What are the Bankreuptcy odds?

[iflyjetz]

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On 3/28/2003 3:24:00 PM Resman1 wrote:

If you have AA, US, UA all in bankruptcy the financing for DL, NW and CO for their filings will be limited. It very well could be that the last "solvent" airline will be the first to shut it''s doors.

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Very salient point.
I expect CAL to be right behind AMR.
DAL would be next. I give them to the end of 2003 at the latest. If Iraq lasts more than another couple of weeks, they could be chap 11 very soon.
NWAC is sitting on a lot of cash; I think that they can ride this one out.

 

[iflyjetz]

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On 3/28/2003 3:54:40 PM eolesen wrote:

I''d move NWAC ahead of DAL and after CAL. NWAC may have a lot of cash, but they also have a lot of debt and cash commitments with A330''s and 757-300''s scheduled for delivery in the near short term.

There are other airlines to consider as well...

YX is teetering on the edge, and some have read between the lines of public statements to conclude that they might simply give up and go into liquidation. No idea where Aloha stands, but to the extent that Hawaiian is able to lower its costs, Aloha will be at a disadvantage.

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There''s a big difference between taking delivery of an aircraft and making debt payments. I haven''t looked at NWAC''s short term debt payments, but a big difference with them is that the state of Minnesota wouldn''t blink an eye to prop them up.

YX? Midwest Express? You''re not talking a lot of capacity removed there. It''d have about the same impact as when Vanguard closed their doors.

 

[WXGuesser]

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On 3/28/2003 3:43:24 PM iflyjetz wrote:

NWAC is sitting on a lot of cash; I think that they can ride this one out.

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Weren''t a lot of people saying that about American about six months back?

TANSTAAFL

 

[Oliver Stone''s Apprentice]

I'd move NWAC ahead of DAL and after CAL. NWAC may have a lot of cash, but they also have a lot of debt and cash commitments with A330's and 757-300's scheduled for delivery in the near short term.

There are other airlines to consider as well...

YX is teetering on the edge, and some have read between the lines of public statements to conclude that they might simply give up and go into liquidation. No idea where Aloha stands, but to the extent that Hawaiian is able to lower its costs, Aloha will be at a disadvantage.

 

[NewHampshire Black Bears]

Well given the fact that "I" am always eternally optimistic("YEAH, RIGHT" !!), I''m going to shock all my "amigo''s" here and predict(if all the concession packages are voted in), that the likelyhood of Carty going "11" is ZERO % !!!!!!!!!!!!!!!!!

Either way, we''re going to be like the words from an old Doobie Bros. song.(with a "slight" change in the wording)

(Original words) -------------- "Taking it to the street"
(Revised version)-------------- Taking it "In the SEAT"!!

NH/BB''s

 

[DFWFSC]

If AA files for BK in the next week or so, and then let''s say UA goes ahead and liquidates in another month, would AA be able to pick up any prize Asia routes or NRT slots ?? Would a BK judge let AA do such a thing?? Just curious...

 

[Bob Owens]

50-50

If AA gets concessions and that causes creditors to abandon UAL then AA might not go BK so they can suck up UALs assetts when they liquidate. For the AA employees its a bad deal because we are stuck with the concessions even though the company will no longer need them. Now they will have even more money to push through Binding Arbitration and the shear size of the company will help sell the idea to the politicians that we should not be allowed to strike.The airline will have hit a Home Run, with the new law in place we will never be able to restore our wages or conditions, they truly will be Permanent concessions". Wages will be determined solely on what the airline chooses to pay, the pilots will be the hardest hit.

If we reject concessions and it looks like UAL will liquidate AA will not go BK for the same reason as above, so they can suck up UALs assetts. They will still push for Binding Arbitration and try and use USAIR's rates to drive ours down. So the still got a triple.

If we reject concessions and UAL looks like its going to stay for a while AA will go BK, followed shortly thereafter by Continental, Delta and so on. The industry will try to pin the blame on stubborn unions. With most of the industry in BK the government will have to do something to straighten things out and this effort at deregulation will go down in history right next to other failed examples of deregulation such as the railroads and the S&Ls.Unfortunately the solution will likely be the regulation of wages as our weak pimp unions still will not work together or even utter the word "STRIKE". So the airlines still get a double.

