Who's next to fold?
- Thread starter bagchucker
- Start date
OP
- Thread Starter
- #17
Agreed. YV is in trouble with the fine levied against them and their stock taking a nose dive.
swflyer
Senior
More trouble for YV (from PlaneBuzz.com):
S&P Kicks Out Mesa From SmallCap 600 Index
This afternoon, after the close of trading, S&P announced that it was removing Mesa Air Group from the S&P SmallCap 600 Index. Aftermarket Technology Corp. (Nasdaq: ATAC) will replace Mesa Air Group.
As those of you who are market watchers know -- being included in an index encourages institutional buyers to buy a stock -- as institutional buyers attempt to mimic the underlying ownership mix of a particular index fund. When S&P selects a stock for inclusion in a fund, institutional investors usually flock to the stock, as they attempt to mimic the underlying stocks in a particular index.
Conversely, when a stock is bumped from an index, you tend to see institutions bail out of the stock. We'll see what happens tomorrow.
Meanwhile, Mesa had yet another rough day today on Wall Street, as shares ended the day down 13%, closing at 1.23. The stock collapsed last week -- losing 41% of its value, closing Friday at 1.41. Trading in Mesa shares was extremely heavy again today.
S&P noted in its release this afternoon that Mesa's market cap is now down to $33 million.
As Airlines Fail, Some Wonder Who's Next?
"The risk really is in some of the second-tier carriers that have less financial means than the major airlines," said Kevin Mitchell, chairman of the Business Travel Coalition
Analysts have also sounded alarm bells about a handful of budget airlines, which they say could be at even greater immediate risk than regional providers.
"I think there are other marginal carriers that could succumb," Calyon Securities analyst Ray Neidl said.
In a recent report, Neidl noted that most major carriers have amassed hefty stockpiles of cash that should help them weather what is expected to be a rocky year for the industry.
But he cited concerns about low-cost carriers AirTran Holdings Inc. and Frontier Airlines Holdings Inc., saying their cash holdings are likely to fall well below 10 percent of expected revenue by the end of the year. Since the Sept. 11, 2001, attacks, a 20 percent cushion "became a more realistic target level for cash," he wrote.
Interesting. Looks like the low cost/second tier/budget carriers will end up taking the hit this time.
"The risk really is in some of the second-tier carriers that have less financial means than the major airlines," said Kevin Mitchell, chairman of the Business Travel Coalition
Analysts have also sounded alarm bells about a handful of budget airlines, which they say could be at even greater immediate risk than regional providers.
"I think there are other marginal carriers that could succumb," Calyon Securities analyst Ray Neidl said.
In a recent report, Neidl noted that most major carriers have amassed hefty stockpiles of cash that should help them weather what is expected to be a rocky year for the industry.
But he cited concerns about low-cost carriers AirTran Holdings Inc. and Frontier Airlines Holdings Inc., saying their cash holdings are likely to fall well below 10 percent of expected revenue by the end of the year. Since the Sept. 11, 2001, attacks, a 20 percent cushion "became a more realistic target level for cash," he wrote.
Interesting. Looks like the low cost/second tier/budget carriers will end up taking the hit this time.
Well there is the airline mantra that goes "If you have to compete in your home airport with WN, you will be squashed and will not ascend to the next level of enlightenment." This despite the report that came out in the last year that showed that on the routes where Frontier and Southwest competed directly, Frontier was winning.
This is not a slam at WN. They are my 2nd favorite domestic carrier, because they often get me to work.
jimntx,
When you say "Frontier is winning"...in what sense? Just curious. I haven't read much about them in a while but have wondered how they have fared. Their sale of aircraft and elimination of routes seemed to indicate a negative vibe...
When you say "Frontier is winning"...in what sense? Just curious. I haven't read much about them in a while but have wondered how they have fared. Their sale of aircraft and elimination of routes seemed to indicate a negative vibe...
eolesen
Veteran
- Jul 23, 2003
- 15,988
- 9,428
Aloha was also winning in terms of market share against Go!, but that didn't help them out much.
Frontier's problem is they're a one-trick show. They have DEN, and that's it. If you're in a war of attrition and stuck between WN and UA, you're going to eventually lose because UA and WN are able to absorb more of the losses across their network. F9 doesn't have that luxury. F9 also has higher fixed costs because of the new fleet ownership expense. UA and WN have the advantage there as well.
Mesa's screwed. They have a convertible maturity date coming up in June, with a potential for $37.8M due to bondholders who chose to convert their notes for cash or stock. Mesa doesn't have the ability to issue enough stock to cover this, and the shareholders need to approve it by 50%+1. If they do, they've just agreed to devaluing their own stock by almost 100% of its current value --- Mesa has about 33M shares outstanding, and would need to issue over 30M shares to cover the convertible.
The next problem they'll have is being delisted by Nasdaq. If the shares are approved, the value is more likely to drop below $1/share. After 30 days below $1, they face being delisted by Nasdaq 90 days later unless they can keep the share price above $1 for ten consecutive days.
Yep, couldn't happen to a nicer group of people....
Frontier's problem is they're a one-trick show. They have DEN, and that's it. If you're in a war of attrition and stuck between WN and UA, you're going to eventually lose because UA and WN are able to absorb more of the losses across their network. F9 doesn't have that luxury. F9 also has higher fixed costs because of the new fleet ownership expense. UA and WN have the advantage there as well.
