In addition to not having financing, The company does not have sufficient passengers. So AA Threatens to Cancel Some Orders.
American executives told their Boeing counterparts in recent weeks they didn’t have sufficient financing for some of their MAX orders and would have to cancel them unless Boeing helped secure funding for the jets, the people familiar with the matter said.
Airlines and plane makers often posture during such negotiations, but the American-Boeing friction marks a twist in the 737 MAX saga. It was American whose push for a new fuel-efficient jet in 2011 helped spur Boeing to develop the MAX, an updated version of its decades-old 737 workhorse, rather than a new single-aisle aircraft.
For Boeing, losing American Airlines ’ 737 MAX orders would add to the Chicago aerospace giant’s worsening financial woes. After a loss of $636 million last year, it has announced plans to sharply reduce production and shed 10% of its 160,000-employee workforce.
In June, Norwegian Air Shuttle AS A became the latest airline to walk away from the 737 MAX, saying it was canceling its orders for 92 of the jets. That followed 313 earlier cancellations by other customers this year.
United Warns It May Cut 36,000 Employees
On July 8, I noted United Warns It May Cut 36,000 Employees
On June 30, the New York Times reported Airbus, Expecting Long Slump in Air Travel, Will Slash 15,000 Jobs.
Airbus CEO, Guillaume Faury, said he didn’t expect air travel to return to pre-virus levels before 2023 and potentially not until 2025.
Cascading Stress
Layoffs in the airlines leads to layoffs at the plane makers. Airlines in stress puts further stress on Boeing and Airbus.
A Surge in Small Business Bankruptcies is Underway
Nearly everywhere you look there is cascading stress. A Surge in Small Business Bankruptcies is Underway
We can debate what the Next Stimulus Will Look Like, but many of these jobs are not coming back, ever.
Mish
Maybe the FED can buy Boeing’s airplanes, but that would bring instant howls that the FED should buy cars, dinners, and maybe hotel rooms. A form of sanctioned corruption. Unfortunately the howls should be the FED has broken its charter and needs to be disbanded.
This is sad but what’s amazing is the number of people who are getting on planes. I know someone who had a moderate case of the virus and did not get another test showing a negative result and then got on two planes within days. There are no controls. Sick people are not quarantined. United and American are selling middle seats. It’s no wonder the virus is raging. I do support bailouts for airlines. We should save key transportation industries from ruin.
Sardy field (KASE) is back in business, as is Eagle County (KEGE). I imagine Centennial is seeing more flights/day than Denver International. Meanwhile, there are still only three scheduled commercial flights per day into Aspen.
Asking out of ignorance, but can’t any and every airline with Boeing or Airbus jets on order simply declare ‘force majeure’ and legally bail out on any future commitments to purchase? Considering the circumstances, this sounds legit.
Can someone help with this idea?
In Utah safely – Last leg took way longer than expected.
Got here at 10:00 PM Sunday evening but just now able to comment.
Will not have movers until tomorrow to unload the Uhaul so in a hotel for at least Sunday night and perhaps Monday too.
Have a post scheduled for early Monday.
I missed the other thread so congrats on the move and arriving safely.
If you can handle the summer heat of southern Utah, you’re made of stern stuff. I spent 14 years in Colorado and never quite got used to the dry heat, but the sunny winter days are nice. Hope you guys enjoy it there!
Happy to hear that you arrived safely Mish
Congrats on the successful move. A new adventure awaits!
You will need a humidifier in the Winter.
It’s done, at long last. Congratulations. Take it easy, avoid stress.
I’d use a sleeping bag / padding on the floor.
There is financial stress in every industry after coronavirus.
I personally am looking forward to the days of more leg room and wider seats, less people on planes…
Just hide my VISA bill from me after I book.
Gasoline and oil prices would have crashed if not for traders gaming the prices. Low prices for airfares will never be seen.
This is why we have bankruptcy laws. Let American file for bankruptcy and let the shareholders / bond holders feel some pain. We don’t need another taxpayer bailout. Airline industry is cooked for the foreseeable future.
How many times has American already filed for bankruptcy?
All these airlines are serial bankruptcy filers.
The entire industry has never made a dime since its inception.
But this is how they “fly”.
Back door nationalization.
Socialist air travel.
The Amtrak model.