If we reject concessions and go bankrupt and are followed by the other airlines and by some miracle our union leaders act like UNION LEADERS and tell the government that the regulation of wages is unacceptable and should the government attempt to impose such one sided restrictions upon union members that we will STRIKE, then the government would have to offer some kind of temporary price stabilization measure on tickets or tax relief to stabilize the industry. Instead of making the workers pay for the mistakes of management the consumer or the taxpayer will pay. So the airlines get a single.

We know that there is going to be a hit no matter what. The question is are we going to get whacked with a Homerun or a single? I can live with anything but a Home Run.

 

[Bob Owens]

I hope your right.

 

[ohcaptainron]

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On 3/28/2003 5:46:35 PM Bob Owens wrote:

50-50

If AA gets concessions and that causes creditors to abandon UAL then AA might not go BK so they can suck up UALs assetts when they liquidate. For the AA employees its a bad deal because we are stuck with the concessions even though the company will no longer need them. Now they will have even more money to push through Binding Arbitration and the shear size of the company will help sell the idea to the politicians that we should not be allowed to strike.The airline will have hit a Home Run, with the new law in place we will never be able to restore our wages or conditions, they truly will be Permanent concessions". Wages will be determined solely on what the airline chooses to pay, the pilots will be the hardest hit.

If we reject concessions and it looks like UAL will liquidate AA will not go BK for the same reason as above, so they can suck up UALs assetts. They will still push for Binding Arbitration and try and use USAIR's rates to drive ours down. So the still got a triple.

If we reject concessions and UAL looks like its going to stay for a while AA will go BK, .....


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Hi Bob, A little perspective, AMR has less than 1.5 billion in cash, much less in free cash.Its burn rate is estimated pre war at 10-12 million a day. Probally much higher now. DIP financing will be available at userous rates, the gates will be more restrictive than UALs current gates.Primarly because of the war effects and the lack of any substancial unequitized assets. The notion of AMR ability to purchase anyone's assets is unlikly. In fact other airlines may be in the market for some of AMRS assets like LHR, AMR WILL file early next week possibly this weekend. Its really the only option.
As far as UAL liquidating anytime soon,it is far less likly than has been reported. Its very likly UAL will have in place the 2.51 billion in labor savings prior to May 1. In addition to the 1.5-2.0 billion in non labor savings, 2.0 billion in unrestricted cash, and a report today of a merger with Luftansa, access to ATSB exit financing, which AMR currently does not have, so based on progress to date AMR is a more likly to face the Chapter 7 scenero only because they are entering the bankruptcy scenero so late in the business cycle in a very difficult financing enviorment. I hope not. These are dire times, these companies are all on the brink, however, the notion of UAL liquidation bailing out the industry is folley. Lets face it if the war drags on, oil stays high, no one flys the industry is looking at nationalisation or reregulation, irregardless the hit all labor will take is self evident at UAL and US Airways, disasterous. Good Luck

 

[FA Mikey]

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On 3/28/2003 4:49:45 PM DFWFSC wrote:



If AA files for BK in the next week or so, and then let''s say UA goes ahead and liquidates in another month, would AA be able to pick up any prize Asia routes or NRT slots ?? Would a BK judge let AA do such a thing?? Just curious...

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I think a more likely scenario is AA having a consortium of banks purchase assets for them and lease from them. The same could work for United buying part of AA, if that was the case.

 

[iflyjetz]

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On 3/28/2003 8:56:38 PM FA Mikey wrote:

I think a more likely scenario is AA having a consortium of banks purchase assets for them and lease from them. The same could work for United buying part of AA, if that was the case.

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Mikey, what assets of AMR would UAL want? South America? South America''s been a great way to flush cash down the crapper lately.
As for the LHR gates, the problem with another company taking them is that the Brits would insist that the bilateral commission renegotiate flying rights. You can bet that the Brits would extract a lot of new flights to the US if someone else bought the LHR gates. Personally, I''d rather see AMR survive.
This board is sounding more & more like the USAirways board; betting on picking up assets from their dead competitors. At least I''m glad to see that ohcaptainron has an understanding of what chap 7 of one of us would mean.

 

[AA80Driver]

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On 3/28/2003 7:09:53 PM ohcaptainron wrote:




Just curious as to where these numbers are coming from. They don''t jive with anything that has come from the company, union or analysts. Don''t get me wrong...I thing we''re heading to BK; I''m just curious about the numbers you''re pushing. I''m hearing that AMR is sitting at about 2.25B with about 750M restricted for debt covenant. They''d enter BK with no less than about 1.5B and are burning cash at about 5M/day. Demand is down due to war but burn is also offset somewhat by $10 fuel surcharge. 250,000 pax/day X10 adds up. This puts us about 5-6 months out from a mandatory BK filing, but it may be prudent to declare with a healthy cash position and have more options.

