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Which US Airline Is The Next To Go Bankrupt?  
User currently offlineAukahkay From Singapore, joined Nov 2005, 69 posts, RR: 0
Posted (8 years 8 months 3 days 14 hours ago) and read 10479 times:

In recent years, due to escalating oil prices and 9/11, several US airlines have filed for bankrupcy protection under Chapter 11 of the US Bankrupcy Code. So far, US, NW, UA and DL are under bankrupcy protection.
Do you guys think that AA is in imminent danger of bankrupcy?

45 replies: All unread, showing first 25:
 
User currently offlineHannigan From United States of America, joined Mar 2004, 327 posts, RR: 0
Reply 1, posted (8 years 8 months 3 days 14 hours ago) and read 10475 times:

Sun Country - I honestly have no idea.  irked 

[Edited 2006-01-21 16:25:37]


We got planes! We got gates! What the hell!
User currently offlineGraham697 From United States of America, joined Dec 2003, 350 posts, RR: 0
Reply 2, posted (8 years 8 months 3 days 14 hours ago) and read 10403 times:

AA is in the best position compared to all majors, I think we have finally seen the industry balance out on that front.


Looking forward to the new AA
User currently offlineCory6188 From United States of America, joined Feb 2004, 2686 posts, RR: 5
Reply 3, posted (8 years 8 months 3 days 13 hours ago) and read 10389 times:

Quoting Graham697 (Reply 2):
AA is in the best position compared to all majors

I don't know if I necessarily agree. I know that AA is larger than CO, but it lost over $600 million in the fourth quarter, compared to CO's loss of "only" $128 million. AA is larger, but not five times the size of CO.

Also, for the year, CO lost $205 million, and AA lost $861 million.

All of the data are from the airline's press releases, by the way.


User currently offlineN723GW From United States of America, joined Nov 2005, 232 posts, RR: 0
Reply 4, posted (8 years 8 months 3 days 13 hours ago) and read 10363 times:

Isn't or wasn't Aloha on the brink?


The dude abides
User currently offlineDeltaGator From United States of America, joined Sep 2005, 6341 posts, RR: 13
Reply 5, posted (8 years 8 months 3 days 13 hours ago) and read 10343 times:

My choice is WN. Their fuel hedges are running out and I predict they will have a worker revolt for higher wages , slower turnarounds, and less work. Just kidding.

I have no idea but AA seems a likely candidate given their high losses but CO is right there as well. CO may have only lost 128 million but they still have a huge amount of debt outstanding do they not? How much does AA have outstanding? And given US's lack of ability to learn from mistakes they could possibly end up back in bk court for a third time.



"If you can't delight in the misery of others then you don't deserve to be a college football fan."
User currently offlineSonOfACaptain From United States of America, joined May 2004, 1747 posts, RR: 6
Reply 6, posted (8 years 8 months 3 days 13 hours ago) and read 10330 times:

Quoting DeltaGator (Reply 5):
And given US's lack of ability to learn from mistakes they could possibly end up back in bk court for a third time.

How can you say that? There is a completely brand new time running US, or I should say US-East.

-SOAC



Non Illegitimi Carborundum
User currently offlineRst033 From United States of America, joined Dec 2005, 37 posts, RR: 0
Reply 7, posted (8 years 8 months 3 days 13 hours ago) and read 10322 times:

The news has not been great for CO. Kellner has already started talking about a rough market. Finally there is the lovable regime in Iran filling the world with its love and overall understanding jacking oil prices to unreasonable levels. I would not be surprised if Iran escalates the rhetoric they’re will be a slew of airlines going in the red.

Great time to buy some naked puts!


User currently offlineAukahkay From Singapore, joined Nov 2005, 69 posts, RR: 0
Reply 8, posted (8 years 8 months 3 days 13 hours ago) and read 10301 times:

What about European carriers? Are any European carriers under bankrupcy protection presently? Sabena has gone bust long time ago. Which is next to go? AZ?

User currently offlineAirlinespotter From United States of America, joined Sep 2005, 162 posts, RR: 0
Reply 9, posted (8 years 8 months 3 days 13 hours ago) and read 10270 times:

Just want to clarify this: US is no longer under chapter 11 protection

User currently offlineOkie From United States of America, joined Jul 2003, 3044 posts, RR: 3
Reply 10, posted (8 years 8 months 3 days 13 hours ago) and read 10258 times:

Here is an ugly.
AA a division of AMR quits paying AE also a division of AMR.
AA declares bankruptcy and settles with AE for an airline. (sounding a little like TWA?)
AE says hey you AAers want a job well we got one for a 40% cut in your previous wages to operate AA LLC a division of AE.
Oh and by the way we only pay mainline wages on planes with 110 or more seats.

