That's not any different than a leased airplane, for instance. If American wants to get rid of the plane, it can reject the lease, and the lessor could repossess the plane and file a claim for any resulting losses. Alternatively, American could keep the plane.
In this situation, I think the responsibility for the airport debt is tied to American's leases at DFW. As long as American keeps the leases, DFW won't have a claim (because it won't have a loss). I imagine the contract was written so that DFW would be protected in the event that American used bankruptcy to reject its leases at DFW and downsize there. That's not going to happen, though
DFW is American's biggest hub, so I can't see the airline scaling back there. I'm pretty sure that there would only have been a liability there if AMR had moved to terminate/restructure its leases at DFW.
AMR Is Now The Short Of All Time (If You Can Find A Share) [View article]
I think the airlines will take off next year. However, AMR is BANKRUPT. That means that when the company exits bankruptcy, the company will create new shares and the shares that you own now will be worthless.
There's a lot of "action" in AMR shares right now and that's exactly why investors should stay away. Investing is (primarily) about predicting companies' performance and business prospects based on research. My investments are not "gambles". If you want to gamble on AMR that's fine; I'm just saying that your odds would be better at a casino or the lottery.
AMR Is Now The Short Of All Time (If You Can Find A Share) [View article]
Not really (ironically enough). Powerball ultimately pays out half of the money it collects. By this time next year, AMR shares will probably be trading for 5-10 cents, just like GM stock post-restructuring.
AMR Is Now The Short Of All Time (If You Can Find A Share) [View article]
Thanks for the comment; I completely agree. I don't think they have a reorganization plan yet; that will take some time. I'm quite certain that there's no hidden asset; literally every asset is mortgaged/otherwise spoken for. In all likelihood, the "new AMR" will be owned by the employees/unions, PBGC, and a few other unsecured creditors. I really think that some commenters on this thread are setting themselves up for big losses by believing that these shares won't be canceled at the end of the bankruptcy process.
AMR Is Now The Short Of All Time (If You Can Find A Share) [View article]
The ticker symbol is MTLQQ: you can see for yourself. It last traded in March at 4 cents. It was basically a slow slide from about 90 cents down to 30 cents over the course of a year or so, and then fell off a cliff.
AMR will continue to trade in positive territory for the next year, in all likelihood. But my view is that it will slide from yesterday's highs to zero over that time.
AMR Is Now The Short Of All Time (If You Can Find A Share) [View article]
Would you pay $5 billion for the name "American Airlines"? The fact is, the company actually has a revenue disadvantage compared to United and Delta. People pay higher average fares to use the latter two airlines. The name would only be valuable if it actually gave the holder a substantial competitive advantage. While it's an iconic name, it isn't that valuable.
Beyond that, I think there is a pretty good chance that the name is one of the assets factored into the $24.7 billion calculation.
AMR Is Now The Short Of All Time (If You Can Find A Share) [View article]
But ultimately, Enron shares were worthless. If you want to play the markets like that, it's your right to do so. I'm glad that you were able to make some quick money! But in my opinion, you're gambling, not investing. I'm an investor, and have no interest in taking on that kind of risk. If I want to gamble, I spend $1 on a lotto ticket.
AMR Is Now The Short Of All Time (If You Can Find A Share) [View article]
A short squeeze theoretically could happen at any company. But being long AMR is basically like running a confidence trick. Eventually people will realize that the shares are worthless, and the price will go to zero. I wouldn't bet all of my assets on the trade, but if I were short now I would be perfectly happy to short even more at $5.
AMR Is Now The Short Of All Time (If You Can Find A Share) [View article]
I don't think you understand how this works. When a company goes bankrupt, unsecured creditors are still able to collect all of the assets that are available after the secured creditors are paid. They have no incentive to reduce their claims beyond 100% of the remaining assets; therefore, they will own the entire company when it comes out of bankruptcy and current shareholders will have nothing.
It's totally possible that a reorganized AMR could be profitable (just like the reorganized Delta/Northwest, reorganized United, and reorganized US Airways). But in all of those cases the old shares were canceled and the profits (such as they were) went to the creditors.
AMR Is Now The Short Of All Time (If You Can Find A Share) [View article]
The reason why I think that the AMR situation is so outrageous is that many companies go chapter 11 because they are showing persistent losses due to bad contracts, changes in market conditions, etc., but actually have enough assets to cover their obligations (more or less). In those situations, shareholders could come out on the other end with something. In this case, there's a $5 billion deficit, even making the favorable assumption that none of the assets are currently booked at higher than their market value. Furthermore, the company is continuing to bleed cash and will do so until they actually get agreement from the labor unions to bring costs in line with American's competitors.
AMR Shares Are Still Fool's Gold [View article]
In this situation, I think the responsibility for the airport debt is tied to American's leases at DFW. As long as American keeps the leases, DFW won't have a claim (because it won't have a loss). I imagine the contract was written so that DFW would be protected in the event that American used bankruptcy to reject its leases at DFW and downsize there. That's not going to happen, though
AMR Shares Are Still Fool's Gold [View article]
AMR Shares Are Still Fool's Gold [View article]
AMR Shares Are Still Fool's Gold [View article]
AMR Is Now The Short Of All Time (If You Can Find A Share) [View article]
There's a lot of "action" in AMR shares right now and that's exactly why investors should stay away. Investing is (primarily) about predicting companies' performance and business prospects based on research. My investments are not "gambles". If you want to gamble on AMR that's fine; I'm just saying that your odds would be better at a casino or the lottery.
AMR Is Now The Short Of All Time (If You Can Find A Share) [View article]
AMR Is Now The Short Of All Time (If You Can Find A Share) [View article]
AMR Is Now The Short Of All Time (If You Can Find A Share) [View article]
AMR will continue to trade in positive territory for the next year, in all likelihood. But my view is that it will slide from yesterday's highs to zero over that time.
AMR Is Now The Short Of All Time (If You Can Find A Share) [View article]
Beyond that, I think there is a pretty good chance that the name is one of the assets factored into the $24.7 billion calculation.
AMR Is Now The Short Of All Time (If You Can Find A Share) [View article]
AMR Is Now The Short Of All Time (If You Can Find A Share) [View article]
AMR Is Now The Short Of All Time (If You Can Find A Share) [View article]
It's totally possible that a reorganized AMR could be profitable (just like the reorganized Delta/Northwest, reorganized United, and reorganized US Airways). But in all of those cases the old shares were canceled and the profits (such as they were) went to the creditors.
AMR Is Now The Short Of All Time (If You Can Find A Share) [View article]