AirTran tacks on add'l $140M to cash

[Lear70]

Since when? And the BOD is OK with this? Any thing to substantiate this or is it just something you've heard from someone else? Maybe you ought to post this on the Forum to make everyone aware of it. 7 years and I've never seen them "front or back loaded" as you claim. They did do that with red eye's but that's a whole other can of worms.

From what I understand, it's only happened to a couple reserve F/O's who didn't know any better at the time.

This is 2nd hand information from a buddy who's on reserve and on probation; told him to call the NPA, he said he would, and I haven't heard about it since and he hasn't been asked to do it again, so maybe it was just a fluke or maybe it was a CDO they turned into a reduced-rest overnight then added a turn at the end, don't really know.

The red-eyes being front-loaded isn't such a big deal, although the back-loaded red-eyes don't sound like much fun.

 

[Nindiri]

Would you continue accrueing senority during a LOA?

 

[PCL_128]

You would continue accruing seniority, but longevity would stop accruing if you stayed out longer than 6 months according to the current contract.

 

[Colonel Savage]

Lear is correct. I have a part-time gig on the side that I can turn into a full-time gig that pays more than second-year pay at AirTran. As long as I could keep the benefits, it would be very worthwhile for me.

Must be a pretty good gig. Anything you can discuss?

 

[Andy]

Andy, are you reading or listening to any of those online "economists"? Martin Weiss, Bill Bonner, Marc Faber, etc? They are all pessimists, have been for years. Are they calling for a depression this time around?

Our economy is supposed to be cyclical, it flushes out excesses that way, restores economic health. If there are excesses in the airline industry or the nation's economy as a whole, then they will have to go.

IMO, the biggest excess is the supply of hot air on Capitol Hill and Wall Street.

I listen to a lot of different economic opinions. I sift through them and draw my own conclusions. While I don't follow any of the names that you mentioned, I may have read a bit of their writings. I've read a few things by Weiss.
Interesting that you choose the word pessimist to describe them. On what do you base that conclusion?

You aren't going to find many economic forecasters call for a recession, much less a depression. Such statements tend to be mocked by those unable to intelligently debate the topic. Some of the comments on this board are a perfect example. Here's a video clip from Jan 2007 that further illustrates my point: http://www.youtube.com/watch?v=yoZV5jt9puc
Most financial forecasters have incentives to make upbeat projections. It's a rarity to see them forecast a recession.

It's humorous that the word depression evokes such apoplectic responses from people. A depression is merely a recession that has a greater than 10% decline in the GDP. The Great Depression was several orders of magnitude greater than a 10% decline in GDP. However, the word evokes visions of the Dust Bowl and 'Of Mice and Men.'

 

[Andy]

Ahhhhhhhh. Nice work on the cut and paste. You sound so smart. I bet you wow the ladies with that kind of genius analytical bull$hit.

Gotta love a guy calling the fire department about his neighbors house on fire, with his own smoke alarm going off in the background.

Thank you very much for the intelligent response. I hadn't anticipated such a brilliant piece of literature from a knuckle dragging neanderthol.

We all have our areas of expertise; take solace in the fact that I can't compete with you on cartoon theme songs. I know that SpongeBob Squarepants lives in a pineapple under the sea, but a guy like you surely impresses the ladies with being able to sing the entire lyrics. And you likely clinch the deal with the theme song from your favorite cartoon, Powerpuff Girls.

 

[RIDETHELIGHTING]

Andy I took time to read your post because I thought they had some insight. But all it seems is that you want do is bash FL on this board and others.

 

[The Prussian]

Andy I took time to read your post because I thought they had some insight. But all it seems is that you want do is bash FL on this board and others.

I don't think Andy is bashing FL as much as he is revealing some research that shows some issues. I'd rather know about it than not. If Andy's got a negative byass on the current economy, or FL,...so be it. He's human and may be right...and may be wrong. No oracle is right 100% of the time. I for one find his posts interesting.

Darn it...just saw that oil went over $120 a barrel...he may be more right than wrong...

 

[Lear70]

Oil is going to $150 by the end of the summer. Count on it.

The dollar is going to continue to lose its power against other currencies which is the main reason oil is going up - takes more dollars to buy it when your dollar isn't worth as much, basic math.

The credit markets are tighter, harder to get loans for both individuals and businesses, housing market continues to slump...

I don't know if it will become an outright "depression" as Andy thinks it will, but you've got your head in the sand if you don't think it's going to get quite a bit worse before it gets any better...

YMMV.

 

[Eagle757shark]

Oil is going to $150 by the end of the summer. Count on it.

The dollar is going to continue to lose its power against other currencies which is the main reason oil is going up - takes more dollars to buy it when your dollar isn't worth as much, basic math.

The credit markets are tighter, harder to get loans for both individuals and businesses, housing market continues to slump...

I don't know if it will become an outright "depression" as Andy thinks it will, but you've got your head in the sand if you don't think it's going to get quite a bit worse before it gets any better...

YMMV.

Lear that is the problem. So many americans have their head in the sand and have no clue about what is going on around them. We have a star struck society. People care more about who Brad Pitt and Jessica Simpson are sleeping with than what is going on in their own backyards.

I think it is human nature to believe that everything is ok and will be ok at your own company. However, given the current fuel prices, it is going to come down to who has the most cash and can hold on long enough to make it through these times. Are we in a recession, technically no. But we have some serious economic issues right now. Will AirTran survive through this economic downturn is anyones guess. Will there be a merger, good question.....but I do know one thing.....things are not rosie!!!!

Airline industry watchers wonder who will fold next
AirTran stock at 5-year low though company says it's strong

By RUSSELL GRANTHAM
The Atlanta Journal-Constitution
Published on: 05/05/08
Who's next?
That has rapidly become the question on many an airline-watcher's mind as one carrier after another has landed in bankruptcy or turned in its keys in recent weeks.
But while big carriers like Delta, United and Northwest airlines were the ones lining up at bankruptcy court after the 9/11 terrorist attacks sent the industry into a tailspin, this time skyrocketing fuel costs are hitting smaller carriers as well. The price of jet fuel, airlines' biggest expense, has jumped about 60 percent in the past year.
"Everyone is vulnerable. Cash is king," said Ray Neidl, a veteran analyst with Calyon Securities.
He predicted that most big airlines this year will likely avoid a crisis, particularly carriers with diverse markets and large cash reserves thanks to previous bankruptcy restructurings. Southwest, Delta, Northwest and Continental are among carriers that appear in better shape because they have adequate cash, significant fuel hedges that lock in prices or other advantages, according to various industry analysts.
Still, six weaker domestic airlines entered bankruptcy proceedings, shut down or announced plans to stop flying in recent weeks. The largest was Denver-based Frontier, which continues flying under Chapter 11 protection. Other casualties include the all business-class carrier Eos and ATA Airlines, both of which ceased operations in April.
The growing pressure has produced a succession of fare increases, along with fewer travel options as airlines cut capacity. Atlanta-based Delta plans to cut domestic capacity 10 percent this year, and Chief Executive Richard Anderson said last month airlines need to hike domestic fares by up to 20 percent to break even.
There are some bright spots, noted Neidl. Travel demand remains strong and airlines are doing an "excellent job" of controlling costs and boosting revenues, he said.
Still, six weaker domestic airlines entered Chapter 11 proceedings, shut down or announced plans to stop flying in recent weeks. The largest was Denver-based Frontier, which filed bankruptcy but continues flying.
Mix in the threat of a recession and shrinking access to capital, and it's "totally unpredictable" which airline could be next to head to court or the scrap heap, said airline analyst Robert Mann, with R.W. Mann & Co. in Port Washington, N.Y.
Even AirTran Airways, which put its growth plans into hyperdrive and made money amid Delta's struggles in recent years, seems to be in Wall Street's doghouse this time around.
The second-largest airline at the Atlanta airport, AirTran's share price dropped in April to a five-year low, apparently on concerns that it could follow Frontier into bankruptcy. The shares remain depressed despite AirTran executives' protests that the Orlando-based company is in better financial shape than Frontier. AirTran's shares are down about 40 percent over the past month.
Kevin Healy, AirTran's senior vice president, said the carrier's fuel bill has soared from about 20 percent of revenues in 2005 to roughly 35 percent last year, making it difficult to pursue its past growth pace, which sometimes topped 20 percent a year.
AirTran recently suspended growth plans for late 2008 and 2009 and sold aircraft. Last week, it completed the bulk of an offering of stock and related securities to raise $150 million and boost cash reserves to about $500 million.
AirTran is "somewhat more sensitive to fuel" prices, said Healy, but also has among the lowest non-fuel costs in the industry. "We actually are relatively still better positioned than the other carriers," he said.
Analyst Mann called the decline in AirTran's stock price "an overreaction." He said AirTran doesn't appear to be vulnerable to the type of cash crunch that pushed Frontier into Chapter 11. He said AirTran should benefit from capacity cuts and fare increases by Delta.
AirTran's move to shore up its cash reserves creates more breathing room, Mann said, but it also helped depress the airline's stock price by diluting its future earnings over a larger number of shares.
Another reason investors are jittery, said Mann, is because the widening credit crunch on Wall Street helped to precipitate some of the sudden airline shutdowns.
"The biggest single problem right now is the credit markets," he said.
That has put pressure on the hedge funds and private equity investors that have been lifelines for some airlines. Eos, for instance, filed for Chapter 11 protection and stopped flying on April 27 after investors refused to chip in more money.
Neidl, the Calyon analyst, left little room for optimism in a recent report titled "The Perfect Storm Revisits the Industry in 2008." He invoked the Bible's Four Horsemen of the Apocalyse to describe the challenges of "high fuel costs, recession, labor unrest and excessive government interference."
Neidl said the industry will shrink either through mergers or bankruptcies. Delta and Northwest announced plans last month to merge into the world's largest airline. United and US Airways are exploring merger options, and American and British Airways may also be looking at adding Continental as an alliance partner, according to reports. Continental is currently part of the SkyTeam alliance between Delta, Northwest, Air France and others.
"In 2008, we have an industry in crisis" in which airlines are switching to "survival mode," said Neidl.
"We believe that many of the airlines that enter Chapter 11 proceedings in this harsh economic environment will be like checking into the Hotel California where you never check out." said Neidl, referring to the former hit song by the Eagles. "The next bankruptcies will be for real."

 

[Andy]

Thread revival.

My post:

No, I'm calling for a depression, which is 10% negative GDP growth during the contractionary phase. We are going through a period of monetary deflation and that will have a significant negative impact on the GDP. The velocity of the money supply is slowing rapidly.http://

PCL's response:

Ok, so you're even nuttier than I thought. Thanks for the clarification. There will be no depression, and any recession will last no more than three quarters.

To be forthcoming, when I wrote the original post, I expected a depression worse than the Great Depression. I still do. My reasoning involves the extremely high debt ratios at all levels of society - personal, corporate, and government. Had I posted that I was expecting worse than the Great Depression, I knew that just about everyone would think that I was a moonbat.
Hopefully PCL's now come around to the idea now that the probability of a depression is increasing rapidly and is being talked about in the mainstream media.

The reason why I chose to revive this thread is because I found a great article that most here should be able to understand: http://www.independent.co.uk/news/b...deflation-could-drag-us-all-down-1030827.html

For anyone who cares to listen, my best piece of advice is to get as debt free as possible. You don't want to have any debt in a deflationary environment.

For oil prices, worldwide demand destruction is going parabolic. I won't be surprised to see $20/bbl oil. Oil futures remain heavily in contango, but that will change over time.

As for the original topic, AAI was very smart to raise capital when they did. I doubt that they could get their hands on that much money in the current environment. And companies are going to want to have as much cash on hand as they can going forward.

 

[cybourg10]

Andy-

Do you think unemployement will hit the levels we saw in the 1930s, something like 25-30%? And when do you see this recession and or depression turning around? Sounds like this is going to get worse before it gets better. I am fortunate enough to be debt free in the form of credit cards, car, mortgage but dumb enough to have about $500 a month in flight school loan payments. I am only 23 yrs old so I guess its not too bad to have loan payments but should I still be putting 10% into my 401k and another 5% in my IRA or should I hold out and have as much cash on hand as possible? Could be looking at a possible furlough next year as well.....Thanks always enjoy reading your posts.

 

[Andy]

Cybourg, while I expect unemployment to be somewhere in the range of numbers you posted, it won't be as bad as the 30s because most households have two wage earners. If one loses a job, it will require a lot of lifestyle adjustments, but it's workable. Where we as a nation have gotten into trouble is due to so many people having a standard of living greater than their paychecks. Too many have bought BMWs on Ford Focus incomes. That will change.
As far as a turnaround in the economy, it'll happen a lot faster after the government stops trying to bail out every near dead company. The quicker that we start accepting some pain, the quicker the economy will recover. However, I can see this dragging for a decade - but I don't have much confidence in guessing how long it will last; there are too many variables that will effect the length of the downturn.

For your 401K, do you get a company match? If so, I'd keep contributing the maximum amount that's matched. But I'd put it into the safest fund offered; mine goes into a money market fund.
Are you a sophisticated investor? If not, don't put your money into an IRA unless you're going to put it into a very conservative investment; the markets still have a long way to fall. You need to be on your A game to maneuver through this kind of market; it's very dangerous to be long or short.
For me, I put my 401k into the money market option more than a year ago. I'll keep it there until I see the markets at a level that I think is more in line with the fundamentals. Right now, I think that Dow 4000/S&P 400 are where the markets need to be based on forward P/Es.
For my TSP (thrift savings plan; govt 401K), I moved everything over to the G Fund more than a year ago.
For my IRA, I buy put options. In the past, I've bought put options on homebuilders (2007), Countrywide, Downey, Lehman Brothers, AIG, Merrill Lynch, and in the last 4 months salesforce.com. There is a lot of risk in that strategy and you really have to know the markets very well in order to do that or you will lose everything.
The name of the game in investments right now is preservation of capital, not return on capital. You've got to be very conservative unless you devote a lot of time to following the markets. A bear market is brutal - with one paw, it will shred investors in long positions and with the other paw, it will have a huge rally and kill investors in short positions.

As far as a furlough goes, make sure that you have some skills outside of aviation. Figure out what you'd like to do and consider getting a part time job there. I spent almost five years furloughed from United; more than 3 of them, I was able to work full time in the AF Reserves. During the rest of the time, my wife brought in a paycheck and we survived just fine. Now, with two paychecks, we have so much money coming in that we can't save it fast enough - it's amazing what adjusting one's standard of living downward will do to your savings.
Have you considered joining the Guard/Reserves? Even if they initially offered you a nonflying job, that'd be a nice part time job that could turn into a full time gig, making a furlough for you completely painless. You're young enough that if they brought you on in a nonflying job and you developed a good reputation, you'd likely get a pilot training slot. Pilot training and follow-on training alone would keep you employed full time for 18 months or so. Just food for thought. But you're going to want to hustle on this if you decide to do it; I would expect Guard/Reserve units to see applications pick up very soon.

Hope that helps.

 

[cybourg10]

Andy-

Thanks, I have been looking into the AF Resrves for some time now. Looks like it would be a great way to bring in some more pay, help me learn a new skill, and help pay for me to finish my degree.

As for the IRA I stopped putting money into it last July, I am far from an expert investor but it does interest me and I would like to learn more. Do you have any good book reccomendations on investing/finance? I have been putting in the maximum and then some for the company match but its all in the TRowePrice 2050 retirement fund.

So you see oil in the $20s another 30-50% drop in the market? Are we looking at another 10% capacity cut (or more) in the ailrine sector in 09?

 

[Lear70]

I think a 4,000/400 DOW/S&P is a bit drastic.

I wouldn't be surprised to see them drop into the 6,000/700 range, and bounce around a bit like they have been, but the only thing that will drive them into the range Andy is talking about is the collapse of an automaker or two, or the crumbling of another financial giant.

Possible, but unlikely. What we'll probably see with the auto industry is exactly what happened to the airline industry post-911. Ch. 11 filings and the attempt at gutting the employee compensation packages. Big question here is, under a Demo. regime, will they be allowed to cut as deeply as the airlines did?

2nd big question is, if they aren't allowed to gut pensions, etc, how big will the lashback be from the airline professionals in the form of discriminatory practice lawsuits against the federal government and, possibly, FINALLY, some kind of tort reform?

Interesting times, indeed.

SOME debt is helpful. A home loan with the interest write-off in a payment range you can afford is always a smart investment, especially if you can buy now with some equity in the purchase.

I also don't see oil dropping below $40 anytime soon. Then again, I am shocked to see it below $50. I posted a while back exactly what oil would do... and it did... on the same, exact timeline I said. However, I think it will bobble in the 40's-50's for the next year, again, barring some unforeseen financial meltdown in another sector.

Depression? I still don't see it... yet... but it's not inconceivable.

 

[maxblast72]

As for the original topic, AAI was very smart to raise capital when they did. I doubt that they could get their hands on that much money in the current environment. And companies are going to want to have as much cash on hand as they can going forward.