 

[FA Mikey]

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On 3/28/2003 11:18:24 PM iflyjetz wrote:

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On 3/28/2003 8:56:38 PM FA Mikey wrote:

I think a more likely scenario is AA having a consortium of banks purchase assets for them and lease from them. The same could work for United buying part of AA, if that was the case.

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Mikey, what assets of AMR would UAL want? South America? South America''s been a great way to flush cash down the crapper lately.
As for the LHR gates, the problem with another company taking them is that the Brits would insist that the bilateral commission renegotiate flying rights. You can bet that the Brits would extract a lot of new flights to the US if someone else bought the LHR gates. Personally, I''d rather see AMR survive.
This board is sounding more & more like the USAirways board; betting on picking up assets from their dead competitors. At least I''m glad to see that ohcaptainron has an understanding of what chap 7 of one of us would mean.

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We have a nice turn key Miami operation.Caribbean operation. In better times for us or someone else its a money maker. Hey did well for Braniff and Eastern before us.

The last thing I want this thread or any of us to drop to the level of the USAIR people. As they continue to lose buckets full of money dreaming each day of what big daddy RSA will buy for them to fly.

 

[iflyjetz]

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On 3/29/2003 6:53:16 AM FA Mikey wrote:

We have a nice turn key Miami operation.Caribbean operation. In better times for us or someone else its a money maker. Hey did well for Braniff and Eastern before us.

The last thing I want this thread or any of us to drop to the level of the USAIR people. As they continue to lose buckets full of money dreaming each day of what big daddy RSA will buy for them to fly.

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Mikey, in spite of thoughts to the contrary, if one of our companies (AMR or UAL) fails, it will hurt the other company.
Here''s why: I already touched on the LHR gates & what the Brits would demand. Those gates & slots wouldn''t end up going to a single US airline; they''d be divided up among both US and British airlines. I am sure that Virgin would love additional presence at LHR, along with discount airlines. Would either of our companies want to do battle with Ryanair out of LHR? So that blows any European advantage gained by one company going out of business.
Domestically, LCCs would move into the cities that were abandoned by the defunct carrier. Southwest, JetBlue, AirTran, and ATA are probably in the strongest financial position to move into new opportunities created by the vaccuum left by the failed carrier.
I don''t know what would happen to the Pacific, Caribbean, or South American routes (depending on who goes belly up). Taking on large debt to acquire those assets may end up killing the ''winner.''

There is another, more sinister aspect that many employees don''t think about. Both AMR and UAL take a predatory stance toward startups in their back yard. There are certain lines that startups don''t cross if they want to survive. For instance, look at AMR''s response to Legend airlines, operated out of Dallas Love. Or UAL''s response to WestPac''s move from COS to DEN. After 911, Frontier tried to expand; UAL had reduced their schedule out of DEN, and Frontier saw an opportunity. UAL''s response was to go back to their full schedule. The result killed yields for both, but Frontier ended up reducing its schedule. With one of the two giants gone, LCCs would be able to prosper much easier. That would end up driving down wages for all airline employees.

One must examine the unintended consequences of thier competitor going out of business. It''s not all a bed of roses. On second thought, perhaps it is a bed of roses ... very thorny roses.

As for AMR''s assets that would benefit UAL, MIA & DFW hubs. Caribbean routes. LGA, BOS, and PHL gates & slots. But UAL is in no position to acquire additional assets, and I don''t think that any white knight is going to come in and loan money. But again, I don''t want to see any of that happen. The consequences to UAL of AMR going out of business aren''t immediately apparent, but would be negative for UAL. USAirways, CAL, Alaska, America West, Southwest, AirTran, ATA, or JetBlue is a different story.

 

[avek00]

Since September 2001, my take on the airline industry has remained the same: The industry must be allowed to evolve with minimal government intervention. Airlines that seek to restructure themselves must be allowed to do so, within a judicial context if necessary. Carriers that refuse to reinvent themselves must be allowed to perish, so that the survivors might have a chance to gain the pricing power and market share necessary to attain profitability.