Time to buy AMR Stock??

[lowpitchstop]

Seems like the wave is at the bottom and time to buy.. Oil is at $88

Who's in??

 

[AA717driver]

Yeah, if you don't like your money. AMR is a financial basket case. They've got just enough money to self-finance their DIP.

The operation is reminescent of UAL's "Summer of Love" in 2001. And, we're not even TRYING to slow down.

Scary stuff...

TC

 

[Flyby1206]

Im in if it drops below $3!

 

[Stifler's Mom]

"Never catch a falling knife."

http://itsjustmoney.blogs.com/its_just_money/2006/05/investor_mistak_1.html

 

[CitationLover]

Seems like the wave is at the bottom and time to buy.. Oil is at $88

Who's in??

I've got some calls to sell you.......

 

[satpak77]

Yeah, if you don't like your money. AMR is a financial basket case. They've got just enough money to self-finance their DIP.

The operation is reminescent of UAL's "Summer of Love" in 2001. And, we're not even TRYING to slow down.

Scary stuff...

TC

further discussion/expansion on this desired.....

 

[CitationLover]

further discussion/expansion on this desired.....

Think of it like this. Why isn't anyone BUYING AMR outright if they simply have $5 bn in "cash" (hint because it has 2x that in debt) for $1.25bn (its current market cap)? After all you'd be up $3.75bn.

Considering AMR is losing $2/sh this last quarter it can be argued the "real" stock price is about a buck.

In spite of all of this, I respect AMR management for not taking the easy way out so far that EVERY other major airline has done: file chapter 11.

 

[satpak77]

being a public university grad, and not Wharton/Harvard B-School, me wonders what magic dust is used by a company, which has historically lost money, came close to Ch.11, etc etc, and then they "find" money to order ??? hundreds of Boeings

 

[CitationLover]

being a public university grad, and not Wharton/Harvard B-School, me wonders what magic dust is used by a company, which has historically lost money, came close to Ch.11, etc etc, and then they "find" money to order ??? hundreds of Boeings

It's called 11.5 BILLION dollars IN DEBT, which AMR is. Bonds, bonds, bonds.

With the downgrade in US Debt though, its going to really hurt AMR.

Interest rates on treasuries will go up.
Banks will need to raise deposit rates to match t-bills.
Corporate bonds will need to raise rates to cover their spread on treasuries.

Thus AMR will pay more interest on any money loaned to them from their investment banks and their corporate bonds will now need to have higher rates to attract investors.

 

[satpak77]

interesting discussion. With AMR paying more interest on money, can they afford to pay that interest ? Are they going to finance this too ? Paying a credit card minimum payment with another credit card ?

Legit questions

 

[Flyby1206]

They wont go BK. Period.

Everyone likes to talk about financials like they make any difference in the survival of an airline. They dont. Airline investing is irrational and goes against all common sense.

 

[Jeff Helgeson]

Braniff

being a public university grad, and not Wharton/Harvard B-School, me wonders what magic dust is used by a company, which has historically lost money, came close to Ch.11, etc etc, and then they "find" money to order ??? hundreds of Boeings

Braniff did this at deregulation in 1978. That didn't work too well for them. Although, they thought they would fly hundreds of new routes the day after dereg. without the resources to do so.

 

[jonjuan]

They wont go BK. Period.

Everyone likes to talk about financials like they make any difference in the survival of an airline. They dont. Airline investing is irrational and goes against all common sense.

They won't go BK? Period? UAL, DAL, CAL didn't go BK? Do you understand that BK is a management/wall street decision? LMFAO, dummy....

 

[CaptWidgeon]

a good buddy of mine lives in texas and is a born and bred texan. he thinks aa won't file for bankruptcy...ever. his thoughts, it's to big and there is just too much money in texas for it to fail.

after i cleaned off my phone from the rhum and coke i spit on his text when i read this...i just had to keep laughing. of course his bro is an east puke and they both think the east got screwed. their logic, "well the america west ceo said if they didn't merge they'd file for bankruptcy."

us piolots are such a sharp groop.

 

[Whataburger]

It's "Texas," not "texas."

 

[Flyby1206]

They won't go BK? Period? UAL, DAL, CAL didn't go BK? Do you understand that BK is a management/wall street decision? LMFAO, dummy....

LOL yea I am sure Wall Street was thrilled when UAL/DAL/NWA/US went BK in the past and wiped out their equity value. Bond holders received pennies on the dollar for their investments too.

Wall Street is where the money comes from that props up the airlines when they should be left to fail.

It IS a management decision, and barring another 9/11-type scenario we wont see AMR go BK in the next 5 years. The BK rules have changed, and gone are the days of a quick trip through BK to slash and burn costs/labor contracts/vendor contracts/etc.

 

[CaptWidgeon]

It's "Texas," not "texas."

texas
texas
texas
texasimp:

 

[jonjuan]

LOL yea I am sure Wall Street was thrilled when UAL/DAL/NWA/US went BK in the past and wiped out their equity value. Bond holders received pennies on the dollar for their investments too.

Wall Street is where the money comes from that props up the airlines when they should be left to fail.

It IS a management decision, and barring another 9/11-type scenario we wont see AMR go BK in the next 5 years. The BK rules have changed, and gone are the days of a quick trip through BK to slash and burn costs/labor contracts/vendor contracts/etc.

I agree that BK laws have changed to make it tougher, however, in these unprecedented economic times, the government will have very little political leverage to keep a large employer from trying to restructure, especially if they can make the case that jobs will be saved. AMR needs to reduce costs and would love to get their hands on the pension obligations. They are about to lose the high yielding NY market as well as face pressure from much healthier competitors.

 

[satpak77]

it would sure suck if AA needed to replace XXXX number of warm bodies because of age 65 mandatory's and did not have the money to hire/train the new bodies.

 

[CitationLover]

They wont go BK. Period.

Everyone likes to talk about financials like they make any difference in the survival of an airline. They dont. Airline investing is irrational and goes against all common sense.

Now you sound like Tim Giethner. "We won't get downgraded!"

Accounting gimics don't last too long. If you think there is too much money in Texas for AMR to fail, please google "Enron". The key to AMR's future is how interest rate movements affect their debt payments and their cash flows. A good idea will be to see what happens tomorrow to the bond market. Hopefully a lot of this downgrade nonsense is baked into the markets already and they barely move......