Delta Expected To File Chapter 11 This Week

[JAMAKE1]

Read it here:

http://biz.yahoo.com/rb/050912/airlines_delta_wsj.html?.v=1

 

[jimntx]

The article did not say that the assets listed in the subtitle would be sold. It said they would be "hocked." All that may mean is that those assets would be put up as collateral for loans. Gates and landing slots at LGA are "worth their weight in gold." (Actually, they may be more valuable than that. )

 

[michael707767]

The article did not say that the assets listed in the subtitle would be sold. It said they would be "hocked." All that may mean is that those assets would be put up as collateral for loans. Gates and landing slots at LGA are "worth their weight in gold." (Actually, they may be more valuable than that. )

[post="299357"][/post]​

He's right. Much like using your car as collateral, as long as you pay your bills, the bank does not reposess your car.

 

[Beer Guzzler]

He's right. Much like using your car as collateral, as long as you pay your bills, the bank does not reposess your car.

[post="299372"][/post]​

The BLEEDING has to stop sometime.. Hock, Sell whatever.. If DL is going to survive they have to get the DEBT problem fixed...

 

[TheDog2004]

The routes and slots are the only things left of any value to put up as collateral.

Unless oil makes a dramatic drop this week Delta will file. 🙁

 

[B.O.B.]

ComAir is worth some $$$! Will SkyWest try and buy them too???

It's sad to see another legacy carrier in BK.

 

[JFK777]

Routes to Tokyo and London? What can a route from ATL to Tokyo be worth? Not as much as one from LAX or JFK. Delta flew from Lax and JFK to Narita but withdrew the service and AA now flies those routes. ATL to Japan is of little value to another airline, the slots at NRT are worth something.

London Gatwick from Atlanta or Cincinatti? Not worth much either unless you happen to have a hub in either city. I don't see Air Tran flying from Atlanta to Gatwick any time soon. I can't think of another airline wanting Gatwick slots right now, Heathrow slots are always worth more but Gatwick nearly worthless.

 

[B.O.B.]

Delta flew from Lax and JFK to Narita but withdrew the service and AA now flies those routes. London Gatwick from Atlanta or Cincinatti?

[post="299618"][/post]​

That was a really stupid mistake by Delta to stop LAX and JFK-NRT. Who would think of flying to LGW from CVG anyway? I guess Delta has finally woke up and smelt the coffee. They too have realized nobody looks at CVG to LGW or anything else for that matter.

They waited too long to file BK. Most analysts say they should have filed over 6 months ago. Some analysts are saying they may even have to liquidate.

 

[WorldTraveler]

For the umpteen millionth time, Atlanta is the world's largest hub and Delta controls 80% of the traffic there. That hub is worth about $4 billion dollars a year in revenue to Delta - and the number is growing as Delta adds more service. No other airline controls as much revenue in as large of a market in any other US city. Cincinnati generates about $1B a year in revenue and Delta controls 90% of it.

Routes to London and Tokyo are not open to any competitor, with or without a hub. It is because those routes are limited access that they have value; it is also the reason why Delta's routes to Germany have not been pledged as collateral since any US carrier that is fit and able can begin service to any city in Germany at any time.

Only analysts who have no knowledge of Delta's finances are suggesting Delta will liquidate. The whole point of debtor in possession (DIP) financing is to provide the money necessary for a company to operate while in bankruptcy. Financiers would not provide financing if Delta did not have the assets necessary to secure DIP financing.

Every airline that has entered bankruptcy has had to pledge virtually all of its assets in order to secure DIP financing. Even non-bankrupt airlines have few unpledged assets as evidenced by the fact that AA is about the only US legacy airline that has unpledged collateral available at this time.

 

[B.O.B.]

For the upmteen millionth time WorldTraveler, is back again. The he thinks Mr. Know it all airline person. Oh please, spare us the moment and go away.

 

[NewHampshire Black Bears]

For the upmteen millionth time WorldTraveler, is back again. The he thinks Mr. Know it all airline person. Oh please, spare us the moment and go away.

[post="299730"][/post]​

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

B.O.B.

This will SHOCK a LOT of folks here,
BUT,
World Traveler is "more right, than wrong"

Where I think he's wrong is, of the (soon to be 3)in BK carriers are concerned, US would be in BK-7 if it were'nt for HP.


Which leaves an "Emerging" UA, with a 60/40 chance of rebounding.(What ever THAT means).
DL won't enjoy anything better than a 50/50 shot, AND still won't have the International reach that It has needed "10 years ago" !!!!!!!

IMHO, DL in BK is another "notch" closer to this Industry getting the Consolidation that it so DESPERATELY needs !!!!!!!!!!!


??????????????????????

NH/BB's

 

[FWAAA]

DL won't enjoy anything better than a 50/50 shot, AND still won't have the International reach that It has needed "10 years ago" !!!!!!!

IMHO, DL in BK is another "notch" closer to this Industry getting the Consolidation that it so DESPERATELY needs

NH/BB's

[post="299750"][/post]​

Agree completely with this. With B6 and WN growing like crazy (as well as others, like FL), and high-yield business travel not growing so fast, something's gotta give, and consolidation among the old legacy airlines may be the answer.

