flydl2atl
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How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 8:32 am

With masisve amounts of debt to service (I believe over 20 billion), thin yields, and the high price of jet fuel, how can Delta survive without filing for bankruptcy? Jerry Grinstein has said that filing for bankruptcy with most of the assests encumbered would likely eventually result in Delta filing CH 11 and eventually being liquidated. What will it take for Jerry to save Delta?

My guesses are some combination of the following:

1. Jet fuel goes down substantially.
2. Delta receives major financing through GE, Boeing, or Airbus.
3. Flyi goes CH11
4. NWA strike causes a major service disruption.
5. Major give-backs from DALPA.
6. Pension reform from congress.
7. Merger with another airline
 
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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 8:37 am

Quoting Flydl2atl (Thread starter):
2. Delta receives major financing through GE, Boeing, or Airbus.

Why would they receive one thin dime from Airbus?

They have no Airbus aircraft, they have shown zero interest in ordering Airbus aircraft.

Many on this board would go nutso if they did and scream foul.

cheers

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Alitalia744
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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 8:44 am

Quoting Mariner (Reply 1):
Many on this board would go nutso if they did and scream foul.

just like the euro's would if Iberia ordered a Boeing...

give it up.
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StevenUhl777
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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 8:47 am

Quoting Flydl2atl (Thread starter):
2. Delta receives major financing through GE, Boeing, or Airbus.

Using what as collateral? What unencumbered assets does DAL have right now? DIP financing will be a challenge for them...

Quoting Flydl2atl (Thread starter):
7. Merger with another airline

Maybe. Who will take on DAL's debt? Any takers?
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ContnlEliteCMH
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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 8:58 am

Cease operations immediately.

Outside of that, I doubt there's little they can do.
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lowrider
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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 9:09 am

Quoting Flydl2atl (Thread starter):
1. Jet fuel goes down substantially.

I see nothing to indicate that this will happen

Quoting Flydl2atl (Thread starter):
2. Delta receives major financing through GE, Boeing, or Airbus

Financed up to the eyeballs by the first two, I doubt airbus has much interests, especially considering that competitor growth can result in more orders

Quoting Flydl2atl (Thread starter):
3. Flyi goes CH11

If/when this does happen, it won't be enough

Quoting Flydl2atl (Thread starter):
4. NWA strike causes a major service disruption.

It hasn't so far, and since NW codeshares, it could also reflect poorly when some of Delta's service is impacted.

Quoting Flydl2atl (Thread starter):
5. Major give-backs from DALPA.

They already gave up 32%, and all of that has already gone through the fuel tanks. Even if they gave up another 32%, it wouldn't be enough. Wages are not a tool to finanace the operation of a company.

Quoting Flydl2atl (Thread starter):
6. Pension reform from congress.

This is a real possibility. It would be a huge, potentially devestating loss to those who lose thier entire pension, but at the rate DL is burning cash, it would only delay the inevitiable.

Quoting Flydl2atl (Thread starter):
7. Merger with another airline

Probably the best option, but with whom? They need a smart, forward thinking, fast reacting managment team. Any takers...?
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flydl2atl
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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 9:13 am

Quoting Mariner (Reply 2):
Why would they receive one thin dime from Airbus?

Airbus lends them money, they agree to a large future purchase of Airbus planes. For instance, replacing their 767 fleet with A350s. Desperate times call for desperate measures. Just an idea...not saying it will happen.

5 billion of Delta's 20 billion dollars of debt is because of an underfunded pension. If Congress would pass pension-reform, then Delta could generate positive cash flow to reduce their debt and subsequently have better access to the credit markets to get better terms on their existing debt. Think of AA in '03. Airlines generate a lot of cash, thus it doesn't take much to go from losing a lot to making a lot (or vice versa).

[Edited 2005-08-26 02:14:42]
 
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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 9:21 am

Quoting Mariner (Reply 1):
Why would they receive one thin dime from Airbus?
They have no Airbus aircraft

You just answered your own question.
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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 9:32 am

Quoting Alitalia744 (Reply 2):
just like the euro's would if Iberia ordered a Boeing...

Call me crazy, but I've flown on an Iberia 747. Was I mistaken, was it not a 747?

Quoting Alitalia744 (Reply 2):
give it up.

Give what up - stating facts? I guess you weren't around for the howls when Airbus put $250 million into US/HP.

Quoting Flydl2atl (Reply 6):
Airbus lends them money, they agree to a large future purchase of Airbus planes.

