The reality is simple. Today, more than ever, we live in a world of branding and a well known household brand is worth more than anything. Anybody can talk about balance sheets, cash-flow statements and all of the other quantitative components of "how a business should be analyzed". But what may fail to realize that most rules are design to fit most of the businesses but not all of the businesses. So all of those here trying to "parrot" what they were taught in "business school" are flawed right at the base. You have businesses and then you have American Airlines, Coca Cola, Mc Donalds, etc. Those brands are so strong that even in their grave they are worth more than 1000 businesses alive. Get my point? Good!!- Because now I am going to start lecturing those "know it alls" trying to scare off some of the young investors here. Have you ever heard about "strategy"? I hope you have because that is exactly what AMR is doing: Strategizing to get rid of all of all of these unions demands. Think about it. If the union contracts or talks would have been productive do you think AA would ve filed? Of course not. But the pesky union knowing how much the avoidance of BK was a pride of its CEO abused from its power. In finance you have "default" and "strategic default". AA is the later one. The stock will recover and the intention of AA's BK was not to get rid of "equity" but rather the inflexibility of the union and some other contracts. At the end of the day, the union will loose and the shareholders will gain as they will see the stock rise to much higher levels as a more lean company. Now next time before I lecture you make sure you bring the apples. Class dismissed!!
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