TWFirst
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Wash Post: DL/NW/Indy Chapter 11 In Sept

Tue Aug 02, 2005 11:06 pm

Not too much of a surprise, but indications are getting stronger that Delta, Northwest, and perhaps Independence will file for Chapter 11 in mid-Sept to take advantage of the current bankruptcy laws before new ones take effect on Oct. 1....

http://money.cnn.com/2005/08/02/news...lines_bankruptcy/index.htm?cnn=yes
An unexamined life isn't worth living.
 
FlyGuyClt
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RE: Wash Post: DL/NW/Indy Chapter 11 In Sept

Tue Aug 02, 2005 11:08 pm

You forgot the key word "COULD."

But thanks for the info and the link.

Safe Flying  Smile

Hopefully no more Chapter 11's for anyone.
Florida Express, Braniff II and ......
 
padcrasher
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RE: Wash Post: DL/NW/Indy Chapter 11 In Sept

Wed Aug 03, 2005 12:35 am

Delta's CEO has already said the new BK laws have no influence on whether the file or not. Additionally, the article mischaracterizes the memo sent to employees. The memo said more work and initiatives were need to avoid BK.
 
goodmanr
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RE: Wash Post: DL/NW/Indy Chapter 11 In Sept

Wed Aug 03, 2005 1:02 am

I think NW/DL are different story than Indy. NW/DL can and probably will survive. NW needs to cut labor costs, and they will be as competitive as anyone. I don't think indy, no matter what they do, can ever do all that well. They bring too much capacity to all their markets, they need to file ch. 7, or go back to flying as an express carrier for a legacy.
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commavia
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RE: Wash Post: DL/NW/Indy Chapter 11 In Sept

Wed Aug 03, 2005 1:02 am

I sincerely hope for the sake of the employees of DL and NW that they don't have to file ever, but both companies may be forced to.

Quoting Padcrasher (Reply 2):
Delta's CEO has already said the new BK laws have no influence on whether the file or not.

And Leo Mullin said he wasn't overpaid!  Smile (Being sarcastic -- I don't actually know if he said that, although I'm pretty sure he thought it.)

Realistically, despite what Grinstein says, I think it is only logical to assume that DL is following the new bankruptcy laws pretty closely and no doubt, if they think that they will have to file after the summer is over, I can't imagine that they would wait until after the new law comes into effect. He can say that the bankruptcy law change has no influence, but I think that's ridiculous and, if true, very poor management. If DL would do better under the current law than the one about to go into effect, that it is no doubt in DL's (and DL's management's) best interests to file before October.

Quoting Padcrasher (Reply 2):
The memo said more work and initiatives were need to avoid BK.

What is the difference between that and the article?

You say that he said: more work is needed.
They say that he said: the work we did isn't enough.
 
panamair
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RE: Wash Post: DL/NW/Indy Chapter 11 In Sept

Wed Aug 03, 2005 1:32 am

Quoting Commavia (Reply 4):
Realistically, despite what Grinstein says, I think it is only logical to assume that DL is following the new bankruptcy laws pretty closely and no doubt, if they think that they will have to file after the summer is over, I can't imagine that they would wait until after the new law comes into effect. He can say that the bankruptcy law change has no influence, but I think that's ridiculous and, if true, very poor management. If DL would do better under the current law than the one about to go into effect, that it is no doubt in DL's (and DL's management's) best interests to file before October.

The provision that would have the most impact for DL is the one limiting management to an 18 month period to file a reorg plan. Grinstein has said that if DL were ever to file, they would plan to exit within 12 months and so this change would not be a decision driver for DL. The other changes involved having to pay utility bills in advance (which would amount to around $25-30 million for DL - again, not a decision driver) and severely restricting retention policies for key executives (again, not a decision driver and considering that DL just went through a management shakeup anyway).
 
FriendlySkies
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RE: Wash Post: DL/NW/Indy Chapter 11 In Sept

Wed Aug 03, 2005 3:41 am

Quoting Panamair (Reply 5):

The provision that would have the most impact for DL is the one limiting management to an 18 month period to file a reorg plan. Grinstein has said that if DL were ever to file, they would plan to exit within 12 months and so this change would not be a decision driver for DL.

