Sponsor Message:
Civil Aviation Forum
My Starred Topics | Profile | New Topic | Forum Index | Help | Search 
Scenario: Dbl Dip Recession. Who Most Vulnerabe?  
User currently offlineItalianFlyer From United States of America, joined Nov 2007, 1099 posts, RR: 2
Posted (3 years 4 months 4 weeks 1 day 20 hours ago) and read 2110 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?

12 replies: All unread, jump to last
 
User currently offlineoykie From Norway, joined Jan 2006, 2756 posts, RR: 4
Reply 1, posted (3 years 4 months 4 weeks 1 day 19 hours ago) and read 1989 times:

Quoting ItalianFlyer (Thread starter):
'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?

I believe AA would be allowed a CH 11 as they are "too big" to just let them collapse.

A double dip, would probably park even more regional jets. Would that be good news for the Q400 as well as the ATR 42/72 combo?



Dream no small dream; it lacks magic. Dream large, then go make that dream real - Donald Douglas
User currently offlineLAXintl From United States of America, joined May 2000, 26175 posts, RR: 50
Reply 2, posted (3 years 4 months 4 weeks 1 day 18 hours ago) and read 1922 times:

Essentially everyone is vulnerable when the revenue floor drops out below them. Its only a matter how each company reacts and how they ride the storm out.

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.

Increasing Signs' Of A Possible Double-Dip Recession
http://www.huffingtonpost.com/2011/0...double-dip-recession_n_916200.html

Rating Agency sees signs of double dip recession‎
http://axcessnews.com/index.php/articles/show/id/21931

10 Signs a Double-Dip Recession Is Coming‎
http://www.theatlantic.com/business/...ssion-is-around-the-corner/242888/

In many ways, US domestic airlines are virtually confirming this already, as most saw declines in bookings and yields starting in June after strong growth thru May.



From the desert to the sea, to all of Southern California
User currently offlinerl757pvd From United States of America, joined Dec 1999, 4718 posts, RR: 11
Reply 3, posted (3 years 4 months 4 weeks 1 day 17 hours ago) and read 1841 times:

Best way to boost domestic jobs/economy.... slash domestic investment... yea that should do it!

After this whole ordeal, part of me thinks the republicans are intentionally sabotaging the economy to win in 2012...

The FAA got screwed and the airport projects across the country will also take a huge hit for the second half od 2011.



Experience is what you get when what you thought would work out didn't!
User currently offlineYXXMIKE From Canada, joined Apr 2008, 310 posts, RR: 0
Reply 4, posted (3 years 4 months 4 weeks 1 day 17 hours ago) and read 1809 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.

Interesting few months ahead!


User currently offlineBMI727 From United States of America, joined Feb 2009, 15845 posts, RR: 27
Reply 5, posted (3 years 4 months 4 weeks 1 day 17 hours ago) and read 1802 times:

Quoting ItalianFlyer (Thread starter):
Lets try and keep this thoughtful and not revisit the ad nauseum 'AA is on the brink'

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?
User currently offlineItalianFlyer From United States of America, joined Nov 2007, 1099 posts, RR: 2
Reply 6, posted (3 years 4 months 4 weeks 1 day 14 hours ago) and read 1614 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.


User currently offlineLTBEWR From United States of America, joined Jan 2004, 13210 posts, RR: 16
Reply 7, posted (3 years 4 months 4 weeks 1 day 14 hours ago) and read 1605 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.

User currently offlinemicstatic From United States of America, joined Jul 2001, 787 posts, RR: 1
Reply 8, posted (3 years 4 months 4 weeks 1 day 13 hours ago) and read 1581 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.


S340,DH8,AT7,CR2/7,E135/45/170/190,319,320,717,732,733,734,735,737,738,744,752,762,763,764,772,M80,M90
User currently offlineripcordd From United States of America, joined Apr 2000, 1197 posts, RR: 1
Reply 9, posted (3 years 4 months 4 weeks 1 day 13 hours ago) and read 1505 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.

User currently offlineFlaps From United States of America, joined Feb 2000, 1301 posts, RR: 4
Reply 10, posted (3 years 4 months 4 weeks 1 day 12 hours ago) and read 1458 times:

Quoting BMI727 (Reply 5):
"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.

And Eastern and PanAm.....


User currently offlinemicstatic From United States of America, joined Jul 2001, 787 posts, RR: 1
Reply 11, posted (3 years 4 months 4 weeks 1 day 12 hours ago) and read 1451 times:

Quoting ripcordd (Reply 9):
AA has not filed so this would put AA to really make it out of there.

See my post above. Going Chapter 11 isn't as easy as just pushing a button and doing it. The credit market is awful right now. Especially for an airline in AA's position.



S340,DH8,AT7,CR2/7,E135/45/170/190,319,320,717,732,733,734,735,737,738,744,752,762,763,764,772,M80,M90
User currently offlinePlaneAdmirer From United States of America, joined Jul 2009, 564 posts, RR: 0
Reply 12, posted (3 years 4 months 4 weeks 1 day 12 hours ago) and read 1425 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.

Top Of Page
Forum Index

This topic is archived and can not be replied to any more.

Printer friendly format

Similar topics:More similar topics...
Who Operates B747 The Most As Of Sept'09 posted Thu Sep 17 2009 03:10:41 by NewYorkCityBoi
BMI At LHR - Who Needs Each Other Most? posted Wed Jul 15 2009 14:59:13 by Gilesdavies
Who Sees The Most A380s These Days? posted Sat May 16 2009 09:25:29 by Mudboy
Who Are Most Likely To Order The A388R posted Thu Feb 19 2009 11:36:28 by 747400sp
MD11 Who Had The Most Success With It? posted Thu May 29 2008 19:43:22 by Thunder747
New York-Los Angeles, Who Offers The Most Seats? posted Wed Mar 14 2007 20:07:58 by Juventus
Who Has The Most 767s? posted Fri Jan 19 2007 08:32:12 by WestJetYQQ
Out Of Production Airplanes- Who Has The Most? posted Mon Oct 23 2006 18:00:07 by DIJKKIJK
Who Has The Most To Lose In MSY? posted Wed Aug 31 2005 05:38:22 by Quickmover
Who Is The Most Profitable North American Carrier? posted Tue Aug 16 2005 10:00:46 by DFORCE1