Okie

[Edited 2006-01-21 17:40:43]

User currently offlineDeltaGator From United States of America, joined Sep 2005, 6341 posts, RR: 13
Reply 11, posted (8 years 8 months 3 days 13 hours ago) and read 10220 times:

Quoting SonOfACaptain (Reply 6):
Quoting DeltaGator (Reply 5):
And given US's lack of ability to learn from mistakes they could possibly end up back in bk court for a third time.

How can you say that? There is a completely brand new time running US, or I should say US-East.

How much of the management is left over from those not so long ago days in bk court? They came out too quickly the first time and went right back. I personally don't think they are very strong after their second run through the court system but we'll see soon enough.

Quoting Airlinespotter (Reply 9):
Just want to clarify this: US is no longer under chapter 11 protection

I know. I was just saying that they didn't learn from their mistakes the first time and wound up right back in bk court. It could happen again.



"If you can't delight in the misery of others then you don't deserve to be a college football fan."
User currently offlineCommavia From United States of America, joined Apr 2005, 11637 posts, RR: 61
Reply 12, posted (8 years 8 months 3 days 13 hours ago) and read 10215 times:

Quoting Aukahkay (Thread starter):
Do you guys think that AA is in imminent danger of bankrupcy?

Absolutely not, nowhere close. AA has more cash on hand with which to sustain itself than any other airline in America (including Southwest). AA is nowhere near bankruptcy.

Quoting Cory6188 (Reply 3):
I know that AA is larger than CO, but it lost over $600 million in the fourth quarter, compared to CO's loss of "only" $128 million. AA is larger, but not five times the size of CO.

You have to dig a bit deeper into the numbers. Of AA's $604M net loss, $220M was just net items, and of that, virtually all was in interest expense. I'm not saying that interest is not a real and growing problem for AA and other airlines trying to pay off long-term debt, but it does not reflect the core financial condition of the American Airlines operation as it stands today. AA's operating loss was $384M for the quarter, slightly more than for the same period last year, but AA also spent 33.4%, or $397M, more in 4Q05 than 4Q04 on juet fuel, which pretty much erased their entire profit margin. In essence, if AA was paying for fuel today what it was paying one year ago, it would have been operationally profitable for the quarter, and if it were paying for fuel today what it was paying in oh, say, the fourth quarter of 2001, it would be making huge operating and net profits. But, once again, fuel prices are part of the airlines' cost structures today, whether they like it or not.

As to the comparison of AA vs. CO, and which is financially stronger, it is a bit of a toss-up. While CO is doing better on a day-to-day financial basis, as evidenced by the fact that they had an operating loss margin for 4Q05 of -3.3%, compared with -7.4% for AA, it is also telling that AA has far more liquid cash as of right now, and that both companies have leveraged virtually all of their assets (although AA started out with far more assets to leverage). Bottom line, IMO: both are superbly run companies with committed management teams and employee workforces, and both are firmly on the road to recovery assuming that one or both of two things happens: a) fuel prices begin to stabalize, and/or b) airlines begin to regain some pricing control. Whether those two things happen, however, is very "up in the air" (pun intended). But I think all would agree that both AA and CO have come an enormous way since 9/11 in restructuring their operations and costs. Both are to be commended.


User currently offlineNIKV69 From , joined Dec 1969, posts, RR:
Reply 13, posted (8 years 8 months 3 days 10 hours ago) and read 10019 times:

Quoting Hannigan (Reply 1):
Sun Country

Doubt it

Quoting Graham697 (Reply 2):
AA is in the best position compared to all majors

I wouldn't say that, if it wasn't for their biz pax AA would be in worse trouble. CO is stronger IMO.


User currently offlineDeltaGator From United States of America, joined Sep 2005, 6341 posts, RR: 13
Reply 14, posted (8 years 8 months 3 days 10 hours ago) and read 10016 times:

Quoting Commavia (Reply 12):
Absolutely not, nowhere close. AA has more cash on hand with which to sustain itself than any other airline in America (including Southwest). AA is nowhere near bankruptcy.

The same thing was said about Delta right after 9/11 with the ridiculous amount of cash they had sitting around. They burned through it quite quickly. I'm not saying they will be in BK but it might happen one day.



