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Thread: Stage is set, for American to file Banckrupcy.

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    Stage is set, for American to file Banckrupcy.


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    American Airlines Taps Credit Lines For Cash Injection, Analyst Downgrades Stock to Sell.

    April 2, 2020

    A filing has revealed that beleaguered airline American Airlines (AAL) has now accessed a total of $2.73 billion from three revolving credit facilities in order to cope with the coronavirus fallout. The company has now borrowed the full $450 million from an April 2016 facility, plus $750 million from a 2013 revolver and ~$1.53B from a 2014 revolving facility.

    Shares have plunged 63% year-to-date, with a 31% drop in just the last five days, the outlook for AAL is particularly worrying.

    “The bearish scenario is playing out,” with air travel potentially suspended this summer due to the coronavirus pandemic. He believes that AAL could emerge from the crisis a much smaller player, with reduced capacity and routes.
    “I always tell the truth. Even when I lie.”

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    How's all that leveraging and borrowing looking now Dacuj ? I remember you defending the borrowing to meet pension obligations…. You claimed it was smart...

    Sure hope your civil war acting reenactments have better strategy.

    Just hired the same firm again that managed the bankruptcy last time.... supposedly to help them navigate the stimulus; you know, the one that is fill out the application and it's approved, just comply with the requirements. Yeah, they need a bankruptcy specialist firm to fill out a few pages of forms. Over $1M a year on company lawyers, and not one of them can fill out a form?
    Last edited by Cujo665; 04-03-2020 at 10:46 AM.
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    ^^^^
    Should make an AAL employee say "Hummmm?". "Never let a crisis go to waste". A former notorious AA MIA/737/CA, aka (Paperclip), plowed most of his spare cash and 401K loan money into AMR stock after BK, made over 8 million and retired early. Good for him, even better for those who had to endure his odd behaviors.

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    AAG has already retained the same firm as last time they went through BK. My projection for what will likely happen is:

    October a bunch of furloughs;

    November another BK;

    In between will be lots of "good faith" concessionary negotiations with all labor groups to keep everybody thinking there isn't going to be a BK.... this lets the company secure lower labor costs before bankruptcy. Many will vote for the concessions to "save the company" and the jobs;

    Post bankruptcy filing, they will 1113 and force a second round of concessions on several but not all employee groups.



    Pretty much the exact same entry playbook as last time, with the addition of furloughs to stem the bleeding.

    I honestly hope I am completely wrong. I have so many good close friends at AA that I'm genuinely concerned for. I seriously hope I'm wrong, but all the indicators are there, even more than last time. The company has recently stopped negotiating with the union and is doing everything through Jerry Glass again... DeJavu. I'd be making plans for a greatly reduced income, and polishing up a resume to be ready at a moments notice just in case.

    Many of the box haulers are hiring and would be a good lifeboat. It might be a good time to jump to Fedex or UPS too, as both were still running reduced size classes. Atlas/Southern could be a decent lifeboat as a last resort.

    I'd do Fedex/UPS first, then Kalitta/Omni & ATI. Those are the best contracts and pay currently. I do know that at Omni we havn't really slowed down much at all. We did shift a few planes worth of flying from scheduled passenger service back to DOD. So there was a period during the WTF moments when we went with greatly reduced flying; but management did a really good job adding more DOD and other Govt stuff to replace the lost scheduled passenger service stuff. We just added one more B767 to the fleet with another coming in a few months.

    Last edited by Cujo665; 04-21-2020 at 11:20 AM.

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    Looks like the cat is out of the bag.....

    https://www.bloomberg.com/news/artic...ck-at-evercore


    Target stock price.... $1

    wow
    Last edited by Cujo665; 05-02-2020 at 09:25 PM.
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    That exact scenario many here warned of appears about to play out. Monstrous debt now about to become meteoric, excess capacity resulting in furloughs and bankruptcy to trim debt and gut labor contracts. For present flows, this will be the lost “half decade”, at least and then what do you flow to? Just a larger regional. The good news for AA is this won’t result in a mass exodus from Envoy as there will be nowhere within the industry to jump to.

    By now, hopefully everyone knows what’s in their savings account.

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    Quote Originally Posted by Beagleboy View Post
    That exact scenario many here warned of appears about to play out. Monstrous debt now about to become meteoric, excess capacity resulting in furloughs and bankruptcy to trim debt and gut labor contracts. For present flows, this will be the lost “half decade”, at least and then what do you flow to? Just a larger regional. The good news for AA is this won’t result in a mass exodus from Envoy as there will be nowhere within the industry to jump to.

