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Discussion in 'General Discussion | Travel' started by UA191, Dec 14, 2011.
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Pretty nice home for senior executives...
Link isn't working. Hoping this is a stop on the Do.
The link didn't work for me either.
I read the bankruptcy filing...they own very little real estate (most is leased)...but one owned property was the London residence. I looked up the address...pretty nice.
I've taken the liberty of replacing the broken link with a working one. Enjoy!
The outrage by the union makes me a little nauseous. Selling this townhouse for $20MM is going to solve the billions of dollars in losses.
Thanks, David. Sorry bout' that guys...
It's still an example of AA not doing everything necessary to keep company alive.
How exactly does selling the townhouse help them trim labor and fuel costs? The profit from this sale, once repatriated, probably doesn't cover one day of extra labor and fuel costs.
Maybe they should round up all the extra pencils? They could probably take the extra planes in the desert and recycle them into aluminum foil so they can save some money covering the entrees in FC.
It's an opportunity for someone to wag their finger at AA and lecture them on how to operate their business...just like when Congress grilled the CEO's of GM, Ford, and Chrysler, and asked who flew commercial and who flew on a private jet.
A great examination would be the operating cost of the townhome on an annual basis vs the cost of execs staying in hotels. If it costs more to stay in a hotel, then simply send an email to the unions and say, "Hey there! How about we sell this townhome in London, put our employees up in hotels, and pay even more!" And of course, also post said information on facebook...
Are you misinterpreting what I wrote on purpose just to get a kick out of it? By your logic, AA should do nothing at all, as there's likely no single action in itself that will pull the company out of its hole. The point is that if a cost benefit can be realized, they should've done it already, this is just one of many. It is possible that it makes sense to have this mansion instead of housing upper management in the expensive hotels, but that certainly wasn't presented that way by the company. Instead they went with the "it was cheaper when we bought it" angle. And may be the upper management should tighten the belt too and lower expectations for the accommodations they get to enjoy in London.
Yeah, trimming labor costs is extremely important, it doesn't all of a sudden make any other cost savings irrelevant.
How do you expect to have your point be taken seriously writing nonsense like that?
I think you're misinterpreting my logic. If AA had hundreds (or maybe even dozens) of these townhomes, and each could be sold for a large profit, and that sum of cash was significant, then I would advocate selling them. But, AA has over $4B in the bank, IIRC.
You could also make an argument to sell it if the cost to maintain the house were exorbitant compared to housing executives in high-end hotels. I tend to think it's probably cheaper to maintain the house as long as the utilization is there, but I think it's fair for the purpose of this argument that the money saved (or overspent) from this exercise is probably meaningless in the grand scheme of AA's expenses. By all means, let me know if you disagree on the ACTUAL dollars, not the concept, being small.
Selling the townhome, in and of itself, may NOT be a cost savings. It may generate some very short-term cashflow. But, repatriating profits from overseas also has tax consequences. So, I would disagree with your statement that selling is a cost savings. Additionally, it's a pretty bad real estate market. Just my opinion, but what AA paid for it is somewhat irrelevant in the discussion as to whether selling is the right option. I see two valid reasons to sell:
1. The profit derived from the sale will have a meaningful impact on their sustainability by increasing their cash reserves in a meaningful way. I think we can both agree that's not the case here.
2. The expenses to maintain the house are drastically higher than the expense to provide executives accommodations they were promised. I don't believe the amount is statistically speaking in either direction.
If AA does not need the extra cash (which it clearly doesn't at this point), then the prudent decision may actually be to keep it. And, if AA has enough cash to continue operating for some time (which it does), then I think any bankruptcy plan filed would have to give consideration to the fact that the real estate may be worth more a year or two from now when the market is better and the cash might actually be needed.
My point about turning airplanes into tinfoil is that AA is more likely to get a more significant return on investment for those airplanes in the desert by selling them to another airline rather than turning them into tinfoil. So, by waiting, they increase the chances of getting more money for creditors. But, turning them into tinfoil is still an option. Just not the best one. A drastic example, but the same premise as selling undervalued real estate to say you sold everything you could to raise money.
How many olives could AA have kept on First class salads if they had sold this property earlier?