"If you can't delight in the misery of others then you don't deserve to be a college football fan."
User currently offlineConcordeBoy From , joined Dec 1969, posts, RR:
Reply 15, posted (8 years 8 months 3 days 10 hours ago) and read 9978 times:

Quoting Commavia (Reply 12):
AA has more cash on hand with which to sustain itself than any other airline in America (including Southwest). AA is nowhere near bankruptcy.

Cash on hand has little direct correlation to the absility go avoid bankruptcy... in fact, airlines need rather significant cash reserves to file and make it through bankruptcy in its own right.


User currently offlineKC135TopBoom From United States of America, joined Jan 2005, 12148 posts, RR: 51
Reply 16, posted (8 years 8 months 3 days 10 hours ago) and read 9937 times:

Quoting Cory6188 (Reply 3):
Also, for the year, CO lost $205 million, and AA lost $861 million.

Even though AA has about $2B cash on hand, they cannot continue to loose money at that rate.

Quoting DeltaGator (Reply 5):
My choice is WN. Their fuel hedges are running out and I predict they will have a worker revolt for higher wages , slower turnarounds, and less work. Just kidding.

WN just signed a new fuel hedge contract, around the 1st part of Nov. 2005. The new contract goes through 2009.

Quoting Commavia (Reply 12):
AA has more cash on hand with which to sustain itself than any other airline in America (including Southwest). AA is nowhere near bankruptcy.

How long do you think AA creditors are going to let them hold onto that cash without being paid? AA also needs a good portion to pay the "golden parachutes" for top executives who bail out just before they file for Chapter 11 protection.


User currently offlineCOERJ145 From United States of America, joined Jun 2005, 1421 posts, RR: 1
Reply 17, posted (8 years 8 months 3 days 9 hours ago) and read 9870 times:

Quoting KC135TopBoom (Reply 16):
Quoting Cory6188 (Reply 3):
Also, for the year, CO lost $205 million, and AA lost $861 million.

Wasn't it a 68million loss for CO??

[Edited 2006-01-21 21:18:54]

[Edited 2006-01-21 21:19:22]

User currently offlineKC135TopBoom From United States of America, joined Jan 2005, 12148 posts, RR: 51
Reply 18, posted (8 years 8 months 3 days 9 hours ago) and read 9830 times:

Quoting COERJ145 (Reply 17):
Wasn't it a 68million loss for CO??

I believe that was the loss CO posted for the 3rd quarter (Jul-Sep). The posted a 4th quarter loss of $128M (Oct-Dec). CO's total loss for CY 2005 was $205M. IIRC, they actually made a few $M the first quarter (Jan-Mar).


User currently offlineDeltaGator From United States of America, joined Sep 2005, 6341 posts, RR: 13
Reply 19, posted (8 years 8 months 3 days 9 hours ago) and read 9817 times:

Quoting KC135TopBoom (Reply 16):
Quoting DeltaGator (Reply 5):
My choice is WN. Their fuel hedges are running out and I predict they will have a worker revolt for higher wages , slower turnarounds, and less work. Just kidding.

WN just signed a new fuel hedge contract, around the 1st part of Nov. 2005. The new contract goes through 2009.

I was being facetious. I doubt though the new fuel hedges are as good as the ones they've had right now though.

Quoting ConcordeBoy (Reply 15):
Cash on hand has little direct correlation to the absility go avoid bankruptcy... in fact, airlines need rather significant cash reserves to file and make it through bankruptcy in its own right

Very true. You don't file for Bk when you have zero cash. You file well before it since you want to reorganize and not liquidate.



"If you can't delight in the misery of others then you don't deserve to be a college football fan."
User currently offlineFLYACYYZ From Canada, joined Jan 2004, 1914 posts, RR: 11
Reply 20, posted (8 years 8 months 3 days 9 hours ago) and read 9799 times:

If for no other reason than to level the playing field in terms of lowering cost structure to be consistent with the other legacy players, my vote goes for AA.


Above and Beyond
User currently offlineUsflysagain From United States of America, joined Sep 2005, 28 posts, RR: 0
Reply 21, posted (8 years 8 months 3 days 8 hours ago) and read 9738 times:

Quoting DeltaGator (Reply 11):

How much of the management is left over from those not so long ago days in bk court? They came out too quickly the first time and went right back. I personally don't think they are very strong after their second run through the court system but we'll see soon enough.

Quoting Airlinespotter (Reply 9):
Just want to clarify this: US is no longer under chapter 11 protection

I know. I was just saying that they didn't learn from their mistakes the first time and wound up right back in bk court. It could happen again.

And I'm just saying that the US managment is completely different right now as Doug Parker (CEO of HP) is now in charge and righting the ship. While I understand using history as a precedent, this is too much of an unfair comparison at this point right now.

Usflysagain


User currently offlineIceTitan447 From , joined Dec 1969, posts, RR:
Reply 22, posted (8 years 8 months 3 days 8 hours ago) and read 9704 times:

Quoting Commavia (Reply 12):
Absolutely not, nowhere close. AA has more cash on hand with which to sustain itself than any other airline in America (including Southwest). AA is nowhere near bankruptcy.

I wouldn't say they are in the clear, and no you never said that! I think they need to restructure their airline a little more. UAL shaved 7 Billion, NWA needs 140million from concessions, how much will any of them save?

Here is an article that might offer some insight into this Question.
Enjoy!

It wont let me hyper link it, so here are a few paragraphs.
At least two airlines are expected to face greater financial challenges this year. Southwest Airlines, which has reported an annual profit for the past 32 years, is facing increased pressure this year because of fuel and labor costs.

Last year, Southwest was able to hedge 80 percent of its fuel prices at $26 a barrel, said airline analyst Ray Neidl of Calyon Securities Inc. This year, only 70 percent of Southwest's fuel is hedged at $36 a barrel. Financially stable airlines are able to off set the effect of fuel-price increases by hedging, or locking in low prices for future deliveries.


Here is some more.

In addition to its fuel concerns, Southwest's contract with its pilots becomes amendable in September.

JetBlue Airways is also expecting higher fuel bills this year because it has lower hedges compared with last year. "We're certainly not going to have the income statement on the hedges . . . in 2006 that we had in 2005," said John Owen, JetBlue's chief financial officer.

To offset the higher fuel prices, airlines such as JetBlue make fewer discounted seats available on flights.
AMERICAN
This month, American's regional carrier, American Eagle, begins charging $1 for a soda on flights out of Los Angeles as part of its newest revenue enhancement test. American, the nation's No. 1 carrier, is also considering charging for snacks, pillows and blankets. The new traveler charges are related to the vigorous cost-cutting moves by American's parent, AMR Group.

United Air Lines



--------------------------------------------------------------------------------


United, the nation's No. 2 carrier, is focusing on expanding internationally as well as on growing its low-cost U.S. subsidiary, Ted. The airline also plans to spend about $400 million on new airport check-in kiosk machines, updating its computer systems and refurbishing its aircraft interiors. United has begun charging passengers $2 for each checked bag at its major hub airports including Washington's Dulles International, Chicago O'Hare and Denver International.


Delta Air Lines



--------------------------------------------------------------------------------


No. 3 Delta has shuttered its two-year-old, low-fare Song subsidiary and is cutting operations, for instance by closing two-thirds of its gates at Orlando International Airport where it once was the region's largest airline. In September, Delta filed for bankruptcy protection and asked for an additional six months to submit its reorganization plan. Delta's pilots agreed last month to a 14-percent temporary reduction in hourly pay and other cuts equal to 1 percent. The cuts will save the airline about $143 million and will be in place until the pilots vote on a permanent agreement in March.

Northwest Airlines



--------------------------------------------------------------------------------


Northwest, which also filed for bankruptcy protection in September, plans to launch a subsidiary carrier, tentatively called NewCo, in 2007 to operate flights to smaller cities with 70- to 100-seat aircraft by 2010. But travelers may have to wait longer than that: The plan has faced increased opposition from Northwest pilots, who said the subsidiary could lead to the outsourcing of pilot jobs. This week, the airline's pilots and flight attendants both threatened to strike if the carrier is allowed to terminate its existing contracts.


Continental Airlines



--------------------------------------------------------------------------------


The airline is expanding to more profitable international routes, such as to Latin American and Europe, where there is less competition, particularly from low-cost U. S. airlines. Continental Airlines has restructured its operations outside of bankruptcy court. The Houston-based carrier reached a tentative agreement with its flight attendants union that could save the carrier about $72 million per year. The membership will vote on the contract later this month. The airline had targeted $500 million in annual concessions from its workers.

JetBlue Airways



--------------------------------------------------------------------------------


With 100 new Embraer 190 100-seat jets, the airline is planning to expand to as many as eight new destinations this year, JetBlue's Owen said. The airline is also considering adding more longer-haul flights, trips of about 2,000 miles, that could connect the East Coast to many Midwestern destinations. Yesterday, the airline announced $25 one-way fares for flights between Dulles and Boston's Logan International Airport for tickets purchased by Tuesday, for travel to be completed by Feb. 15.

