AMR bankruptcy Likely.....so says the Associated Press

[Sacha]

Fudgepacker,

Your airline is making money, you are not......

You thought the last pay cuts the arbitrator shoved up your butt were bad....

Wait till the Delta boys make the company pull the rug out from under your regional airline feed......now we are talking some real pay cuts.....

Better hope USAIR East aquires you.....you will get date of hire......and a pay raise
and Reserve in PHL......

 

[MooneyPilot]

You would think if AMR DIDN'T file for bankruptcy, in the long run they would get a better deal on aircraft, being solvent is also an important factor when negotiating leases.

 

[Fubijaakr]

Not really. If the airplanes are financed by the aircraft builders, then that debt is secured. Then they do a prepackaged bankruptcy and USAir sweeps up the pieces.

 

[CitationLover]

AMR front end options are up to 170% implied volatility but put pricing shows about a 10% chance of bankruptcy at this time. Good time to sell AMR options with front end volatility so high.

 

[Dornier 335]

Food for thought ...

source


Wall Street: Maybe Those Scummy Occupiers Have A Point


Let's stop the politically correct drivel about how the trendy "I hate America" circuses that are showing up in front of Wall Street institutions have some sort of honorable intent.



They are basically lynch mobs looking for rich people to politically if not literally hang. Being rich or well to do, it seems, is now bad, and those that are deserve no protection of the law. Sort of like being associated with royalty after the French Revolution. No further discussion - being financially successful is proof of anti-proletariat greed.


But some Wall Street types do play into these clowns' hands. In particular, the implication by some analysts that filing bankruptcy is some sort of easy and honorable thing to do. We heard it last week, with the suggestion that American Airlines should just file Chapter 11 and all will be well. See, then AA can dump employee pensions, and dump a lot of debt, too. The story also goes to the point of criticizing the airline for not doing it years ago, as most other carriers did.


It's not an issue of Chapter 11. It's one of those processes that corporations are sometimes forced to do. In fact, it's a process that has preserved jobs in the long term. But that's not what some of these Wall Street gurus are talking about: they just look at C-11 as a way of legally defrauding investors, employees, vendors, and retirees. They imply that if a company can do this, and clean up the bottom line, it's really okay.
Probably none of these cardboard financial shamans have ever seen a small vendor go out of business because a major customer filed C-11. Probably none of these bozos know that airports get zapped - not only with bills that aren't paid, but in some cases having to return any funds the airline paid 90-days prior to the filing. Probably none of these flippant paper-peddlers have seen what happens to families when that expected retirement pension gets cut in half or worse.


Here's the bottom line. American and its unions did the right thing in 2003 by working together to avoid bankruptcy. The carrier should be lauded for this. What happens in the future is another thing. But the Wall Street implications that filing C-11 just to get a better bottom line, as some are implying, is appalling.

 

[Sacha]

True statement. No industry has abused CH 11 more than the Airline Industry to my knowledge . My wife said that in Grad school, CH11 was studied by turning to Chapter 11 in the Corporate Finance Textbook as casually as studying IPO's. She said the professors not only didn't attach any stigma to it, they approached as just another financial tool when conducting business.

 

[heywood jablome]

Thanks for the insight. I love the drama on this forum, but the bottom line is that we are all just peons in this game. Best of luck, all....

 

[waveflyer]

"Let's stop the politically correct drivel about how the trendy "I hate America" circuses that are showing up in front of Wall Street institutions have some sort of honorable intent. "

Not to drift, but 1- as airline people we've all seen the absolute unfairness and theft of our productivity- we all ought to be there- kick the balls of the unfocused flighty types- but there MAKING OUR CASE.

And 2- I love when liberals protest, it's "they hate america", but when conservative tea partiers do it they are "PATRIOTS! Expressing their American rights to assemble and free speech".

Cmon man

 

[Sacha]

"Let's stop the politically correct drivel about how the trendy "I hate America" circuses that are showing up in front of Wall Street institutions have some sort of honorable intent. "

Not to drift, but 1- as airline people we've all seen the absolute unfairness and theft of our productivity- we all ought to be there- kick the balls of the unfocused flighty types- but there MAKING OUR CASE.