Although I was wrong - I predicted that DL would make it without filing a Ch 11 petition.

 

[WorldTraveler]

I'll take the compliment, NHBB, even if was an underhand toss. WT knows his facts but he has biases like everyone else on this board. With all humility and respect, the whole reason I participate in this board is to share what I have learned with those who are learning. Although there surely are people who would rather bash people, there are many others that are interested in learning. The internet is a great forum for exchanging information... and for sharing hopes and fears.

I am also fully aware that DL is not regarded as highly as other carriers that have sexy international routes. The proof of the pudding, however, is what you do with what you have.

Lots of folks expected US to be liquidated and there were even those that predicted it for UA. Based on that, it is certain that there will be even supposed "experts" who will predict liquidation for Delta.

I fully expect that Delta will move with lightning speed to turn its business around. There have been a slew of network announcements already and I expect that there will be more as DL repositions its network so that it makes money. DL will also move quickly to thin its fleet, esp. of domestic widebodies and 50 seat RJs.
DL will move quickly to shake things up in the HR dept. They have no choice but to cut pay of employees now in order to stem the red ink quickly. My hope is that DL will differentiate itself from the rest of the industry by addressing many of the structural issues with employee compensation in the industry which revolve largely around the idea that once an employee has been hired by a legacy airline they can sit back and collect a paycheck for the next 30 years with a pension afterwards. I expect that DL will adopt many of the performance based compensation tactics that the LCCs use; Delta has tried for years to implement performance based pay but was stifled by ALPA. I expect that DL will make it less attractive for senior employes to stick around to finish a career- at least by freezing the pension plans. I'm going a bit out on a limb here but I expect that DL will not terminate their pension plans; doing so would be a politically stupid thing to do in my mind. To pay for retaining the pension plans, however, employees will have to take deeper cuts now.

Let me close with the following quote from the front section of USAToday Money (9/13):

Led by CEO Gerald Grinstein, who succeeded former CEO Leo Mullin in January 2004, Delta has sought for 20 months to restructure outside of bankruptcy.

As a result, Delta's bankruptcy case promises to be well organized. Since last year, when it narrowly averted Chapter 11, Delta has been working with law firm Davis Polk & Wardwell and financial advisers on a possible bankruptcy filing.

 

[jbguppy]

For the umpteen millionth time, Atlanta is the world's largest hub and Delta controls 80% of the traffic there. That hub is worth about $4 billion dollars a year in revenue to Delta - and the number is growing as Delta adds more service. No other airline controls as much revenue in as large of a market in any other US city. Cincinnati generates about $1B a year in revenue and Delta controls 90% of it.

Routes to London and Tokyo are not open to any competitor, with or without a hub. It is because those routes are limited access that they have value; it is also the reason why Delta's routes to Germany have not been pledged as collateral since any US carrier that is fit and able can begin service to any city in Germany at any time.

Only analysts who have no knowledge of Delta's finances are suggesting Delta will liquidate. The whole point of debtor in possession (DIP) financing is to provide the money necessary for a company to operate while in bankruptcy. Financiers would not provide financing if Delta did not have the assets necessary to secure DIP financing.

Every airline that has entered bankruptcy has had to pledge virtually all of its assets in order to secure DIP financing. Even non-bankrupt airlines have few unpledged assets as evidenced by the fact that AA is about the only US legacy airline that has unpledged collateral available at this time.

[post="299697"][/post]​

My take is much more negative unfortunately, DAL has waited too long for things to improve in oil, revenue, and competitors to go away and make them better.

Unfortunately what is different according to press reports is the majority of
DIP dollars will be immediately returned to GE. Liquidity appears to be quite problematic even after DIP. I don't see how the company operates as cash burn appears to overwhelm their balances in short order. Covenants associated with the DIP financing will be significant (I would bet.)

With the required holdback for Visa and MC not yet funded, and all tangible assets used to collateralize loans, what will DAL do if oil stays up over the depressed revenue environment over the winter?

The ugly truth in my opinion is they will be forced to sell more items, they will have to quickly and continually shrink to lower cost, which in turn reduces already sparse revenue thanks to simplifares.

Look at the orderly liquidation that has been happening at Independence Air, the same could be happening at DAL. A slow release of aircraft onto the market, a slow reduction in service, market share, and a slow deterioration of revenue and financial performance. If this was as easy as some make it out to be, all would do it. Seeking the courts protections is a crap shoot for the future of your company.

GE is quite smart to do this DIP deal if it is correctly reported in the Journal, as it gets the billion owed from earlier liquidity strings being pulled, and puts itself in the primary creditor position in case things get ugly. I think the best case scenario is a fragmentation and a much smaller DAL and a very painful restructuring.

A very ugly picture indeed, and not something to be wished on anyone, good luck to all at DAL.

JBG

 

[WorldTraveler]

I think it is precisely because DL won't have a huge amount of cushion that they will have to move very quickly to shore up revenue and cut costs. I expect that the press releases for new service and reports of pay and benefit changes will emerge very quickly.