MiamiAirport Formerly NY George

Like responses above there has got to be a middle ground and more importantly this industry needs to operate in reality. Not only have they squandered cash away without any regard to tough times they've created a business model that causes pathetic customer service and inadequate operational support. Should your grocery store operator stay in business because they decided to sell half the store merchandise below cost of goods sold?

Unfortunately the people that will be hurt are the ones that don't have a year or two of income in the bank. Not to mention all the knock on effects - hotel clerk, shuttle driver, call center support staff. They all face a very ugly economic reality which I find more frighting than anything this virus could bring.

socalduck

This is cascading out of control. Time for some meaningful government action, e.g., guaranteed business interruption insurance for all companies. Opening the discount window for banks or sending out $1000 checks to consumers is not going to get the job done. There is a complete collapse of confidence underway.

ijgordon

No, it's the opposite. The company is *spending* money to buy back its shares from investors in the public market. The reverse, which is what they should be forced to do and I haven't seen anyone talk about, is to go back to those shareholders (or anyone with money, really) for new equity issuance. Lots of companies did it in the GFC, from Citibank to MGM. It's particularly apropos here, IMO. It sucks for the airlines who bought high and have to sell low, but c'est la vie.

Eh, well there's a difference when you're talking about any one airline (let them live and die) and the entire airline industry (quite essential). And of course the more consolidated the industry is, the closer those two scenarios are. Hence the current AAL is probably "too big to fail" but the old AA (or US Airways) was probably not.

GoPhils

Fair enough, but should they really need it after a few bad weeks? You'd think they'd have a rainy day fund after years of massive profits. I could see giving them a bailout in a couple months, but after a copule weeks seems kinda ridiculous IMO.

dvs7310

Despite the president's optimism, this is not a weeks-long problem. This is going to be several months at best. China took over 2 months to get back to normality, and it's so much more widespread across the US and Europe already than it ever was in China. The numbers aren't up to China's level yet but they will get there and I expect the US to be much much worse, it's literally touched every corner of the country which wasn't the case in China. I don't see the US airline industry coming back to normal capacity for a good 4-6 months. It's going to be pretty rough on such a cash intensive industry when there is near zero revenue coming in. Let's hope the bailouts are even enough money to keep the big 3 or even the big 5/6 (adding WN, B6, AS) afloat. The big 3 though should take priority due to extensive international networks.

GoPhils

Oh I agree for the most part, just saying that I wouldn't think they would really need the money until after several of those months have happened (at the earlierst), not a couple week.s

dvs7310

Even I'm only running a small company, but still I'd much rather know I had funding available to stay afloat sooner than later. I'm sure the big 3 CEOs all have smart people advising them on how long this is likely to last and when their do or die date is. Regardless of how little people think of Mr. Parker in this thread (and I'm no apologist), I would not want to be sitting in his position right now with the knots in my stomach wondering if we were going to be walking into bankruptcy court tomorrow or even next week and shut down all operations, get kicked out of the alliance upon filing, etc. A bailout after filing BK would still be detrimental these days, so if I were Parker, Munoz, or Bastian, I'd want to have that funding lined up as soon as possible regardless of cash on hand at the moment.

GunsOfNavarone

AAL at 10.06 at the moment. AAL's 52 week low set last week s 10.01.

If AAL breaks 10.00 downward- may get very interesting, as AAL has never traded in single digits.

AndyPatterson

It did dance as low as 10.00 at 2:25 pm today! A far cry from the high-50s several years ago.

Percentage-wise, Alaska has also cratered similarly. I'm not putting any money into either, though.

Herb687

It briefly broke $9 in the after hours session this evening. I saw an $8.98 print about half an hour ago.

I'm not sure what to do here. Part of me wants to buy sub-$9 but part of me also thinks that bailout plus bankruptcy anyway is the most likely outcome for AAL.

(Caveat: buy for a TRADE, that is. I would not want to invest in AAL.)