And 2- I love when liberals protest, it's "they hate america", but when conservative tea partiers do it they are "PATRIOTS! Expressing their American rights to assemble and free speech".

Cmon man

Now I know what's wrong with you.....funny, I don't remember tear gas, Police Officers being punched, crapping on Police cars or doorsteps and general rioting at Tea Party protests...

I think you should put on your SWA uniform and go down there with them. If you really believe in it. I just hope there is a picture of you on the front page of the NYT...then come back to work....see how well your received.

After listening to many of them being interviewed about what they stand for, I think you would fit right in..clueless...

 

[blackjack]

http://www.rollingstone.com/politic...all-street-isnt-winning-its-cheating-20111025
Matt Taibi (portions of article):

People aren't jealous and they don’t want privileges. They just want a level playing field, and they want Wall Street to give up its cheat codes, things like:

FREE MONEY. Ordinary people have to borrow their money at market rates. Lloyd Blankfein and Jamie Dimon get billions of dollars for free, from the Federal Reserve. They borrow at zero and lend the same money back to the government at two or three percent, a valuable public service otherwise known as "standing in the middle and taking a gigantic cut when the government decides to lend money to itself."
Or the banks borrow billions at zero and lend mortgages to us at four percent, or credit cards at twenty or twenty-five percent. This is essentially an official government license to be rich, handed out at the expense of prudent ordinary citizens, who now no longer receive much interest on their CDs or other saved income. It is virtually impossible to not make money in banking when you have unlimited access to free money, especially when the government keeps buying its own cash back from you at market rates.

CREDIT AMNESTY. If you or I miss a $7 payment on a Gap card or, heaven forbid, a mortgage payment, you can forget about the great computer in the sky ever overlooking your mistake. But serial financial ********************ups like Citigroup and Bank of America overextended themselves by the hundreds of billions and pumped trillions of dollars of deadly leverage into the system -- and got rewarded with things like the Temporary Liquidity Guarantee Program, an FDIC plan that allowed irresponsible banks to borrow against the government's credit rating.
This is equivalent to a trust fund teenager who trashes six consecutive off-campus apartments and gets rewarded by having Daddy co-sign his next lease. The banks needed programs like TLGP because without them, the market rightly would have started charging more to lend to these idiots. Apparently, though, we can’t trust the free market when it comes to Bank of America, Goldman, Sachs, Citigroup, etc.
In a larger sense, the TBTF banks all have the implicit guarantee of the federal government, so investors know it's relatively safe to lend to them -- which means it's now cheaper for them to borrow money than it is for, say, a responsible regional bank that didn't jack its debt-to-equity levels above 35-1 before the crash and didn't dabble in toxic mortgages. In other words, the TBTF banks got better credit for being less responsible.

STUPIDITY INSURANCE. Defenders of the banks like to talk a lot about how we shouldn't feel sorry for people who've been foreclosed upon, because it's they're own fault for borrowing more than they can pay back, buying more house than they can afford, etc. And critics of OWS have assailed protesters for complaining about things like foreclosure by claiming these folks want “something for nothing.”
This is ironic because, as one of the Rolling Stone editors put it last week, “something for nothing is Wall Street’s official policy." In fact, getting bailed out for bad investment decisions has been de rigeur on Wall Street not just since 2008, but for decades.
Time after time, when big banks screw up and make irresponsible bets that blow up in their faces, they've scored bailouts. It doesn't matter whether it was the Mexican currency bailout of 1994 (when the state bailed out speculators who gambled on the peso) or the IMF/World Bank bailout of Russia in 1998 (a bailout of speculators in the "emerging markets") or the Long-Term Capital Management Bailout of the same year (in which the rescue of investors in a harebrained hedge-fund trading scheme was deemed a matter of international urgency by the Federal Reserve), Wall Street has long grown accustomed to getting bailed out for its mistakes.
The 2008 crash, of course, birthed a whole generation of new bailout schemes. Banks placed billions in bets with AIG and should have lost their shirts when the firm went under -- AIG went under, after all, in large part because of all the huge mortgage bets the banks laid with the firm -- but instead got the state to pony up $180 billion or so to rescue the banks from their own bad decisions.

