Just How Many Times Can You Go Bk

[deltawatch]

Airline annalist Neidl, said yesterday Continental tops bankruptcy watch ... How many times can an airline use BK? Won’t that be their 3rd. Should Usairways even try to come out in June if fuel prices remain so high?

 

[PHL]

I don't see how this "annalist" you refer to can rank CO higher than DL on the BK watch. CO still has around $1B in cash. DL just had a $5B loss. CO has their labor and operational costs pretty streamlined, as it is.

 

[PCM78]

These companies can go into Bankruptsy as many times as they want it seems, so they can get concessions from their employees...

 

[eolesen]

CO tops the list because they have nothing left to borrow against. I believe DL still has some furniture left to burn. Not much, but some. DL also has some assets that could be sold, i.e. the Shuttle, Comair, and ASA. CO already spun off ExpressJet.

DL's "$5B" loss was an accounting loss. Excluding paper losses, they only lost $2.3B, and they had $1.8 billion in unrestricted cash at the end of December.

CO in comparison had $1.4B in unrestricted cash and a loss of $255M excluding paper losses.

 

[700UW]

It is the other way around, CO still has assets, DL has mortgaged everything in two recent deals from AMEX and GECAS.

 

[eolesen]

It is the other way around, CO still has assets, DL has mortgaged everything in two recent deals from AMEX and GECAS.

[post="257201"][/post]​

See above. DL still has Comair, ASA, and the Shuttle. Those could be sold off. CO doesn't have squat that they could sell aside from CO Micronesia, which might interest someone, but not nearly as much as the NE Shuttle.

 

[700UW]

The Shuttle is part of DL, not a seperate entity.

Atlanta-based Delta said it hopes to cover all 2005 expenses with cash reserves, cash from operations and existing loans. But it predicted a "substantial" loss this year and said it can't borrow anymore because its assets — mainly jets — already secure other loans.

USA Today Story

In its filing, Delta said that its cash reserves would be much lower at the end of 2005 than last year unless it can sell assets or raise money in other ways. Its ability to borrow more money, however, is limited because it has already pledged most of its assets as collateral on previous loans.

AP Story

 

[gatemech]

I thought I read something in the Lorenzo days that 3 strikes you are out. CH7.

Can anyone confirm this? Memory is fading these days.

 

[700UW]

Nope, there is not three strikes in Bankruptcy.

 

[FWAAA]

The Shuttle is part of DL, not a seperate entity.

[post="257205"][/post]​

🙄

Duhhh. That has nothing to do with the fact that DL has the slots and gates at LGA and DCA that can be sold if necessary. How many slots and gates does CO control at either of those airports?

CO expects to end Q1 with between $1.3 billion and $1.4 billion of unrestricted cash:

http://www.continental.com/vendors/default...ult.asp&i=irSEC

CO has contributed nearly all of its remaining stock in XJT to its defined benefit plans (as of Mar 14, CO still owns only 19.7% of it), while DL still owns Comair and ASA. Much like AMR still has some unrealized value in Eagle if it gets desperate.

CO is certainly the next to go, as it has massive pension and debt repayment obligations due this year. DL will be close on its heels.

 

[a320av8r]

Nope, there is not three strikes in Bankruptcy.

[post="257208"][/post]​

We'd better hope not.

 

[Winglet]

The CEOs get as many trips to the trough as they want.

 

[700UW]

CO has negotiated concessions with all groups that freezes their current pensions.

The IAM Represents the F/As and they got the IAM pension plan in their contract if ratified, and it freezed the CAL CARP plan.

DL will go before CO.

 

[Mtnman928]

Nope, there is not three strikes in Bankruptcy.

[post="257208"][/post]​

If that is the case and it's not just the employees that get affected by BK; every vendor and supplier of goods and services will be screaming each time a company goes through BK.

If some CEO decides for the 15th time that he has to change a contract with someone, he'll just go Chapter 11 and not pay his bills. In fact why even have a contract and just run into BK.

Mtnman

 

[JS]

If that is the case and it's not just the employees that get affected by BK; every vendor and supplier of goods and services will be screaming each time a company goes through BK.

If some CEO decides for the 15th time that he has to change a contract with someone, he'll just go Chapter 11 and not pay his bills. In fact why even have a contract and just run into BK.

Mtnman

[post="257461"][/post]​

That won't happen, because 1) just because you file for bankrupcty doesn't mean you can just rip up contracts. A bankruptcy judge has to approve it. 2) The CEO of a publicly traded corporation has a fiduciary duty to the stockholders. If a CEO went to the bankrupcty court on a whim, he would sued out of the job in five seconds.

The owner of a privately owned company could file as many times as he wants, but the judge isn't going to go along with it, and the company's credit would be destroyed.

It's the same with individuals who rush to declare personal bankrupcty just to get rid of their credit card debt they ran up. It works once, but you destroy your credit, making it difficult to return to bankrupcty court over and over.