I was at the Fornaro's townhall meeting with employees back about 6 months ago. He said he was raising cash then because Airtran wanted to be one of the first to get the cash because there wouldn't be much cash to go around towards the end of the cycle.

While our management has made some moves that make you shake your head and wonder, they have been around for a while and generally have a pretty good idea on what is going on economically.

I feel pretty comfortable with Airtran's position going into 2009 with sub $2/gallon Jet A. Airtran's business model is less impacted by overall economic environment than by fuel prices (just look at Airtran's 2002/2003 performance) and oil demand doesn't look to be rising significantly anytime soon.

 

[Eagle757shark]

I was at the Fornaro's townhall meeting with employees back about 6 months ago. He said he was raising cash then because Airtran wanted to be one of the first to get the cash because there wouldn't be much cash to go around towards the end of the cycle.

While our management has made some moves that make you shake your head and wonder, they have been around for a while and generally have a pretty good idea on what is going on economically.

I feel pretty comfortable with Airtran's position going into 2009 with sub $2/gallon Jet A. Airtran's business model is less impacted by overall economic environment than by fuel prices (just look at Airtran's 2002/2003 performance) and oil demand doesn't look to be rising significantly anytime soon.

AirTran's business model over the last 7 years has been to take advantage of others misfortune i.e. Metrojet, US Airways, Independance Air, and ATA. Now that there are no east coast carriers in bankruptcy and the playing field is about even, what will be their plan? That is what wallstreet wants to see and me as well. I don't think you can sell airplanes to profitablity. What is the strategic long term objective? In this current environment, beware if your CEO can't state one!

 

[Andy]

Do you have any good book reccomendations on investing/finance? I have been putting in the maximum and then some for the company match but its all in the TRowePrice 2050 retirement fund.

So you see oil in the $20s another 30-50% drop in the market? Are we looking at another 10% capacity cut (or more) in the ailrine sector in 09?

I used to recommend 'The Intelligent Investor' by Benjamin Graham. But that was in 'normal' times. Instead of a book, I recommend a message board, www.tickerforum.org. There's a diverse crowd of people who are very financially savvy.

The India and China are falling apart, which is killing demand for oil. Prior to the Olympics, China was very aggressive in building a strategic petroleum reserve. They stopped after the olympics and that alone has had a big impact on oil prices. I read a couple of weeks ago that 36,000 Chinese factories have closed since the Olympics. That's huge demand destruction. And just imagine how much less gasoline is consumed by every person who loses their job - it's no longer necessary for them to drive to/from work.

For the airline industry, business hasn't fallen off a cliff yet; capacity cuts have matched a drop in the number of people flying. I think that after the holiday season, the airports will be a bigger ghost town than we've seen in a long time. Christmas is going to be terrible for retailers.

 

[Andy]

I think a 4,000/400 DOW/S&P is a bit drastic.

I wouldn't be surprised to see them drop into the 6,000/700 range, and bounce around a bit like they have been, but the only thing that will drive them into the range Andy is talking about is the collapse of an automaker or two, or the crumbling of another financial giant.

Possible, but unlikely. What we'll probably see with the auto industry is exactly what happened to the airline industry post-911. Ch. 11 filings and the attempt at gutting the employee compensation packages. Big question here is, under a Demo. regime, will they be allowed to cut as deeply as the airlines did?

2nd big question is, if they aren't allowed to gut pensions, etc, how big will the lashback be from the airline professionals in the form of discriminatory practice lawsuits against the federal government and, possibly, FINALLY, some kind of tort reform?

Interesting times, indeed.

SOME debt is helpful. A home loan with the interest write-off in a payment range you can afford is always a smart investment, especially if you can buy now with some equity in the purchase.

I also don't see oil dropping below $40 anytime soon. Then again, I am shocked to see it below $50. I posted a while back exactly what oil would do... and it did... on the same, exact timeline I said. However, I think it will bobble in the 40's-50's for the next year, again, barring some unforeseen financial meltdown in another sector.

Depression? I still don't see it... yet... but it's not inconceivable.

I base 400 S&P on $40 in forward earnings on the S&P. Analysts haven't pulled down numbers far enough yet and the PE ratio historically goes to single digits in a recession.