UNGRADUATED TAXES. I've already gone off on this more than once, but it bears repeating. Bankers on Wall Street pay lower tax rates than most car mechanics. When Warren Buffet released his tax information, we learned that with taxable income of $39 million, he paid $6.9 million in taxes last year, a tax rate of about 17.4%.
Most of Buffet’s income, it seems, was taxed as either "carried interest" (i.e. hedge-fund income) or long-term capital gains, both of which carry 15% tax rates, half of what many of the Zucotti park protesters will pay.
As for the banks, as companies, we've all heard the stories. Goldman, Sachs in 2008 – this was the same year the bank reported $2.9 billion in profits, and paid out over $10 billion in compensation -- paid just $14 million in taxes, a 1% tax rate.
Bank of America last year paid not a single dollar in taxes -- in fact, it received a "tax credit" of $1 billion. There are a slew of troubled companies that will not be paying taxes for years, including Citigroup and CIT.
When GM bought the finance company AmeriCredit, it was able to marry its long-term losses to AmeriCredit's revenue stream, creating a tax windfall worth as much as $5 billion. So even though AmeriCredit is expected to post earnings of $8-$12 billion in the next decade or so, it likely won't pay any taxes during that time, because its revenue will be offset by GM's losses.

GET OUT OF JAIL FREE.

Millions of people have been foreclosed upon in the last three years. In most all of those foreclosures, a regional law enforcement office -- typically a sheriff's office -- was awarded fees by the court as part of the foreclosure settlement, settlements which of course were often rubber-stamped by a judge despite mountains of perjurious robosigned evidence.
That means that every single time a bank kicked someone out of his home, a local police department got a cut. Local sheriff's offices also get cuts of almost all credit card judgments, and other bank settlements. If you're wondering how it is that so many regional police departments have the money for fancy new vehicles and SWAT teams and other accoutrements, this is one of your answers.
What this amounts to is the banks having, as allies, a massive armed police force who are always on call, ready to help them evict homeowners and safeguard the repossession of property. But just see what happens when you try to call the police to prevent an improper foreclosure. Then, suddenly, the police will not get involved. It will be a "civil matter" and they won't intervene.
The point being: if you miss a few home payments, you have a very high likelihood of colliding with a police officer in the near future. But if you defraud a pair of European banks out of a billion dollars -- that's a billion, with a b -- you will never be arrested, never see a policeman, never see the inside of a jail cell.
Your settlement will be worked out not with armed police, but with regulators in suits who used to work for your company or one like it. And you'll have, defending you, a former head of that regulator's agency. In the end, a fine will be paid to the government, but it won't come out of your pocket personally; it will be paid by your company's shareholders. And there will be no admission of criminal wrongdoing.
The Abacus case, in which Goldman helped a hedge fund guy named John Paulson beat a pair of European banks for a billion dollars, tells you everything you need to know about the difference between our two criminal justice systems. The settlement was $550 million -- just over half of the damage.
Can anyone imagine a common thief being caught by police and sentenced to pay back half of what he took? Just one low-ranking individual in that case was charged (case pending), and no individual had to reach into his pocket to help cover the fine. The settlement Goldman paid to to the government was about 1/24th of what Goldman received from the government just in the AIG bailout. And that was the toughest "punishment" the government dished out to a bank in the wake of 2008.
The point being: we have a massive police force in America that outside of lower Manhattan prosecutes crime and imprisons citizens with record-setting, factory-level efficiency, eclipsing the incarceration rates of most of history's more notorious police states and communist countries.
But the bankers on Wall Street don't live in that heavily-policed country. There are maybe 1000 SEC agents policing that sector of the economy, plus a handful of FBI agents.