American Airlines ! AAL ! AA

American Airlines has moved to quash speculation that a dramatic fall in its stock price on 3 October is a precursor to a Chapter 11 reorganisation.

American and its parent AMR have repeatedly prided themselves over the fact the carrier has never filed for Chapter 11, especially during the 2000-2010 timeframe when every other US major entered a formal restructuring.

The result is American has battled consistently higher labour costs than its peers and is currently in negotiations with a large number of employee groups to achieve more cost effective collective bargaining agreements.

Shares of American Airlines on the New York Stock Exchange closed at $1.98 on 3 October, roughly 33% below the 30 September close of $2.96. The precipitous decline triggered a freeze in trading of the company's shares. But American issued a statement explaining the pause in trading was due to automatic triggers established by the exchange that pause trading based on share price volatility.

American's chronic financial under-performance compared with its US legacy peers has bolstered speculation during the last few months that the carrier would enter bankruptcy protection, and the plummeting share price has intensified that sentiment.

However, American on 3 October specifically stated: "That is certainly not our goal or our preference. We know we need to improve our results, and we are keenly focused as we work to achieve that."

American is also facing higher than expected rates of pilot retirements this autumn, and has sought relief from the Allied Pilots Association on staffing stipulations in the current contract.

Wall Street has been scrutinising American's under-performance relative to its peers for quite some time. Weeks ago analysts at CRT highlighted American's unit revenue growth lagged behind the industry in every region during the second quarter, noting that American's domestic unit revenues grew by 4.9% compared with 8.9% for the industry.

While American's stock decline on 3 October was dramatic, the carrier's share price has been on an overall decline since it announced a record order with Airbus and Boeing on 20 July. From that time to mid-August its share price fell roughly 25%.

American while acknowledging its structural problems, has also asked for patience from the financial community as it institutes long-term strategic moves designed to reverse its fortunes including its "cornerstone" strategy to focus the majority of its flying in Dallas, Chicago, New York, Miami and Los Angeles as well as its new joint venture agreements with its Oneworld partners over the Atlantic and Pacific.

American has roughly $1.3 billion in debut maturities due in 2011, and recently the carrier launched a $726 million enhanced equipment trust certificate (EETC) to offset some of that debt.

American Airlines plans to retire up to 11 Boeing 757s from its fleet during 2012.

The carrier revealed those fleet adjustments in a announcement detailing a 3% capacity cut year-over-year for the fourth quarter of this year.

"While our advance bookings are generally in line with last year, we are taking these additional steps in light of the uncertain economic environment, ongoing high fuel costs and to ensure we run a reliable schedule for our customers given additional pilot retirements we anticipate throughout the fourth quarter," said Virasb Vahidi, American's Chief Commercial Officer.

The carrier is experiencing a higher than normal level of pilot retirements due to a pension provision in the pilot collective bargaining agreement that allows a 60-day look back period of the carrier's stock to secure a pension unit value in place at the beginning of that window. That particular contract element covers pilots 60 and over. American's stock has been on a steady decline the last couple of months, and fell more than 30% on 3 October.

Factoring in the latest reductions American stated its full year 2011 capacity should grow by 0.4%, with mainline consolidated capacity increasing 1.2%.

"This represents an approximate 3 percent reduction in the company's capacity expectations versus American's initial guidance provided in January 2011," said the carrier.

The latest capacity cuts will modestly increase American's 2011 unit costs compared with guidance provided by the carrier on 21 September.

American also stated high jet fuel prices will result in a $29 million non-cash fuel hedging charge recorded in its fuel expenses for the third quarter, and a strengthening in the US dollar will drive a $22 million incremental charge resulting from foreign exchange volatility.

Dallas-based American recently moved to quell concerns that a Chapter 11 filing by the carrier was imminent, stating it was not the carrier's goal or preference.

American Airlines (AA) parent AMR Corp. did little to mitigate concerns about its financial health when it reported a third-quarter net loss of $162 million Wednesday. The result was reversed from net income of $143 million earned in the year-ago period and marked the company's fourth straight negative reporting period following the rare profit in last year's third quarter.

