American Airlines files for bankruptcy protection Chapter 11

[Mohd Suhaimi Fariz 2]

Looks like 2011 is not a good year for airlines:

 

FORT WORTH, Texas, Nov. 29, 2011 — AMR Corporation (“the Company”), the parent company of American Airlines, Inc. (“American”) and AMR Eagle Holding Corporation (“American Eagle”), announced that in order to achieve a cost and debt structure that is industry competitive and thereby assure its long-term viability and ability to continue delivering a world-class travel experience for its customers, the Company and certain of its U.S.-based subsidiaries (including American and American Eagle), today filed voluntary petitions for Chapter 11 reorganization in the U.S. Bankruptcy Court for the Southern District of New York.

 

AMR’s Board of Directors determined that a Chapter 11 reorganization is in the best interest of the Company and its stakeholders. Just as with the Company’s major airline competitors in recent years, the Chapter 11 process enables American Airlines and American Eagle to continue conducting normal business operations while they restructure their debt, costs and other obligations.

 

 

Find out more here

[Y. J. Foo 0]

The inevitable has arrived...

 

Hope they will emerge as a leaner, healthier airline. DL and UA have done that, so it's not impossible that they can emerge as well.

Edited November 29, 2011 by Y. J. Foo

[Mike P 0]

I thought AA is profitable all the while? They didn't seem to report loss.

[Y. J. Foo 0]

I thought AA is profitable all the while? They didn't seem to report loss.

 

According to Wikipedia, AA (or more precisely, its parent AMR Corporation) suffered US$471M loss during 2010 fiscal year.

[JuliusWong 0]

AMR posted $24.7 billion in assets and $29.6 billion in debt, so even though they have cash in the bank, their liabilities outweigh their assets.

 

http://www.bloomberg.com/news/2011-1...york-as-talks-with-pilots-end.html

 

Btw, the title is a bit misleading, its bankruptcy protection= Chapter 11. Immediate bankruptcy = direct liquidation is Chapter 7. Seems like OneWorld alliance is plagued with problems this year. Hope 2012 is a better year for them.

[flee 5]

Lets hope they do a JAL...

 

Best of luck to AA for 2012.

[alberttky 0]

And I thought they just ordered tonnes of new jets??

[flee 5]

They are still a going concern - life has to go on when you are under bankruptcy protection. It just means that you take the pressure off from creditors as you try to restructure. That may mean earlier retirement of old, fuel inefficient planes and network cuts.

[KC Sim 2]

Continental, Delta and JAL have all travelled down this path ... and emerged stronger. Perhaps AA will too ... but given the scale of the airline, the task at hand is incredible. And it should continue to acquire those new planes it had ordered - including the B777-300ERs - and sell off those aircraft that are no longer fuel-efficient.

 

And when it is ready to emerge leaner, more efficient, more commercially viable and perhaps more profitable, hopefully it takes the opportunity to update its livery.

 

Hopefully, this is achieved without impacting its employees in a drastic manner.

 

KC Sim

[Josh T 0]

This pathway of restructuring may be what both MAS and Qantas need.

[BC Tam 2]

..... - and sell off those aircraft that are no longer fuel-efficient

The challenge will be for AA to find a buyer, and then convince them they are able to operate those oldies profitably when AA itself is buying new fuel efficient equipment to stem losses

Definitely a test of good salesmanship

[alberttky 0]

The challenge will be for AA to find a buyer, and then convince them they are able to operate those oldies profitably when AA itself is buying new fuel efficient equipment to stem losses

Definitely a test of good salesmanship

 

Plenty of companies in Africa that are willing to take them in.

[filipeseda 0]

The main problem with AA from an operational perspective is that it still retains an MD fleet that is just too big. Given their age and fuel consumption issues, the economic imperatives of operating these aircraft have had quite a significant impact on AA. Also, AA does not have a strong presence in Asia relative to UA/CO or DL and relies somewhat heavily on European markets for international passengers. Of course, it has a significant presence in Latin America, but even that is a highly volatile and difficult market place, given the price collusion that Latin American carriers often engage in.

[Mohd Suhaimi Fariz 2]

Looks like American's Chapter 11 endeavour has effects closer to home.

 

Quek loses in airline shares - Paper loss following AMR bankruptcy at RM273mil

 

PETALING JAYA: Tan Sri Quek Leng Chan, whose family interests include the Hong Leong and Guoco groups, may be looking at an almost complete loss just 3 months after acquiring a 7.3% stake in AMR Corp, the holding company of American Airlines Inc, which filed for bankruptcy on Tuesday.

 

Quek had acquired 24.4 million shares in AMR through Hong Kong-listed Guoco Group Ltd and related companies.

 

On its website, Guoco group said investments covering the global capital markets were made in view of enhancing capital value in line with the company's vision of achieving superior long-term returns for shareholders.

 

The United States third-largest airlines went bust and filed for Chapter 11 bankcruptcy after it failed to post full-year profit since 2007 with US$24.7bil in assets and US$29.6bil in debt, according to news reports.

 

Other major shareholders of the airline included Primecap Management Co, a Pasadena, California-based investment firm with 12.30% stake, ICC Capital Management from Orlando, Florida with 7.49% stake and Capital World Investors with 7.40%.

 

Although it is unclear at what price the cigar-chomping Quek had acquired the shares, based on the closing price on Aug 15, the shares would have been worth US$92.2mil (RM275.21mil based on the exchange rates then) or US$3.78 per share.

 

On Tuesday, AMR's share price closed at 26 cents, down 93.12% since Aug 15.

 

Therefore, the media-shy Quek, known as a super high-roller who frequents casinos in Las Vegas according to reports, may be looking at paper losses of US$85.88mil(RM273mil as of yesterday's exchange rate).

