USAirways quietly Becomes creditor of AMR

[WorldTraveler]

All I have to say is $10.9 billion in debt, plus $38 Billion of aircraft on order.

So thats $48.9 billion in debt they will have, are you doing some kind of fuzzy math to say that $5 billion will cover $48.9 billion in debt they will have?

And I never said a word about Parker, I am not a fan of his.

While AA has an enormously large order book, they will not have anywhere close to that much debt upon emergence, in part because some of the debt will be reduced in BK and half of their order book is not financed and not firm.
It does appear that AMR/AA will have a sizeable pension liability that they will continue to be responsible for and which would be US' - or anyone else's that choose to merger with or acquire AA.
Secured creditors will get paid regardless... it is unsecured creditors that are the main focus on chapter 11. Secured creditors may see their debts reduced for the fair value of the assets.
The size of AA's order book may have to be reduced because of the pension liabilities which were not planned.... but the timeframe for firming up the second half of the orders will come well after AA is out of BK.
....
The chapter 11 BK process is largely built on swapping debt for equity in the reorganized company.
.
It should be noted that upon US' 1st exit from BK, they issued several billion dollars worth of stock in exchange for their debts that was subsequently cancelled in BK 2.
It is precisely what happened to US and other "double dippers" that means the creditors of AA will look very closely at all of AA's assumptions and weed out every unsupportable piece of data that AA tries to use but which cannot be born out by airline history.

As the last legacy airline to file BK, AA has the benefit of learning from history in former airline BK's, but so do AMR's creditors in not only ensuring that they will get paid but also in navigating any unsolicited takeover attempts to ensure that the greatest financial outcome is achieved, regardless of the option chosen.

The chances are very high that AMR will emerge without the need for exit financing.

 

[signals]

In any case, even if AA should "need to obtain exit financing," we all know that Doug Parker is the only person capable of attracting the interest of those on Wall St. He has a special unique gift not shared by any other corporate executive.

In my day we said that if you put enough make-up on a clown they'll become Tammy Faye Baker. Parker is spending more on PR than Scientology John Travolta and Tom Cruise combined!

 

[Mrs. McFly]

In my day we said that if you put enough make-up on a clown they'll become Tammy Faye Baker. Parker is spending more on PR than Scientology John Travolta and Tom Cruise combined!

That's classic!

 

[ContUNITEus]

They should do like a reality TV show on US Airways' pursuit of airline partners. Kinda like the setting of the Bachelor, where all these whores make out with the one guy for nothing. Or an 'Anna-Nicole-Smith-like' show with Doug playing a character like.... well..... Anna-Nicole Smith. Should even wear an outfit like hers, be drugged up all the time, and eat pickles when a merger doesn't happen.

 

[ContUNITEus]

You seem to forget the secured creditors want cash, not stock and the $38 billion for new aircraft wont be paid for in stock, neither will the bondholders and the underfunded pension. Loans want cash not stock.

Plus they are still going to need cash to operate and pay the bills.

You are soooooo mistaken..... not all of that debt is from secured creditors and as someone (unsecured) who received a dividend of shares of an airline exiting bankruptcy, I can tell you that creditors get pennies on the dollar and most likely it will be stocks. I sold those stocks finally after owning them for a few years without them changing in price. (Matter of fact they are worth less now than when I finally decided to sell them.)

Not only will you get pennies on the dollar, but they will also pull a little stunt of claiming that they "had sent you a letter" asking if you wanted cash vs stocks, which of course is a lie, resulting in them dumping stock on you.

 

[Hopeful]

My hunch is that one AA gets "consenual" agreements with the unions one way or another.....The creditors will be offered more favorable terms and merger mania will then become more favorable to AMR.

What I find ironic here is analysts, critics and many a Tom, Dick, and Harry preaching that AA NEEDS to merge in order to survive. But yet some of these same ilks scream and yell that this BK was not necessary because of $5 billion in cash.....
If they didn't need to file BK,,THEN WHY THE NEED TO MERGE?

 

[WorldTraveler]

What I find ironic here is analysts, critics and many a Tom, Dick, and Harry preaching that AA NEEDS to merge in order to survive. But yet some of these same ilks scream and yell that this BK was not necessary because of $5 billion in cash.....
If they didn't need to file BK,,THEN WHY THE NEED TO MERGE?

