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Impairment of EMJ-135 aircraft
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The AEPA has no desire to dampen your good cheer as you herald the New Year but it may be worth your while to ask the Chief Pilot, or your union, what AMR management meant by the following statement included in the AMR 8-K Filing with the U.S. Securities and Exchange Commission of December 16, 2009
An 8-K Filing is a report of unscheduled material events or corporate changes.
("unscheduled material events" - read as "changes not previously disclosed to investors")
Management begins its disclosure with:
AMR Corporation is filing herewith its Eagle Eye communication to investors
and under Notes is the following statement.
2/ The Company expects to have special items of approximately $170 million in the fourth quarter related to the impairment of certain route and slot authorities in South America and certain ERJ-135 aircraft as well as charges associated with the retirement of the A300 fleet. Consequently, the company expects special items to total approximately $350 million for the full year 20009
Ten (10) months earlier, in its 10-K Filing (annual report which provides a comprehensive overview of the company for the past year) of February 19, 2009 with the U.S. Securities and Exchange Commission, management made the following statements;
The second quarter 2008 results include an impairment charge of $1.1 billion to write the McDonnell Douglas MD-80 and Embraer RJ-135 fleets and certain related long-lived assets down to their estimated fair values, and a $55 million accrual for employee severance costs.
and
In the second quarter of 2008, in connection with the May 21, 2008 announcement regarding capacity reductions and related matters, the Company concluded a triggering event had occurred and required that fixed assets be tested for impairment. As a result of that testing, the Company recorded impairment charges related to its McDonnell Douglas MD-80 aircraft and Embraer RJ-135 aircraft.
and
In accordance with Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" (SFAS 144), the Company records impairment charges on long-lived assets used in operations when events and circumstances indicate that the assets may be impaired. Assets or groups of assets are considered impaired when the undiscounted cash flows estimated to be generated by those assets are less than the carrying amount of those assets and the net book value of the assets exceeds their estimated fair value. In connection with the May 2008 capacity reduction announcement, the Company concluded that a triggering event had occurred requiring that fixed assets be tested for impairment. As a result of this test, the Company concluded the carrying values of its McDonnell Douglas MD-80 and the Embraer RJ-135 aircraft fleets were no longer recoverable.
and
Included in the charge for the Embraer RJ-135 fleet were write downs on 29 aircraft, of which 19 were considered held for sale as of December 31, 2008.
As of the February 2009 10-K the AMR Corporation owned 39 Embraer RJ-135 aircraft; 33 operating and 6 sun bathing in the desert. As stated above 29 aircraft were written down and 19 aircraft were held for sale. That leaves 10 aircraft (39 minus 29).
Is the impairment mentioned in the December 8-K Filing associated with the remaining 10 Embraer RJ-135 aircraft or not?
Maybe that is a question that alpa, the great pilot union, should be able to answer as the impairment will surely affect the pilot staffing at American Eagle Airlines Inc, especially when junior manning, extensions, re-assignment and fatigue have become the de facto SOP (Standard Operating Procedures) at American Eagle Airlines, Inc.
Ten (10) less aircraft equals fifty (50) less Captains.
Good Luck in 2010.
alpa MEC members singing karaoke and enjoying a $500 meal in Mexico City at the IFALPA Conference
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Posted on Friday, January 01, 2010
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