donder10
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Joined: Sun Oct 21, 2001 5:29 am

US Major Most Likely To Go Bankrupt?

Mon Jan 21, 2002 7:31 am

Which of the US majors is most likely to go bankrupt in the next year or so.
CO have made profits for a while but I'm not sure they have too many assets,USAirways has a high cost structure,is losing money likes there's no tomorrow and are suffering from the decrease in passenger numbers accross the Atlantic.
United can't fill their 744's regularly and are planning on parking upto 12 I believe.
 
AA737-823
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RE: US Major Most Likely To Go Bankrupt?

Mon Jan 21, 2002 8:05 am

It's a hard call.

AA and United are in BAD BAD shape. United has four BRAND NEW 777s that just rolled off the line... but they are having engines removed nd being moth balled for long term storage. not good.

AA is bad- retiring all 717s and 727s... selling new 737s to Qantas... parking 777s...

They are hurting the worst, BUT- they also have the most room for bad times.

Continental, Northwest, AmWest, MidEx, are ALL in though shape I'd say.

So, in conclusion, I would say the first one to go will probably be AmWest.

But I wouldn't be surprise if AA or UA eventually went bust.

Randy
 
usairways85
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RE: US Major Most Likely To Go Bankrupt?

Mon Jan 21, 2002 8:08 am

i think usairways will be the first to go, they lost over 1 billion dollars last year. something tells me that if they keep losing money they will be gone before you know it.
 
Jeff G
Posts: 438
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RE: US Major Most Likely To Go Bankrupt?

Mon Jan 21, 2002 8:13 am

A tie: America West and US Airways. I don't think either one will be around in 2004. I hope I'm wrong. United may file bankruptcy this year, but will survive in the long run. AA can take care of itself, in spite of the hard times it's had lately. DL, NW, CO, SW, and AL will all be OK.
 
Guest

RE: US Major Most Likely To Go Bankrupt?

Mon Jan 21, 2002 8:56 am

American had plans to totally retire its 727 fleet due to age before Sept 11, that is a non-factor in this argument (they're actually better-off without them). And as for the 717's they were also a temporarily held aircraft (aquired along with TWA), with intentions of complete liquidation were decided before sept 11. Now as for the 777's being parked, I cannot come up with a valid explaination for that, except fiscal requirements.

Cameron
 
Ciro
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RE: US Major Most Likely To Go Bankrupt?

Mon Jan 21, 2002 9:12 am

US Airways has the worst financial shape. It will either go bankrupt or become a mega regional feeder carrier for a larger airline.

I will go for the first option!
The fastest way to become a millionaire in the airline business is to start as a billionaire.
 
Hoffa
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RE: US Major Most Likely To Go Bankrupt?

Mon Jan 21, 2002 9:42 am

I think United is losing the most money at the moment...they are, like every other airline literally haemorraging cash although loads are improving (yields are still horrendous though) but again this is the same story at every other airline.

United seems more exposed due to their huge Asian, European, and Latin American presence (business traffic has tumbled precipitously).

But so far all the airlines except America West have been reluctant to sign up for US Government backed loans because it means signing away control/shares of your airline to the government, in effect nationalizing it.
 
Arsenal@LHR
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RE: US Major Most Likely To Go Bankrupt?

Mon Jan 21, 2002 9:46 am

I'd say United, they look in a desperate shape. Hope i'm wrong though. The day UA or AA goes bust for good, will be a very very sad day.  Crying

Arsenal@LHR
In Arsene we trust!!
 
brains
Posts: 242
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RE: US Major Most Likely To Go Bankrupt?

Mon Jan 21, 2002 9:47 am

US, AW, UA are the airlines in the worst shape. CO, DL, WN, NW will do alright. AA is a toss-up.
Brains
 
XFSUgimpLB41X
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RE: US Major Most Likely To Go Bankrupt?

Mon Jan 21, 2002 1:01 pm

If United continues losing money at the rate it is now, it will be out of money by March.

US Airways and American are pretty close behind.
Chicks dig winglets.
 
prosa
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RE: US Major Most Likely To Go Bankrupt?

Mon Jan 21, 2002 1:06 pm

I'll be a ray of sunshine and predict that none of the majors will fail in the foreseeable future. They'll all get through this rough period, battered but still standing.
I'll base this on two factors:
1) Memories of September 11 will fade, and fear of flying will start to recede.
2) The economy seems to be on the mend, which will translate into increased business travel and better yields.
"Let me think about it" = the coward's way of saying "no"
 
Guest

RE: US Major Most Likely To Go Bankrupt?

Mon Jan 21, 2002 2:12 pm

This is why I do not think America West will go bankrupt anytime in the near future. We have secured over 400 million in loans and 600 million from various concessions from venders and other bussiness partners. This funding will help keep HP around well into the future.
 
flashmeister
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RE: US Major Most Likely To Go Bankrupt?

Mon Jan 21, 2002 2:52 pm

Even the most generous of loans have to be repaid at one point or another... and if there's no money to pay the loan, you have a problem. America West has no profits to use to pay the loans, and nothing left to put up as collateral to borrow more money.

Combine that with labor trouble, governmental meddling as a result of ceding 33% of the airline (and some operational control), low yields, poor public perception, etc... and you have a real mess.
 
ILUV767
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RE: US Major Most Likely To Go Bankrupt?

Mon Jan 21, 2002 3:50 pm

Regarding United Airlines. I doubt that they will go bankrupt. When Jim Goodwin announced that UA would go bankrupt, people forgot that he said "if we keep loosing money at this rate." Right now, United is loosing close to 1 million a day...not 13 million a day when Goodwin made that statement. It has been going down since Novemeber.

Currently, there are four 747s in storage. The other 40 747s are flying the line. Most of them are sent to Asia, or the south pacific once a day. Most of the flights to Asia are going out full/oversold in all cabins.

I saw the pictures of the 777s at PAE, and the deal with those are that there are not enough 777 engines for 777s. They are being put on an "out of service" status, not "stored" status. United has not yet stored a single 777, like it has with the 747. Just to set the record straight.

United's average load factor is around 77% compared to 68% at most other carriers. They also cut more flights post september 11th, but kept the ones at the peak periods. They have cut east-west redeyes as they get in after midnight/1am. They kept west-east red-eyes as they arrive early in the morning.

United is also taking delivery of new Airbusses. Sadly, these planes are going to Ansett for two years. On the plus side, United is making a lot of money by doing this. At the moment, they do not need the extra busses, so leasing them out is a good move for UA.

So, whats wrong with United? Well, United is loosing around 1 million a day. Our average load factor is not high enough, and the premium cabin yeilds are not as high as they once were. United also has to pay its labor force more than any other carrier. Expect pay cuts to come before summer from all employee groups, especially ALPA.

As a cost saving measure, United is starting to contract out many more flights to its Express carriers. SkyWest is opening up a RJ hubs in SFO, LAX and DEN. AirWisconsin RJs are being spotted several times aday in LAX to assist SkyWest. New routes are going to Express that were once shuttle. Where 737s would go out empty to places like SBA and BOI, RJs are now/soon going to these markets. Many of the ex Shuttle routes are going to Express. While the thoughts of an hour in an RJ is not the most pleasent, it saves the company tons of money.

To fix the problems, United fired Jim Goodwin as its CEO and hired Jack Creighton who is accepting no pay for his job, just stock options.

To reduce costs, routes are going to RJs, service items are being cut/reduced, and non-ecential flights are being cut.

A positive effort is being made so that United will fly you where you need to go when you need to go. West to east transcons depart around 11am, for an evening arrival. East coast to west coast transcons leave in the evening for nightime arrivals. Connecting flights to Latin America, Europe, Asia and the South Pacific meet these flights.

United still has one of the best route maps, and has some of the strongest alliance partners. They still offer a award winning product, even with the service cuts. As more and more people begin to fly, sources tell me that by April, United will have a positive cash flow.

I L U V 7 6 7
 
Prinair
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RE: US Major Most Likely To Go Bankrupt?

Mon Jan 21, 2002 5:22 pm

Flashmeister....

WRONG

Get your facts in order before providing wrong information about HP.
PRINAIR : Puerto Rico International Airlines
 
User avatar
BNE
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RE: US Major Most Likely To Go Bankrupt?

Mon Jan 21, 2002 6:16 pm

I guess would be US Airways, maybe not go broke completely but a major downsizing may be necessary.
Does any no how big Eastern were when they stop flying. Who picked up all there passengers. Seems inconvincable a large carrier can go broke, but Ansett did it so it can happen to anyone.
Why fly non stop when you can connect
 
Elchanan
Posts: 60
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RE: US Major Most Likely To Go Bankrupt?

Mon Jan 21, 2002 8:22 pm

What's with the government loans deal anyway? Isn't this the first time the US Government becomes partial owner of any of the airlines? Is this even valid according to American law? I understand that the situation caused by Sept.11 is extremely special, but I should think that any government involvement would be temporary and only in the form of loans - without actually buying shares of a company. Or is the government really getting into the business of aviation? Please help me out getting the facts straight here...
elchanan
 
Greg
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RE: US Major Most Likely To Go Bankrupt?

