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AMR Corp. (AAMRQ.PK -2%) says that American's first Boeing (BA) 787-9 Dreamliner aircraft...

AMR Corp. (AAMRQ.PK -2%) says that American's first Boeing (BA) 787-9 Dreamliner aircraft delivery, previously scheduled for 2014, has been delayed due to production issues, and due to the complexity of the financial arrangements with stakeholders and the bankruptcy court, it can't guarantee whether the purchase will still go through. AAMRQ.PK cut a deal with BA in 2008 to buy 42 Boeing 787-9 Dreamliners, with the right to acquire an additional 58 aircraft.
Comments (11)
  • ecrivain
    , contributor
    Comments (19) | Send Message
     
    Sadly this airline is doomed.
    17 Oct 2012, 01:24 PM Reply Like
  • thomasone
    , contributor
    Comments (89) | Send Message
     
    i have significant amount of stock in AA. Sold some at a paltry 0.37 and my retirement savings have really taken a hit. I did believe managment when they said they had billions to keep the airline going for years. It seems radilcal to destroy entirely shareholder value for the sake of a deal with the pilots union. I thought managment and the board would be ethical.

     

    I dont know what to do with the rest of the stock-
    will it be converted to new stock or wiped out entirely?
    will the board will culaple in a class action, is there any credibiltiy that legal action will arise as the board so mis-informed investors.

     

    It is a sad situtation where the worlds greatest airline becomes a basket case purely due to the greed of the pilot union and those who control the bankruptcy who no doubt benefit.

     

    Should I keep the stock ? do i have any choices? will there be some settlement in the future, even if small. I feel by selling it for a few cents in the dollar just plays into the hands of those who are part of this conspiracy.
    17 Oct 2012, 02:35 PM Reply Like
  • markcc
    , contributor
    Comments (1021) | Send Message
     
    I am an American Platinum for life (2 million miles), that bought 250 puts (25,000 shares) on AMR stock last year when the stock was 6. Unfortunately, I have no advice for you as the stock has diminished so severely and the outcome is so uncertain. Most analysts say the stock will be wiped out to zero value.
    One thing is sure, if you are holding on to a thread of hope that you will gain anything from the management of a totally bankrupt company, you need to rethink your investment strategy. Voluntary bankruptcies are up to the board and are subject to daily reassessment and daily changes in decisions and public statements.
    In the current bankruptcy model, the remaining assets, which include the frequent flyer points and value have been preserved on behalf of distributions to creditors that are left with pennies on the dollar. The instant that a judge determines that a bankruptcy plan is useless, the frequent flyer plan is cancelled and all the assets are liquidated and proceeds spread among the creditors, then it is all over.
    The relationship between pilots and their airline is such that the airline operates on behalf of the pilots that try to exact maximum pay. Once the concept of mutual interest fades, the pilots can suck all the remaining value from the entity. In this case, it may put the remaining enterprise so far that there is no recovery for anyone.
    17 Oct 2012, 04:09 PM Reply Like
  • freeman8201
    , contributor
    Comments (543) | Send Message
     
    I follow what Warren Buffet said, and I am paraphrasing, airliners are too risky because gasoline it always a factor and empty seat lose money and is unpredictable.

     

    After I read gem of advice from mr. Buffet I've never looked back at investing airliners again.

     

    try the railroad companies or electric power companies.
    17 Oct 2012, 06:15 PM Reply Like
  • thomasone
    , contributor
    Comments (89) | Send Message
     
    thanks for the response. Right now the stock is .36 cents which is better than zero, but not much better. I rarely see any comments about shareholders on any web site- the concern is mostly employees, passengers and service. I realize the risks one takes but it difficult to understand the rationalization behind managements decision to go the bankruptcy route- with several billion in cash. Its obviously better for someone, other than the shareholders.Do management benefits from fees bonus and does the judge consider the motivation. The creditors of course may benefit but the only group that is liquidated are the shareholders who are the smallest with a cap of only $123 million. Will the AAMRQ be converted to new shares if if a small piece. Its all very strange .One lesson i have learned is never ever to invest in a union infested industry. Unions have destroyed every business where they are prominent and should not be allowed in the public sector as they have ruined local economies also.
    19 Oct 2012, 08:51 AM Reply Like
  • markcc
    , contributor
    Comments (1021) | Send Message
     
    To be sure, as soon a management makes the determination that all is lost, regardless of cash on hand, the board then is working on behalf of the creditors. What they did is in line with industry predictions and would have been grossly irresponsible if they did not go into bankruptcy on behalf of the creditors. I am a CPA and cash is not a good indicator of financial well being if it is already committed. As for the stock, I don't see any way a judge would give stock that is worth more than pennies, and he/she would only do that to hold off potential lawsuits from the prior AMR shareholders. As for the unionization, my experience says that it is not the unionization, but the relationship with management that is important. Structural differences between companies and industries preclude a blanket condemnation of unions. Even within the airlines the strength of pilots is stronger than the flight attendants. I recall the AA strike in the 80s where I was on the plane the next day and management was pretrained for flight attendant tasks.
    19 Oct 2012, 06:49 PM Reply Like
  • markcc
    , contributor
    Comments (1021) | Send Message
     
    The pilots union has to realize that eventually their stunts will lead to liquidation of all assets, their jobs and their seniority... at that point everybody loses as the airplanes are sold for pennies on the dollar and their jobs vanish. Gone are the Reagan era tactics that are designed to prevent an airline stoppage.