    By now, hopefully everyone knows what’s in their savings account.
    add in AAG rehiring the same bankruptcy law firm, and requiring all labor groups to go through Jerry Glasshole again and the handwriting is pretty clear. Same game plan as last time.

    1 - start to squeeze as many concessions as possible from the labor groups by November.
    2 - August, send out WARN notices
    3 - November declare bankruptcy
    4 - shed debt, restructure loans and oh yeah... get more concessions from labor groups.
    5 - probably merge the three regionals while in bankruptcy as part of the “restructuring”

    APA should file single carrier on all 4 airlines. AA is telling college kids that it’s their one and only career interview. You go to the bigger planes simply as a function of your seniority list position.... you don’t have to go, only if you want to. Sure sounds like just being senior enough to hold a specific base, specific plane, or different seat.... being forced to wear AA lanyards, single ticketing system, integrated baggage systems, it’s all designed to look like one big airline. Their creation of no interview flow rather than preferential interview may have actually crossed the line to single carrier.
    if I were an APA pilot, single carrier would look pretty good right now.... flow down to RJ Captain is better than furlough.
    Last edited by Cujo665; 05-03-2020 at 09:59 AM.
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    In Parker’s state of the airline on apr30 he mentioned the need for possible restructuring of management.

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    Seen this before.
    AMR did the same thing, most ended up at eagle legacy after amr restructured mgt

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    Quote Originally Posted by Jdflyer View Post
    In Parker’s state of the airline on apr30 he mentioned the need for possible restructuring of management.



    https://seekingalpha.com/article/4340519-american-airlines-stock-only-option-value-left


    They've borrowed another $10.2B in the past month, depleting their revolving credit accounts, not including another $4.75B in grants.

    …. and NOW Parker is saying some changes may need to be made in management structure.... This was going to happen eventually anyway as the pilot shortage worsened. Now it will happen sooner due to the passenger shortage from COVID19.


    Care to guess which consolidation they announce first? I'm betting PSA into Envoy. It's an easier and quicker merge with less training cycles.
    Last edited by Cujo665; 05-04-2020 at 10:32 AM.
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    Quote Originally Posted by Cujo665 View Post



    https://seekingalpha.com/article/4340519-american-airlines-stock-only-option-value-left


    They've borrowed another $10.2B in the past month, depleting their revolving credit accounts, not including another $4.75B in grants.

    …. and NOW Parker is saying some changes may need to be made in management structure.... This was going to happen eventually anyway as the pilot shortage worsened. Now it will happen sooner due to the passenger shortage from COVID19.


    Care to guess which consolidation they announce first? I'm betting PSA into Envoy. It's an easier and quicker merge with less training cycles.
    With a merge like that...pilots will be at least 10-13 years older when they flow...guarantee. Some Envoy pilots will drop over 1,000 numbers.
    Last edited by NoOtPilot; 05-04-2020 at 04:41 PM.

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    Stop The Bankruptcy Talk
    Jun. 23, 2020
    Based on a thesis!

    “Fact”
    The market appears entirely infatuated with American Airlines Group (AAL) going bankrupt without any real review of logical facts.

    “Assumption”
    American Airlines was talking about a zero cash-burn target by year-end with the goal of generating profits next year on reduced capacity.

    “Hope”
    The airline is already targeting the June daily cash-burn rate of only $40 million, down $10 million per day from previous estimates.

    “Reality”
    This amount doesn't even include the $22 million in daily PSP funds where the airline is overpaying for payroll in June when total capacity is still down 75% and domestic capacity is down 70%.

    April-May(Actual)
    June*-July*(Estimates)
    American Airlines 8-K


    “Furlough”
    Even under the worst-case scenario, the monthly liquidity burn is currently $1.2 billion, giving the company enough liquidity for nearly 10 months of no improvements in cash flows or cost reductions.
    Investors already know that cash flows will improve on October 1 because payroll costs are too high for capacity due to the PSP funds' requirement to maintain full payroll until October 1.


    “Gamble”
    Also, revenues will jump with domestic demand set to surge as American Airlines increases July capacity from 30% of 2019 levels in June to 55% next month.


    “The Truth”
    -October 2020-

    Wonder why International Markets was never mentioned in this article?

    https://seekingalpha.com/article/435...KUw..#comments

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    Quote Originally Posted by Cujo665 View Post



    https://seekingalpha.com/article/4340519-american-airlines-stock-only-option-value-left


    They've borrowed another $10.2B in the past month, depleting their revolving credit accounts, not including another $4.75B in grants.

    …. and NOW Parker is saying some changes may need to be made in management structure.... This was going to happen eventually anyway as the pilot shortage worsened. Now it will happen sooner due to the passenger shortage from COVID19.


