To me, being from Europe, it doesn't make any sense that a company with 4.6 billion USD in the bank, who've just made the largest order in history, can file for bankruptcy protection and it almost reeks of some form of 'dirty' business.
Europe or not, AA's money in the bank or orders outstanding makes little difference to their bankruptcy and there's hardly anything 'dirty' about it.
AA's cash of about $4B (this is often misquoted by the media -- they actually only have $300M in cash, the rest of that "$4B" is actually in short-term securities), though seemingly a lot of money, is chump change for a company like AA. They pay out more cash than that every 30 days on day-to-day bills.
To give you an idea of how bad a shape the company was in -- they had $4B in cash, they own
hundreds of planes and billions of dollars worth of facilities totalling over $15B, but up until Tuesday you could have bought the entire company for a mere $0.5B -- just $500M in cash. That was the total value of 100% of its shares on the market. Why? Because it's debt was STAGGERING (over $30B) and its potential to make profits in the future was virtually nil, what with the costs it was bearing.
So how does a company like that manage to place such a big aircraft order? Well, first and foremost, the planes haven't even been bought yet. It's only PLANS for purchases that have been talked about. The terms of the agreements haven't even been cemented yet. And secondly, creditors buy planes, not the airlines. American hasn't, and wouldn't, put up a dime of its own money. It will borrow every penny of it. Being in bankruptcy actually makes it easier to get favorable terms from creditors than they would have gotten before when creditors were worried about going into bankruptcy where the status of their getting paid would have been in jeopardy.
Had they not made that order, Airbus wouldn't give a flipping toss about AA going bankrupt, but now, with this order in place, Airbus might step up and support the bankruptcy protection. If something like this would have happened in Russia or something I would understand and accept it, but in America, I think somebody should at least do some research into it.
Don't see what 'research' there is to do. Your guess is probably a very valid one and I'm sure it played a small role in the decision to place the order for a couple reasons. There's nothing illegal, immoral, or even unethical about getting your big and influential suppliers to support your efforts to get out of bankruptcy. Regardless, one does not "support" bankruptcy. You get it. Every single person or company in the US has the rights to do it. You don't need companies to campaign for government support or anything like that. So whether or not Boeing or Airbus or anyone "supported" it, is really fairly moot.
Any other company in another part of the world would have gone bankrupt and ceased to excist but somehow the American carriers won't.
Oh hardly. How many times in the past couple decades have governments all over the world stepped up to bail out, loan, re-organize, or even full-on nationalize (or simply remain nationalized) their air carriers? The protection of ones air carriers is an
EXTREMELY common event
worldwide. And this isn't even a government-supported activity at this point, it's simply the way things work in Chapter 11 bankruptcy protection in the US for ALL businesses -- a protection that exists in somewhat similar forms throughout much of the Western world.
I do things for AA and work my ass off for them. In return they pay me. I make costs for AA but as I'm smart, they pay me more than the costs I make. AA keeps spending money and at some point they cannot pay me anymore. In the meanwhile I'm still making costs for them. They are a big company so I'm guessing they can file for Chapter 11, me being a small company, I can say goodbye to my money, because AA (in my point deliberately) kept spending money they didn't have.
For one, the guys who make the stuff for AA, provide the food, the gas, whatever -- 99%, maybe even 100%, of them will get their money. Business as usual on a day-to-day basis will continue and AA will continue to pay their normal operating bills. That's why you declare Chapter 11 before you are completely out of cash, so that you can continue to pay your suppliers while the courts rule on reorganization. If AA was dead and completely broke it would be declaring Chapter 7 and go into immediate liquidation.
The guys who get screwed are the ones who lend money to AA -- the ones who continued to loan AA money even when they were $30B in debt and not making profits for the better part of a decade. They loaned money to AA
knowing there was a risk, a substantial risk, to their getting paid back. And they charged an interest rate to AA accordingly. And that's why companies in bad shape continue to remain in bad shape -- their interest rate just grows and grows and they're paying huge amounts of interest on the debt that they have that they can't get out of it. That's the entire reason Chapter 11 exists. It's basically a big giant reset button that stops the endless cycle of continuously-growing debt that a company can find itself in.
But even those people aren't likely to get completely screwed. They'll get most, if not all, of their money back. They're just not likely to get the interest on it that they were planning on because the Courts will rule that they need to restructure their debt and they'll get a lower interest rate on it. Bondholders are usually the most screwed -- they have no material interest in the company (i.e. they don't own a leveraged asset like a bank lending AA money backed by a plane), they aren't part of AA's day-to-day cash operations, and they lent the money (usually very long-term) on the basis of making decent interest. When that interest is slashed the bonds become money losers.
And it's very important to note that the Creditors have to AGREE that that is the plan they want. Chapter 11 is not necessarily a "get out of jail free" card and the creditors just all get screwed and don't get a dime. The company poses reorganization plans or even creditors propose plans and then the creditors all get to vote on the plan that they want. Since it is a vote inevitably there may be some people that end up not getting much out of the deal since those who are owed the most money get the most say, but most creditors come out just fine in a bankruptcy provided the company actually turns things around and "comes out" of bankrupcty in good shape. This is a FAR better alternative than not getting a dime. In this manner, most creditors are actually HAPPY to see a company in trouble go into bankruptcy because it's far more likely to pay its bills.