I could be wrong, but I can't think it would be particularly interesting to Airbus. As others have noted, Delta has debt up the wazoo, about the last thing they need is more debt to service.

I can't think why GE would do it - they are trying to reduce their exposure to risk, not increase it.

In the case of HP/US, Airbus had a long history with both carriers.

Quoting Zone1 (Reply 7):
You just answered your own question.

Rhetorical question.  Smile

cheers

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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 9:34 am

Quoting Flydl2atl (Thread starter):
With masisve amounts of debt to service (I believe over 20 billion), thin yields, and the high price of jet fuel, how can Delta survive without filing for bankruptcy? Jerry Grinstein has said that filing for bankruptcy with most of the assests encumbered would likely eventually result in Delta filing CH 11 and eventually being liquidated. What will it take for Jerry to save Delta?

Although I personally wish it was not so (as I have friends there), I don't think there's any way that they can now avoid a bankrupty filing (Chapter 11, restructuring, and -not- a Chapter 7 liquidation). There is simply too much debt, fuel cost increases are beyond their control (not hedged), and they can't count on Congress to enact pension funding reform on the prompt schedule that Delta needs.

The icing on the cake here (as far as reasons that I think they'll seek Chapter 11 protection) is that the bankruptcy law changes take effect on October 17th. Given the choice of restructuring under the Chapter 11 Code as it exists today, or doing so after the new Code goes into effect, the former gives them much more flexibility than the latter. United has been in Chapter 11 for almost 3 years now, and under the new Code, a firm would have to be out in 12-18 months.

I don't think it unreasonable to assume that Delta will take the same path as United by filing under the existing Code, and therefore getting the same restructuring flexibility that United has had in the last almost 3 years. Since NWA, AA, and Continental all have similar fuel cost and pension cost exposures (but have differing debt and cashflow), it's hypothetically possible that they could also take refuge under the existing Chapter 11 Code, so they too (along with United, ATA, and US Airways) could be on the same level playing field as far as restructuring flexibility. With that protection, maybe 2006 would see lower fuel prices, and Congress enacting some kind of pension reform.

I hope nobody interprets any of this to mean that I hate Delta (or any of the other airlines mentioned) or wish to see them or anyone in bankruptcy--I don't. Situationally, the obscene cost of fuel, and the other factors have created a scenario and shrinking timeframe where big changes are coming to the industry over and above those that have already transpired....

Best of luck to -everyone- in the industry....
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LawnDart
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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 9:45 am

Quoting Lowrider (Reply 5):
They need a smart, forward thinking, fast reacting managment team.

There have been a couple of managerial changes at Delta recently that portend "forward thinking, fast reacting" might be coming soon. The new CFO is, from what's been said, a pretty sharp individual. The fomer Alitalia, former Continental guy now at DL marketing also has a good reputation.

I wouldn't be surprised to see some interesting developments in the near future (one of which could be, admittedly, CH11).

Quoting ContnlEliteCMH (Reply 4):
Cease operations immediately

I hate to be critical, but comments like these, even if in jest, display an ignorance of fact. An airline with the amount of debt that Delta has is still a viable entity, if only to pay off the debt! The franchise is a strong one, and management could focus on those strengths to return the carrier to eventual profitability and pay off the debt.

That's what debtors are counting on...they are owed substantial amounts of money, and the ability to get paid that money exists with an operating carrier, not the presumption that someone wants to buy a fleet of second-hand MD88s during a liquidation sale...

Apart from that, "cease operations immediately" means wrenching hardship for thousands of employees. No one in the airline industry likes to see that kind of pain endured by their brethren...even those at the competition.

Quoting Mariner (Reply 1):
Why would they receive one thin dime from Airbus?

As pointed out in a later reply, because DL agrees to purchase a huge honking fleet of Airbii...

Imagine...DL gets Airbus to agree to take their fleet off DL's hands...the 777s and 738s could be remarketed easily, and the 757s find a home with FedEx (why not?). The MD88s...well...I smell a write-off...or sell a few here, a few there. Remember, Boeing was out hawking A340s a couple of years ago.

In return, DL buys 72 A319s...200 A320s...120 A321s and 130 A350s of various sizes...531 aircraft (about the same as the current fleet). Would Airbus do it? Imagine the ability to trump the 787 alone with an order for 130 A350s.

Oh, and toss in an option for about 200 next-generation A320s...oh, and about 500 Embraer 170 / 190s to replace those CRJs (who has a stake in Embraer?). Oh, and the whole damn fleet is powered by CFM56s...GENx...and CF34s...built by the same company that decides...hmm...maybe investing in DL ain't such a bad thing after all...

