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American Airlines stock crashes, burns. Dramatic graph added!

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crab said:
Oh yeah I've been waiting for years. A few of my friends are pilots with them and two are near retirement age. One got nervous a few months ago of this 11 coming one day at work and literally filed for his partial that day when he got home. The other can take full next month but is nervous. If they filed 11 while these guys were waiting to be paid their retirement, they'd likely lose it.
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I'm surprised it hadn't happened sooner. They've let United and Delta cut their costs, merge with other airlines, and reassert themselves almost without a fight.
 
There goes all my 33,000 unused frequent flier miles.

Damn.
emot_frown.gif
 
RavenSEAL said:
Time to buy 'em stocks!
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Actually, if you're tolerant of risk, now would be the time to start looking at buying unsecured debt. Common stock will likely get wiped out. But just to look at Northwest as an example, there was a point in time when its unsecured debt was trading at about $.20c on the dollar whereas the confirmed Chapter 11 plan had unsecured debt being paid somewhere around $.65c on the dollar.

Not bad.
 
FelixDeKat said:
I sure hope not, but usually everyone gets a haircut. AAdvantage is carried as a liability on the balance sheet and will be treated as such. 😳
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Only in a liquidation would there be a real concern. AA isn't about to enter chapter 11 while at the same time alienating it's most loyal customer base. An email just popped up a few minutes ago basically saying there are no changes in line for the programs and that all mileage would be honored.
 
Spikesoldier said:
FTFY
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AA would still have been competitive if they had restructured around the same time as Delta and United plus a merger or two. They have not risen to meet the increasing domestic and international competition.

They need to buy Alaska and build international routes.
 
The Airlines should be Nationalized, it's obvious they can't run themselves in the free market despite charging insane fees for baggage and changing flights.
 
Well; I booked a flight on Etihad, but the first past of the flight is operated by AA. Should I be worried? Will be traveling in less than two weeks time.
 
K1052 said:
Only in a liquidation would there be a real concern. AA isn't about to enter chapter 11 while at the same time alienating it's most loyal customer base. An email just popped up a few minutes ago basically saying there are no changes in line for the programs and that all mileage would be honored.
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You dont understand the bankruptcy process do you? Liquidation is not the primary factor that dertermines who gets what. The companies ability to honor ALL its debts AND liabilities going forward is what is key. If a company cant pay everyone on its cash flow, you dont get 100%. Period.

The secureds and unsecureds are first in line to receive equity and a PORTION of their original debt, which in total MAY equal 100%. Last in line are unfunded liabilities like AAdvantage miles, retirement accounts, healthcare, etc. They may find a way to dishonor the miles by increasing the number required to obtain flights (deflation) as a certain measure, but the result is the same.

I have been involved in several corporate and personal bankruptcies and know the entire process from beginning to end.
 
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FelixDeKat said:
You dont understand the bankruptcy process do you? Liquidation is not the primary factor that dertermines who gets what. The companies ability to honor ALL its debts AND liabilities going forward is what is key. If a company cant pay everyone on its cash flow, you dont get 100%. Period.

The secureds and unsecureds are first in line to receive equity and a PORTION of their original debt, which in total MAY equal 100%. Last in line are unfunded liabilities like AAdvantage miles, retirement accounts, healthcare, etc. They may find a way to dishonor the miles by increasing the number required to obtain flights (deflation) as a certain measure, but the result is the same.

I have been involved in several corporate and personal bankruptcies and know the entire process from beginning to end.
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Deflating the value of the miles or wiping out the program entirely would materially damage the airline's customer base and reduce revenue. The judge overseeing the bankruptcy knows this, the airline knows this, and the people using the airlines know this. In fact if anything I'd expect American to start aggressive bonus programs now with AAdvantage to encourage people to fly the airline, that is one likely reason they phased out the lifetime Gold and Plat elite status for non BIS miles.
 
K1052 said:
Deflating the value of the miles or wiping out the program entirely would materially damage the airline's customer base and reduce revenue. The judge overseeing the bankruptcy knows this, the airline knows this, and the people using the airlines know this. In fact if anything I'd expect American to start aggressive bonus programs now with AAdvantage to encourage people to fly the airline, that is one likely reason they phased out the lifetime Gold and Plat elite status for non BIS miles.
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For our sakes I hope this is the case. But you have to realize that debt is or has already been sold to hedge funds for far less than face value and they will demand the highest recovery to generate a profit on their speculative bet on that debt. They will do what they can afford and I doubt that will include aggressive bonus programs. Anything else will be opposed by debt holders and a lengthy legal battle will ensue, customer base be damned.

For the record, we should choose a point of reference to see if they do deflate the miles or use precious DIP money to keep customers. You have to remember they are still on razor thin margins and any effort will be expensive no matter how much they may want to try it.
 
K1052 said:
AA would still have been competitive if they had restructured around the same time as Delta and United plus a merger or two. They have not risen to meet the increasing domestic and international competition.

They need to buy Alaska and build international routes.
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flew them transatlantic and US domestic a few months ago. Their hard product is light years behind European and Asian legacy carriers. Planes are old and worn out and so are their cabin crews. They should rename it Ghetto Airlines. When flying transatlantic, I try to avoid them (and the other USA legacy carriers).
 
K1052 said:
I'm surprised it hadn't happened sooner. They've let United and Delta cut their costs, merge with other airlines, and reassert themselves almost without a fight.
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That and they up and disappeared from all the travel sites earlier this year.
 
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