Is financing for AA's 320s locked in?

[Hopeful]

And during the first quarter conference call, Arpey said this about liquidity:



Looks to me like AMR is carefully planning for the very real possibility that a Ch 11 filing becomes inevitable - that's the significance of referring to section 1110-eligible aircraft.

Then they need to file already! What is all this feet dragging by the company?

Screw the workers already and move on with it!

 

[robbedagain]

how about screwingmgmt rather than the little folks who actually make the airline fly its sad and pathetic that mgmt only looks to screw the employees not themselves. US AA DL just to name a few!

 

[damajagua]

Then they need to file already! What is all this feet dragging by the company?

Screw the workers already and move on with it!

I agree but they rather prolong the pain.
Don't forget we have a complete bunch of idiots
running this company. Where the hell is the
BOD?

 

[Hopeful]

I agree but they rather prolong the pain.
Don't forget we have a complete bunch of idiots
running this company. Where the hell is the
BOD?

They are waiting for the TWU to agree to a bankruptcy-like contract!

 

[chris perry]

They already did in 2003...

 

[Hopeful]

They already did in 2003...

Yes, but the billions$$$$ employees gave back is not enough.

 

[eolesen]

I agree but they rather prolong the pain.
Don't forget we have a complete bunch of idiots
running this company. Where the hell is the
BOD?

If you had idiots running the company, they'd have taken the loser's way out and declared bankruptcy already.

Bankruptcy is intended to be a measure of last resort for companies or individuals who have no more options left open to them.

I know, it's all about the stock options, right? Tilton and the clowns at legacy UA already showed that's not an issue. They'll just restore and more on exiting bankruptcy.

 

[Super FLUF]

If you had idiots running the company, they'd have taken the loser's way out and declared bankruptcy already.

No, they are not idiots. Actually, they have played the labor bricks like a harp.

They already suckered the employees into 8 years of BK wages. Now they can actually declare BK and lock in at least another 6 years of worse BK wages. That's 14 years of toilet wages for the labor brick scum all while pocketing 10's of millions for themselves for doing such a "spectacular" job running AA into the ground.

Our management team will be the envy of the other airline executives.

 

[Rogallo]

No, they are not idiots. Actually, they have played the labor bricks like a harp.

They already suckered the employees into 8 years of BK wages. Now they can actually declare BK and lock in at least another 6 years of worse BK wages. That's 14 years of toilet wages for the labor brick scum all while pocketing 10's of millions for themselves for doing such a "spectacular" job running AA into the ground.

Our management team will be the envy of the other airline executives.

So, so true.

 

[Frank Szabo]

No, they are not idiots. Actually, they have played the labor bricks like a harp.

They already suckered the employees into 8 years of BK wages. Now they can actually declare BK and lock in at least another 6 years of worse BK wages. That's 14 years of toilet wages for the labor brick scum all while pocketing 10's of millions for themselves for doing such a "spectacular" job running AA into the ground.

Our management team will be the envy of the other airline executives.

A real businessman would understand the true cost of doing such a thing - sadly, we haven't a one at AMR.

It's one thing going to the employees asking for help, but asking for help AGAIN after the first go-round was shown to be based in lies and the "union" the employees pay to represent them being complicit?

Arpey, company, and the bod haven't seen labor costs yet.

 

[eolesen]

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.

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.

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.

You guys can continue to wait for the rest of the world to change back to what it was, or you can resign yourselves to the fact that you're not working for the same company you did 15 years ago.

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.

I've got time for a quick round of golf before the corporate jet heads off for a long weekend, so I'll let you guys carry-on... The discussion hasn't changed in ten years, so I'm sure I won't miss out on anything new. 😉

 

[Frank Szabo]

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.

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.

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.

You guys can continue to wait for the rest of the world to change back to what it was, or you can resign yourselves to the fact that you're not working for the same company you did 15 years ago.

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.

I've got time for a quick round of golf before the corporate jet heads off for a long weekend, so I'll let you guys carry-on... The discussion hasn't changed in ten years, so I'm sure I won't miss out on anything new. 😉

OK - which one of the multi-million dollar consultants are they waiting for to "lead them from the pitfalls and wild beasts and set them upon the path of righteousness"?

It takes nothing but common sense to see where the company has erred, to put it mildly. What's the friggin' holdup with the necessary changes? Are we speaking of a corporation "too owing" to its pet union? Changes can be made in short order that can have the company back on a reasonable footing in a year or so - why is this not occuring? Is this not what the gurus desire?

Bottom line - NO BALLS on the part of the million dollar "management".

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.

The "only" lie was the main morale breaker, E. That's the one that's equivalent to one getting married then finding out the new wife or husband has no intention of settling down. Very few marriages survive a partner's unwillingness to quit fooling around with the old boyfriends or girlfriends.

The "only" lie was the very thing that ensures the employees will not trust management again. It really doesn't matter whether one is within out without re: the company. Unless those employed by American truly are masochists and enjoy mistreatment and constant lies, that one "small" item is an unrecoverable event - there will be a crash.

Once the stupidity and lies of the Centrepork infestation broke the morale of the troops, little was left to repair. Until that is fixed, if it can be repaired, kindly explain what good even a bankruptcy filing will do? Yes - it gets all the numbers in line again but I'm not interested in an answer from a textbook - what good will such an action do to bring the troops back on board with the management?

NONE.