     

    If you dont believe me, look at the number of airlines like Spirit and JetBlue that are going into DFW unstopped by American's competition.
    17 Oct 2012, 03:56 PM Reply Like
  • aaretired
    , contributor
    Comments (22) | Send Message
     
    BUT the pilots will be happy. They can say what the EA pilots said; I told you so!
    17 Oct 2012, 11:06 PM Reply Like
  • thomas85225
    , contributor
    Comments (563) | Send Message
     
    Boeing has only delivery 29 787-8 to date!
    which made the line rate 2.9 not 5 per month
    Boeing must sell and delivery 1100 to break even on the 787 which well take 10-20 years
    the 787 is Risk shaving program when Boeing make money the vendor will make money!
    The first 40 787 has cost Boeing 32 Billion dollars 50 of the first 70 aircraft had to be rework
    the program is costing 5 million a day !
    (The 787-8 are 3.5 years late and 4 tons over weight and do meet performance guarantee Boeing said it well made 10 787 by the end of the years (what years)
    http://reut.rs/OJkCJo

     

    Boeing is already writing late fee checks to the airline
    The 747-8 has delivery 30 aircraft which is 2 years late and 2.4 billion over budget and only 111 order plus 5 more which are reorders from China that cancel 27 of their 787
    There has been 114 cancelation of 787 plus Qantas 787-9
    ( Qantas will kept their options open for the 787)
    http://bit.ly/SYyEss

     

    American Airline has orders 42 firm and 58 options for 787-9
    American Airline has been remove from most wed site, the Boeing wed site only shown 11 787 on orders, there orders for 737 and 777 has been remove other web site American Airline orders 460 aircraft from Boeing and Airbus, is now is the hand of the bankruptcy court, American airline has only take delivery of one 777 since filling

     

    http://bit.ly/OJkDwY
    http://hrld.us/XpWY5Q
    The 787-9 has been delay about year ago, and the 787-9 engines have yet to be certify
    The 787-9 has only had a 50% drawing release
    the 787-9 still must have a 12-24 month flight test program and be FAA certify that after the 787-9 is roll out in 2014
    No 787-9 production tooling in Japan, Kansas, South Caroline and Italy has made its way on to assembling line
    No 787-9 assembly line has been set up in south Caroline
    Boeing Everett line was going to have 4 position for 787-9 but the length of the 787-9 will only allow 3 787-9
    Boeing has not learn any lesion form the 787-8, none of the Boeing Good Oh boy , FBI: Family’s, Friends and In-laws, Its Bottle Head Managements (just a bunch of yes men’s / women’s) will still be running the 787-9 program and Boeing Engineering Change Board most likely well dump another mountain of engineering after design release of the 787-9 has been release into the vendor (the 787-8 all over again)
    Boeing said its well increases the size of the Vought plant in south Caroline by 63% but it has yet to buy or installed more composite equipment, auto clay ect
    Maybe when Airbus out delivery Boeing the Boeing Stock holder will take action to fire the commercial aircraft management at Boeing
    Little has change at Boeing to prevent another 787-8 and 747-8 disaster and the stock is still falling from $104 from 4 years ago to $73.67
    There good news is Jim Albaugh got he’s 57 million to leave the company
    17 Oct 2012, 07:29 PM Reply Like
  • ecrivain
    , contributor
    Comments (19) | Send Message
     
    to blame the pilots for the problems at American is completely unfair. They are just one aspect of the company. Many times it is their inept planning that begins the spiral downwards. Add in a some mishaps and wham it's out of control. The pilots like any other employee are trying to maintain their careers. They aren't bus drivers, they're highly skilled employees that take years to get their experience that is required by law to operate an airplane.

     

    It seems that the only time a pilot gets any respect is when the engines are gone and he/she needs to land it in the Hudson, then suddenly every penny that pilot has ever earned isn't enough to bring you safely to ground.

     

    Now with American, there are numerous problems. Having seats move during flight sure doesn't reassure the public you offer a safe environment. The issue with Boeing doesn't help. But don't think that the pilots and all of the employees haven't given up a lot already in pay and benefits to keep this airline going. Now it's just a matter of time, so make that last drop a good one.
    18 Oct 2012, 07:05 AM Reply Like
  • markcc
    , contributor
    Comments (1021) | Send Message
     
    Blame? No. Just observations based on dozens of conversations. As an American frequent flyer, when I talk to the American non-pilot employees, they feel that pilots take too large a share of the pie, relegating them to terminally low salaries and financial strain. I feel that, while the pilots have made concessions, the market pricing for airline services has significantly tightened over the last 10 years. The pilots at American seem to be forcing the reinstatement 1990's type salaries when the market has significantly changed. Unfair? If the union persists making strike demands on the judge in the bankruptcy, the judge may ultimately determine that with the high pilots salaries, there is no value left and liquidate. This already happened with the Eastern and Braniff liquidations, where the 727 planes were sold for $3 million each. Unlike the previous liquidations, the rest of the industry is contracting now and the competition would love American to disappear so they could grow again. American would be parking its fleet in the desert.
    18 Oct 2012, 10:51 AM Reply Like
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