Think I'm fantasizing? How's this for fantasy...Air France joins the party and makes an investment in their largest code-share partner, while at the same time committing themselves (including KLM) to the A350 as well.
 
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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 9:52 am

Quoting LawnDart (Reply 10):
Think I'm fantasizing?

In the case of the Airbus fleet, yes. For several reasons.

(i) I think Airbus might take a risk for a small-ish amount of money, but on an order of that size, I think they would feel very uneasy about getting paid.

A fleet transition of the kind you describe would cost a freakin' fortune - in transition costs, as separate from acquisition costs.

(ii) Given that Delta has had minimal interest in Airbus, I can't think why they would be interested now.

As my mom used to say: always be nice to 'em on the way up, coz you never know when you're going to need 'em on the way down.

(ii) Why would Delta not go to GE - or Boeing - first?

cheers

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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 10:10 am

Quoting Mariner (Reply 11):
i) I think Airbus might take a risk for a small-ish amount of money, but on an order of that size, I think they would feel very uneasy about getting paid.

Airbus needs to sell aircraft...getting someone to finance the purchase is the trick. Once the airplane leaves the factory and Airbus turns over the keys, it's not Airbus' problem anymore.

Can Airbus convince someone to finance? Psst...buddy...finance DL's huge fleet purchase at good rates, and I'll get you more business later as well...nah...don't worry, they're good for it, and if they stiff us, we can resell to someone else...they're great aircraft, everyone wants one.

Quoting Mariner (Reply 11):
A fleet transition of the kind you describe would cost a freakin' fortune - in transition costs, as separate from acquisition costs.

Press Release...dateline Toulouse. EADS subsidiary Airbus today announced the largest single aircraft order in the history of commercial aviation. Troubled U.S. carrier Delta Air Lines today placed on order for 530 jets, with options for another 200 aircraft, including 130 of Airbus' new A350 jetliner, thus vaulting that aircraft into the lead over Boeing's 787.

As part of the deal, Delta pilots will be transitioned to the new fleet at Airbus' training facility in Miami. Also, Airbus has agreed to assist in transition Delta TechOps to the new fleet with an agreement to set up a joint venture that would make Airbus maintenance available to other carriers as well.

Quoting Mariner (Reply 11):
(ii) Given that Delta has had minimal interest in Airbus, I can't think why they would be interested now.

$$$. Money talks. And DL seriously considered the A330 (but eventually went with the ever-popular 767-400).

Quoting Mariner (Reply 11):
(ii) Why would Delta not go to GE - or Boeing - first?

Delta to the Boeing and G.E. salesmen: we've gotten this great offer from Airbus and from Rolls-Royce and IAE. What can you do for me?
 
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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 10:21 am

Quoting LawnDart (Reply 10):
I hate to be critical, but comments like these, even if in jest, display an ignorance of fact.

On the contrary. I realize what you are saying -- about debt service, franchise, etc. There are employees, and communities, etc. to be considered as well. However, you are either willfully or otherwise ignoring the opposite path, one with another set of "facts": one way to stop losing money is to stop operations.

The question here is how could Delta survive while avoiding Chapter 11. There is probably *nothing* Delta can do, at this point, to avoid it. Ceasing operations obviously violates the requirement for survival

But ceasing operations *will* avoid Chapter 11. I'm not saying it's realistic. You may not like the side effects, and neither does anybody else, but it would accomplish the goal. To say otherwise is, to me, being ignorant of this obvious and self-explanatory fact.

And before you attack me further, perhaps you should consider the reality of many other businesses, such as the one I own. When we started our consulting company, we openly discussed shuttering the operation as a viable exit strategy. There are *facts* that make this viable: the company's present value to its stakeholders could be in excess of what it may be at some future point. If we believe that the company's position will continue to deterioriate, it is *obviously* in our best interests to cease operations. If you are losing a dime on every dollar you turn, and you don't think you can stop the loss, ceasing operations *is* a viable way to stop further deterioration of the stakeholder's position. This is a plain and obvious FACT even if we have employees, franchise, and physical assets.

EDITED because I misrepresented the original question in the thread.

[Edited 2005-08-26 03:25:56]
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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 10:33 am

Quoting Flydl2atl (Thread starter):
Jerry Grinstein has said that filing for bankruptcy with most of the assests encumbered would likely eventually result in Delta filing CH 11 and eventually being liquidated. What will it take for Jerry to save Delta?

