall cost structure which won't stabilize until they are out of or toward the end of the reorganization process.
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In order to successfully restructure, AA has to be able to finance those losses and demonstrate it can come out as a viable company.
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Without DIP, AA will have to use the cash it has in the bank in order to ride thru BK and then come out w/ a viable business model that can rebuild cash.
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DAL and UAL both had far more than $1B in cash in 2003/05 when they filed. US had the lowest cash on hand during BK - dipped to around $1B and they came close to hitting thresholds where their funding would be cancelled.
Of course the answer was to impose steeper pay cuts to reduce cash flow.
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You do not want AMR trying to reorganize with "fumes" left in the tank.
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Since you think the banks have enough info that they keep shoveling money to AMR, whose mattress do you think the cash is stored under - since it apparently isn't "in" the bank?

here's what Forbes said
"The airline has about $3.1 billion in debt payments due by the end of next year. As of June 30, AMR had $5.2 billion unrestricted cash which are expected to drop below $4 billion by the end of next year, as per Moody’s, indicating that cash reserves may fall inadequate for debt repayments in absence of sufficient operating cash flow the following year."
http://www.forbes.com/sites/greatspeculations/2011/09/22/moodys-lowered-outlook-stokes-amr-liquidity-concerns/?partner=yahootix