Didn't UA say they'd be out in 12 months too? Look how that went...
 
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N328KF
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RE: Wash Post: DL/NW/Indy Chapter 11 In Sept

Wed Aug 03, 2005 3:45 am

We need corporate Darwinism in the form of Chapter 7.
When they call the roll in the Senate, the Senators do not know whether to answer 'Present' or 'Not guilty.' -Theodore Roosevelt
 
padcrasher
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RE: Wash Post: DL/NW/Indy Chapter 11 In Sept

Wed Aug 03, 2005 4:36 am

There was a point by point explanation in the conference call on why the new BK laws matter not to Delta.

It is only your uneducated opinion Comavia that it would be better for Delta to file before October. GG doesn't feel that way. Delta still has 1.7 Billion. You can make no case for BK this year. GG said in the memo more out of court work is needed to avoid BK and that is what he will do.
 
FlyPNS1
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RE: Wash Post: DL/NW/Indy Chapter 11 In Sept

Wed Aug 03, 2005 4:47 am

Quoting Padcrasher (Reply 8):
You can make no case for BK this year.

Actually, a case can easily be made. If DL is going to file, they need to have enough cash on hand to actually make it through the BK process. If they wait till next year, DL's cash reserves will be extremely low which makes a successful emergence from BK less likely. This is particularly true if pension legislation doesn't pass in a timely manner.

Remember last year, GG stated that he would make cuts one time only because he wanted to "do it once and do it right." Clearly, he was wrong, because now he is talking about another round of cuts.

Can DL still avoid BK? I believe they can. However, DL's management needs to act fast and quick talking. GG has been saying for months that additional cuts need to be made (beyond the original $5 billion), yet we've seen very little action. DL's management continues to be too slow in reacting to the changes in this industry.
 
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STT757
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RE: Wash Post: DL/NW/Indy Chapter 11 In Sept

Wed Aug 03, 2005 4:49 am

Quoting FriendlySkies (Reply 6):
Didn't UA say they'd be out in 12 months too? Look how that went...

UAL has received another extension,

http://news.yahoo.com/s/ap/20050802/ap_on_bi_ge/united_airlines
Eastern Air lines flt # 701, EWR-MCO Boeing 757
 
padcrasher
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RE: Wash Post: DL/NW/Indy Chapter 11 In Sept

Wed Aug 03, 2005 4:53 am

But they are not down to the 1 Billion mark. The 1 Billion mark that I have read over and over again by various brokerage house publications. They are not even close. You are making my case.
 
FlyPNS1
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RE: Wash Post: DL/NW/Indy Chapter 11 In Sept

Wed Aug 03, 2005 5:01 am

Quoting Padcrasher (Reply 11):
But they are not down to the 1 Billion mark. The 1 Billion mark that I have read over and over again by various brokerage house publications. They are not even close. You are making my case.

The 1Billion mark is the lowest DL will go before filing. However, in reality, they will probably file sooner.

Here's an analogy: Do you always wait for your cars gas gauge to be pointing at E before you refill? Probably not. Most people will fill up around the 1/4 mark because they know it's too risky to wait till the gauge is at E. $1Billion is the E for Delta, but they won't necessarily wait that long.

Keep in mind that DL could easily be at that 1 Billion mark by 12/31....of course this depends on many variables (fuel, pension relief, etc).
 
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mariner
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RE: Wash Post: DL/NW/Indy Chapter 11 In Sept

Wed Aug 03, 2005 5:03 am

Quoting Padcrasher (Reply 11):
But they are not down to the 1 Billion mark. The 1 Billion mark that I have read over and over again by various brokerage house publications.

What's a billion, here or there?

"The airline ended the second quarter with about $2 billion in cash reserves, a key watermark that Delta officials say the company needs to preserve in order to avoid a crisis."

http://msnbc.msn.com/id/8783274/

cheers

mariner
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padcrasher
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RE: Wash Post: DL/NW/Indy Chapter 11 In Sept

Wed Aug 03, 2005 5:05 am

LOL. Well you analogy is not grounded in reality.

Again, I've read the reports from Goldman Sachs, Ray Niedl, Bear Sterns, etc. They don't share your wild guess about the cash limit.