The auto industry can't be salvaged in its present form. Demand for vehicles is going south of 10 million on an annual basis. With that as a backdrop, they either need to get small quickly or one has to go out of business. I don't know how much the govt is going to try to prop them up, but without structural reforms, the auto industry is a money pit.

Homes are NOT an investment. Shelter is a necessity, but right now houses are a lousy investment. Even with the tax breaks. And the housing industry is nowhere near recovery; there's a huge excess supply of homes that will continue to drive down home prices along with a ton of negative amortization loans that will be recast through 2012. Housing prices will likely keep falling through 2014 at a minimum. I am renting and will continue to rent for the next five years at a minimum. Rent prices are dropping, so I am seeing my housing costs decrease annually.

 

[Lear70]

I base 400 S&P on $40 in forward earnings on the S&P. Analysts haven't pulled down numbers far enough yet and the PE ratio historically goes to single digits in a recession.

Yes, the PE ratio does historically go to single digits, but single-digit PE ratios don't automatically drive a 80+% decrease in stock prices. Again, it will take some type of crisis to drive prices down significantly from the levels we're at right now.

The auto industry can't be salvaged in its present form. Demand for vehicles is going south of 10 million on an annual basis. With that as a backdrop, they either need to get small quickly or one has to go out of business. I don't know how much the govt is going to try to prop them up, but without structural reforms, the auto industry is a money pit.

Agreed, and that's my concern. There have been huge plant closures, layoffs, and we're nowhere NEAR where we need to be with the big 4. Just like the majors, the healthiest thing would be to lose one (probably Chrysler) and have the others restructure and retool. There's a reason so many companies are writing these companies off as a TOTAL loss before those companies have even discussed a filing or a shutdown.

If we don't get that and we have also get a huge bailout package, it WILL drive another market dive, and that could tip us over the edge from recession into depression.

Homes are NOT an investment. Shelter is a necessity, but right now houses are a lousy investment. Even with the tax breaks.

For many years, people have been programmed to think of a house as an investment. You are correct in that it's really not a traditional investment, but the assertions made in Rich Dad, Poor Dad, that a home is only an investment if it generates revenue, is flawed on many, basic levels, for these reasons:

1. You have to pay for a place to live, anyway. If you are going to pay LESS in rent than your monthly house payment minus your year-end tax deduction for the interest payment, then, maybe, you can look at the house as a bad investment, but most people (unless they buy a McMansion), will be within that limit easily. A 3-bedroom apartment is anywhere from $900-1,100 a month. A 3-bedroom house is anywhere from $1,000-1,300 a month. Easy math.

2. Right now is a great time to buy. Yes, the market still has some drop left to it, but we'll see it happen in the next year. More importantly, because of the risk that Obama will make changes to the tax code, these banks are dumping a lot of NICE homes they were previously hanging onto.

3. FHA programs and others are about to dramatically change, Dec 31st. Down payments will increase, "gift" portions of your down payment (which can account for up to 50% of your down payment) will disappear. Credit will get even tighter. If you don't get into a house now, you may not be able to for a long time to come.

Case in point, there was a foreclosure on the market for $248,000 a 2,700 sq ft home in a lakefront community. 6 year old home, under home warranty for 4 more years, great schools, fastest-growing area in the city, the last appraisal was at $265,000... I snagged it last week for $198,000, 30 year FHA Fixed at 5.78%. Because it's so far under appraisal, I have no PMI, my payments are about $1,300, and a 3 bedroom house for rent (unless it was a dump) would run me $1,100-1,200 a month anyway. I save money every month and, when the housing market recovers (2 years estimated if we don't have another big hit in the economy and get pushed into a 4-7 year depression), I'll sell it, take the equity, pay off my student loan, and use the rest as a down-payment on another home.

Houses CAN be invesments, you have to have housing anyway, and just because it's not going to make you money every month doesn't mean it's debt you need to avoid. Everyone needs to have a house... purchase smartly and you'll always be better off than renting.

Rent prices are dropping, so I am seeing my housing costs decrease annually.

Maybe in your area... not here. The people who have decent homes for rent are quickly realizing that the people who are getting evicted from ARM mortgages have NO interest in renting an apartment, have the income to support a $1,200-$1,400 a month payment (what it was before the ARM adjusted) and aren't lowering their rent prices AT ALL.

Not for decent homes in nice neighborhoods, anyway. Apartment rent may be falling, but not decent homes. We're not in a depression yet, and people are still buying the basics.