eastern023
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If AA Demises, Who Gets What?

Fri Sep 30, 2011 1:33 am

In a hypothetical scenario of AA's liquidation:

What would happen to its route authority? What carrier gets what?

1. DL Moves into MIA? Launches Latin American routes. Or UA does?
2. Who gets the European routes?
3. What happens to the current Boeing and Airbus mega order?
4.What happens to OneWorld? The alliance would really scramble without a North American carrier more so now with Mexicana dead). Desperately scramble to get US to move over?
5. ORD would be all UA's turf then.
6. What happens to DFW? Jetblue takes over?

What do you think?
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N62NA
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RE: If AA Demises, Who Gets What?

Fri Sep 30, 2011 1:37 am

Gee, what's with all the "AA Demise" and "AA Bankruptcy (insinuating Chapter 7)" topics today?
 
FlyASAGuy2005
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RE: If AA Demises, Who Gets What?

Fri Sep 30, 2011 2:18 am

Let me first say that I DO NOT believe AA will go the way of Chap. 7, even if its not right away (11 first then 7) however I will answer your question as you said this is purely hypothetical and for entertainment.

I don't think the LGA slots will go to one particular airline. In the estate sale, I think that a host of airlines will bid for them in batches; this being set up by the DOT to keep things level.

JFK is a hard one. DL and B6 stand to gain the most although DL can already grow organically with what they have in their portfolio. There are routes I think they should try with a combination of mainline and large RJ but not many. They may very well bid for the sake of bidding to have the opportunity to grown but I don't see them throwing away money like they did in the past. This is a very new DL.

I'm going to leave DFW out. There are no shortage of gates at current and anyone can step in at any time and try to "hub" there. The question is who would want to fill the AA void if something like this happens. That's a HUGE market to just let sit. This isn't PIT or MCI.

LAX- well everyone and their mother will try to catch those passengers so that's a no brainer. DL for sure will look at it as a golden opportunity, as they are just about always the #3 if not #4 in terms of price command and market share.

MIA is sort of in the same boat. I also think that UA may actually try to drive their foot deep in the market if such an opportunity arose. IAH is great for traffic going south but MIA serves a different and isolated role to many many markets. It's just so O&D rich.
I think UA again will try to step up to the plate, in turn trying to turn ORD into a fortress hub.

LHR is a true golden egg though. Yes it's open skies but time slots are still VERY VALUABLE.

On top of all of this, there will be a long line of investment firms trying to raise cash for a start-up or 2 to fill in the many holes that will be left behind.

[Edited 2011-09-29 19:42:43]
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washingtonian
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RE: If AA Demises, Who Gets What?

Fri Sep 30, 2011 2:28 am

Oh, I love and hate these threads so I'll participate for a few of the cities. In the event of a Chapter 7 filing:
Delta would be the obvious candidate to move into Terminal 8 at JFK. It might be a tad too small for them, so they'd have to expand it but it would be a wonderful home for Delta, even if they don't purchase all of American's JFK slots.

At MIA, I'm sure you'd see competition between United and Delta for American's assets. Between the new North terminal and extensive route network, it would be quite a catch for either airline.
 
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lightsaber
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RE: If AA Demises, Who Gets What?

Fri Sep 30, 2011 2:51 am

Quoting eastern023 (Thread starter):
What would happen to its route authority?

NRT routes as collateral for loans, so whomever loaned AA the money.

Most of the rest would be a 'free for all.' Perhaps some chunks sold off by creditors to individual airlines.
ORD would be likely to be split up with UA trying to grab as much as possible.
DFW would be a 'free for all'
JFK, as flyASAguy2005 noted, will be tough.
LAX will be sliced and diced. Either a private entity will buy T4 a la T2 or LAX will take over the gates and split them up.

Quoting FlyASAGuy2005 (Reply 3):
I think UA again will try to step up to the plate, in turn trying to turn ORD into a fortress hub

They'll try. B6 and VX will try to gain as many gates as possible... ORD will be... interesting.

What will also be interesting is the aircraft. Not the 77Ws, those will go to the global market. The MD-80s are toast. So the question is when would AA meet its 'demise?' If later, than there will be a flood of A319s, 738s, and other new airframes to be 'snatched up.'

AA needs to become more efficient and quickly. This economy won't be forgiving. I hope they turn around. I do not have much hope.