1 Billion is what they need.
 
padcrasher
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RE: Wash Post: DL/NW/Indy Chapter 11 In Sept

Wed Aug 03, 2005 5:09 am

That paragraph makes no sense. Watermark? Delta has been below the 2 Bil mark for 9 Months now. Obviously MSNBC is missing something.
 
mtnmanmakalu
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RE: Wash Post: DL/NW/Indy Chapter 11 In Sept

Wed Aug 03, 2005 5:13 am

Quoting STT757 (Reply 10):
UAL has received another extension

This is an old joke- If they can't get their s**t together in going on 3 years in bankruptcy now, they never will!! Crap or get off the pot UA!!

And as for NW or DL- I'm sure they are both looking at bankruptcy as an easy option to let some judge play "God" with their contracts and pensions just like they did at UA and US... I hope it doesn't happen but it is looking more like it will everyday that passes...

mtnman
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exFATboy
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RE: Wash Post: DL/NW/Indy Chapter 11 In Sept

Wed Aug 03, 2005 5:22 am

Quoting Mtnmanmakalu (Reply 16):
This is an old joke- If they can't get their s**t together in going on 3 years in bankruptcy now, they never will!! Crap or get off the pot UA!!

This latest extension was requested by the creditor's committee, not management.

I've been as critical of UA management as anyone about the interminable delays in filing, but this extension isn't their idea. GIven the incredible reorg costs in their last financials, I'd hope to God that they were actually ready this time.
 
FriendlySkies
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RE: Wash Post: DL/NW/Indy Chapter 11 In Sept

Wed Aug 03, 2005 5:24 am

Quoting Mtnmanmakalu (Reply 16):
This is an old joke- If they can't get their s**t together in going on 3 years in bankruptcy now, they never will!! Crap or get off the pot UA!!

Are you sure that's a joke? I don't find it funny at all.
 
TPASXM787
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RE: Wash Post: DL/NW/Indy Chapter 11 In Sept

Wed Aug 03, 2005 5:26 am

DL is a mess there is no doubt about that.

However, in this day and age, who isn't a mess? Yes, AA/CO posted small profits this quarter, but it is the summer, and what will happen later this year in the slower season? It's important to look at the whole year before making too many outlandish predictions.

That being said, DL is in a very precarious position since they basically leveraged the whole company with the loan from AMEX. Any way about it, there is no way that approx. $22bil in assets and $27bil in debts is good.

Something has to give.
This is the Last Stop.
 
mtnmanmakalu
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RE: Wash Post: DL/NW/Indy Chapter 11 In Sept

Wed Aug 03, 2005 5:27 am

Quoting FriendlySkies (Reply 18):
Are you sure that's a joke? I don't find it funny at all.

Actually its a sad, sick joke and it shows what is wrong with the bankruptcy system in the US- Can you imagine a "regular" citizen trying to milk it out for this long... Give us all a break!!!
I do, I don't, whatever.......
 
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mariner
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RE: Wash Post: DL/NW/Indy Chapter 11 In Sept

Wed Aug 03, 2005 5:27 am

Quoting Padcrasher (Reply 15):
Delta has been below the 2 Bil mark for 9 Months now.

Hmmm? Delta thinks they have $2 billion.

http://news.delta.com/article_display.cfm?article_id=9797

"At June 30, 2005, Delta had $2.0 billion in cash and cash equivalents and short-term investments, of which $1.7 billion was unrestricted."

cheers

mariner
aeternum nauta
 
padcrasher
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RE: Wash Post: DL/NW/Indy Chapter 11 In Sept

Wed Aug 03, 2005 5:41 am

Mariner,

You're confused. The cash balance that we speak of the the "unrestricted" cash balance. The loan covenant limits are set from this figure. The 1 Billion that you've heard me mention is the "unrestricted" balance that would set off a filing.

It doesn't matter that some know nothing web reporter called the 2 Bil figure a "water mark". It has nothing to do with the issue at hand.
 
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mariner
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RE: Wash Post: DL/NW/Indy Chapter 11 In Sept

Wed Aug 03, 2005 5:57 am

Quoting Padcrasher (Reply 22):
You're confused. The cash balance that we speak of the the "unrestricted" cash balance.

