Seeking Alpha

American Airlines Group has a lot of cash

  • American Airlines Group (AAL +2.1%) disclosed earlier this week that it has $10.3B in cash and investments.
  • Though it will take some time to smooth out integration costs and financial reporting, the cash position is larger than what analysts expected.
  • Down the road, the excess liquidity will likely be used to further reduce the company's debt load or "reward" shareholders, says JPMorgan.
  • SEC Form 8-K
Comments (10)
  • Day Trader001
    , contributor
    Comments (664) | Send Message
    "Good News" for the largest airline in the world......$$
    17 Jan, 02:20 PM Reply Like
  • DonAmp
    , contributor
    Comments (160) | Send Message
    Great news for AAL and (OTCQB:AAMRQ)!
    17 Jan, 11:46 PM Reply Like
  • markcc
    , contributor
    Comments (777) | Send Message
    What happened to all the money that got taken away from the American Airlines pension plans? Are they and others going to be made whole? ... or was this all a gimmick to rob the creditors and employees?
    18 Jan, 09:50 AM Reply Like
  • fireboy420
    , contributor
    Comments (9) | Send Message
    I am long on AAL with plenty of cash in hand. It is still strong buy. My prediction is around 45 dollar by end of the year.
    19 Jan, 02:27 AM Reply Like
  • Eugene Bem
    , contributor
    Comments (8) | Send Message
    Delta, United Airlines, America West, US Airways (the current acquirer of American Airlines), and Frontier Airlines are just a few example airlines that have reorganized under US bankruptcy laws. Stockholders have been wiped out. Pensions have been abandoned by the bankrupt companies. Aircraft orders have been canceled. Contracts with suppliers have been torn up.


    There seems to be no stigma attached to airline bankruptcy. Airlines are still being treated as highly respected corporations in the business community. For example the big US automakers and banks have a litany of reasons for why Washington should throw them a lifeline, not the least of which is their claim bankruptcy would destroy them. It’s a different story for commercial aviation because an airline bankruptcy isn’t terribly newsworthy and in the case of American Airlines allow for large cash reserves.
    20 Jan, 09:40 PM Reply Like
  • markcc
    , contributor
    Comments (777) | Send Message
    Eugene, Looking froward, I don't see this scenario of bankruptcies going forward. The consolidation in the industry will protect pricing and the smartness of the new management is not just going to pump a lot of new planes on a bunch of new routes that don't make any money.
    21 Jan, 07:04 AM Reply Like
  • dfwmike
    , contributor
    Comments (2) | Send Message
    Eugene, most of your points are false when applied to the US airways and AAL merger. Stockholders were not wiped out and the pensions were frozen but still intact up to the day of being frozen. Aircraft orders were not canceled during the bankruptcy with one new plane coming in every week. The only true statement is that some suppliers were not made whole on their claims and some contracts were redone.
    27 Jan, 12:20 PM Reply Like
  • Eugene Bem
    , contributor
    Comments (8) | Send Message
    I beg to differ, lots of analysis DFWMike to support my points see comments below and more then happy to provide you with the facts
    28 Jan, 07:17 PM Reply Like
  • Eugene Bem
    , contributor
    Comments (8) | Send Message
    just one of several examples of aircraft order changes under bankruptcy reorg

    American Airlines has renegotiated orders with Boeing Co. to save money and in some cases get a slightly smaller, less expensive version of the new 787 jet.


    The so-called Dreamliner was delayed during production and has had problems recently — including a fire aboard a Japan Airlines 787 last week in Boston. Federal safety officials are reviewing the plane’s design and production.


    Fort Worth-based American said Monday that it updated deals to buy Boeing 737 and 787 aircraft to save money and move up deliveries of the 787s to November 2014.


    The agreements to also settle Boeing claims arising from American’s 2011 reorganization filing await bankruptcy court approval.


    American parent AMR Corp. is considering whether to merge with US Airways Group Inc.
    28 Jan, 09:31 AM Reply Like
  • Eugene Bem
    , contributor
    Comments (8) | Send Message
    a bit of USAirways and American Airline Pension Plan History



    Between 2003 and 2005, after US Airways filed for bankruptcy, the Pension Benefit Guaranty Corp. took over four of the airline's pension plans, saddling the agency with about a $2.8 billion loss.


    In early 2012, after American Airlines parent company AMR Corp.'s November 2011 Chapter 11 bankruptcy filing, American said it intended to terminate its four massively underfunded pension plans.


    At the time, the PBGC which would have taken over the obligations, estimated the plans had about $8.3 billion in assets and about $18.5 billion in promised benefits. If they had folded, the PBGC would have been liable for about $17 billion in promised but unfunded benefits, resulting in an $8.7 billion loss to the agency, which would have been the PBGC's biggest loss in its history. The PBGC's biggest loss was its 2005 takeover of four United Airlines plans, which cost the agency about $7.3 billion.
    28 Jan, 09:38 AM Reply Like
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