"When National Airlines filed for chapter 11, that doesn't mean they have to stop flying. In fact, I think this was a strategic move....."
Indeed, we all read the scripted P.R., but let me remind you that Chapter 11 while not signaling fatal problems is serious indeed. Let me also remind you, that "chapter 11" refers to Chapter 11 of the Bankrputcy Code so technically while N7 may not be out of money, they are bankrupt.
Chapter 11 proceedings are very serious yet very interesting. Companies routinely place themselves in chapter 11 so as not to default on their obligations. Al, as a future airline honcho, probably knows a ton more about this than me, but my dad is a banker and he's explained it to me fairly well. Apparently, when a company files for chapter 11, all obligations are off. Thats pretty serious when you owe great deals of money to lenders, investors, venders etc....Everything gets tied up in courts now, and National has the opportunity to "reorganise" effectively removing themselves from many monetary obligations. While this seems a terrrific opportunity for struggling companies to reemerge from difficult times, it has a catch of course.
Companies that file for this protection are no longer as gleeming and credible. This certainly is a stain on their record and future investors will be more cautious when investing in the airline, for obvious reasons. If they filed chpt. 11 again, than they stand to lose much of their investment depending on where they are in the que.
You see it can get very complicated, as National emerges, it will attempt to repay its obligations and now that its finances are shaky, those owed money are going to line up and often times fight to get preferential status as to who gets money first and what proportion of whats owed is actually returned.
Thankfully, it appears that N7 is not in an emergency situation like Legend and Reeve, they have enough cash to continue operations and fully expect to reemerge. Also, times are good and National is fundamentally a good company, very very low costs, so all bets are they will survive, but don't trust the P.R. that strongly, chapter 11 bankrputcy protection is fairly serious, so there is something going on behind the scenes that may not be as beautiful and happy as Conway makes it out to be.