DL, unfortunately, has the highest risk of going under. While I hope it isn't so (DL was the first airline I flew on), Bankruptcy is not going to be avoided by them. Its only a question of when.

Quoting Flydl2atl (Reply 6):

Airbus lends them money, they agree to a large future purchase of Airbus planes. For instance, replacing their 767 fleet with A350s. Desperate times call for desperate measures. Just an idea...not saying it will happen.

Can DL turn around quick enough to make this purchase? Maybe it would be the largest fleet order ever; replace the MD-80's, MD-90's, 732's, right away with a 318/319/320 fleet. Get financing with GE to go for the CFM's... This is the best scenario I see...

Quoting LawnDart (Reply 10):

That's what debtors are counting on...they are owed substantial amounts of money, and the ability to get paid that money exists with an operating carrier, not the presumption that someone wants to buy a fleet of second-hand MD88s during a liquidation sale...

The old adage, owe the bank $100,000 the bank owns you, owe the bank $10,000,000,000 and you own the bank. It would rock the world for DL to go under... but when do you stop throwing good money after bad? And if DL does go under, MD-80's will go for a few bucks over their bare metal scrap value! Maybe we could chip in and buy one?  hyper ??  duck 

Airlines do go out of business (Tango Uniform). Braniff, Eastern, Pan Am... and more. I give DL five months to get their act together... But then again, I didn't give DH this long nor US... So hopefully I'm wrong again!  spin 

OPENnlguy, I agree, DL will have to file chapter 7. I'm just not sure how they'll avoid chapter 11 unless GE/Airbus/Boeing come riding in on a white horse. FL is ripping them apart in ATL. Not to mention B6 on NE to Florida and I'm sure DH is hurting their yields...

It seems that at least one USA major is going to liquidate... which one? Since US dodged the bullet... DL seems next in its path...

Lightsaber
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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 10:34 am

Quoting ContnlEliteCMH (Reply 13):
If you are losing a dime on every dollar you turn, and you don't think you can stop the loss, ceasing operations *is* a viable way to stop further deterioration of the stakeholder's position. This is a plain and obvious FACT even if we have employees, frachise, and physical assets.

"If you don't think you can stop the loss". Delta management obviously thinks they can. Remember, they posted two years of $1 billion + profit not too long ago.

Quoting ContnlEliteCMH (Reply 13):
The question here was what Delta could do, if anything, to avoid Chapter 11. There is probably *nothing* Delta can do, at this point, to avoid it. Except this. Ceasing operations *will* avoid Chapter 11. I'm not saying it's realistic.

I'm glad you're not saying it's realistic, because it isn't. As you stated, so many entities have a stake in DL's survival...and throwing in the towel is not in the nature of large corporations. Chapter 11 may certainly not be avoidable, but most large corporation at least try to restructure their debt before calling it quits. And if history is any indication, DL will be around a while before ceasing operations.

Quoting ContnlEliteCMH (Reply 13):
And before you attack me further,

I'm sorry, but if you're original post hadn't been more than a two sentence, drive by shooting, I wouldn't have felt the need to criticize. Now, if you had originally stated with what you ended up saying in this reply, it would've made for a good initial response.
 
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mariner
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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 10:37 am

Quoting LawnDart (Reply 12):
Airbus needs to sell aircraft...getting someone to finance the purchase is the trick. Once the airplane leaves the factory and Airbus turns over the keys, it's not Airbus' problem anymore.

Seperate issue. I was talking about getting its investment back - "getting paid" for that.

The $250 million that is going into US/HP is, finally, peanuts. But to get Delta back from the brink would cost several billion, and Delta is a money losing business.

I note that United has lined up $3 billion in exit fiancing and is looking for more.

Assuming that Delta would need at least a similar sum, on top of its present debt, I would be deeply nervous about getting my money back if I were an investor.

Airbus and Boeing are aircraft manufacturers not airline financiers (mostly). To have to fall back on their good graces for money suggests that the capital markets are closed to Delta.

In which case, to lend Delta billions would seem to me to be foolhardy.

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SEAPlane10
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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 10:37 am

If Chapter 11 bankruptcy were to occur, what would happen to the frequent flyer miles accrued? Would they still be redeemable?

Regards
 
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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 10:37 am

Quoting Lightsaber (Reply 14):
OPENnlguy, I agree, DL will have to file chapter 7. I'm just not sure how they'll avoid chapter 11 unless GE/Airbus/Boeing come riding in on a white horse. FL is ripping them apart in ATL. Not to mention B6 on NE to Florida and I'm sure DH is hurting their yields...