Mon Jan 21, 2002 10:49 pm

USAir and/or America West.
AA and UA should have enough cash for a bit.
 
Guest

RE: US Major Most Likely To Go Bankrupt?

Mon Jan 21, 2002 11:23 pm

>>United is loosing close to 1 million a day...not 13 million a day when Goodwin made that statement. It has been going down since Novemeber.<<

The $1,000,000/day was during the holiday season. This is that dull, slow period where no one flies all that much until President's day weekend.
 
zrs70
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RE: US Major Most Likely To Go Bankrupt?

Tue Jan 22, 2002 6:17 am

Let's get our codes straight!

America West = HP (AW does not exist)
Southwest = WN (SW does not exist)
17 year airliners.net vet! 2000-2016
 
Hoffa
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RE: US Major Most Likely To Go Bankrupt?

Tue Jan 22, 2002 6:28 am

According to this Reuters report of 20 Jan 2002, United is still losing $15 MILLION daily according to the Presidential Emergency Board which is studying the issue of pay rises for UAL mechanics:

http://reuters.com/news_article.jhtml;jsessionid=MY0GPD0X3JQ2ECRBAEKSFFAKEEARMIWD?type=businessnews&StoryID=530160

A $15 Million cash burn rate is significantly higher than than what AA, CO, DL, or US are losing. ILUV767 mentioned their high exposure to international flying which is precisely the problem to start with.

I have heard rumors that UA will be filing for bankruptcy later this week! Can anybody confirm?
 
Flying-Tiger
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RE: US Major Most Likely To Go Bankrupt?

Tue Jan 22, 2002 6:36 am

SW does exist, that´s the code of Air Namibia.

Regards
Flying-Tiger
http://fly.to/rorders
Flown: A319/320/321,A332/3,A380,AT4,AT7,B732/3/4/5/7/8,B742/4,B762/763,B772,CR2,CR7,ER4,E70,E75,F50/70,M11,L15,S20
 
XFSUgimpLB41X
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RE: US Major Most Likely To Go Bankrupt?

Tue Jan 22, 2002 6:43 am

ILUV767.... that stuff that iheard about united is recent.. they were doing a bit better i think for a short while.. but they really need to make some big changes to keep their head above the water. Its really sad.
Chicks dig winglets.
 
flashmeister
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RE: US Major Most Likely To Go Bankrupt?

Tue Jan 22, 2002 6:50 am

Get your facts in order before providing wrong information about HP.

Prinair...

Perhaps you care to refute my arguments rather than just saying I'm wrong?
 
donder10
Posts: 6944
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RE: US Major Most Likely To Go Bankrupt?

Tue Jan 22, 2002 8:05 am

USAirways aren't even that big so for them to lose 1 billion smackers is saying something.Even pre Sep11 how were their yields doing?
Donder10
 
NWA ARJ
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RE: US Major Most Likely To Go Bankrupt?

Tue Jan 22, 2002 8:18 am

I think NW will do just fine. It is a toss up between UA, AA, AM West, and USAir. Hard to tell which will go first
Nightmare 68, Fargo Tower, Runway 36, Fly Runway Heading, Mantain 10,000, Cleared For Takeoff, Change To Departure
 
2cn
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RE: US Major Most Likely To Go Bankrupt?

Tue Jan 22, 2002 8:50 am

Zrs70-AW may not be the code for America West, but it is shorthand for America West.. not everyone knows the codes, and rather then typing the full name, some may type AW or SW for America West and South West... it isnt that big of a deal to go and correct people on.
 
2cn
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Joined: Wed Aug 22, 2001 6:30 pm

RE: US Major Most Likely To Go Bankrupt?

Tue Jan 22, 2002 8:53 am

oh and Prinair, Flashmeister is correct at least with the loans. There comes a time when the loans are due for repayment, and if the airline hasnt been making enough money and saving it, then they can't repay, and have a major problem on their hands. Also, hasnt America West been having problems paying their leases for their planes?? (not trying to stir anything up.. just can't remember if this was true or not)
 
artsyman
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Joined: Wed Feb 28, 2001 12:35 pm

RE: US Major Most Likely To Go Bankrupt?

Tue Jan 22, 2002 9:14 am

AA isn't going anywhere, nor are Delta, they are both in pretty decent financial shape to weather out this storm, I would say that Continental are going to be fine now also, although I was worried for a little while due to the lack of unencumbered aircraft, but they reduced costs and increased load factors and as the yields gradually improve industry wide, they will probably be the first out of the red.