Chairman and CEO Gerard Arpey noted that AA's quarterly fuel costs soared 30% year-over-year and told reporters and analysts that "it's no secret that the court restructuring process used by our competitors [in the previous decade] … has intensified our competitive challenge." AA has long asserted that labor cost savings achieved by other major US airlines via Chapter 11 bankruptcy restructuring (avoided by AA) have left it at a serious disadvantage (ATW Daily News, Oct. 5).

Arpey maintained that AA has "put in place building blocks which … build a strong foundation for future success." But, he added, the Dallas-based company must tackle a key remaining "structural" impediment: the lack of "next-generation labor contracts … more in line with the competitive market realities." He said, "In many respects, what we're talking about … are transformational kinds of [collective bargaining] agreements … It has become our number one priority."

To that end, airline management has in recent weeks engaged in "very focused and intensive dialogue" with the Allied Pilots Assn. representing AA flight deck crew, according to Arpey. "Those efforts continue," he said.

AMR generated $6.38 billion in revenue in the third quarter, up 9.1% year-over-year, while costs lifted 15.2% to $6.34 billion. Operating profit was $39 million, down 88.5%. CFO Bella Goren said AA feels "reasonably well about the revenue environment heading into the winter."

But the carrier, which already has lowered fourth-quarter capacity (ATW Daily News, Oct. 12), is "planning for flat to down capacity next year," she added. Third-quarter mainline traffic rose just 1% to 33.9 billion RPMs on flat capacity of 39.94 billion ASMs, producing a load factor of 84.9%, up 0.9 point. Passenger yield heightened 7% to 14.21 cents.

The first phase of American Airlines’ narrowbody renewal program is starting to take shape with confirmation that the airline plans to lease 130 Airbus A319s and A321s, starting in 2013.

Few concrete details are being offered by the carrier, and it still is unclear how many of each type American intends to add to its fleet. In addition, questions remain about the 100 Boeing 737NGs also discussed during American’s big fleet announcement in July, although the comments from American indicate that the Boeing leases could include more than one variant.

American’s public statements reinforce the financial as well as operational benefits of adding both the A319 and A321, even though the aircraft will be powered by different, newly upgraded engines not fitted to any aircraft of the current fleet. The conclusion, though, is that the financing packages, and associated maintenance contracts, arranged through Airbus really are as attractive as American indicated back in July.

The airline also indicated that the leases announced Monday are for 10 years, which will allow American to return the aircraft before significant maintenance costs are incurred. This is another incentive to trial new aircraft and engine types before the larger, more expensive Airbus NEO and Boeing MAX aircraft arrive in 2017.

The A321s are a replacement for at least some of the 124 Boeing 757-200s American operated at the end of the third quarter. The European narrowbodies, and possibly the 737-900ER, also will replace transcontinental Boeing 767-200ER services, but with only 15 of those in the fleet, the loss of domestic widebody services will be minimal.

American’s A319 plans are a little more interesting, as there is no simple, one-for-one swap with the 211, 140-seat MD-80s currently operated by the U.S. legacy. Indeed, under the new offer to its pilots, American has plans for a new “SNB” or small narrowbody operation whose pilots will have different pay rates and work rules than other mainline crews. Without further details or a ratified pilot agreement, though, it is unclear how the A319 will be integrated into American’s fleet.

American also confirmed plans to add 15 more Boeing 777s to its fleet. Under current delivery plans, this includes two -300ERs in 2012, seven more in 2013, and two -200ERs each year from 2014 to 2016.

FORT WORTH, Texas , Nov. 29, 2011 /PRNewswire/ -- AMR Corporation ("the Company"), the parent company of American Airlines, Inc. ("American") and AMR Eagle Holding Corporation ("American Eagle"), announced that in order to achieve a cost and debt structure that is industry competitive and thereby assure its long-term viability and ability to continue delivering a world-class travel experience for its customers, the Company and certain of its U.S.-based subsidiaries (including American and American Eagle), today filed voluntary petitions for Chapter 11 reorganization in the U.S. Bankruptcy Court for the Southern District of New York .