Mesa's screwed. They have a convertible maturity date coming up in June, with a potential for $37.8M due to bondholders who chose to convert their notes for cash or stock. Mesa doesn't have the ability to issue enough stock to cover this, and the shareholders need to approve it by 50%+1. If they do, they've just agreed to devaluing their own stock by almost 100% of its current value --- Mesa has about 33M shares outstanding, and would need to issue over 30M shares to cover the convertible.
The next problem they'll have is being delisted by Nasdaq. If the shares are approved, the value is more likely to drop below $1/share. After 30 days below $1, they face being delisted by Nasdaq 90 days later unless they can keep the share price above $1 for ten consecutive days.
Yep, couldn't happen to a nicer group of people....
CNN reported today next airlines to watch out for BK-Closure is
Italian airline AT and EXpress JET and Frontier.
So becareful to not think it could't happen at Frontier.
WN and UAL are driven them out of business.. When Southwest came in we all knew this would happen with F9
There were several news stories detailing the proposed share issuance to pay off the debt due in June. I'm guessing the stock hits two bits within a week or so. The end is near.
CynicalResAgent
Veteran
I dont' think F9 is doomed to be the next one to file. They have great potential with Lnyx to increase revenue by connecting people to the higher revune destinations Lnyx connects them to. I think they would make an amazing partner for WN if they could work out an agreement to be their international codeshare partner.
I doubt Express jet would completey fold due to their extensive presence as a partner to CO and others. That being said I would not be suprised if they do a quick and orderly shut down of their self branded service. I do not see how XE can be profitable as a stand alone entity. I know they were hoping to avoid the fate of Indepence Air by not abandonig their regional feeder markets but with fuel skyrocketing doing point to point service on a RJ cannot be profitable at fares that would attract passengers.
I have read numbers that even state a full ERJ does not break even unless the fares are relatively high..... hmmmm, maybe some person who wants to part with money will make an all first class RJ airline.
I doubt Express jet would completey fold due to their extensive presence as a partner to CO and others. That being said I would not be suprised if they do a quick and orderly shut down of their self branded service. I do not see how XE can be profitable as a stand alone entity. I know they were hoping to avoid the fate of Indepence Air by not abandonig their regional feeder markets but with fuel skyrocketing doing point to point service on a RJ cannot be profitable at fares that would attract passengers.
I have read numbers that even state a full ERJ does not break even unless the fares are relatively high..... hmmmm, maybe some person who wants to part with money will make an all first class RJ airline.
They have been eliminating unprofitable routes (what a concept!
). The really knowledgeable airline people are ROTFLTAO with the idea of only flying routes you make money on. What about the prestige factor of flying ONT to BUR? Besides, we have ALWAYS flown that route. By winning I meant that their load factors on competing routes have been higher than WN on same routes. I don't care what CNN says--they have been wrong before, you know--I wouldn't count Frontier as down and out just yet.
Deja vu. Substitute 'CO' for 'WN' and you've got the original Frontier's dilemma, circa 1985-86. They gave up and sold out to PeoplExpress, who in turn pulled the plug on the entire Frontier operation in Sept of '86.
Frontier Airlines Files for Chapter 11 Reorganization; Normal Operations Continuing and Unaffected
Friday April 11, 2:01 am ET
- Frontier Airlines and Subsidiaries Will Continue to Operate Complete Flight Schedule, Honor All Tickets and Reservations, Maintain EarlyReturns Frequent Flyer Program, and Provide Pay and Benefits to Employees -
DENVER, April 11 /PRNewswire-FirstCall/ -- Frontier Airlines Holdings, Inc. (Nasdaq: FRNT - News) today announced that, following an unexpected attempt by its principal credit card processor to substantially increase a "holdback" of customer receipts, which threatened to severely impact Frontier's liquidity, Frontier and its subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code.
Frontier intends to continue normal business operations today and throughout its reorganization process. Specifically, it expects to continue to:
-- Operate its full schedule of flights;
-- Honor tickets and reservations and provide refunds and exchanges as
usual;
-- Maintain its EarlyReturns frequent flyer program and other award-
winning customer service programs;
-- Provide employee wages, healthcare coverage, vacation, sick leave and
similar benefits without interruption; and,
-- Pay suppliers for goods and services received during the reorganization
process.
Link
next up?................... :unsure:
Friday April 11, 2:01 am ET
- Frontier Airlines and Subsidiaries Will Continue to Operate Complete Flight Schedule, Honor All Tickets and Reservations, Maintain EarlyReturns Frequent Flyer Program, and Provide Pay and Benefits to Employees -
DENVER, April 11 /PRNewswire-FirstCall/ -- Frontier Airlines Holdings, Inc. (Nasdaq: FRNT - News) today announced that, following an unexpected attempt by its principal credit card processor to substantially increase a "holdback" of customer receipts, which threatened to severely impact Frontier's liquidity, Frontier and its subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code.
Frontier intends to continue normal business operations today and throughout its reorganization process. Specifically, it expects to continue to:
-- Operate its full schedule of flights;
-- Honor tickets and reservations and provide refunds and exchanges as
usual;
-- Maintain its EarlyReturns frequent flyer program and other award-
winning customer service programs;
-- Provide employee wages, healthcare coverage, vacation, sick leave and
similar benefits without interruption; and,
-- Pay suppliers for goods and services received during the reorganization
process.
Link
next up?................... :unsure:
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