United have their work cut out for themselves, I think they will file chapter 11, but then just restructure. They are too big and too spread to cope with the change in the industry since Sept 11th, but they will not disappear, just re-organize

Jer
 
A330300
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RE: US Major Most Likely To Go Bankrupt?

Tue Jan 22, 2002 9:17 am

"When Jim Goodwin announced that UA would go bankrupt, people forgot that he said "if we keep loosing money at this rate." Right now, United is loosing close to 1 million a day...not 13 million a day when Goodwin made that statement. It has been going down since Novemeber."

While true, if nothing turns around, UA faces an inevitable death. Maybe not soon, but if things keep going on like they have been...

 
UALfa@jfk
Posts: 303
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RE: US Major Most Likely To Go Bankrupt?

Tue Jan 22, 2002 9:32 am

What I'm not understanding is how on earth is UA still carrying a cash burn of $15 mill/day when, since Goodwin made that announcement, UA has since...

-retired ALL its 727s
-furloughed a few thousand FAs
-cut a bunch of routes
-closed several city ticket offices
-cut back on meal/beverage services
-fuel prices have since decreased
-sold UA connexions software
-fired a heap of middle and low-level management
-accepted Creighton's offer of accepting no salary
-ceased lease-renewals of certain gates and ticket counters at certain cities

There's no way in the world UA is still cash burning that same $15 million a day! Perhaps NOT down to $1 mill, but certainly not as high as it was originally.

Does this make any sense???
 
DouglasDC8
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RE: US Major Most Likely To Go Bankrupt?

Tue Jan 22, 2002 9:44 am

UALfa@jfk-you make a good point. In addition to the cuts that you have mentioned, United has yet to realize the cost savings from the pilot layoff. As the pilots bump lower seniority pilots into different airplanes, there is a great training liability. This training delay results in pilots such as 727 captians being paid for not flying while they await training for their 737 (for example).
 
AIR757200
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Joined: Mon Jul 17, 2000 8:30 am

RE: US Major Most Likely To Go Bankrupt?

Tue Jan 22, 2002 9:59 am


The press cash-burn numbers are very exaggerated. Don't believe everything you hear. Anyone notice that the airlines are not really reporting their daily cash-burns? It's not that bad after the recent cuts. Then again, I'm not saying they are breaking-even.

AIR757200
 
AA737-823
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RE: US Major Most Likely To Go Bankrupt?

Tue Jan 22, 2002 12:38 pm

Someone responded to my original statement that AA had plans to retire both 727s and 717s before 9-11 hit. While that is true, they did NOT have plans to retire them right now. The 727s were to stick around until 2003, and the 717s were going to be returned at a rate of 2 per month, starting in October. That's a far cry from having both types out-of-fleet by June.

I have always respected ILUV767, but I have to argue a few things about United.

IF the deal with UA's 777 is a shortage of PRatt engines, they why, oh WHY, did they take engines off the planes? Planes that already had engines got them removed... so it doesn't sound like a shortage to me.

I don't think ANY of the majors are losing as little as one mil per day, that's a ridiculous expectation right now.

I think AA has a long way to go to regain profitability, especially since they haven't seen it much this year at all.

We have too much competition to support all of the airlines right now. And, on top of that, all of them have over stepped their markets. If American had any monopolies, it would be fine. But what does one airline offer that another doesn't?
 
dash8tech
Posts: 708
Joined: Mon Jul 05, 1999 8:40 pm

RE: US Major Most Likely To Go Bankrupt?

Tue Jan 22, 2002 2:34 pm

Another thing to realize about US Air dropping 1 Billion in the 4th quarter is that their biggest hub is Reagan National. Shut down Atlanta, Houston, DFW, Chicago, or San Francisco for that long and see how much Delta, Continental, Amercian, and United drop after that.

Cheers.
 
Guest

RE: US Major Most Likely To Go Bankrupt?

Tue Jan 22, 2002 3:43 pm

HP has not been having problems paying the aircraft lease payments. Parker has said that the lease payments will be paid by the due dates. Also HP has several years to repay the loans and I do not think they will have a problem repaying them. Parker has a sound bussiness plan that will help HP start making profits once more.
 
Guest

RE: US Major Most Likely To Go Bankrupt?

Tue Jan 22, 2002 8:16 pm

>>Another thing to realize about US Air dropping 1 Billion in the 4th quarter is that their biggest hub is Reagan National.<<

Um, no it isn't.