Leon Cooperman: “The notion that American Airlines has an enterprise value today higher than pre-Covid because of the debt they’ve issued…doesn’t make any sense,”, CNBC



https://www.cnbc.com/2020/06/15/leon-cooperman-says-speculation-by-robinhood-traders-in-stocks-like-airlines-will-end-in-tears.html


– Out of all the major U.S. airlines, $AAL was the least profitable and most indebted going into 2020.

– Back in April, management estimated that they would burn through $70 million in cash per day

– $9.8 billion in debt maturing between 2021 and 2023, including $1.9 billion in expected mandatory pension contributions.

– $34.1 billion in debt and lease obligations by the end of the 1st quarter.

-2022 unsecured debt currently trading at around 60 cents on the dollar after previously falling to around 35 cents on the dollar only a few weeks ago.

Source: Adam Levine-Weinberg CFA, Seekingalpha

On Thursday, June.11th, AAL spiked 41%, setting an intraday record.

(The International Air Transport Association)
“Debt Levels: Airlines entered 2020 in relatively good financial shape. After a decade of profits, debt levels were relatively low ($430 billion, roughly half annual revenues). Vital financial relief measures by governments have kept airlines from going bankrupt but have ballooned debt by $120 billion to $550 billion which is about 92% of expected revenues in 2021. Further relief measures should be focused on helping airlines to generate more working capital and stimulating demand rather than further expanding debt.”
archive



5 thoughts on “Leon Cooperman: “The notion that American Airlines has an enterprise value today higher than pre-Covid because of the debt they’ve issued…doesn’t make any sense,”, CNBC

Leave a Reply

%d bloggers like this: