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How AAL ranks after airline bailout floated

How AAL ranks after airline bailout floated

Old Mar 16, 20, 1:47 pm
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How AAL ranks after airline bailout floated

It was floated about three hours ago airlines may recieved a 25 billion dollar grant, and another 25 billion in loan gaurenttes. This information has not been validated, but is all over the internet.

Here are the results to airline stocks:

AAL up 2.34%

UAL down 10.5%

DAL down 4.27%

LUV down 6.61%

JBLU down 6.31%

ALK down 14.4%

Chairman Parker wins today. His recent meeting with President Trump must have gone well.

Last edited by GunsOfNavarone; Mar 16, 20 at 1:53 pm
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Old Mar 16, 20, 1:50 pm
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WOW- AAL now up over seven percent, while UAL drops to being down over 13 %.

Fascinating.
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Old Mar 16, 20, 2:25 pm
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Airlines, especially AA, should not get a blanket bailout without being required to agree to something like EU261 for all flights in the USA.
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Old Mar 16, 20, 3:07 pm
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Originally Posted by Phasers View Post
Airlines, especially AA, should not get a blanket bailout without being required to agree to something like EU261 for all flights in the USA.
You're not the only one who feels that way.
NY Times: Donít Feel Sorry for the Airlines
Before providing them any assistance, we must demand that they change how they treat their customers and employees.

I think the tricky part here is that what's tipping things over the edge are the government-initiated travel bans. Of course as a consumer, I'd love to see additional protections. But is it really fair to impose this draconian operating environment on the airlines (or whoever, really) and then demand a pound of flesh back from them in exchange for a lifeline? I think it's quite a different situation from the GFC and the bailout of the banks and the related regulatory requirements/changes. That said, I don't think AA should get any more favorable of a bailout than the others just because they're in worse shape due to bad capital allocation decisions made by management over the past few years. Let the stock go to zero / claw back senior management's comps, and put in a new management team instead.
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Old Mar 16, 20, 3:10 pm
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Not even worth the cost of the bandwidth to discuss.

The chances of Congress enacting a statute authorizing DOT to issue such a rule was hovering at close to zero before Covid-19. Now, it might be at zeroes out to the 4th or 5th decimal point.

Not only a poor idea in the first place, but US businesses won't support it as that welfare compensation is paid through higher fares and there aren't a lot of businesses looking to pay that right now.
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Old Mar 16, 20, 3:22 pm
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I'm going Alaskan over AAL simply because the last 5 years AAL has had a flat dividend. Alaskan on the other has had a continued increase. I'll still fly AA for international routes, but im putting my money where it will actually come back to me. With that said, all of these stocks are on fire sale!
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Old Mar 16, 20, 3:41 pm
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The few remaining network carriers are a national strategic asset that have become the very definition of "too big to fail." People who have been mistreated by the airlines during this decade's consolidation phase may be forgiven for feeling a little schadenfreude right now, with a whole row of them on their knees. But this is not the '80s or 2001, when the US could afford to lose a few to competitive market forces. So good luck prying concessions out of AA, UA, etc. in return for taxpayer lifelines. The country needs these companies in stable shape and comes from a weak bargaining position -- especially if they stand to go bust because of government decisions like grounding domestic traffic.
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Old Mar 16, 20, 4:08 pm
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Originally Posted by BearX220 View Post
The few remaining network carriers are a national strategic asset that have become the very definition of "too big to fail." People who have been mistreated by the airlines during this decade's consolidation phase may be forgiven for feeling a little schadenfreude right now, with a whole row of them on their knees. But this is not the '80s or 2001, when the US could afford to lose a few to competitive market forces. So good luck prying concessions out of AA, UA, etc. in return for taxpayer lifelines. The country needs these companies in stable shape and comes from a weak bargaining position -- especially if they stand to go bust because of government decisions like grounding domestic traffic.
Treat passengers like garbage and you reap what you sow. $50bn is $167 for each man, woman, and child in this country. Explain to the average family of four why they should be reaching into their wallets to the tune of almost $700. Let them fail.
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Old Mar 16, 20, 5:09 pm
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Originally Posted by GunsOfNavarone View Post
WOW- AAL now up over seven percent, while UAL drops to being down over 13 %.

Fascinating.
Isn't the implication here that AA had the weaker financial position to begin with, and thus would benefit more from a potential bailout, while UA's competitive advantage would be eroded by a bailout that lifts all ships?


