Feb 11, 2013, 1:55 pm
Last edit by: JDiver
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This thread has been set aside for discussing AAMRQ as an investment, but be aware this is not FlyerTalk's purvue (earning and burning miles, flying).
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This thread has been set aside for discussing AAMRQ as an investment, but be aware this is not FlyerTalk's purvue (earning and burning miles, flying).
Disclaimer - link to this guideline
NEVER rely on information or opinions posted on FlyerTalk to replace the information that you receive from your frequent traveler programs. While FlyerTalk is full of great information, we cannot guarantee the accuracy or completeness of any information provided on the boards.
FlyerTalk is founded on the principles of support, empowerment, information and entertainment. Use good judgment when considering how to use information derived from the forums and consult representatives from the appropriate programs before doing anything that might affect your travel or put your miles and points at risk. Remember that what's right for one person may not be right for you.
FlyerTalk is not liable for any loss or damage caused by information obtained through our forums.
AA stock (now AAMRQ) investment / valuation issues (consolidated)
Feb 11, 2013, 1:33 pm
#61
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JHIN: Completely incorrect. I don't know where to begin, but here's a shot:
Even if the existing AAMRQ stock is not cancelled and gets to retain some value, the $8 billion hypothetical/assumed value of AMR will be new stock issued to the creditors of AMR (and new stock issued to the existing LCC shareholders). In most Ch 11 cases, the existing AAMRQ would be canceled without any value at the time of reorganization and replaced with all-new stock distributed to the unsecured creditors of AMR. The existing stockholders would see their stock cancelled. Worthless. No value.
In this case, perhaps the existing stockholders will get one share of the new US-AA (let's call it AMRNEW) in exchange for, let's say, perhaps 100 shares of the existing AAMRQ. So maybe each current share would be worth, maybe, a dime. Or a nickel.
Your post doesn't take into account the billions of dollars of new stock that must go to the AMR unsecured creditors - as they will not be paid in cash - but in new stock.
Even if the existing AAMRQ stock is not cancelled and gets to retain some value, the $8 billion hypothetical/assumed value of AMR will be new stock issued to the creditors of AMR (and new stock issued to the existing LCC shareholders). In most Ch 11 cases, the existing AAMRQ would be canceled without any value at the time of reorganization and replaced with all-new stock distributed to the unsecured creditors of AMR. The existing stockholders would see their stock cancelled. Worthless. No value.
In this case, perhaps the existing stockholders will get one share of the new US-AA (let's call it AMRNEW) in exchange for, let's say, perhaps 100 shares of the existing AAMRQ. So maybe each current share would be worth, maybe, a dime. Or a nickel.
Your post doesn't take into account the billions of dollars of new stock that must go to the AMR unsecured creditors - as they will not be paid in cash - but in new stock.
Feb 11, 2013, 1:38 pm
#62
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I doubt too many would come to FlyerTalk searching for investment advice, and I would frankly advise that's not at all what FT is about. But here are what some airline-savvy people have thought:
"Once you get hooked on the airline business, it's worse than dope."
— Ed Acker, while Chairman of Air Florida
"These days no one can make money on the goddamn airline business. The economics represent sheer hell."
— C. R. Smith, President of American Airlines.
"A recession is when you have to tighten your belt; depression is when you have no belt to tighten. When you've lost your trousers - you're in the airline business."
— Sir Adam Thomson
"If the Wright brothers were alive today Wilbur would have to fire Orville to reduce costs."
— Herb Kelleher, Southwest Airlines, USA Today, 8 June 1994
"The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money. Think airlines. Here a durable competitive advantage has proven elusive ever since the days of the Wright Brothers. Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down."
— Warren Buffett, annual letter to Berkshire Hathaway shareholders, February 2008.
"Running an airline is like having a baby: fun to conceive, but hell to deliver."
— C. E. Woolman, principal founder Delta Air Lines
"People who invest in aviation are the biggest suckers in the world."
— David G. Neeleman, after raising a record $128 million to start New Air (the then working name for what became JetBlue Airways), quoted in Business Week, 3 May 1999
"I'm flying high and couldn't be more confident about the future."
— Freddy Laker, Laker Airways, 3 days before the collapse of Laker Airways, 3 February 1982.
"This is a nasty, rotten business."