    Care to guess which consolidation they announce first? I'm betting PSA into Envoy. It's an easier and quicker merge with less training cycles.
    Nah, I would guess PDT into Envoy. Same equipment.

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    Quote Originally Posted by NoOtPilot View Post
    Stop The Bankruptcy Talk
    Jun. 23, 2020
    Based on a thesis!

    “Fact”
    The market appears entirely infatuated with American Airlines Group (AAL) going bankrupt without any real review of logical facts.

    “Assumption”
    American Airlines was talking about a zero cash-burn target by year-end with the goal of generating profits next year on reduced capacity.

    “Hope”
    The airline is already targeting the June daily cash-burn rate of only $40 million, down $10 million per day from previous estimates.

    “Reality”
    This amount doesn't even include the $22 million in daily PSP funds where the airline is overpaying for payroll in June when total capacity is still down 75% and domestic capacity is down 70%.

    April-May(Actual)
    June*-July*(Estimates)
    American Airlines 8-K


    “Furlough”
    Even under the worst-case scenario, the monthly liquidity burn is currently $1.2 billion, giving the company enough liquidity for nearly 10 months of no improvements in cash flows or cost reductions.
    Investors already know that cash flows will improve on October 1 because payroll costs are too high for capacity due to the PSP funds' requirement to maintain full payroll until October 1.


    “Gamble”
    Also, revenues will jump with domestic demand set to surge as American Airlines increases July capacity from 30% of 2019 levels in June to 55% next month.


    “The Truth”
    -October 2020-

    Wonder why International Markets was never mentioned in this article?

    https://seekingalpha.com/article/435...KUw..#comments
    International Markets (Latin America) update:

    June 24, 2020

    WHO: "Pandemic for many countries in the Americas has not peaked"

    Dr. Mike Ryan, World Health Organization executive director of the health emergencies program, said Wednesday that the Americas have not reached their coronavirus peak.

    Particularly across Central and South America, Ryan said, “We've seen a steady and worrying continuation of trend — with many countries experiencing between 25% and 50% rise in cases over the last week.”

    Ryan added many countries are still “suffering sustained community transmission.”

    “Unfortunately, the pandemic for many countries in the Americas has not peaked. They are not reaching a low level of transmission within which we can achieve a sustainable exit from public health and social measures,” Ryan said at Wednesday's briefing.
    Across the region, we will likely see a “sustained number of cases and continued deaths in the coming weeks,” he said.

    Though Ryan said there is no way to predict the numbers, at this point the epidemic is “still intense” across a range of countries.

    “I don't think anybody wants to go back to population-wide, society-wide lockdowns. But the only way, in some circumstances, to avoid that now is a very, very, very aggressive investment in our capacity to detect cases, confirm cases, quarantine contacts, and keep our communities onboard and willing — able without coercion — to support clear messaging and clear instructions and requests from government in a trusting environment,” Ryan said.
    Last edited by NoOtPilot; 06-25-2020 at 11:18 PM.

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    Quote Originally Posted by Meatloaf View Post
    Nah, I would guess PDT into Envoy. Same equipment.
    easier and faster to do PSA into Envoy. If you do PDT, you have to do indoc and sim short course. If you do PSA it’s indoc only. With PSA they’d technically be adding a fleet type not currently on property. Just copy all the PSA stuff onto ENY letterhead.
    PDT isn’t as easy..... both operate the same type. Flows, callouts, procedures, policies.....all different. They’d need indoc and the EMB short course requal before you could mix crews. Now, if PDT can ensure their stuff is an exact copy of ENY flows, callouts, procedures, policies they could convince the CMO to accept it. But it needs to be almost exact, even down to EWBS procedures, and manual W&B.
    Last edited by Cujo665; 06-28-2020 at 04:40 PM.
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    Quote Originally Posted by Cujo665 View Post
    easier and faster to do PSA into Envoy. If you do PDT, you have to do indoc and sim short course. If you do PSA it’s indoc only. With PSA they’d technically be adding a fleet type not currently on property. Just copy all the PSA stuff onto ENY letterhead.
    PDT isn’t as easy..... both operate the same type. Flows, callouts, procedures, policies.....all different. They’d need indoc and the EMB short course requal before you could mix crews. Now, if PDT can ensure their stuff is an exact copy of ENY flows, callouts, procedures, policies they could convince the CMO to accept it. But it needs to be almost exact, even down to EWBS procedures, and manual W&B.
    Ah I see. short term yes. But then they lose the efficiencies of having single fleet airlines. Displacements and training are cheaper in those systems. Plus MTX costs compound.

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