Lightsaber
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gizmonc
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RE: If AA Demises, Who Gets What?

Fri Sep 30, 2011 2:55 am

IF AA would go Chapter 7 Doug Parker of US Airways would be first in the bankrupcy court to purchase AA. This man is not going to stop until he does something with US Airways. US Airways might be the step child of airlines in the US but old Doug boy has his sights on getting larger. He missed the boat with both DL and UA. US has done pretty decent in the past year so if he has a chance he will make a move.
 
mhkansan
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RE: If AA Demises, Who Gets What?

Fri Sep 30, 2011 3:15 am

Can we quit it with all these "AA's imminently going to die" threads?

Theme is getting old.




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F9Animal
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RE: If AA Demises, Who Gets What?

Fri Sep 30, 2011 3:20 am

I will not even speculate on such a hypothetical question. AA is indeed facing trouble, but they have size in their favor. I think if anything, we will see a smaller sized AA in the long term. I personally feel sick to my stomach when I read the recent doom and gloom threads on AA. I have the deepest respect and sympathies for any AA employee who stands up and gets defensive over the negative threads on these forums. If anyone can appreciate that, it would be a F9 employee.

AA is a long ways from Chapter 11. If they did go Chapter 11, I can promise they would emerge a much healthier airline. The CEO has shared many times that he will do whatever he can to avoid even going into any bankruptcy, and will find a way to bring the airline to health. American Airlines is a fine airline, and has a wonderful product. Just the loyal customers alone would keep AA flying for many years to come.

Long live AA!  
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Prinair
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RE: If AA Demises, Who Gets What?

Fri Sep 30, 2011 3:32 am

Quoting F9Animal (Reply 8):
American Airlines is a fine airline, and has a wonderful product. Just the loyal customers alone would keep AA flying for many years to come.

That was said about Eastern, Pan Am, Braniff International and many others....
PRINAIR : Puerto Rico International Airlines
 
dbo861
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RE: If AA Demises, Who Gets What?

Fri Sep 30, 2011 3:40 am

Quoting eastern023 (Thread starter):
3. What happens to the current Boeing and Airbus mega order?

It would be null and void with the bankruptcy. Those planes haven't even been built yet, but it would open up production slots for other airlines to receive aircraft from both manufacturers sooner.
 
F9Animal
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RE: If AA Demises, Who Gets What?

Fri Sep 30, 2011 3:42 am

Quoting Prinair (Reply 9):
That was said about Eastern, Pan Am, Braniff International and many others...

It was, but we are in a different day and age. Technology has dramatically improved since the demise of those great carriers listed in your reply. If those airlines had the ability to use the technology we have today, I have a funny suspicion that most of them would have survived their demise.

Here is one example of what I mean.

Pan Am 103 would not have happened in today's technology.

And the airlines listed would have done amazing with bookings with today's internet shoppers. The tools airlines have today are much better than what was around in the 80's and 90's, Imagine if say Pan Am had a fleet of NG's in their fleet, and no tragic bombing of 103? I bet they would have been about the size of AA today!
I Am A Different Animal!!
 
SonomaFlyer
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RE: If AA Demises, Who Gets What?

Fri Sep 30, 2011 3:48 am

Long story short:

1. Chapter 11 Reorganization - AA dumps its contracts, renegotiates its aircraft deals and restructures. It will emerge with labor costs much lower than now. It will also park/dump many of its MD 80's and shrink in size as it tunes its network for profitability in a way it can't now with the current labor deals.

2. Chapter 7 Liquidation - HIGHLY UNLIKELY. If it happens, the assets go to the highest bidder. Routes, slots, planes etc down to the computers all go on the block. Modern planes like the 77W's and 738's will be sold or repo'd depending on their financing. The MD 80's will be sold or scrapped.

I just don't see AA liquidating unless they've already tried Chapter 11 and the economy double dipped into a deep and prolonged recession.
 
Bravo1Six
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RE: If AA Demises, Who Gets What?

Fri Sep 30, 2011 3:48 am

Quoting dbo861 (Reply 10):
It would be null and void with the bankruptcy. Those planes haven't even been built yet, but it would open up production slots for other airlines to receive aircraft from both manufacturers sooner.

Not quite. The agreements remain in full force and effect (i.e., Chapter 11 doesn't automatically terminate anything). The debtor doesn't need to do anything about the agreement until emergence. At that point the debtor must either reject or affirm the agreement.