Boeing is part of the MIC. Bailing out AA and getting them to buy those planes helps Boeing. Ergo…
I wish someone would stop and ask why airlines are so important? The planes will still exist and the skilled personal can be rehired by the next company.
We really are at the end of this credit cycle. When the most unproductive and mismanaged companies can’t be allowed to fail it’s just and endless loop of money creation.
Initial response by the bozos were that the airlines needed the support to keep people employed. Would have been better to let everyone take their medicine and start new sooner rather than later.
Yes, you are right.
This is socialism. Protect workers at all costs.
In capitalism let them bankrupt. Only strong, efficient and profitable will survive and come out stronger after crisis.
Economy would have crashed even if the government did not shut down non essential business. The increased number of fatalities that would have resulted combined with the fact that this Covid virus is highly contagious would have been enough to convince consumers not to fly, cruise, vacation, dine out, attend concerts and sporting events etc.
I have said that from the start. The outcome is the same either way. The difference is the time to destination.
And now consumers are paying off debt. The nerve of some people.
“Nearly everywhere you look there is cascading stress.”
Governments shutting down economies, will cause that.
Airline Industries Laid Off Workers, Then Got Money Meant to Prevent Layoffs link to truthout.org
Oops I dropped the soap. Taxpayer please pick that up for me.
Well, it wouldn’t be America, if it wasn’t a kleptocratic shithole ran solely for the benefit of the most useless of the useless, now would it?
No problem. Dave Portnoy and his army of monkeys will trade AA to the very end. If they could do it with Hertz, they sure could do the same s*** here.
Looks like your answering the question in the “What Will the Next Covid Stimulus Bill Look Like?” post:
It will include debasing and taxing the productive, in order to ensure idle “bondholders”, “pensioners”, “investors”, stockholders”, “banks”, “funds” and other waste, won’t have to take a market loss on their “investment” in AA and Boeing. Nor any other useless zombie.
After all, it’s America. Land of Useless Leeches feeding off competent productives…
This is where we disagree. “Productive” is in the eyes of the beholder. I would argue that Facebook, Google, Twitter, etc should be taxed to the maximum. I mean what productive stuff are they selling? Same with hedge funds, private equity, etc. All that stuff about making capital more efficient is bullshit. The FIRE sector makes the government look like Mary Sue.
There is an absolutely enormous difference between Google, which revolutionized/still does… how the world finds information, and some illiterate yahoo picking random stocks and numbers while The Fed is robbing others in order to fund providing him with the only “edge” the dimbulb will ever have. The two have, literally, nothing in common whatsoever.
That being said, most of the money Brin and Page has made off of Google, is on account of the exact same asset pumping. Neither of them would need a Fed robbing others to be very rich, since they are actually useful beings and all; but the same process which is facilitating The Fed handing the fruits of others’ labor to idle, connected nothings living off of simple welfare mediated by “asset appreciation”; is also how most of Brins and Pages fortune came about. At least in nominal terms.
Taxing productive activities, result in less productive activities being undertaken. In what kind of alternaverse, aside from Kacynski’s I suppose, is reducing productive activity somehow a good thing?
OTOH, taxing idly hogging resources which others could make productive use of, increases productivity. If you absolutely need to fund a government, that’s how you go about doing it. At least unless the whole purpose of it all, as in current day America, is simply to rob productive people for the benefit of connected welfare recipients who produce nothing. By specifically transferring “ownership” and control of all resources, from those competent enough to produce them, to idle nothings too dumb to produce anything with them.
I read a very interesting article years ago about how democracy would get around this rent seeking problem.
The only viable options were expanding federal government elections 100 fold. So 10,000 senators, 50k house. The idea was a senator may cost you 2 million or so and for 102 million you can control that branch(it’s far less in really). So it’s not viable with more officials.
Lottery for some percentage of elected officials with special power. They might be able to declassify and investigate things like a special counsel.
Term limits of course. And the opposite of permanent officials with a no wealth clause.
Our path is just more of the same just like EVERY single government in history. Take from the productive and give to the connected and inflate away any existing wealth owned by the poor with economic shocks mixed in to buy cheap assets in the deflationary side of the shock.
Rinse and repeat.
Per the founders, the ratio to represented to representatives, should not exceed 30,000 to 33,000. Of course, those guys at least made some effort to facilitate freedom for people. instead of, 100% full stop, simply facilitate using the government as a vehicle for robbing productive people for the benefit of deadweight leeches, as is the current obsession.