Furlough Estimates

Ecl!pse said:
Just factually speaking, American has the highest debt level in the US industry (forget the absolute debt amount - their relative debt amount is the highest in the industry), the worst margins in the US industry (and has for the past 3 years), and had a significant working capital hole starting 2020. Based on these factors, I would say it's a reasonable assessment that they are in the worst shape going into this.
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Again, AA has a lot of work to do.

The facts are:

AA has 34B in total debt. 24B in net debt. Now has zero 757/767/A330-300. Has dumped older 737’s and the 190 fleet. AA has the newest fleet and has undergone major infrastructure improvements.

Coming into this mess and according to the 8k AA has:
8B in cash
10B in unencumbered assets
3B in unsold miles.

I like our chances. Well, as much as anyone’s in this environment.
 
AAPalmTree said:
Again, AA has a lot of work to do.

The facts are:

AA has 34B in total debt. 24B in net debt. Now has zero 757/767/A330-300. Has dumped older 737’s and the 190 fleet. AA has the newest fleet and has undergone major infrastructure improvements.

Coming into this mess and according to the 8k AA has:
8B in cash
10B in unencumbered assets
3B in unsold miles.

I like our chances. Well, as much as anyone’s in this environment.
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Think about what you're saying; even if the airline was liquidated, they'd still be discharging $13 billion in debt AFTER all the assets and cash paid for currently held debt.

American is in the hole for more than the GDP of Zimbabwe.
 
jtrain609 said:
Think about what you're saying; even if the airline was liquidated, they'd still be discharging $13 billion in debt AFTER all the assets and cash paid for currently held debt.

American is in the hole for more than the GDP of Zimbabwe.
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Different debt to equity ratios but America loves debt. Who knows, the airline airline industry may just be the next welfare system.

 
Kingairer said:
Theres nowhere to run right now. Not military, not asia, not middle east, not another domestic carrier.
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My thoughts exactly. After 9/11 the regionals grew at the expense of the mainline... so many of us went to the regionals either organically or via J4J deals.

Some airlines capitalized on the sudden availability of highly experienced pilots. Vanguard, Eastwind, ProAir, AirTran, ATA... all still hired

Many pilots became Expats because overseas carriers continued hiring and growing.

The fractionals exploded post 9/11 and companies looked for more secure ways to move their people. NetJets, Flexjet, FlightOptions...

Same with part 91 corporate flight departments...

None of these avenues are available right now. Every single one is hurting just as badly as we are. We can joke about Truckmasters but even the trucking industry can't absorb the massive number of one-trick ponies this industry is about to barf up. (Myself included)


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Oh... and incidentally, who remembers what happened to HIRING MINIMUMS after 9/11?


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Kingairer said:
No passenger airline can continue to exist with 10% load factors so until we fix that, we’re all doomed although AA may be first.
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This is the ultimate truth. Right now, everyone is up the proverbial creek without a paddle. It doesn't really matter who goes first (if anyone does in fact go). It will be an interesting 6-9 months, to say the least.

jtrain609 said:
Think about what you're saying; even if the airline was liquidated, they'd still be discharging $13 billion in debt AFTER all the assets and cash paid for currently held debt.

American is in the hole for more than the GDP of Zimbabwe.
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This assumes the assets are worth what is claimed. Right now, no airplane is worth what it was a mere 60 days ago. Expect the narrowbodies to take 20-30%+ haircuts (worse for the older vintages), and even worse for the widebodies, which were struggling well before Covid. No demand for airplanes right now. A good proxy for this is to look at aircraft leasing stocks, which generally trade on a price-to-book value basis - the market has all of these guys priced well below 0.5x book value - this doesn't necessarily mean the stock market is right, but there is clearly a strong view that these guys wouldn't come close to liquidating for 100 cents on the dollar.
 
Well I wonder if the JC AdBot is trying to tell my Junior A** something....

Screen Shot 2020-04-13 at 10.28.29 PM.jpg
 
AAPalmTree said:
The facts are:

AA has 34B in total debt. 24B in net debt. Now has zero 757/767/A330-300. Has dumped older 737’s and the 190 fleet. AA has the newest fleet and has undergone major infrastructure improvements.

Coming into this mess and according to the 8k AA has:
8B in cash
10B in unencumbered assets
3B in unsold miles.
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Well, the debt pile is growing and the cash pile is shrinking. And there are certainly covenants on that debt that may well already have it in default. Any improvement to the situation depends on positive cash flow. I don't see any scenario where that happens without much less flying happening.
 
ZapBrannigan said:
Oh... and incidentally, who remembers what happened to HIRING MINIMUMS after 9/11?


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Definitely goes to show why it's important to get 1000 TPIC if possible, which I know is something you always recommended.

If I recall, you're pretty senior at SWA right? Are you worried about a furlough?
 
typhoonpilot said:
I'll chime in with my two cents since this thread was started by a fellow USAir furloughee.

A little bit of historical perspective. The "first" USAir furlough from 1991-1998 started in January, 1991 with 200+ pilots furloughed. Of those 200+, 25 were hired by United in 1991 and a few others by Delta. The second group of furloughs started in July, 1991 and it eventually went to over 700 pilots furloughed. All but a little over 300 were recalled within 6-9 months. The remaining "302" stayed on furlough until October, 1998. Back to United for a moment. United interviewed in early 1991 and hired a high percentage of the furloughees. They did not interview any more until 1995 and had a very strange 5% success rate for those that interviewed.

What is the point of that? Sometimes it is better to be out the door first while other companies are still hiring. If I was in the bottom 30% of a U.S. major airline I would be looking for a job right now. Given the ease of which one can get a leave of absence, it would be the wisest course of action to start looking for a job right now.

Sadly there are not many places hiring right now so this point might be moot.

Hopefully early outs; voluntary leaves of absence; and significantly higher retirement numbers than years past will help reduce the coming pain, but make no mistake there will be massive furloughs coming before the end of this year.
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There’s no guarantee there will be furloughs. More than likely there will be, but it’s just a guess like everything else at this point.
 
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