Transportation

As Some Airlines Move Toward Chapter 11, Fuel Suppliers Demand Cash (AMR)

The major US airlines can no longer get "net 30 days" as credit terms, or any terms at all. Fuel companies want cash. They do not want to end up holding the tank if a carrier defaults and its receiveables go into a pool as part of a bankruptcy.

According to The Times of London, "Sources within the airline industry indicate that credit is being denied to most of the leading American carriers and the practice is moving to Europe and Asia."

Such action by major suppliers is often a sign of concern that some airlines won’t make it. Suppliers are usually a better barometer than outside analysts because they have to deal with the carriers day-to-day.

Wall St. has begin to talk about the failure of one or more airlines. Most trade near 52-week lows. AMR (AMR) has a market cap of only $1.6 billion as its stock has gone from a 52-week high of $29.32 to $6.32.

If other major suppliers ask airlines to pay upfront, the cash crisis in the industry may get worse.

Douglas A. McIntyre

Take Charge of Your Retirement In Just A Few Minutes (Sponsor)

Retirement planning doesn’t have to feel overwhelming. The key is finding expert guidance—and SmartAsset’s simple quiz makes it easier than ever for you to connect with a vetted financial advisor.

Here’s how it works:

  1. Answer a Few Simple Questions. Tell us a bit about your goals and preferences—it only takes a few minutes!
  2. Get Matched with Vetted Advisors Our smart tool matches you with up to three pre-screened, vetted advisors who serve your area and are held to a fiduciary standard to act in your best interests. Click here to begin
  3. Choose Your  Fit Review their profiles, schedule an introductory call (or meet in person), and select the advisor who feel is right for you.

Why wait? Start building the retirement you’ve always dreamed of. Click here to get started today!

 

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.

AI Portfolio

Discover Our Top AI Stocks

Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.

You can follow him investing $500,000 of his own money on our top AI stocks for free.