That is the single most necessary thing to ensure success of any business, and what didn't happen in the past to other companies that may have had a chance had all pulled in the same direction.

This time, Centrepork goes first and sets an example but it's a given they've no intention of doing so as their collective management ego won't allow it. Most of us want their heads and those of this so-called "union" on matching platters being displayed on the steps of Centrepork.

 

[WorldTraveler]

Yep, that's to be expected; recall that AMR borrowed about a billion dollars in mid-March secured by LHR and NRT slots to boost the cash balance and has probably paid down a billion or so of this year's maturing debt (and/or some combination of pension contributions) in the third quarter. We'll know for sure in about a month. I would bet serious money that AA generated positive operating cash in the third quarter but that maturing debt and pension contributions consumed at least a billion dollars.

although less than 24 hrs have passed since I posted this, the thread has carried on ... in force.
Yes, I have said for quite some time that those who thought that the $6B in cash that AA had wouldn't last real long if they could no longer borrow money or are no longer able to refinance debt.
In their SEC filings earlier this year, AMR said they had better than $2B in debt payments due this year - plus their pension obligations... I don't remember the exact amount but AMR did refinance some of it - pushing the payments out.
They still have significant amounts of debt and pension obligations due in the current and 4th quarters - thus, the drain on cash is very much expected - and some of that will occur in the 4th quarter - thus it wasn't reflected in AMR's calculations regarding the $900M decrease in cash that will occur in the 4th quarter.
.
Given that AMR has said they will do impairment analysis on their fleet later this year, it is possible that the underlying assets will be found to be insufficient for the debt they guarantee - which could further diminish cash as AMR might have to either put up more collateral or reduce their indebtedness.... since they likely have no further unmortgaged collateral they can pledge, the alternative is to shell out more cash. Since they appear to have no unmortgaged assets, they will not be able to obtain debtor-in-possession financing which is essentially the working cash a company needs while they are in bankruptcy. Absent DIP, AMR MUST ensure they have enough cash to get them thru a BK should that occur - $3B is the minimum amount of cash AMR should hold going into BK and probably a lot more.
Debt service and pension obligations stop very quickly after a BK filing. Operational losses still have to be covered.
If AMR did not generate positive cash flow in the 3rd quarter or did so at fairly small levels, the chances of depleting cash due to operational losses is quite high.
.
The implication of this is that as AMR's cash declines, the pressure to stem losses increases - and with it comes the threat to the pension plans - and the resulting likelihood that the pensions will be terminated... which will itself drive a spike in retirements from people who want to get in on the current pension plans... and remember that retirement funding of all forms usually is not paid in BK so employees could be faced with a terminated pension plan but no 401K replacement until AA emerges.
Thus, there could be a further spike in retirements, including pilots, which could drive operational shortages and reduced cashflow which creates a viscious cycle.
.
The point in knowing this information is that for some people it does provide insight about what will likely happen w/ AA/AE and how AA employments should prepare themselves. For those who say they intend to stick it out but will reduce their output to match their reduced salaries, there isn't much any of us can do to argue otherwise. For others, though, they will give their best regardless of the return.
.
E is absolutely right that the world has changed... there is way too much finger pointing about what has caused AA's problems and far too little on how to get out of the present situation.
I personally believe that AMR mgmt had some flawed assumptions - other carriers would fail and AA didn't need to do make some of the tough choices they otherwise should have made. IN reality, airline BKs have not been completely successful in the past so it could well have been rational to believe that at least one of AA's competitors wouldn't make it out.
I also believe that AA's best efforts after the 2003 cuts were hampered by efforts well beyond AA's control - the 2004/05 spike in fuel prices, one of the deepest economic drops in US history, and the unfortunate reality that Washington is itself so broken that they can't fix anything - and just keep passing the blame and bill everyone else.
AA's mgmt might not have been able to overcome even half of what they have outside of BK... and even then once again there is no assurance that BK would have worked.
.
Whatever got AMR to this point, though, is far less important than what it will take to get AA back on its feet and as a viable employer and competitor. Right now, AA's employee loyalty is barely palpable and competitors continue to escalate their attacks on AA's core markets; as AA's core markets from both ORD and DFW going both east and west are infiltrated by competitors, the fix MUST COME quickly or AA could well become one of the statistics of airlines that did not successfully restructure or did so only to find they were so weakened they could never compete.
.
AA needs mgmt that can steer the company and employees thru a restructuring that becomes more difficult by the day - but they also need employees that are not dead set on burning the company down because their own expectations are so far out of line that they can never become reality.

 

[eolesen]

That's the one that's equivalent to one getting married then finding out the new wife or husband has no intention of settling down. Very few marriages survive a partner's unwillingness to quit fooling around with the old boyfriends or girlfriends.

The statute of limitations on pissing and moaning about your spouse is five years. If you stuck around knowing their behavior, then perhaps your inability to act and inability to stop holding a grudge is the problem, not their past behavior...

Keep in mind one of the reasons I left five years ago was disillusionment on where AA was heading.

Most of us want their heads and those of this so-called "union" on matching platters being displayed on the steps of Centrepork.

Good luck with that, Frank. I know you want your pound of flesh, but I don't see it happening, and it really won't do any good.

 

[Bob Owens]

AMR MUST ensure they have enough cash to get them thru a BK should that occur - $3B is the minimum amount of cash AMR should hold going into BK and probably a lot more.

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.