I don't vote in the various polls since I'm not employed by AMR or any of its subs but IMO, AA will only file for Ch 11 in the unlikely event that there's a work stoppage initiated by one of its represented workgroups. As long as the negotiations continue and the unions are not released by the NMB, AA can muddle along as is. WT will probably stop by to repeat how AMR is doomed because of its high costs compared to DL and UA, but the reality is that AA probably won't run low on cash for quite a while as long as the flights aren't grounded because of a strike.
At 3/31/11, AMR was sitting on more than $6.2 billion of total cash and thus far in 2011, the company has been able to borrow and refinance its debt due during 2011. AA has financing lined up for all 2011 738 deliveries and AA has some effective fuel hedging in place. None of the typical triggers for a Ch 11 filing are yet in place. UAL had to file because it had billions of pension underfunding catch-up payments all due at once and did not have the cash. Same at US. Delta and NW both had huge pension contributions due and other debts due and both were running low on cash compared to AA's current position.
No, WT is NOT going to come along and say that AA is doomed and has no choice but file. AA/AMR will file when it is financially forced to do so and not a day before.
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The 6.2B in cash includes restricted cash which is not available for general corporate use including to pay down debt.
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AMR has refinanced SOME but not all of its 2011 debt unless you have material non-public information inwhich case I would suggest you not post it on the internet.
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Yes, airplanes generally can be financed for the purchase price but that is not always a given because market prices continually change and a decrease in demand could force AA to reevaluate the value of the collateral it has already pledged before it can take on more debt; it's no different than if you applied for a home equity line of credit. They won't reappraise your house as long as you live in it and don't try to take on more debt. If you intend to sell it and need to know what you can get out of the house (and payoff a mortgage) or if you take on more debt they are going to look at the value of the assets underlying your existing debt. It is very possible that the debt you want might be limited because the collateral you have no longer covers your existing debt - including if your credit rating declines. Airplane purchases are still debt and Wall Street won't allow you to continue to take on debt if your overall finances cannot support it.
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And the primary reason why the current fuel crisis (Arpey's words) are troubling is because demand will drop as prices rise - and they have to rise to cover the cost of fuel. AA IS the highest cost producer which means it is more susceptible to discounting below normal market prices based on the price of oil at that time which WILL occur in off peak periods. It is obvious that competitors are already targeting AA markets and that will only increase as AA's ability to defend its network continues to diminish.
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Even if fuel prices drop dramatically back and AA's hedges are sufficient (and no US airline that I know of is more than 50% hedged because the risk is too great to do so, meaning alot of fuel price increases WILL hit the bottom line), AA still has to stop its string of losses and become in a position to defend its markets and grow. \
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I agree that SOME Of AA's labor leaders may be getting the message that their expectations for snapbacks to pre-2003 levels are no longer realistic, esp. unless significant productivity improvements are made. But many AA employees and their labor representatives DON'T get that yet and until that realization is reached, AA cannot move forward as a company. As long as it remains it a state of partial paralysis, competitors will continue to attack AA's key markets which is part of why AA's revenue performance has trailed other carriers.
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It is ENTIRELY possible that AA will slide through this oil crisis just like it has others... but at some point, SOON, AA has got to deal with its structural problems which include labor costs or can it have any hope of returning to the position of leadersihp it once had.
BTW, I didn't and won't vote in this poll not because I don't work for AA but because I don't have enough information to know w/ any certainty what AA will do if it has to make enough tougher choices.
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I absolutely agree that there is little value in continuing to write thousands of pages of "my boogers are better than yours" or "I can shoot mine further than yours."
(The thread would be much, much longer, but the former moderator used to start a new thread each week (and close the previous week's thread) to keep the thread size manageable.)