I don't know exactly how that's agreeing with me, because I actually said:

Quoting OPNLguy (Reply 9):
I don't think there's any way that they can now avoid a bankrupty filing (Chapter 11, restructuring, and -not- a Chapter 7 liquidation).

I'll say again, 11, *not* 7....  Wink
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Evan767
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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 10:40 am

Well Delta did just sell ASA to SkyWest generating 385 million in cash. Not close to 20 billion but I think it is a good start.
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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 10:40 am

Quoting SEAPlane10 (Reply 17):
If Chapter 11 bankruptcy were to occur, what would happen to the frequent flyer miles accrued? Would they still be redeemable?

Another airline might buy out the FF program in an attempt to lure passengers to them, but it would have to be a very large airline (only AA could pull it off in my opinion).

Otherwise, kiss those miles goodbye.

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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 10:49 am

Quoting Lightsaber (Reply 20):
Another airline might buy out the FF program in an attempt to lure passengers to them, but it would have to be a very large airline (only AA could pull it off in my opinion).

Otherwise, kiss those miles goodbye.

Not good news, not good news at all! A lot of trips have been planned using the miles...even went out of my way to ensure flying on SkyMiles partners.

What about the partner airlines...namely Air France in this case?

Is Lan Chile also one of their partners?

Regards
 
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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 10:56 am

Quoting LawnDart (Reply 15):
I'm sorry, but if you're original post hadn't been more than a two sentence, drive by shooting, I wouldn't have felt the need to criticize. Now, if you had originally stated with what you ended up saying in this reply, it would've made for a good initial response.

I'll stop assuming that some facts are as self-evident as *I* thought they were.
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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 11:10 am

Quoting Lightsaber (Reply 20):
Another airline might buy out the FF program in an attempt to lure passengers to them, but it would have to be a very large airline (only AA could pull it off in my opinion).

Otherwise, kiss those miles goodbye.

Lightsaber

Umm, no. The original post asked what would happen if they filed for Ch 11. Like in the case of United, US, Continental, and all the other airlines that have filed for Ch 11. the airline still runs and your miles are still good. The only time you lose your miles is if they go to Ch 7 and cease to exist. We are still quite a ways from that.
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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 11:15 am

Quoting Evan767 (Reply 19):
Well Delta did just sell ASA to SkyWest generating 385 million in cash. Not close to 20 billion but I think it is a good start.

Thats about the same amount they lost last quarter. Its like burning the furniture to stay warm. I think it will take a miricle to avoid bankruptcy at this point. All we can do is get our personal houses in order and hope it is only Chap 11.
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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 11:16 am

They can't and they won't. It's necessary to cancel the current union agreements. Once cancelled, they'll reorganized, sign a new charter with pilots, and come back better than ever.

Regards.
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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 11:42 am

I don't see a realistic scenario for Delta to avoid a Chapter 11 Bankruptcy filing. As others suggested that they will probably do so before the date the USA Bankruptcy laws change (including as to businesses) in mid-October, probably after getting the 3rd quarter financial numbers. I would suggest that they would do so the weekend of October 8th-9th and probably in a specially arranged outside of business hours filing in USBC in Atlanta or New York City.
Going into BK would be the easiest way to deal with the situation they face. They can get out of onerous union contracts (especially as to the senior pilots), modify work rules, lay off people, get out of old pensions, modify or ditch property and aircraft leases, ditch or modify routes - all pending approval of the court. Even then DL has to have a huge amount of luck and smart management to ever leave Ch. 11 and not go into Ch. 7 Liquidation.
 
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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 12:19 pm

Quoting Flydl2atl (Thread starter):
3. Flyi goes CH11

Let's not give FlyI that much credit...

Quoting Lowrider (Reply 5):
Quoting Flydl2atl (Thread starter):
6. Pension reform from congress.

This is a real possibility. It would be a huge, potentially devestating loss to those who lose thier entire pension, but at the rate DL is burning cash, it would only delay the inevitiable.

You know, I think this could really help. It would smooth out their pension plan payments, kind of like converting a short term mortgage with a baloon payment to a long-term fixed rate mortgage.

The real question is what would bankruptcy even do? If look at their SEC filings, they've reduced operating costs from $13 billion annually to almost $5 billion annually OUTSIDE of Chapter 11. I think really the only thing they can do in BK is restructure a lot of their leases.
 