— Robert L. Crandall, CEO & President of American Airlines.
"The game we are playing her is closest to the old game of 'Christians and lions.'"
— Robert L. Crandall, CEO & President of American Airlines.
and finally,
"I've never invested in any airline. I'm an airline manager. I don't invest in airlines. And I always said to the employees of American, 'This is not an appropriate investment. It's a great place to work and it's a great company that does important work. But airlines are not an investment.'"
— Robert L. Crandall, CEO & President of American Airlines.
Anyway, good luck with that.
"Once you get hooked on the airline business, it's worse than dope."
— Ed Acker, while Chairman of Air Florida
"These days no one can make money on the goddamn airline business. The economics represent sheer hell."
— C. R. Smith, President of American Airlines.
"A recession is when you have to tighten your belt; depression is when you have no belt to tighten. When you've lost your trousers - you're in the airline business."
— Sir Adam Thomson
"If the Wright brothers were alive today Wilbur would have to fire Orville to reduce costs."
— Herb Kelleher, Southwest Airlines, USA Today, 8 June 1994
"The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money. Think airlines. Here a durable competitive advantage has proven elusive ever since the days of the Wright Brothers. Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down."
— Warren Buffett, annual letter to Berkshire Hathaway shareholders, February 2008.
"Running an airline is like having a baby: fun to conceive, but hell to deliver."
— C. E. Woolman, principal founder Delta Air Lines
"People who invest in aviation are the biggest suckers in the world."
— David G. Neeleman, after raising a record $128 million to start New Air (the then working name for what became JetBlue Airways), quoted in Business Week, 3 May 1999
"I'm flying high and couldn't be more confident about the future."
— Freddy Laker, Laker Airways, 3 days before the collapse of Laker Airways, 3 February 1982.
"This is a nasty, rotten business."
— Robert L. Crandall, CEO & President of American Airlines.
"The game we are playing her is closest to the old game of 'Christians and lions.'"
— Robert L. Crandall, CEO & President of American Airlines.
and finally,
"I've never invested in any airline. I'm an airline manager. I don't invest in airlines. And I always said to the employees of American, 'This is not an appropriate investment. It's a great place to work and it's a great company that does important work. But airlines are not an investment.'"
— Robert L. Crandall, CEO & President of American Airlines.
Anyway, good luck with that.
Feb 11, 2013, 1:41 pm
#63
Join Date: Nov 2007
Location: Los Angeles
Programs: AA LT Gold
Posts: 3,646
AA as the news reports is expected to merge with USAir and it will be named American Airlines with an estimated value of $11B. I'm not an expert around stock values and math but it does seem to me that there is an upside - anyone care to comment?
AA today has 335M shares outstanding & a $462M market cap
Value $1.37/share and currently trading at $1.45
UsAir has $2.3B market cap & 163M shares outstanding which puts it right at $14.37 about where it trades today.
This is an all stock deal so combined the carriers end up with 498M shares outstanding@ $11B which to mean translates into $22.00 per share??? Correct??
A $150,000 investment = 100,000 shares and a Diff $1.50 to $22.00 means a $20.50 per share upside potential putting an initial $150K investment at netting $2,050,000.00 gross profit. Over some period of time.
Of course it may not be instant - looks like United and Delta coming out of bankruptcy took about 3-4 months to hit any double digit numbers and United today is above $20 range, Delta today's worlds largest carrier is in the mid $14 range and if AA tops them as expected as world's largest carrier makes me wonder how fast they hit $22 per share??
I'm still contemplating an investment here.....What is anyone's thoughts?
AA today has 335M shares outstanding & a $462M market cap
Value $1.37/share and currently trading at $1.45
UsAir has $2.3B market cap & 163M shares outstanding which puts it right at $14.37 about where it trades today.
This is an all stock deal so combined the carriers end up with 498M shares outstanding@ $11B which to mean translates into $22.00 per share??? Correct??
A $150,000 investment = 100,000 shares and a Diff $1.50 to $22.00 means a $20.50 per share upside potential putting an initial $150K investment at netting $2,050,000.00 gross profit. Over some period of time.
Of course it may not be instant - looks like United and Delta coming out of bankruptcy took about 3-4 months to hit any double digit numbers and United today is above $20 range, Delta today's worlds largest carrier is in the mid $14 range and if AA tops them as expected as world's largest carrier makes me wonder how fast they hit $22 per share??
