Dal Liquidation

[ohcaptainron]

"In a most ominous statement, Delta warned that restructuring under Chapter 11 would be 'particularly difficult' because it lacks sufficient unencumbered assets for a meaningful DIP loan," wrote King. "That introduces the specter of liquidation over credit."
...............................
The entire news article follows:

Delta Air Lines stock plummets
Liquidity, bankruptcy concerns shake investors
By August Cole, MarketWatch
Last Update: 4:54 PM ET May 11, 2005


SAN FRANCISCO (MarketWatch) -- Delta Air Lines shares on Wednesday plunged to historic lows for a second day after the carrier's latest warning of more red ink and liquidity issues triggered fears of yet another bankruptcy in the airline industry.



Delta's stock ended down 23 cents to $2.74 after touching $2.46 - a level not seen in more than two decades and below levels late last year when the airline teetered on the brink of bankruptcy. See full story.

After the Atlanta-based carrier (DAL: news, chart, profile) submitted its quarterly filing with the Securities and Exchange Commission on Tuesday, the specter of Chapter 11 bankruptcy loomed again.

"Graphic language in Delta's [first-quarter 2005] 10-Q indicates a bankruptcy filing is very likely," wrote CreditSights debt analyst Roger King in a research note.

On Tuesday, the Atlanta-based airline said that more cost cutting may be needed as competition remains intense and fuel prices stand at dramatically higher than even a year ago.

"We cannot assure you that the anticipated benefits of our transformation plan will be achieved, or that these benefits, if achieved, will be adequate for us to maintain financial viability," Delta wrote in the filing.

In considering the filing, analysts honed in on language about the carrier's liquidity.

"In a most ominous statement, Delta warned that restructuring under Chapter 11 would be 'particularly difficult' because it lacks sufficient unencumbered assets for a meaningful DIP loan," wrote King. "That introduces the specter of liquidation over credit."

Delta's decline comes as United Airlines (UALAQ: news, chart, profile) , in its struggle to get out of bankruptcy, has received permission from a bankruptcy judge to terminate its pension plans and turn them over to the government. See full story.

US Airways (UAIRQ: news, chart, profile) and ATA Holdings (ATAHQ: news, chart, profile) are also bankrupt.


August Cole is an editor for MarketWatch in San Francisco.

 

[Flying Titan]

Others have pointed this out as well - that DAL may bypass Ch. 11 and be forced into Ch. 7 -- however, I don't think that's very likely. Assuming DAL has to file for BK protection (which is likely), they still have many assets which would be attractive to investors, including Comair, ASA, DL Shuttle routes, slots at LGA & DCA, restricted int'l routes, etc. Some of the very same assets that could be put up for sale outside of BK could be used for collateral to attract exit financing in BK.

 

[NewHampshire Black Bears]

Others have pointed this out as well - that DAL may bypass Ch. 11 and be forced into Ch. 7 -- however, I don't think that's very likely. Assuming DAL has to file for BK protection (which is likely), they still have many assets which would be attractive to investors, including Comair, ASA, DL Shuttle routes, slots at LGA & DCA, restricted int'l routes, etc. Some of the very same assets that could be put up for sale outside of BK could be used for collateral to attract exit financing in BK.

[post="268657"][/post]​

++++++++++++++++++++++++++++++++++++++++++++++++++++

What ever will happen, WILL happen.

One thing is ABSOLUTELY for sure, if DL"rolls over", AA will be an even bigger International giant, out of NY/JFK, with a brand new palace(terminal), to boot !!

NH/BB's

 

[Whitestoneclimb]

DAL should make sure it learns what not to do by looking at USAirways. You can't shrink yourself to profitability. Selling off certain assets is like a homeless person selling your coat for food. Sure, you'll be able to fill your belly for a little while, but you'll freeze to death when the sun goes down. Just my opinion.

 

[WNrforlife]

I think that DL's goose is cooked. They're done.

 

[WorldTraveler]

Get a life you losers. Delta is the most politically savvy airline in the bunch. You'll recall (if you take your medication and stay off the booze long enough) that DL went down this same path of scare tactics last year and obtained $1.5 billion worth of annual cost cuts plus another $1B in financing. DL management knows exactly what they are doing.

Airlines the size of DL just don't die. Look at how long UA has limped along but even moreso US. From a network and asset perspective, US is little more than a miniature DL (or DL is little more than an oversized US); neither have hugely valuable rights and are predominantly east coast players. The big difference, however, is that DL hasn't let LCCs continue to encroach on its markets and DL has allied itself with some of the strongest players in the industry:
1. Delta has a very strong relationship w/ American Express which is uniquely more powerful than any other financial services company.
2. Delta is allied with Air France which is the most powerful airline in Europe. Delta gives AF and other Skyteam partners access to the entire east coast where most European traffic originates, something CO and NW cannot do.
3. DL still owns and controls the largest regional jet fleet in the world and has arrangements with the highest quality carriers who are not about to let DL fail since they have nowhere to put their planes. DL has been more creative with using regional jets than ANYONE in the world and has used RJs to keep its revenue stable, something UA and US simply have not done - yet they manage to survive.
4. DL has historically been the industry leader in cost control for decades and lost that advantage for about 10 years - critical ones mind you. Current DL leadership understands what has happened and will get costs back under control but they will kick and scream in order to succeed.
The future is ccrtainly no bed of roses for Delta but prediction of liquidation is simply hallucinating. (there are other non-chemical ways to get a biological rush that are far safer and don't mess with your mind afterwards, if you know what I mean).