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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 12:50 pm

Quoting Flydl2atl (Thread starter):
With masisve amounts of debt to service (I believe over 20 billion), thin yields, and the high price of jet fuel, how can Delta survive without filing for bankruptcy?

Except for a sudden and dramatic drop in the price of fuel, none of the scenarios are viable in the long run.
Tired of airline bankruptcies....EA/PA/TW and finally DL.
 
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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 1:18 pm

Quoting OPNLguy (Reply 9):
I hope nobody interprets any of this to mean that I hate Delta (or any of the other airlines mentioned) or wish to see them or anyone in bankruptcy--I don't. Situationally, the obscene cost of fuel, and the other factors have created a scenario and shrinking timeframe where big changes are coming to the industry over and above those that have already transpired....

My brother is a DL pilot. Every time he calls me from the cockpit, and I ask him what he's doing, his response is "just wondering how long it is before Delta files for BK, and whether I'll have a job this time next year."

IOW, the insider view at DL is not optimistic.
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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 1:27 pm

Quoting OPNLguy (Reply 18):
I don't know exactly how that's agreeing with me, because I actually said:

Oops, my bad, I reversed the two bk numbers!  embarrassed  I meant to agree that DL would probably go into BK.

Quoting Zone1 (Reply 23):

Umm, no. The original post asked what would happen if they filed for Ch 11. Like in the case of United, US, Continental, and all the other airlines that have filed for Ch 11. the airline still runs and your miles are still good. The only time you lose your miles is if they go to Ch 7 and cease to exist. We are still quite a ways from that.

Sorry everyone, I'm fighting a cold and I just can't get chapter 7 and 11 straight in my head today. Mea culpa.

My answers were meant for liquidation. Obviously, if an airline keeps flying, the FF miles stay good. (A la UA).

Lightsaber
"They did not know it was impossible, so they did it!" - Mark Twain
 
OPNLguy
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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 1:31 pm

Quoting Halls120 (Reply 29):
My brother is a DL pilot. Every time he calls me from the cockpit, and I ask him what he's doing, his response is "just wondering how long it is before Delta files for BK, and whether I'll have a job this time next year."

If he's got some reasonable amount of seniority, I'd expect him to have a job as I don't think that Delta would shrink much.

One of the things that ones sees on this thread (and elsewhere) is that some folks think bankrupt = kaput and otherwise don't distinguish between a reorganization under Chapter 11 and a liquidation under Chapter 7.
ALL views, opinions expressed are mine ONLY and are NOT representative of those shared by Southwest Airlines Co.
 
kanebear
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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 1:39 pm

A friend of mine is in an ops capacity at DL and is sending his resume out hither, thither and yon. He's survived cutbacks, etc but he's very ready to get out. IMO morale is zilch at DL... very very sad to see.
 
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lightsaber
Crew
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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 1:45 pm

Quoting OPNLguy (Reply 31):
is that some folks think bankrupt = kaput and otherwise don't distinguish between a reorganization under Chapter 11 and a liquidation under Chapter 7.

Like me tonight!  duck 
Ok, I'm the son of a retired accountant, so I normally know the difference! Its this darn cold.

Lightsaber
"They did not know it was impossible, so they did it!" - Mark Twain
 
positiverate
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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 2:12 pm

Quoting Halls120 (Reply 29):
My brother is a DL pilot. Every time he calls me from the cockpit, and I ask him what he's doing, his response is "just wondering how long it is before Delta files for BK, and whether I'll have a job this time next year."

Call me crazy...but shouldn't he be flying the plane and not making personal calls from the cockpit?
 
halls120
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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 2:15 pm

Quoting Positiverate (Reply 34):
Quoting Halls120 (Reply 29):
My brother is a DL pilot. Every time he calls me from the cockpit, and I ask him what he's doing, his response is "just wondering how long it is before Delta files for BK, and whether I'll have a job this time next year."

Call me crazy...but shouldn't he be flying the plane and not making personal calls from the cockpit?

I would have thought that on this web site, I wouldn't have had to point out the obvious, that he was calling while the plane was at the gate.
"Suppose you were an idiot. And suppose you were a member of Congress. But I repeat myself." Mark Twain, a Biography
 
GQfluffy
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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 2:43 pm

Quoting LawnDart (Reply 12):
$$$. Money talks. And DL seriously considered the A330 (but eventually went with the ever-popular 767-400).

Weak argument...but how about fleet commonality?

Quoting Evan767 (Reply 19):
Well Delta did just sell ASA to SkyWest generating 385 million in cash. Not close to 20 billion but I think it is a good start.

