New Merger Rumor

[WorldTraveler]

Embraer is traded on the NYSE under the symbol ERJ.... so yes they do have to follow US accounting rules - which incidentally aren't terribly different from what is accepted globally.
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FWAAA,
the phrase "is far less likely" is not presented as fact.... but Embraer's writedown is based on valuation and since the 60 day window for AMR to reject leases did not even close until the 1Q2012, Embraer did not have to take the writedown other than to note that the chances are very high that they will suffer some financial repercussions because of AMR's BK.
Yes, it is possible to take a charge now and then turn around and reverse it as part of an order later (lease trade-ins are often used to discount the purchase price).

The point remains that we have heard all kinds of rumors that AA/AMR will acquire the Ejet and there hasn't been any confirmation of it. We have now seen that Embraer is going to write down the value of their existing exposure to AMR and there is no corresponding offset for new equipment.
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My gut tells me that AMR's existing creditors are not going to allow AMR to take on a couple billion dollars more debt given that AMR is now being pressured to freeze rather than terminate its pensions and already has an order book from Boeing and Airbus that exceeds $25 billion.
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I think we are real closed to seeing that the wish list of what AA believes it needs to fix its business model exceeds what its creditors will allow.
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Btw, thanks for the kind words about my business sense.

 

[AAviator]

FWIW, the A319 NEO has economics as good if not better than the E190. Word from my buds at B6 say that they're not that happy with the mx costs of the E190 either. There are plenty of E170/175's out there currently ordered at contract operators to fit the scope relaxation AA is seeking.

 

[jimntx]

Nice strawman. Nowhere in my post did I mention "U.S. accounting rules." The US is not alone when it comes to accounting rules. As you may know, other countries (even Brazil) have accounting rules applicable to publicly traded companies. In the case of Embraer, its 2011 earnings press release says this:


http://www.marketwatch.com/story/embraer-releases-4th-quarter-and-fiscal-year-2011-results-2012-03-20

Oh, so sorry, Mr. He-who-is-without-sin-or-error. Tell me, have you ever done business in Brazil? I have, and it is my experience that what Brazilian companies say and what they do is quite often two entirely different things--much like AMR executives that you so readily cheer for.

 

[eolesen]

perhaps you can show us a screen shot with an AA-US connection on the route noted.... and explain why AA would allow Advantage redemption on a carrier that so far as I know (perhaps I missed something) is not an Advantage partner.
US is not listed as an Advantage participant....

You must be taking reading lessons from either john john or Josh.


AA.com doesn't allow redemption availability to show non-partner carriers. Period. There's no point.

AA.com does allow availability to show non-partner carriers when there's a combinable fare and at least one segment on AA or AS.

It's hardly rocket science -- these are settings easily managed in carrier preferred display, something offered by Amadeus and other GDS's, and presumably built into most in-house managed airline websites.

 

[trenchworker]

perhaps you can show us a screen shot with an AA-US connection on the route noted.... and explain why AA would allow Advantage redemption on a carrier that so far as I know (perhaps I missed something) is not an Advantage partner.
US is not listed as an Advantage participant....

http://www.aa.com/i18n/AAdvantage/earnMiles/travel/airlines/main.jsp

Yes, you are right, USAir is Star Alliance, not our Oneworld...
AA.com, Jetnet, does not have ANY USAir info on there, and thats what makes this weird... said relative even plugged in a different date for another travel time and didn't show up.. so they called AA advantage directly, and the rep there had no idea about why it let them do the DFW - DCA (AA flight) then DCA- ALB (Us Air) 12 hours earlier.
BTW - this date is for August '12.

Just kind of ironic, as I have never heard of that before, with all this USAir - AA 'talk'....

 

[WorldTraveler]

Sounds like you have the same Texas sized AArogance about foreign companies and governments that AA displayed when it released its press release saying it couldn’t get the slots it wanted at PEK for its new ORD-PEK flight - with the predictable result that AA STILL has not improved on its slot times at PEK while other carriers have. And predictably, other carriers are posting better financial performance on their flights to/from PEK because they have been able to diplomatically solve problems.
No, Jim, it is accounting and if you believe that Embraer is “cooking its books” and distorting financial reality, by all means contact the SEC and let’s get them banned from doing business in the US. Boeing and Canadair will probably make sure you get positive space first class travel on any airline you want for the rest of your life.
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You really have no idea how well I know Brazil.
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Thanks, E, for confirming that there really is no programmatic way for US flights to show up on an AA award ticket display unless AA codeshares on the flight already. All network carriers offer combinability with each other’s fares in the hope that selling a little AA is a choice that even a few people might make instead of flying on UA or other carriers that actually serve the city with their own aircraft.
Can we chalk up the “I got a combined AA-US schedule so they must be merging” as yet one more hope that some people have for a merger that no one except a few people in US mgmt, some of their employees, and a few investment analysts who want to make a fast buck on LCC are pushing?
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Problem with the whole 319 is better than E jet argument is that fuel burn statistics provided by operators to the DOT for all aircraft types of 100-130 seat aircraft show that the 319 has the highest fuel burn per block hour for all aircraft in its class – which includes the 737-700, 717, and yes on the lower end the Ejets and Canadairs. Given that the Airbus narrowbody is heavier than Boeing’s narrowbody and even for the new engine versions of those two aircraft, Boeing still claims that its aircraft will have better fuel efficiency.
But more significantly, IIRC, some of AA’s earliest deliveries under its massive order will be current generation 319s –which will not have neo fuel efficiency. But even if you take Airbus’ claims for a ~15% improvement in fuel burn over the current models, the 319neo is still barely better than the 717 which is a comparably sized aircraft. And Embraer also is considering a new engine for the Ejet family meaning that comparing the 319neo to an existing Embraer model is probably not valid.
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Summarizing, once again AA is trying to deal with its lack of a 100-130 seat aircraft either by putting an 88 seat version of the CRJ or Ejet at Eagle, pushing the scope clause even further and enraging AA pilots OR the option is to put the 319 at mainline even though even the best fuel burn statistics show that even the 319neo will have fuel burn only slightly better than a certain carrier’s fleet of 100 717s which are apparently being seriously considered for acquisition by an AA competitor at buy one get three or four free kind of prices.
Add in that AA’s proposal requires flying those 319s at a B scale lower than other mainline aircraft and its no wonder that AA labor finds neither plan acceptable.
Meanwhile other carriers are paying pilots who fly their 120-130 seat aircraft rates that will be higher than what AA is proposing for the 319.
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And the issue still has not been addressed that AMR’s turnaround plan is based on spending $25B or more on aircraft – even before a rework of AE’s fleet is considered – and AMR’s plan now has to factor in keeping via a freeze a significant portion of its pensions…. So AMR’s debt levels coming out of BK will not be much lower than any of its peers or what AMR has now and will skyrocket over the coming years.... making creditors VERY NERVOUS about AMR’s ability to return to viability, esp. when AMR’s debt levels will be 2-3 TIMES what other larger US carriers will have.
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Some people will resist critically evaluating what AA says it is going to do in its turnaround plan with what other companies are already doing … but the option is to bury one’s head in the sand and pretend it will all work out - or throw insults at those who point out the reality that some would prefer not to see.