AMR's Board of Directors determined that a Chapter 11 reorganization is in the best interest of the Company and its stakeholders. Just as with the Company's major airline competitors in recent years, the Chapter 11 process enables American Airlines and American Eagle to continue conducting normal business operations while they restructure their debt, costs and other obligations.

American Airlines and American Eagle are operating normal flight schedules today, and their reservations, customer service, AAdvantage® program, Admirals Clubs and all other operations are conducting business as usual. Likewise, throughout the Chapter 11 process, American and American Eagle expect to continue to:

Provide safe and reliable service;
Fly normal schedules;
Honor tickets and reservations, and make exchanges and refunds as usual;
Fully maintain AAdvantage frequent flyer and other customer service programs, and ensure all AAdvantage miles and elites status earned by members remain secure and intact;
Provide Admirals Club access and similar amenities to members and eligible customers;
Remain an integral member of the oneworld® alliance, of which American is a founding member, and continue its codeshare partnerships;
Provide employee wages, healthcare coverage, vacation, and other benefits, without interruption; and
Pay suppliers for goods and services received during the reorganization process.

These filings have no direct legal impact on American's operations outside the United States .

Thomas W. Horton , Chairman, Chief Executive Officer and President of AMR and American Airlines, said, "This was a difficult decision, but it is the necessary and right path for us to take - and take now - to become a more efficient, financially stronger, and competitive airline.

"We have met our challenges head on, taking all possible action to secure our long-term position. In recent years, even as the airline industry faced unprecedented challenges, American strengthened our domestic and global network; fortified our alliances with the best partners around the world; launched a transformational fleet deal that will give American the youngest and most efficient fleet in the industry; and invested in our product, service and technology to build a world class customer experience.

"But as we have made clear with increasing urgency in recent weeks, we must address our cost structure, including labor costs, to enable us to capitalize on these foundational strengths and secure our future. Our very substantial cost disadvantage compared to our larger competitors, all of which restructured their costs and debt through Chapter 11, has become increasingly untenable given the accelerating impact of global economic uncertainty and resulting revenue instability, volatile and rising fuel prices, and intensifying competitive challenges.

"Our Board decided that it was necessary to take this step now to restore the Company's profitability, operating flexibility, and financial strength. We are committed to working as quickly and efficiently as possible to appropriately restructure American so that it can emerge from Chapter 11 well-positioned to assure the Company's long term viability and its ability to compete effectively in the marketplace," Horton stated.

Horton continued, "Throughout the restructuring process, as always, our customers remain our top priority and they can continue to depend on us for the safe, reliable travel and high quality service they know and expect from us. We intend to maintain a strong presence in domestic and international markets, including our cornerstones in Dallas/Fort Worth , Chicago , New York , Miami and Los Angeles . As we and all airlines routinely do, we will continue to evaluate our operations and service, assuring that our network is as efficient and productive as possible.

"Achieving the competitive cost structure we need remains a key imperative in this process and, as one part of that, we plan to initiate further negotiations with all of our unions to reduce our labor costs to competitive levels."

"American Airlines has a strong, proud history and we will have a successful future. Working through this difficult, but necessary action and process, I am confident we will succeed in enhancing our reputation as a global leader known for excellence and innovation, a travel partner customers seek out, and a carrier that serves communities throughout the world," Horton concluded.

The Company has approximately $4.1 billion in unrestricted cash and short-term investments. This cash, as well as cash generated from operations, is anticipated to be more than sufficient to assure that its vendors, suppliers and other business partners will be paid timely and in full for goods and services provided during the Chapter 11 process in accordance with customary terms. Because of the Company's current cash position, the need for debtor-in-possession financing is neither considered necessary nor anticipated.