Question, does this mean Skywest (the DL side) will operate out of ATL now as well as SLC?

fluffy
This isn't where I parked my car...
 
Kohflot
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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 5:23 pm

It seems very little has been said about what's brought Delta to this point. I'll throw in my  twocents .

IMHO, Delta has wasted the past four years chasing after low-yield leisure travelers..

1) They built Song in an attempt to attract passengers from jetBlue.
2) They built up even more extensive RJ flying from MCO and TPA to attract passengers from Independence Air.
3) Many of their new routes to Mexico have been immaculately timed with announcements by Frontier.

Granted, there have been a few good ideas (TXL, MAA, etc.), even if they haven't been hugely successful. But in general, it seems they've done very little to attract a higher-yielding clientele..

1) Their BusinessElite product has been allowed to become non-competitive (to put it nicely).
2) Many mainline routes were downgraded to RJs, no doubt alienating some valued frequent fliers.
3) Interior refurbishing has crawled along at a snail's pace.
4) They've handed the business-travel transcon market to AA, CO, and UA.
5) DFW.....
6) They've consolidated even more of their flying at ATL, an airport some frequent fliers intentionally avoid.

I guess I don't understand why they have acquiesced to other majors that were in the same boat while spending millions of dollars to attract the $89 Northeast-to-Florida passengers. Some may argue that they were merely trying to protect market share.. but what loyalty are they protecting when study after study shows most travelers these days make their decision based on price?

These are strictly my opinions and are not necessarily shared by anyone else.
Ask why..
 
sebolino
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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 5:30 pm

Quoting Alitalia744 (Reply 2):

just like the euro's would if Iberia ordered a Boeing...

give it up.


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ILOVEA340
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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 6:44 pm

One way is to not sell people like me $198 flights from San Francisco to Zürich and $135 r/t flights from SFO-BOS.
just my 2 cents

p.s. I'll take those fares when they offer them but I won't hold it against them to get rid of those fares.
 
CV747
Posts: 166
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RE: How Can Delta Avoid Filing For Bankruptcy?

Fri Aug 26, 2005 7:11 pm

Quoting StevenUhl777 (Reply 3):
Maybe. Who will take on DAL's debt? Any takers?

There are candidates, but outside the US. The US law does not allow a majority ownership from abroad. (Which eventually only cuts of US companies from badly needed capital.)


On the CH 11 vs. CH 7 discussion: I am missing one point in the discussion.
CH 11 protects the company from creditors. But running in CH11, means that your cashflow has to be OK. Without the necessary cashflow CH11 is going to lead straight into CH7.
Example: If DAL gets CH11 protection. The banks or leasing companies cannot cut credits and demand the money back. But on the other hand, all service companies, especially fuel providers will demand to get their invoices paid on the spot. If you have cash flow problems... No Fuel, no flights.

Olafur
 
halls120
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RE: How Can Delta Avoid Filing For Bankruptcy?

Sat Aug 27, 2005 2:55 am

Quoting Kohflot (Reply 37):
1) Their BusinessElite product has been allowed to become non-competitive (to put it nicely).
2) Many mainline routes were downgraded to RJs, no doubt alienating some valued frequent fliers.
3) Interior refurbishing has crawled along at a snail's pace.
4) They've handed the business-travel transcon market to AA, CO, and UA.
5) DFW.....
6) They've consolidated even more of their flying at ATL, an airport some frequent fliers intentionally avoid.

I agree completely with #1, #3, #4, and #6.
"Suppose you were an idiot. And suppose you were a member of Congress. But I repeat myself." Mark Twain, a Biography
 
Evan767
Posts: 2198
Joined: Wed Aug 24, 2005 10:52 am

RE: How Can Delta Avoid Filing For Bankruptcy?

Sat Aug 27, 2005 3:13 am

Quoting Lowrider (Reply 24):



Quoting Lowrider (Reply 24):
Thats about the same amount they lost last quarter. Its like burning the furniture to stay warm. I think it will take a miricle to avoid bankruptcy at this point. All we can do is get our personal houses in order and hope it is only Chap 11.

Yes but it still gives time for Delta to figure out what they are going to do to avoid this.

Quoting GQfluffy (Reply 36):
Question, does this mean Skywest (the DL side) will operate out of ATL now as well as SLC?

From what I have heard, yes. This doesn't make sense though for obvious reasons.

BTW, Delta pilots are not going to take another cut and I agree with them. It is just too much money to lose.
The proper term is "on final" not "on finals" bud...
 
gigneil
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RE: How Can Delta Avoid Filing For Bankruptcy?

