toomanybooks

Yes, I am aware.

"Smiley face."

Pucnit

AMR @ $1.68 - Down -0.14 (-7.69%) as of 1:40PM 11/17/2011. Someone right before noon dumpped +1M shares....

mrowl

Is bankruptcy the only hope that all the executives are canned? This whole mess is horrible mismanagement.

thecompdude

Are AA miles safe? Or should we be looking at burning thee miles off quickly?

Jacobin777

It still probably wouldn't "can" the management.

None of the other carriers which went into BK eliminated their miles. IIRC, DL did however dilute their mileage redemption program. I'm not so sure if that was a function of BK however.

HeathrowGuy

1. I can't fault labor on this one - AA presently has the worst management team, by far, of the US legacy carriers.

2. To add insult to injury, AA's management ranks (and im not just referring to the officer and VP ranks) are among the most highly-paid in the business, and AA has little to show for it.

3. Bankruptcy is not a viable option for AA. UA and DL barely survived their BK filings intact because competitors had weak balance sheets and a lack of capital to pose a genuine menace. That's not the case today. New Delta and New United could make a multitude of offers in BK to the effect of either ending AA as we know it or to so strongly dilute the financial benefits of BK that AA would emerge not much better off than it is today.

Science Goy

Some argue that you should never keep miles sitting around too long since, like cash, their value will inevitably decline with time (bankruptcy or no).

China Clipper

That's scary. It would seem as though there's no way out

MiamiAirport Formerly NY George

From what I'm reading, the pilots now say they want to come to terms with ongoing negotations between Thanksgiving and year end.

A dropping stock price, even if its goes below $1 a share, in itself has no impact on cash flow or losses. The issue becomes if debt holders do not want to refinance debt, ask for even more collateral, or impose difficult terms and interest rates. Also, if vendors tighten up on credit terms.

And no I don't believe that DL, and particularly UA as it is trying to keep its integration on track, is going to come after AA to put it out of business if AA ends up in Chapter 11. But you can probably take it to the bank that Doug Parker will be speaking with bankers on a financing package to acquire AA out of bankruptcy.

kingarthur

I heard that too, they are scrapping talks till 11/28. The lack of urgency is appalling. Basically, they are giving the equity market the middle finger, despite a dwindling market cap of less than $600 million. This attitude is sure to rattle bond holders, who at some point down the road can force AA into Chapter 11 bankruptcy.

With respect to rolling over debt, everything I have heard is that AA is not in imminent need of cash. They do have some time to get their act together as their current cash flow structure is protected by debt / service contracts.

The travesty unrolling is that they are wasting a golden opportunity to "do the right thing" and restructure voluntarily. I agree with the FTers who state the likely CH 11 outcome is a lose-lose for the airline AND the pilots, and can only be attributed to incompetent management on both sides.

I also agree with the poster who differentiated AA's situation from the other legacy carriers when they filed Ch 11. What that means, no one knows, but I don't think it will result in AA's demise. However, I would expect negative implications for myself and other loyal AAers with respect to service, capacity, value of miles, etc.

Jacobin777

Bit confused on the "Smiley face"...do you mean this:

It would still be up to the judge and possibly creditors if UA and/or DL (or whoever actually) were to make a "pitch" if AA were in BK. AA's has billions in the bank. Its "critical level" is $3billion. Once it gets to that level, it might have problems. Right now, it has about $4.5 billion in the bank.

While management could have done some more, I'm not so sure why all the blame goes to management when it has 1 hand tied behind its back.

From not being able to fly certain planes, to not being able to fly many routes (due to stage length, etc), to the cost of pension/insurance and jet fuel sky rocketing up the past few years, there was little AA management could have done besides "limp" this carrier about.

AA should have filed for BK in 2003, but AA was looking pretty good in 2007 when its stock was close to $40/share and its market cap close to $14 billion.

shoodawg

There is a way out: Management takes salary cuts and forgoes bonuses, and labor accepts minimal increases along with some work rule adjustments, until the company returns to sustained profitability.

makfan

As long as AMR can avoid violating its debt covenants, then they can't be forced into bankruptcy. I'm sure their CFO/Controllers are well aware of the requirements and will do everything possible to stay within them.