American is filing motions today with the Court seeking interim relief that will ensure the Company's continued ability to conduct normal operations, including the ability to:

Provide employee wages, healthcare coverage, vacation, and other benefits without interruption;
Honor pre-petition obligations to customers and continue customer programs including American's AAdvantage frequent flyer program;
Pay for fuel under existing fuel supply contracts, and honor existing fuel supply, distribution and storage agreements; and
Assume and honor contracts relating to interline agreements with other airlines.

As announced separately today, the Board of Directors of AMR Corporation appointed Horton Chairman and Chief Executive Officer of the Company, succeeding Gerard Arpey , who informed the Board of his decision to retire. Horton will also succeed Arpey as Chairman and Chief Executive Officer of American Airlines and will retain the title of President.

AMR's lead counsel is Weil, Gotshal & Manges LLP and its financial advisor is Rothschild, Inc.

More information about American Airlines Chapter 11 filing is available on the Internet at AA.com/restructuring. Information for suppliers and vendors is available at (866) 736-9011 or (703) 286-2757 , or by sending an email to amr.supplier@aa.com.

AMR will be filing monthly operating reports with the Bankruptcy Court and also plans to post these monthly operating reports on the Investor Relations section of AA.com. The company will continue to file quarterly and annual reports with the Securities and Exchange Commission, which will also be available in the Investor Relations section of AA.com.

Les grandes manoeuvres s'organisent pour tenter de mettre la main sur le transporteur en faillite American Airlines: Delta Airlines, deuxième compagnie mondiale, sa concurrente US Airways et la société d'investissement TPG Capital sont intéressées.

Delta Airlines a fait appel à la firme de conseil et d'investissement Blackstone pour la conseiller sur une offre qu'elle envisage de faire, a indiqué à l'AFP une source proche du dossier.

AMR, la maison mère d'American Airlines, a déposé le bilan le 29 novembre. Elle avait alors assuré pouvoir poursuivre ses activités grâce à une trésorerie disponible garnie de 4 milliards de dollars.
Delta, qui avait fait une première fois faillite en 2005, était devenue brièvement la plus grosse compagnie de la planète après avoir fait l'acquisition de Northwest Airlines en 2008.

Le Wall Street Journal affirme par ailleurs que la sixième compagnie américaine, US Airways, est également intéressée, tout comme le fonds d'investissement TPG Capital.

Contactés par l'AFP, des porte-parole de Delta Airlines et Blackstone se sont refusés à tout commentaire. Des porte-parole d'American Airlines et TGP n'ont pas pu être joints.

Deuxième plus grosse compagnie aérienne du monde, derrière l'alliance formée par United et Continental, Delta a réalisé une étude sur les risques qu'une telle fusion avec American contrevienne aux lois anti-monopole, et conclu qu'il lui suffirait de "quelques concessions" pour convaincre les autorités.

Une fusion des deuxième et troisième transporteurs aériens américains ne devrait cependant pas être facile à faire accepter par la division antitrust du département de la Justice.

Elle vient de faire échouer le projet de rachat de T-Mobile USA, quatrième opérateur de téléphonie Mobile du pays, par le numéro deux du secteur ATT Wireless.

Un mariage avec US Airways, sixième compagnie du pays qui s'est déjà restructurée en déposant deux fois le bilan en 2002 et 2004, serait plus facile à faire accepter.

En outre, selon lui, AMR a déposé le bilan pour pouvoir tailler dans les coûts des retraites de ses employés et pour alléger sa dette, non pour restructurer ses opérations proprement dites.

AMR disposant d'assez de liquidités pour continuer à fonctionner normalement pendant sa faillite, c'est elle qui mène sa restructuration et non ses créanciers. Elle dispose de 18 mois pour faire approuver un plan de sortie de faillite à un juge.

Un comité de créanciers, qui comprend notamment les syndicats du groupe en raison de la question des fonds de retraites ou encore le constructeur aéronautique Boeing, a également voix au chapitre.

La prochaine audition au tribunal des faillites de New York aura lieu le 27 janvier.