I'm still contemplating an investment here.....What is anyone's thoughts?
Feb 11, 2013, 1:54 pm
#64
Join Date: Mar 2001
Location: Dallas
Programs: AA PLT/5MM; AS MVP GLD 75K; DL DM; EK SLV; HHonors DIAM; Marriott GLD
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"I've never invested in any airline. I'm an airline manager. I don't invest in airlines. And I always said to the employees of American, 'This is not an appropriate investment. It's a great place to work and it's a great company that does important work. But airlines are not an investment.'"
— Robert L. Crandall, CEO & President of American Airlines.
— Robert L. Crandall, CEO & President of American Airlines.
Feb 11, 2013, 1:56 pm
#65
Join Date: Jun 2002
Location: SEATTLE, WA USA
Programs: UAL, AA, AS, CX
Posts: 1,973
JHIN: Completely incorrect. I don't know where to begin, but here's a shot:
Even if the existing AAMRQ stock is not cancelled and gets to retain some value, the $8 billion hypothetical/assumed value of AMR will be new stock issued to the creditors of AMR (and new stock issued to the existing LCC shareholders). In most Ch 11 cases, the existing AAMRQ would be canceled without any value at the time of reorganization and replaced with all-new stock distributed to the unsecured creditors of AMR. The existing stockholders would see their stock cancelled. Worthless. No value.
In this case, perhaps the existing stockholders will get one share of the new US-AA (let's call it AMRNEW) in exchange for, let's say, perhaps 100 shares of the existing AAMRQ. So maybe each current share would be worth, maybe, a dime. Or a nickel.
Your post doesn't take into account the billions of dollars of new stock that must go to the AMR unsecured creditors - as they will not be paid in cash - but in new stock.
Even if the existing AAMRQ stock is not cancelled and gets to retain some value, the $8 billion hypothetical/assumed value of AMR will be new stock issued to the creditors of AMR (and new stock issued to the existing LCC shareholders). In most Ch 11 cases, the existing AAMRQ would be canceled without any value at the time of reorganization and replaced with all-new stock distributed to the unsecured creditors of AMR. The existing stockholders would see their stock cancelled. Worthless. No value.
In this case, perhaps the existing stockholders will get one share of the new US-AA (let's call it AMRNEW) in exchange for, let's say, perhaps 100 shares of the existing AAMRQ. So maybe each current share would be worth, maybe, a dime. Or a nickel.
Your post doesn't take into account the billions of dollars of new stock that must go to the AMR unsecured creditors - as they will not be paid in cash - but in new stock.
Feb 11, 2013, 1:56 pm
#66
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Feb 11, 2013, 2:02 pm
#67
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The existing AMR stockholders may get a pittance to buy their cooperation in voting in favor of a merger, as Harvey Miller hinted a few weeks ago. But the existng AMR stockholders (who hold AAMRQ) will for the most part be left out in the cold while LCC stockholders and AMR's unsecured creditors split what might be $10 or $11 billion of new stock. At that time, the existing AAMRQ will be canceled - it will simply cease to exist. That's what happens in most bankruptcy cases.
Feb 11, 2013, 5:56 pm
#68
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I like the honesty in it. Any CEO today (say, Horton?) would likely get flogged in public.
This cat doesn't play
This cat doesn't play
...
"I've never invested in any airline. I'm an airline manager. I don't invest in airlines. And I always said to the employees of American, 'This is not an appropriate investment. It's a great place to work and it's a great company that does important work. But airlines are not an investment.'"
— Robert L. Crandall, CEO & President of American Airlines.
Anyway, good luck with that.
"I've never invested in any airline. I'm an airline manager. I don't invest in airlines. And I always said to the employees of American, 'This is not an appropriate investment. It's a great place to work and it's a great company that does important work. But airlines are not an investment.'"
— Robert L. Crandall, CEO & President of American Airlines.
Anyway, good luck with that.
Feb 11, 2013, 7:58 pm
#69
Join Date: Mar 2010
Location: Seattle, WA, USA
Programs: AS MVP Gold 75K, Marriott Lifetime Titanium
Posts: 1,598
AA stock (now AAMRQ) investment / valuation issues (consolidated)
My favorite airline riddle:
Q: How do you make a small fortune in the airline business?
