ItalianFlyer From United States of America, joined Nov 2007, 1099 posts, RR: 2 Posted (2 years 11 months 3 weeks 6 days 6 hours ago) and read 2064 times:
This is based on hypotheticals...but based on current quarterly GDP numbers coming out of the US and EU, it is not entirely out of the question. Lets say, God forbid, most of the Western economies slide back into another sharp recession going into 2012. Who do you think is most vulnerable? This applies to all things related to commercial aviation...including manufacturers.
Lets try and keep this thoughtful and not revisit the ad nauseum 'AA is on the brink' or 'when will AS merge with ______' discussions. With all the changes in BK laws since the early 00s...is Ch. 11 an option? What will carriers do with all this new metal coming online over the next few years if traffic is flat or declining? What will manufacturers do if their order books are replaced with cancelations? Now that most US carriers have a la carte priced everything...how will they manuver around $140 plus p.bbl. oil when pricing leverage isnt there?
YXXMIKE From Canada, joined Apr 2008, 308 posts, RR: 0
Reply 4, posted (2 years 11 months 3 weeks 6 days 3 hours ago) and read 1763 times:
I guess you have to look at who's sitting on the most amount cash with the least amount of exposure to possible rising interest rates (if a ratings cut does happen).
I'd say one's that could fail, contrary to the to big to fail would be AA. When airlines have been profiting in the past couple of quarters they have been posting some epic losses. Virgin America as well, they haven't put together consistent back to back quarters of profitability and I think they'll be very exposed to a double dip. I'd also say that the VS could also be a victim of a double dip.
I can see US, AS, WN doing well through the recession as they seemed to have survived the last one in fairly good shape. However it all really depends on how long and how severe another dip would be; if it's long and bloody then most global carriers will take some big hits especially if oil prices remain high.
I think that right now American is vulnerable. They have higher costs than most competitors and are going to be on the hook to pay for a lot of new planes in the coming years. New planes that they need, but still, it will put a financial strain on them. If things start to go downhill, AA could re-organize and get their house in order (as I believe they should have done in the 2001-2007ish period) to likely stay in business, but I don't think their position now is particularly enviable.
Quoting oykie (Reply 1): I believe AA would be allowed a CH 11 as they are "too big" to just let them collapse.
"Too big to fail" doesn't apply in the airline industry. Braniff thought they were too big to fail, and look how that turned out.
Why do Aerospace Engineering students have to turn things in on time?
ItalianFlyer From United States of America, joined Nov 2007, 1099 posts, RR: 2
Reply 6, posted (2 years 11 months 3 weeks 5 days 23 hours ago) and read 1568 times:
Quoting LAXintl (Reply 2): Btw - according to more than a few, the US already on the cusp of a double-dip as of last quarter now that the governments actual GDP numbers were revised downwards last week.
Exactly LAX...thats why I was starting a post like this.
LTBEWR From United States of America, joined Jan 2004, 13032 posts, RR: 12
Reply 7, posted (2 years 11 months 3 weeks 5 days 23 hours ago) and read 1559 times:
More vulnerable is not so much major USA airlines but more likely some Euro based ones as countries, especially Ireland, Greece and Portugal are having severe economic problems. It could get worse for airlines worldwide with declining tourism and business travel in much of the world.
micstatic From United States of America, joined Jul 2001, 775 posts, RR: 1
Reply 8, posted (2 years 11 months 3 weeks 5 days 23 hours ago) and read 1535 times:
I think it would be AA. I think they'd have a hard time going CH11 as the requirements have changed. Even if allowed I can't seeing the credit market being their to get them financing to get out. Would make more sense for them to be gobbled up in pieces.
ripcordd From United States of America, joined Apr 2000, 1149 posts, RR: 1
Reply 9, posted (2 years 11 months 3 weeks 5 days 22 hours ago) and read 1459 times:
I would have to say DL/UA since they already lowered their costs thru BK going thru that again for them would be very painful and might not make it out. AA has not filed so this would put AA to really make it out of there.
PlaneAdmirer From United States of America, joined Jul 2009, 560 posts, RR: 0
Reply 12, posted (2 years 11 months 3 weeks 5 days 22 hours ago) and read 1379 times:
AA, sadly, but will survive, F9 likely to refile, but may not pull through without new equity, US Air's survival would be in doubt. The backlogs of A&B would be in serious jeopardy as well. DL & UA will be hurt, but may not need file. This alll depends on if there is a second recession and the severity of it.