Southwest Airlines



--------------------------------------------------------------------------------


The nation's largest low-cost carrier continues to expand its route network. Southwest began service out of Denver this month, its third new destination in eight months. Analysts also expect Southwest to have more pricing power out of Baltimore-Washington International Thurgood Marshall Airport because of the demise of Independence Air. In an effort to sell more seats, Southwest next month will join the majority of the airline industry by restricting the number of free seats it offers on each flight for redemption by members of its frequent-flier program. But frequent fliers will now have two years -- instead of one year -- to use their flight credits before they expire.

US Airways



--------------------------------------------------------------------------------


After merging with America West last fall, the now-Tempe, Ariz.-based US Airways Group Inc. will spend the year trying to integrate both airlines' operations. The airline is focusing on combining the two reservation systems and Web sites by early 2007. Meanwhile, the airline has lowered its prices in key markets. The airline last month cut its prices on its shuttle between New York and Washington's Reagan National Airport by 44 percent on tickets purchased 21 days in advance. Yesterday, the airline cut fares to nearly 20 destinations by as much as 60 percent primarily on routes out of its three hub airports in Pittsburgh, Philadelphia and Charlotte


Kind of a nice read.


User currently offlineSunking737 From United States of America, joined Feb 2005, 2045 posts, RR: 8
Reply 23, posted (8 years 8 months 3 days 8 hours ago) and read 9650 times:

Quoting Hannigan (Reply 1):
Sun Country - I honestly have no idea.

I don't think so bud, as they have already done it in 2001, and new owners took over April 2002. The investors have been very happy since day one.  Cool



Just an MSPAVGEEK
User currently offlineMEA-707 From Netherlands, joined Nov 1999, 4328 posts, RR: 35
Reply 24, posted (8 years 8 months 3 days 7 hours ago) and read 9611 times:

Frontier and Spirit aren't doing well lately, I just have the guts feeling one of them might just cease or file for chapter 11 overnight without anyone expecting it.


nobody has ever died from hard work, but why take the risk?
25 AirCanada014 : I would say AA way before CO.
26 TACAA320 : I respectfully disagree. But CO has been under chapter 11 more than once. AA ever never.
27 BigGSFO : Personally I think Hooters Air will be the next to go "tits-up" (pun intended).
28 Hannigan : That's why I said I have no idea. I wasn't being serious.
29 JBLUA320 : I wouldn't be surprised to see Spirit go... They haven't been having too much luck lately. We hear little about them because they are private, but so
30 Centrair : There has been a lot of talk of increasing foreign investment and lifting foreign ownership of U.S. carriers. I wonder if these changes come through,
31 Malaysia : What about Independence Air Mark 2?
32 M404 : My guess is CO and AA simply based on feelings that to match the savings the other legacies will/have achieved in BK they will have to unless employee
33 Post contains images LTU932 : Doubtful. As if someone would want a DH v2. I'm curious about that as well. I believe this could also be part of what hurt DH in its final months bef
34 Christao17 : Let's clarify something here: That $2 charge is not for each checked bag. That charge is for each bag checked with a skycap, and it is not limited to
35 Jamake1 : Without trying to create a mutiny on this board, my guess would perhaps be Spirit Airlines. They have a brand new fleet of airbus aircraft and are cha
36 LSPA : Oil prices when up about the same in every country around the world (Europe probably the most). So my guess is that every airline needs to adjust tick
37 Antoniemey : Which would work, IF all the airlines would do it... but you have holdouts like WN (Due to hedges) or NW (Due to management stupidity) and then every
38 WhiteHatter : If Iran becomes a problem with military action by the Israelis or other countries then oil could spike to over $100 a barrel. And in that environment
39 Aerokiwi : Exactly what is so unreasonable about that? Seems perfectly fair to me. Perhaps not to you but then they may be why labour costs are so much of the p
40 Nkops : I can tell you that NK is not making money, but not in imminent danger of filing BK (or so they tell us!!!)
41 AJMIA : Not CO/AA. You cannot go into BK just to throw out your contracts and lower your cost. I think they will work out their issues on their own before BK
42 ChiGB1973 : This is very true. TZ should have filed a long time before they did. TZ tried for years to get the lease payments adjusted through lawyers and/or in
43 VV701 : No. There is no Chapter 11 Protection in Europe. If you are declared bankrupt in Europe then you go out of business and your assets are sold off by a
44 JamesJimlb : I personally think that delta is gonna go bankrupt because i heard something about them cancelling song. yet i also think some of the "small airlnes"
45 Post contains links Bongo : Just to add some info to your post: Predictions:Airlines To Disappear In The Next 2 Yr (by Bongo Jun 23 2005 in Aviation Polls & Prefs)
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