I'm not sure that any among AA labor argued that AA needed to file but some of those people are arguing for the merger.

But there are a number of people regardless of positions on merging that argue that seem to forget that BK has a pretty high success rate for companies that desire to emerge independent.
Since there has been 7 plus years since the last legacy airline filings, many people forget the process does work to restructure the companies, even if it is horribly painful to labor.

There is little to no evidence that AA needs a merger in order to successfully emerge and survive.

The only real question regarding mergers is whether other entities can provide more value to AMR's creditors - and the law does give them the right to "shop" for the best deal.

 

[AAviator]

They should do like a reality TV show on US Airways' pursuit of airline partners. Kinda like the setting of the Bachelor, where all these whores make out with the one guy for nothing. Or an 'Anna-Nicole-Smith-like' show with Doug playing a character like.... well..... Anna-Nicole Smith. Should even wear an outfit like hers, be drugged up all the time, and eat pickles when a merger doesn't happen.

LOL!!!!

Here's DP's song to AA !! Just fast forward to the 1:50 mark if you're not into Zac Brown

 

[PITbull]

What percentage of US creditors were paid in cash and not in new stock?

I seriously doubt that AA's plan will consist of cash payments to the unsecured creditors. They'll get the new AMR stock and perhaps some cash. Generally, the only debt that gets paid in cash at the conclusion of the Ch 11 case is the Debtor in Possession lender, and since AA didn't seek DIP financing . . . .

In any case, even if AA should "need to obtain exit financing," we all know that Doug Parker is the only person capable of attracting the interest of those on Wall St. He has a special unique gift not shared by any other corporate executive.

The only unique attracting interest and influence he got was spending a day in jail for a DUI he got slapped on him 2006, after he attempted to takeover DL while in BK for $11B, and was told to go pound salt over a cliff by the congressional committee at a hearing. He went to a party at night and got pulled over with some friends.

 

[signals]

The only unique attracting interest and influence he got was spending a day in jail for a DUI he got slapped on him 2006, after he attempted to takeover DL while in BK for $11B, and was told to go pound salt over a cliff by the congressional committee at a hearing. He went to a party at night and got pulled over with some friends.

Ha-ha...if I didn't know any better he had some enemies on that congressional committee.

 

[FrequentFlierCA]

What a pathetic PR stunt by Doug Parker. Is he really so desperate that he's buying near worthless AA bonds?

AA might be the key for him to realize his global airline fantasy, but US is not a key for AA to survive.

In other words, US Airways nees AA a lot more than AA needs US Airways.

 

[wings396]

And your point is? If indeed US needs AA more than the opposite, what would you expect him to do as the CEO?
Ensuring the long term viability of his company is his job just in case you overlooked that tidbit. Can you say the same for any of the crowns at the helm of AA? Horton is looking out for his own wallet, and that's about it. Horton is every bit as desperate as Parker, but for a different reason.

 

[eolesen]

This is about as significant as the Icelandic hedge fund who bought up shares of AMR a few years ago.

http://articles.marketwatch.com/2007-11-30/news/30680991_1_amr-frequent-flier-frequent-flier-program

 

[Hopeful]

What a pathetic PR stunt by Doug Parker. Is he really so desperate that he's buying near worthless AA bonds?

AA might be the key for him to realize his global airline fantasy, but US is not a key for AA to survive.

In other words, US Airways nees AA a lot more than AA needs US Airways.

What's funny about this whole US taking over AA talk is that there are people here claiming AA needs US to survive.....
Are they kidding? Since when is AA's position and network in the industry so paltry they can't survive alone?
The same people spewing that AA needs US are the same ones saying this bankruptcy is a sham and totally not necessary due to the near $5 billion in cash.

Just look at US' network and position.....It's laughable compare to AA's.

 

[wings396]

What's funny about this whole US taking over AA talk is that there are people here claiming AA needs US to survive.....
Are they kidding? Since when is AA's position and network in the industry so paltry they can't survive alone?
The same people spewing that AA needs US are the same ones saying this bankruptcy is a sham and totally not necessary due to the near $5 billion in cash.

Just look at US' network and position.....It's laughable compare to AA's.

And then take a look at AA's network position in comparison to DL & UA's, and it's laughable as well.
Maybe this will make things a bit clearer for you........