I'm not remotely confused, Padcrasher.

You can tap dance around this as much as you like, you can sing five acts of "Lucia di Lammormoor", but unless Delta is lying to the SEC, they had $2 billion in cash and cash equivalents at the end of the 2Q.

You may be speaking of "unrestricted cash balances" - but I am not. I cannot speak for MSNBC, but it makes sense to me.

Now - your CEO may chose to ignore perilous thresholds but that doesn't mean the MSNBC concept is wrong.

cheers

mariner
aeternum nauta
 
scott0305
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RE: Wash Post: DL/NW/Indy Chapter 11 In Sept

Wed Aug 03, 2005 6:10 am

"Actually its a sad, sick joke and it shows what is wrong with the bankruptcy system in the US- Can you imagine a "regular" citizen trying to milk it out for this long... Give us all a break!!!"

Well said. When will all this time and money wasting silliness end? What is clearly needed in the US airline industry is consolidation. Too many majors and too much protection. Into bankruptcy, out of bankruptcy, into bankruptcy....give me a break!
 
irelayer
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RE: Wash Post: DL/NW/Indy Chapter 11 In Sept

Wed Aug 03, 2005 6:19 am

Quoting Mtnmanmakalu (Reply 20):
Actually its a sad, sick joke and it shows what is wrong with the bankruptcy system in the US- Can you imagine a "regular" citizen trying to milk it out for this long... Give us all a break!!!

And they got to keep most of their capital, renegotiate all of their lease terms, etc etc...its just outrageous. Bankruptcy "protection" is just that...time to reorganize and recoup without everyone coming after you for the bills you owe. It is not carte blanche to do whatever you want, expense them, and then dodge the bills. If I declared bankruptcy my credit would be ruined for at least 5 years. I would be lucky to get a loan or a good credit card for about 5 years after that. When UA emerges from bankruptcy, they BETTER have their sh*t together and they BETTER be making money.

-IR
 
schipholjfk
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RE: Wash Post: DL/NW/Indy Chapter 11 In Sept

Wed Aug 03, 2005 11:49 am

Delta's stock price is at 43 year low today (Aug 2, 2005) !!!
What does that tell you?
The fun of flying... love it !!!
 
jdaniel001
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RE: Wash Post: DL/NW/Indy Chapter 11 In Sept

Wed Aug 03, 2005 1:26 pm

Indy could file earlier than September. But they should go directly to liquidation, as no bank would ever give them DIP financing. They have no history or credit. DL/NW should file Ch. 11. The need the holiday from the creditors and the shelter to wait out the high fuel prices and over capacity.
We Are UNITED!
 
flyibaby
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RE: Wash Post: DL/NW/Indy Chapter 11 In Sept

Wed Aug 03, 2005 1:31 pm

JDaniel

It seems like every since you left INDY you've become a bit of an Indy basher. Were you really that unhappy?
By the way, this is for no one else to throw their two cents on, just really am curious and what his opinion.
 
StevenUhl777
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RE: Wash Post: DL/NW/Indy Chapter 11 In Sept

Wed Aug 03, 2005 1:43 pm

Quoting Mariner (Reply 13):
What's a billion, here or there?

"The airline ended the second quarter with about $2 billion in cash reserves, a key watermark that Delta officials say the company needs to preserve in order to avoid a crisis."

As my macroeconomics professor used to joke: "What's a few zero's among friends?!"

Seriously...forget about $1 Billion. An airline like DL or UA, and those at that level better have $2 Billion just to keep the operation going each day. If they wait until unrestricted cash falls to $1 Billion, forget it...shut the doors.

Quoting Padcrasher (Reply 22):
Mariner,

You're confused.

I doubt it.  Wink Mariner has his shit together. Very rare that he's wrong on anything on this forum...

Quoting Mariner (Reply 23):
but unless Delta is lying to the SEC,

And if they are, that takes DL into a whole new pot 'o trouble...
And the winner for best actress is....REESE WITHERSPOON for 'Walk the Line'!!!!!!!!
 
commavia
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RE: Wash Post: DL/NW/Indy Chapter 11 In Sept

Wed Aug 03, 2005 1:44 pm

Quoting Jdaniel001 (Reply 27):
But they should go directly to liquidation, as no bank would ever give them DIP financing.