Sat Aug 27, 2005 3:16 am

All or nothing, is it?

That worked out well at Eastern... something the DL pilots should all remember vividly.

N
 
panamair
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RE: How Can Delta Avoid Filing For Bankruptcy?

Sat Aug 27, 2005 3:33 am

Quoting Evan767 (Reply 42):
BTW, Delta pilots are not going to take another cut and I agree with them. It is just too much money to lose.

Great. Let DL and the judge throw out their contract entirely, impose another round of 30% cuts across the board, and while we're at it, throw out the pensions as well....
 
georgiaame
Posts: 949
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RE: How Can Delta Avoid Filing For Bankruptcy?

Sat Aug 27, 2005 3:33 am

Kohflot stated it much more eloquently than I ever could. (He obviously hasn't flown with them recently)

Personally, I don't believe they can avoid bankruptcy. I don't think they can avoid flat out liquidation. Their position is much worse than anyone on this BB or in the Delta boardroom is stating.

Their stock is selling at about $1.35 a share, which makes them worth about $195 million as of yesterday. The whole friggin airline can be bought tomorrow for $97M. What is the cost for a new 777? Hell, for a 767? What is the going price for a well maintained, used 777? Because I know where you can get 8 of them pretty cheaply.

I'm not wearing a golden parachute, but if I were, I would be reaching for the rip cord right about now.
"Trust, but verify!" An old Russian proverb, quoted often by a modern American hero
 
DLPMMM
Posts: 2118
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RE: How Can Delta Avoid Filing For Bankruptcy?

Sat Aug 27, 2005 3:33 am

Quoting CV747 (Reply 40):
On the CH 11 vs. CH 7 discussion: I am missing one point in the discussion.
CH 11 protects the company from creditors. But running in CH11, means that your cashflow has to be OK. Without the necessary cashflow CH11 is going to lead straight into CH7.
Example: If DAL gets CH11 protection. The banks or leasing companies cannot cut credits and demand the money back. But on the other hand, all service companies, especially fuel providers will demand to get their invoices paid on the spot. If you have cash flow problems... No Fuel, no flights.

You are correct that cashflow is very important in Chapter 11. Most all the service companies that DL is dealing with already have DL on a cash in advance basis due to the looming prospect of Chapter 11. During Chapter 11 DL's cash flow would actually probably improve as the payments on DL's crushing long term debt (but not leases) and pension obligations could be suspended. There would be additional costs involved in Chapter 11 (primarily legal) but I would hardly expect these to exceed the amount of the suspended debt service. I would also expect that much of the legal expense has already been incurred by DL and the much of the Chapter 11 exit plan has already been formulated.

Union contracts are mostly a non issue with DL as only the pilots (and one other small group, the trainers? I forget) are unionized, and they agreed in the last contract to convert to a defined contribution pension plan.

I think this could end up looking like the last CO pre-packaged Chapter 11 filing.

If DL could dump the past pension and debt obligations, their CASM is in line to be a competitor in the future.
 
OPNLguy
Posts: 11191
Joined: Tue Jun 15, 1999 11:29 am

RE: How Can Delta Avoid Filing For Bankruptcy?

Sat Aug 27, 2005 3:42 am

Quoting DLPMMM (Reply 46):
Union contracts are mostly a non issue with DL as only the pilots (and one other small group, the trainers? I forget) are unionized,

I believe it's the dispatchers, represented by PAFCA, an in-house union...
ALL views, opinions expressed are mine ONLY and are NOT representative of those shared by Southwest Airlines Co.
 
padcrasher
Posts: 1815
Joined: Tue Aug 10, 2004 6:17 am

RE: How Can Delta Avoid Filing For Bankruptcy?

Sat Aug 27, 2005 4:50 am

Quoting Evan767 (Reply 42):
BTW, Delta pilots are not going to take another cut and I agree with them. It is just too much money to lose.

DALPA just voted out Malone today. He was seen a an obstacle to further cuts.
They voted in a guy that talked about being pragmatic....hmmm?

Is it possible that the Delta pundits on airliners.net got it wrong again?
 
padcrasher
Posts: 1815
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RE: How Can Delta Avoid Filing For Bankruptcy?

Sat Aug 27, 2005 4:59 am

Anybody know what this "20 Billion" in debt figure translates into CASM for Delta? I'll bet it's a really big number compared to what the industry average is?LOL

I won't hold my breath for any basher to answer this.

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