I could go on but let's turn to the competition....

for those who think AA and NW are so invincible, let me remind you that both face the least amount of competition at their primary hubs of DFW and DTW and MSP, respectively. As LCC capacity increases, that advantage will fail. As a current AA employee recently put it on this board, "AA is very scared about the prospect of the Wright Amendment falling" which it is very likely to do. AA will lose billions of dollars in revenue when WN expands carte blanche from DAL or another LCC sets up shop at DFW. As for NW, B6 has already promised that their EMBs will be used to pick off alot of markets in the middle part of the country - where NW is strong and where EVERYONE knows (except perhaps the NW booster club here) that fares are much higher than in the rest of the country. And....NW's costs are near the highest in the industry (significantly higher than DL's even before DL started its transformation plan) - not exactly the position an airline wants to be in when they have to start battling LCCs.

Let's dispense with the histeria and try using your brains.... I know it's hard to do for some of you but give it a try.

 

[whatkindoffreshhell]

"Politically savvy......management knows what it is doing"?????

Are we talking about the same management 'knowing what they're doing' by endorsing LeoMullin borrowing $20 BILLION on the road to oblivion??

At least UA management wasn't that smart!

You know, no matter how thirsty you may be, after a few moments of forced drinking from an open fire hydrant the exercise ceases to be refreshing!

 

[markkus757]

I'm sure that their "great" relationship with AMEX took a small(?) hit when DL burned through the multi-hundred million dollar influx of cash in less than a quarter...

 

[FlyUs]

DAL should make sure it learns what not to do by looking at USAirways. You can't shrink yourself to profitability. Selling off certain assets is like a homeless person selling your coat for food. Sure, you'll be able to fill your belly for a little while, but you'll freeze to death when the sun goes down. Just my opinion.

[post="268761"][/post]​

Actually, US has yet to sell any core assets. What they have done, is reduced a lot of unprofitable flying and redeployed their assets, while still maintaining their #1 position for market share in the NE. Since 911, US has down-sized over 30%. It's all about survivability. Maybe Delta needs to do the same thing. I remember Wolfe said at a gathering in Boston when he first joined the company that Delta was the only carrier that will continue to fly a route even when unprofitable.

 

[luv2fly]

I'm sure that their "great" relationship with AMEX took a small(?) hit when DL burned through the multi-hundred million dollar influx of cash in less than a quarter...

[post="268818"][/post]​

Well folks we can take comfort in this. If a company as $hitty as U can make it, there is hope for anyone.

 

[jimntx]

I could go on but let's turn to the competition....

As a current AA employee recently put it on this board, "AA is very scared about the prospect of the Wright Amendment falling" which it is very likely to do. AA will lose billions of dollars in revenue when WN expands carte blanche from DAL or another LCC sets up shop at DFW...

Let's dispense with the histeria and try using your brains.... I know it's hard to do for some of you but give it a try.

[post="268782"][/post]​

May i suggest that you take a dose of your own medicine? Billions of dollars? Millions maybe, but it hasn't happened yet. And, there is only so much increase that WN can accomplish at Love. Remember that the city of Dallas supports the Wright Amendment; so, they would not be disposed toward eminent domain condemnations to expand Love. Love is completely hemmed in by "built up" neighborhoods.

 

[FA Mikey]

Get a life you losers.

I could go on but let's turn to the competition....

for those who think AA and NW are so invincible, let me remind you that both face the least amount of competition at their primary hubs of DFW and DTW and MSP, respectively. As LCC capacity increases, that advantage will fail. As a current AA employee recently put it on this board, "AA is very scared about the prospect of the Wright Amendment falling" which it is very likely to do. AA will lose billions of dollars in revenue when WN expands carte blanche from DAL or another LCC sets up shop at DFW. As for NW, B6 has already promised that their EMBs will be used to pick off alot of markets in the middle part of the country - where NW is strong and where EVERYONE knows (except perhaps the NW booster club here) that fares are much higher than in the rest of the country. And....NW's costs are near the highest in the industry (significantly higher than DL's even before DL started its transformation plan) - not exactly the position an airline wants to be in when they have to start battling LCCs.

Let's dispense with the histeria and try using your brains.... I know it's hard to do for some of you but give it a try.

[post="268782"][/post]​

No airline is invincable, but those you mentioned are far better suited to weather lcc competition than DAL in is current low prospect situation.

AA scared? Doubt it. They have been in many markets with SWA for years and have held there own through out TX and the surrounding states. NWA the same in DTW. Its DAL who is being screwed and unable to compete with airtran in ATL.

No the wright amendament will not cause AA to lose billions. There is a limit to what SWA can do at DAL. As far as other lcc's coming to DFW. Its free its open, because DAL turned tail and ran out.

 

[FA Mikey]

Well folks we can take comfort in this. If a company as $hitty as U can make it, there is hope for anyone.

[post="268841"][/post]​

Very true

 

[FA Mikey]

Actually, US has yet to sell any core assets. What they have done, is reduced a lot of unprofitable flying and redeployed their assets, while still maintaining their #1 position for market share in the NE.

[post="268838"][/post]​

I would say U didnt sell any assets, they just ran from the competition in any market they compete. Wasnt U big at BWI?

Since 911, US has down-sized over 30%. It's all about survivability.

[post="268838"][/post]​

Its gutted its self and all the employees.

Maybe Delta needs to do the same thing. I remember Wolfe said at a gathering in Boston when he first joined the company that Delta was the only carrier that will continue to fly a route even when unprofitable.

[post="268838"][/post]​

LOL what markets is U profitable? If they continue to lose billions every year, by what you are saying they should just shut U down correct?

 

[us0004us]

LOL what markets is U profitable? If they continue to lose billions every year, by what you are saying they should just shut U down correct?

[post="268868"][/post]​

thank goodness delta and ual are doing ok, now....


good luck to all