As a practical matter it never goes that long. The counterparty to the contract will often try various legal arguments through various court hearings to "force" some type of earlier acceptance or rejection. In the case of an aircraft purchase agreement, the OEM can't stop building aircraft just because of Chapter 11 - what it can do is ask the court to either relieve it of its obligations or force the airline to accept or reject. If rejected, the OEM gets a claim as an unsecured creditor.
 
HPRamper
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RE: If AA Demises, Who Gets What?

Fri Sep 30, 2011 4:04 am

Quoting eastern023 (Thread starter):
4.What happens to OneWorld? The alliance would really scramble without a North American carrier more so now with Mexicana dead). Desperately scramble to get US to move over?

Yes. US would be the most likely domestic carrier to switch.

Quoting eastern023 (Thread starter):
5. ORD would be all UA's turf then.

Not for long. ORD is too valuable for everyone else to sit on their thumbs and watch UA turn it into a fortress.

Quoting eastern023 (Thread starter):
6. What happens to DFW? Jetblue takes over?

With what planes? Other airlines would make a move on DFW and while nobody may have the moxie to replace the AA hub, it could become a focus for several carriers. I know US salivates over the idea of owning DFW, but I also think F9 could do very well at DFW in the absence of the AA fortress. It has the potential to be another very lucrative hub for them, much more like DEN than MKE, and probably even more profitable than DEN if they play their cards right.
 
avek00
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RE: If AA Demises, Who Gets What?

Fri Sep 30, 2011 4:04 am

Quoting bravo1six (Reply 13):
In the case of an aircraft purchase agreement, the OEM can't stop building aircraft just because of Chapter 11 - what it can do is ask the court to either relieve it of its obligations or force the airline to accept or reject. If rejected, the OEM gets a claim as an unsecured creditor.

Not quite.

Section 1110 of the Bankruptcy Code provides for special protections applicable to leases and secured financings of aircraft and aircraft equipment. Section 1110 allows aircraft lessors and other parties, such as investors in debt secured by aircraft equipment, to repossess aircraft 60 days after a chapter 11 filing pursuant to the terms of the parties’ agreement, unless the debtor agrees to perform all obligations under the applicable aircraft agreement and cures certain defaults. Under section 1110, a debtor must either agree to perform under the lease or financing, or face repossession of the aircraft. Section 1110 of the Bankruptcy Code also provides an exception for consensual workouts where aircraft lessors and financiers agree to accept less than contractual payments pursuant to what is referred to as an “1110(b) Agreement.” Neither the agreement to fully perform nor the execution of an 1110(b) Agreement constitutes an assumption of the underlying aircraft lease, though the latter may provide for such disposition upon approval by the court.

In this manner, absent creditor consent to lesser payment, the creditor must receive payment in full or its rights under the underlying aircraft agreement, including any right to repossess the aircraft, will not be subject to the automatic stay or be otherwise limited or affected by any other provision of the Bankruptcy Code or by any power of the court.

http://www.weil.com/wgm/cwgmhomep.ns.../Files/BBJuly05/$file/BBJuly05.pdf
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dbo861
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RE: If AA Demises, Who Gets What?

Fri Sep 30, 2011 4:14 am

Quoting bravo1six (Reply 13):

Not quite. The agreements remain in full force and effect (i.e., Chapter 11 doesn't automatically terminate anything). The debtor doesn't need to do anything about the agreement until emergence. At that point the debtor must either reject or affirm the agreement.

The original poster of this thread was not referring to liquidation, not Chapter 11 bankruptcy.

Quoting lightsaber (Reply 5):
What will also be interesting is the aircraft. Not the 77Ws, those will go to the global market. The MD-80s are toast. So the question is when would AA meet its 'demise?' If later, than there will be a flood of A319s, 738s, and other new airframes to be 'snatched up.'

Don't forget about the large fleet of brand new and fairly new 738s..I could see WN and possibly DL picking up several of these frames. As for the MD-80s, some of the newer ones might find their way to Allegiant.
 
LipeGIG
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RE: If AA Demises, Who Gets What?

Fri Sep 30, 2011 4:16 am

There's another thread, covering the same subject, open just less than 1 hour before this one.
We would not delete the posts here, but please continue the discussion there

Link
Biggest Beneficiary Of A AA Bankruptcy (by ssublyme Sep 29 2011 in Civil Aviation)


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