For the sake of the industry, I'd hope so, but unfortunately, I'm not too optimistic. There appears to be creditors right now who have absolutely no problem with taking huge risk on injecting tons of money into failing airline business models. These creditors are propping up these dead-weight airlines and are dragging the whole industry down by drowning it in a sea of overcapacity.
 
jdaniel001
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RE: Wash Post: DL/NW/Indy Chapter 11 In Sept

Wed Aug 03, 2005 2:02 pm

Quoting Commavia (Reply 30):
For the sake of the industry, I'd hope so, but unfortunately, I'm not too optimistic. There appears to be creditors right now who have absolutely no problem with taking huge risk on injecting tons of money into failing airline business models. These creditors are propping up these dead-weight airlines and are dragging the whole industry down by drowning it in a sea of overcapacity.

I wonder if there is any rules in the Sarbans-Oxley Law that allows the public to turn in these idiots for wasting money on pipe dreams.
We Are UNITED!
 
flashmeister
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RE: Wash Post: DL/NW/Indy Chapter 11 In Sept

Wed Aug 03, 2005 3:46 pm

Indy has no history? Didn't they manage to stay in the air as Atlantic Coast for a few years before their "transformation"?

It's not over until the padlocks are on the headquarters, folks. If US, the basket case of airline management, can pull itself out of Chapter 11 twice in five years, anyone can do it once.
 
goodmanr
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RE: Wash Post: DL/NW/Indy Chapter 11 In Sept

Thu Aug 04, 2005 12:18 am

Quoting Flashmeister (Reply 32):
It's not over until the padlocks are on the headquarters, folks. If US, the basket case of airline management, can pull itself out of Chapter 11 twice in five years, anyone can do it once.

I think US and Indy are different stories. At least US still has some routes that they can make money on, Indy has heavy competition on every route they fly, nobody likes RJ's, and they can't seem to attract any business travelers. The guys that pay high fares (me included) want their miles to get them somewhere besides Cleveland (no offense to cleveland) and want their status and to have a prayer of not flying on an RJ. Indy is trying to be like a bus service of the air or something, and it's just not working.
USAirways - Chairmans Gold
 
MAH4546
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RE: Wash Post: DL/NW/Indy Chapter 11 In Sept

Thu Aug 04, 2005 12:27 am

Quoting TPASXM787 (Reply 19):
Yes, AA/CO posted small profits this quarter, but it is the summer, and what will happen later this year in the slower season?

The second quarter is two-third during the spring. You can't report summer (third quarter) results until the summer ends. And considering that April and May (which are 2Q) are two of the slowest months in air travel, it's pretty impressive.
a.
 
Midway2AirTran
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RE: Wash Post: DL/NW/Indy Chapter 11 In Sept

Thu Aug 04, 2005 3:33 am

It wouldn't suprise me if Delta delayed filing till after the new laws pass as they have been attempting to do everything out of court for so long now as is. I can't comment on whether that will be a bad or good idea; however from what I understand, DL does share good ties with a few of its largest creditors giving them better ability to handle the new laws should they wait. From a stockholders perspective, it is horrible management that burns through "huge" amounts of cash in less than a decade as with Delta and other carriers like that!

As for Indy, they seem to be improving as the A320's are lowering total CASM with the extra seats and range, lease renegotiations now done, less RJ's in fleet, and resorting their schedules. Load factors have also increased by around 40%(from DH monthly boarding reports) since earlier this year showing that the new Airbus service is creating a positive effect in additions to fleet reduction. IMO, it may keep them alive and kicking longer than most think, I'm not sure what they would have to gain through Chap. 11 bankruptcy after all the above has already been done? Guess we can only guess till we see more financials finally released from them! If anything, it will probably be the fuel driving them to do so.

IMO, Northwest will file for sure before Oct. 17th to gain the competitive advantages from filing.

Quoting Panamair (Reply 5):
The other changes involved having to pay utility bills in advance

Wouldn't fees/rents to airports fall in this catagory, I think it would be more than the estimate above?
"Life is short, but your delay in ATL is not."