 

His potential losses came on the heels of another turbulent period for the airlines industry which has barely recovered from the global financial crisis of 2008/2009.

 

The International Air Transport Association director-general and chief executive officer Tony Tyler had said that 2012 would be a tough year although the industry's net profit forecast for this year had been revised to US$6.9bil from US$4bil in June.

 

He said this was due to “still exceptionally weak” profitability, with net margins at 1.2% versus the industry's US$594bil in revenue.

 

Meanwhile, Hong Leong Financial Group Bhd posted a 22.11% drop in net profit to RM252.20mil for the third quarter ended Sept 30 compared with the quarter a year ago after taking into consideration a surplus transfer of RM175mil. Revenue for the quarter under review rose 19.04% to RM919.67mil.

Source

Edited December 1, 2011 by Mohd Suhaimi Fariz

[Y. J. Foo 0]

Looks like American's Chapter 11 endeavour has effects closer to home.

 

 

 

That reminds me of a joke about investment in an airline:

 

Q: How to be a millionaire in airline business?

A: Start with a billion.

[Mohd Suhaimi Fariz 2]

That reminds me of a joke about investment in an airline:

 

Q: How to be a millionaire in airline business?

A: Start with a billion.

 

I think Warren Buffett said it best - If a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down.

Edited December 1, 2011 by Mohd Suhaimi Fariz

[Y. J. Foo 0]

I think Warren Buffett said it best - If a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down.

 

Sounds brutal, but unfortunately he's pretty much nailed it...

[flee 5]

American seeks court approval to shed leases on MD-80s

 

American Airlines has asked a US court to allow it to shed leases on 24 aircraft, mostly Boeing MD-80s, in a move to cut costs as it seeks to restructure following yesterday's Chapter 11 bankruptcy protection filing.

 

In a motion filed with the US Bankruptcy Court of the Southern District of New York, the carrier requested to abandon the leases on 20 MD-80s and four Fokker 100s, saying the aircraft are a "cash drain" on the business.

 

Most of the aircraft have already been taken out of service, said American.

 

"After reviewing the terms of the leases, the debtors [American] have determined they are of no utility and value to them," said the airline, adding that the leases were entered into in "a different economic climate than the one facing the airline industry today".

 

"These same aircraft and engines have little if any marketable value and are no longer necessary to the debtors' operations," it added. Storage of the unused aircraft is "nothing more than a cash drain" on the carrier, it said.

 

The MD-80s listed by American were mostly built in the 1980s, Flightglobal's ACAS database shows. In its last quarterly filing, American listed four Fokker 100s, 46 MD-80s, one Boeing 737-800 and one Airbus A300 as aircraft in storage.

 

A hearing on the motion is scheduled to be held on 22 December, stated American. Responses to the motion are due by 15 December.

 

Source

[JuliusWong 0]

From another website, the rego of the aircraft:

 

F100s

N1402K, N1403M, N1404D, N1405J

 

Super 80

N227AA, N569AA, N570AA, N571AA, N462AA, N463AA, N464AA, N465AA, N249AA, N251AA, N452AA, N453AA, N457AA, N458AA, N459AA, N460AA,N461AA, N939AS, N940AS, N941AS

 

Can't believe they are still paying for F-100 when was long gone since 2004. The A300B4 as well. Legal clauses and issues might have disallowed them to offload the planes.

[JuliusWong 0]

American asks bankruptcy court to get rid of 18 planes

 

HANGAR_5_-2_12996459American Airlines wants to get out of leases on 18 aircraft, most which are parked in the desert in New Mexico, according to a bankruptcy filing made on Friday.

 

The filing identifies leases on 10 Boeing 757-200s, 6 McDonnell-Douglas MD-80s and one Airbus A300 aircraft that the Fort Worth-based carrier wants to shed. Thirteen of the planes are currently located at the Roswell International Air Center.

 

The aircraft range in age from 17 to 23 years old.

 

"In view of the large number of aircraft American Airlines has on order, it seeks to accelerate its fleet renewal strategy. To meet all of these goals, the Debtors are analyzing the benefits of rejecting leases, selling and abandoning owned aircraft and engines, and contemplating methods for the return and surrender of rejected and abandoned aircraft and engines," the company said in the filing.

 

Earlier this week, American filed a motion to keep 85 planes that were mostly between 11 and 13 years old. The aircraft listed were Boeing 737-800, 757-200, 767-300ER and 777-200ER models.

 

The carrier has already terminated leases on 20 MD-80s and four Fokker 100s and its regional carrier, American Eagle, has asked to keep 47 Bombardier CRJ-700s, paying $10.2 million to bring 19 up to date.

 

As of September 30, American had 616 aircraft in its fleet, as well as 52 planes that it owned or leased but was not operating.

 

Read more here: http://blogs.star-telegram.com/sky_talk/2012/01/american-asks-bankruptcy-court-to-get-rid-of-18-planes.html?utm_source=twitterfeed&utm_medium=twitter#storylink=cpy

 

American Airlines has filed a motion with the bankruptcy court to reject the leases on 18 additional aircraft, including 11 Boeing 757-200s, 6 Super 80s and even an old Airbus A300. The aircraft are:

 

N14077 A300B4-605R

 

N611AM 757-223

N614AA 757-223

N617AM 757-223

N626AA 757-223

N627AA 757-223

N629AA 757-223

N631AA 757-223

N632AA 757-223

N641AA 757-223

N643AA 757-223

N648AA 757-223

 

N578AA DC-9-82

N59523 DC-9-82

N7538A DC-9-82

 

N9402D DC-9-83

N9412W DC-9-83

N9413T DC-9-83