AA hires bankruptcy attorneys ---sounds eerily familiar

[cs_studentguy]

Reuters
Major U.S. airlines hire bankruptcy lawyers
Tuesday January 21, 2:16 pm ET
By Kathy Fieweger
CHICAGO, Jan 21 (Reuters) - More major U.S. airlines, including the world''s
largest, American Airlines, have hired bankruptcy lawyers in the face of an
unprecedented downturn as war with Iraq looms, sources familiar with the
matter said on Tuesday.
The sources said the hiring of various firms does not necessarily mean that
the airlines are preparing imminent bankruptcy filings. But it signals they
are keeping options open as billions of dollars in industry losses continue
since the Sept. 11, 2001 attacks threw the industry into an unprecedented
financial crisis.

 

[LGA Fleet Service]

[P]IMajor U.S. airlines hire bankruptcy lawyers[/P]
[P]By Kathy Fieweger[/P]
[P]CHICAGO, Jan 21 (Reuters) - More major U.S. airlines, including the world's largest, American Airlines, have hired bankruptcy lawyers in the face of an unprecedented downturn as war with Iraq looms, sources familiar with the matter said on Tuesday.[/P]
[P]The sources said the hiring of various firms does not necessarily mean that the airlines are preparing imminent bankruptcy filings. But it signals they are keeping options open as billions of dollars in industry losses continue since the Sept. 11, 2001 attacks threw the industry into an unprecedented financial crisis.[/P]
[P]UAL Corp. <UAL.N>, parent of United Airlines, and US Airways Group Inc. <UAWGQ.OB> filed for bankruptcy last year, after lagging revenue and high costs drained their cash.[/P]
[P]Both airlines are using the bankruptcy process to sharply cut costs with union employees, change work rules and restructure aircraft leases. Analysts and airline executives say that will leave competitors at a serious disadvantage.[/P]
[P]Also, as United and US Airways restructure, sources said competing carriers wishing to purchase any assets that might come up for sale during a court-mediated reorganization would also require bankruptcy advice for that purpose.[/P]
[P]Wall Street estimates the major U.S. carriers lost between $8 billion and $10 billion in 2002, levels which cannot be sustained for long.[/P]
[P]American, a unit of Dallas-based AMR Corp. <AMR.N>, has retained lawyers Marcia Goldstein and Martin Bienenstock at its long-time legal adviser Weil Gotshal & Manges, sources said.[/P]
[P]The law firm partners were not immediately available to comment.[/P]
[P]Harvey Miller, the former well-known head of the bankruptcy group at Weil Gotshal, has also been retained as an adviser to American from his current banking firm of Greenhill & Co., several sources said. Miller was not immediately available to comment.[/P]
[P]Also said to have hired bankruptcy attorneys for various purposes were Continental Airlines <CAL.N> and America West Holdings Corp. <AWA.N> A source familiar with the matter said Delta Air Lines Inc. <DAL.N> and Northwest Airlines Corp. <NWAC.O> were also "shopping around."[/P]
[P]PRUDENT MOVE[/P]
[P]Tim Doke, a spokesman for American, declined to comment on whether AMR had retained either firm, but noted that the airline had a long-standing legal relationship with the Weil Gotshal law firm.[/P]
[P]"With a third of the airline industry in bankruptcy and the prospect of war with Iraq...it would be imprudent of any airline not to be exploring all of its options," Doke said.[/P]
[P]America West spokeswoman Patty Nowack said the Phoenix-based carrier had retained Skadden, Arps, Slate, Meagher and Flom back in the fall of 2001 and continues to consult with their attorneys from time to time.[/P]
[P]America West was the first major U.S. airline to win backing from the federal government for backing of private sector loans. US Airways also won conditional approval but United was denied its bid for backing of $1.8 billion in loans.[/P]
[P]Continental spokesman Dave Messing declined to comment on what firms if any may have been hired. Shortly after the Sept. 11, 2001, attacks, the airline's outspoken chief executive, Gordon Bethune, had predicted imminent bankruptcy at the Houston-based carrier without immediate aid from the federal government.[/P]
[P]At one point in 2002, Continental was predicting a return to profitability. But in the spring, a nascent industry recovery evaporated and Continental last week said it did not expect profits in 2003.[/P]
[P]In a recent research report, Merrill Lynch analyst Michael Linenberg noted that the most of the industry is very highly leveraged already.[/P]
[P]"The industry's average debt/total capitalization ratio is 90 percent, similar to where it was in the early 1990s and high versus most other industries," he said.[/P]
[P]Other than United and US Air, Linenberg listed Northwest and America West as having the highest debt-to-cap ratios of 107 percent and 96 percent as of September, 2002. AMR's ratio was listed at 90 percent and Continental, at 91 percent.[BR] [/P]

 

[bagsmasher]

Who was it that said they didn't believe in the domino theory?

 

[BlitzPigs]

 

[wings396]

Hold on to your wallets folks, Don is going to be fishing in them soon. I hate to be the bearer of bad news, but I already travled this path.