A: Start off with a big one.
Q: How do you make a small fortune in the airline business?
A: Start off with a big one.
Feb 11, 2013, 8:28 pm
#70
Join Date: Sep 2004
Location: Chicago
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Posts: 681
Ua stock was worthless after the bankruptcy. New shares were issued after the recap. Not sure how a stock merger works in bankruptcy, but if you're just looking now my vote says you're too late. I wouldn't touch a bankrupt stock of any company this far into chapter 11.
Here's a 5 year chart on UAL. Note the $40 starting period. This was the run up to the original CO merge rumor, which Continental rejected. Stock then fall quickly to under $5. It rises, then some idiot picks up the original bankruptcy story as news 6 years later causing it to go under $1 in minutes (stock halts trading as Evryone goes what the &$@@?) Goes back under $5. The the US courtship starts and CO comes in....stock has been flat since.
http://finance.yahoo.com/q/bc?s=UAL&...=on&z=l&q=l&c=
Yes Virginia,you can make money in airline stocks, but remember the other stock saying, buy low, and in the case of airlines, have the your hand firmly on the rip cord and be prepared for a quick exit.
Again, 5 year chart is well after UA came out of bankruptcy. If you bought the stock in the $30s in 2008 and you didn't take a loss you're still waiting.
Here's a 5 year chart on UAL. Note the $40 starting period. This was the run up to the original CO merge rumor, which Continental rejected. Stock then fall quickly to under $5. It rises, then some idiot picks up the original bankruptcy story as news 6 years later causing it to go under $1 in minutes (stock halts trading as Evryone goes what the &$@@?) Goes back under $5. The the US courtship starts and CO comes in....stock has been flat since.
http://finance.yahoo.com/q/bc?s=UAL&...=on&z=l&q=l&c=
Yes Virginia,you can make money in airline stocks, but remember the other stock saying, buy low, and in the case of airlines, have the your hand firmly on the rip cord and be prepared for a quick exit.
Again, 5 year chart is well after UA came out of bankruptcy. If you bought the stock in the $30s in 2008 and you didn't take a loss you're still waiting.
Feb 12, 2013, 11:08 am
#71
Join Date: Nov 2008
Location: UK/USA
Programs: AA EXP
Posts: 830
AAMRQ is down 11.03% already today.
Make that -17.93%
Make that -17.93%
Last edited by IflyonAA; Feb 12, 2013 at 11:31 am
Feb 14, 2013, 7:57 am
#72
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Now that the merger has been announced, I've seen that AA stake holders will get 72% of the new company, but has anyone seen any breakdown of this, what % if any will go to AAMRQ stock holders?
A half hour into the trading day, AAMRQ is at $2.43, +86% today, and it's been a tight trading range 2.35 - 2.47.
A half hour into the trading day, AAMRQ is at $2.43, +86% today, and it's been a tight trading range 2.35 - 2.47.
Feb 14, 2013, 8:03 am
#73
Join Date: Jun 2011
Location: BOS
Programs: AA EXP
Posts: 7,710
Now that the merger has been announced, I've seen that AA stake holders will get 72% of the new company, but has anyone seen any breakdown of this, what % if any will go to AAMRQ stock holders?
A half hour into the trading day, AAMRQ is at $2.43, +86% today, and it's been a tight trading range 2.35 - 2.47.
A half hour into the trading day, AAMRQ is at $2.43, +86% today, and it's been a tight trading range 2.35 - 2.47.
Feb 14, 2013, 8:33 am
#74
Join Date: Sep 2011
Programs: AA SPG Amex
Posts: 4,644
Exactly!! LCC has more than tripled since AMR filed its Ch 11 petition because if there's a merger, they're likely the only current stockholders of either company who will get the new stock (along with the AMR creditors). Of course, the time to make a lot of money with LCC was to get in during November/December 2011.
Feb 14, 2013, 8:39 am
#75
Join Date: Sep 2011
Programs: AA SPG Amex
Posts: 4,644
The WSJ article from yesterday said AAMRQ holders would only receive 3.5% of the new stock plus some complicated ill explained performance payments/distributions. I doubt those performance incentives justify the new stock premium, but the stock is clearly worth something.