Originally Posted by BearX220 View Post
The few remaining network carriers are a national strategic asset that have become the very definition of "too big to fail."...The country needs these companies in stable shape and comes from a weak bargaining position.
I get that 1) a domestic route network is a national strategic asset, and 2) we happen to have legacy carriers providing that. But I'm not sure that 1 + 2 = $50B. What is to say that it has to be *these* exact carriers providing the service? Are we really sure that the likes of an Emirates, or Jeff Bezos, or Elon Musk, couldn't plug-and-play with something better? The terminals are built, the pilots are trained, aircraft are essentially a commodity good...I can see pilot / FA / mechanic union contracts being a big rock that's hard to move, and IT / reservations systems being a giant mess. But where else is the "secret sauce" that can't be cooked up elsewhere? FF programs? It's not like they have patents or trade secrets. Just some thinking out loud...
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Old Mar 16, 20, 6:12 pm
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The wild card in all of this is that for very obvious reasons, the US government told the airlines "You must cease doing business on just about every route you have which makes money". So logic says some sort of government intervention is inevitable.
(I suppose same could now be said for restaurants, stores, theaters, etc. who are forced to close or drastically cut services due to govt. rules).
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Old Mar 16, 20, 6:13 pm
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Originally Posted by arlflyer View Post
I get that 1) a domestic route network is a national strategic asset, and 2) we happen to have legacy carriers providing that. But I'm not sure that 1 + 2 = $50B. What is to say that it has to be *these* exact carriers providing the service? Are we really sure that the likes of an Emirates, or Jeff Bezos, or Elon Musk, couldn't plug-and-play with something better? The terminals are built, the pilots are trained, aircraft are essentially a commodity good...I can see pilot / FA / mechanic union contracts being a big rock that's hard to move, and IT / reservations systems being a giant mess. But where else is the "secret sauce" that can't be cooked up elsewhere? FF programs? It's not like they have patents or trade secrets. Just some thinking out loud...
High capital cost of entry and low returns. Bezos or Musk aren't going to burn money on an industry like aviation and the US would nuke itself before turning over a primary mode of national transport over to someone like the UAE.

Secret Sauce is that its an industry that loses money a lot. It takes a special type of person to want to get in and run an org like that.
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Old Mar 16, 20, 6:19 pm
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Originally Posted by javabytes View Post
Treat passengers like garbage and you reap what you sow. $50bn is $167 for each man, woman, and child in this country. Explain to the average family of four why they should be reaching into their wallets to the tune of almost $700. Let them fail.
Even if AA had all lay flat beds and gold plated toilets, they would be failing. The economic hardship of airlines globally has nothing to do with quality of passenger comfort; see how OZ and KE are basically broke.
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Old Mar 16, 20, 6:24 pm
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This doesn't bail out the airlines. It bails out the airline stockholders.

Let them go through chapter 11, and only if that reorg is at risk should the taxpayers step in to keep them flying.
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Old Mar 16, 20, 6:50 pm
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Didn't AA spend a ton of money on repurchasing its stock, which could have gone into investing in new planes and other capital expenditures that would have benefited all passengers for years and years?
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Old Mar 16, 20, 6:56 pm
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Originally Posted by javabytes View Post
Let them fail.
Originally Posted by arlflyer View Post
What is to say that it has to be *these* exact carriers providing the service?... where else is the "secret sauce" that can't be cooked up elsewhere?
Imagine that your local electric or gas company is in desperate financial straits. Nobody likes them much, they have lied to customers and operated in predatory and abusive ways, so the decision is to let them fail. It's not that hard to run a major utility -- very capital-intensive, but no secret sauce really -- but are you the customer really willing to sit in the dark for the months or year it might take to find a successor operator, have them buy the defunct company's assets, organize to provide service, etc.? Same question for urban transit systems, or wireless networks -- are you willing to let them fail and open a void that might or might not be filled by a competent successor? After a long time?

I get that the remaining airlines are mostly abusive and anti-customer, and inspire little or no sympathy. That's not the point. The point is that consolidation and lame anti-trust policy have brought us to the point where losing any of the Big Four, even for a few weeks or months, would create grievous hardship in certain parts of the country. Few want to see Doug Parker humbled more than I do, but destroying American Airlines permanently would hurt the people of PHL/PHX/DFW/CLT far more.
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