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More Airline Bankruptcies This Week

Sun Dec 17, 2000 1:11 am

Look for more airline bankruptcy announcements in the coming week.

Vanguard is certainly one that is in trouble and their are a few others that may surprise everyone.

Do not book tickets for March and beyond yet. It looks like we will have yet more consolidation in the US Airline industry.

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RE: More Airline Bankruptcies This Week

Sun Dec 17, 2000 3:56 am

This is the sort of topic that compells me to view other message boards. IF this is true, then do yourself and us other readers a favor by quoting some sources and gain some credibility in the process. It's no secret that many airlines are in a financial crisis, yes Vanguard, and TWA just to name two. However, please don't use board space to epxpress what appears to be a half-baked opinion.

For the record, I would like to see all airlines do well, but unfortunately it's not a perfect world.

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RE: More Airline Bankruptcies This Week

Sun Dec 17, 2000 4:07 am

Mdsmith11, I have to agree with you. It's always easy for those to point out the painfully obvious and appear knowledgeable. This forum has the potential to be quite interesting and gain considerable credibility. Hopefully at some point down the road this will happen.
My definition of cool ? Not trying so hard to be cool.
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RE: More Airline Bankruptcies This Week

Sun Dec 17, 2000 7:45 am

Say what you will but I gave advance notice the other week on Alligant and National. I was on the money on a few others within the last 6 months.

It was my job to monitor the carriers. If you want to criticize fine. But, when I was leasing the aircraft we wanted to know who was folding and who wasn't.

My sources... Late aircraft lease payments that are forcing leasors to foreclose and airlines to go Chapter 11 or lose the planes.

Top carriers on the titanic watch as Plane Business would call it..


TWA although ailing has been withholding payments on items such as terminal leases and pilot retirement to shore up the end of the year balance sheet. They are not likely to fold in the immediate future and I am bullish on them.

I would suggest a few more commuter carriers and regionals are likely to fold within the calander year.

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You Want Sources

Sun Dec 17, 2000 8:14 am

HOw about these bits and pieces from the SEC Form 10Q as of November 14,2000. Here's some choice morsels:

Net loss for the third quarter 2000 was $4.7 million.

Operating revenue increased less than 1 percent for the quarter ended September 30, 2000 compared with the quarter ended September 30, 1999. Operating expenses increased 13% or $4.5 million, most of which is attributable to increased fuel costs which increased 83% year over year.

Total operating revenues remained flat
Capacity increased 14%
The number of passengers decreased 12%
Load factor decreased from 68% to 59% for the quarter ended September 30, 2000.

PARAGRAPH IN ACCOUNTANTS' REPORT. The report issued by the Company's independent auditors for the year ended December 31, 1999 contains an explanatory paragraph expressing substantial doubt about the Company's ability to continue as a going concern. The report states that because of the Company's net losses and working capital deficit, the Company anticipates that additional debt or equity capital will be required to fund operations in 2000. The report further states that there can be no assurance as to the availability of further financing and that there is substantial doubt about the Company's ability to continue as a going concern. See also "Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources."

Quite frankly, I'm amazed that they haven't filed bankruptcy long before now.
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RE: More Airline Bankruptcies This Week

Sun Dec 17, 2000 8:19 am

If the only thing that was ever supposed to be posted here was fact, this wouldn't be a discussion forum.

Even if I think that someone's opinion is half-baked, they're entitled to post just as much as I am...

I think that Activale puts up a good point here - the conditions seem to be a little hostile for the small or troubled carriers... so it should be interesting... I wouldn't doubt that more lines will fold soon.

And, in case I haven't justified myself enough to you to be considered worthy, deal with it.

RE: More Airline Bankruptcies This Week

Sun Dec 17, 2000 8:29 am

acvitale: say it ain't AirTran! No matter what! Promise?
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RE: More Airline Bankruptcies This Week

Sun Dec 17, 2000 8:48 am

Allegiant filed chapter 11 bankruptcy a few days ago. Fuel costs have driven all but one flight out of FAT and many passengers were stranded. Mgmt. is considering selling the airline or forming a partnership if they cannot get back on their feet.
I do not have any details as far as who they want to sell to or form a partnership with. This is the extent of what I know.
Get your patchouli stink outta my store!
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RE: More Airline Bankruptcies This Week

Sun Dec 17, 2000 9:01 am

Is ProAir still flying? If so, I'd be very surprised that they've lasted this long.

RE: More Airline Bankruptcies This Week

Sun Dec 17, 2000 9:13 am

Pro Air is gone! They had their Air Opperators Certificate withdrawn about 4 months ago and have not moved much since.

In my opinion this is a completely germane topic and one of significant importance in light of the events of the past 2 weeks. If you'd prefer to read surveys about weather ppl like the 747X or A3XX better or whats the biggest plane that visits your airport, I urge you to find a new forum.
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RE: More Airline Bankruptcies This Week

Sun Dec 17, 2000 10:23 am

I think that there will be more announcements in the coming weeks, and a lot of consolidation in the U.S airline industry over the next year.

A lot of the smaller start ups are looking shakey, as are some of the more substantial / established carriers. Fuel prices and competition seem to be biting hard.

The same trend seems to be happening throughout the world. There are more and more airlines signing into alliances, and buying stakes in each other. The overall result could mean several mega carriers covering the whole world, further down the track.
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RE: More Airline Bankruptcies This Week

Mon Dec 18, 2000 12:31 am

As mentioned earlier Pro Air is gone. Alligant is in chapter 11.

Air Tran recieved a 260 million bond refinancing from of all people Boeing Aircraft. Air Tran is actually profitable but, the bond issue from Valujet was still hanging over their heads. The refinancing assures AirTran of long term financial security. ATA also recently went thru a similar financing vehicle from Boeing that corresponded with Boeing taking an equity position in the airline along with the ordered 757-300s and 737NGs. ATA will likely order the 777 within the next year as a result of the improved balance sheet.

TWA is rumored to be looking at a rather innovative financing effort in the near term. TWA CEO and COO Compton and Gitner along with a host of accountants and lawyers were visiting a few major investment banking groups in New York City about 2 weeks ago and the probability of an equity investment looms near. I expect this to be announced in the first week of the new year.

Gulfstream airlines is rumored to be having significant yield and load problems and coupled with poor labor relations and a few pilot issues is causing a backlog of maint. and reliability issues. Continental owns about 1/4 of Gulfstream and it looks like the carrier may be forced to sell the whole operation to Continental according to several e-mails I have recieved. If that occurs the carrier can avoid bankruptcy and restructure operations with a series of more profitable paid for flying contracts but with partners United, Northwest, TWA, Copa amd others left in the cold. (See it is no surprise all the Gulfstream planes are being repainted in CO colors.)

World is in between a rock and a hard spot. For years the holding company raided the coffers and left the airline lean. They were close to bankruptcy a few years ago but, things looked like they turned the corner when the carrier stopped flying scheduled service and returned to military and civilian charters. The high cost of fuel however and cash flow look to be taking their toll. Added to the mix the lean season started earlier and World's MD11s are much in demand with carriers like FedEx Lufthansa and UPS wanting them and willing to pay leasors premium money to fly them World may have to file Chapter 11 just to keeps its planes as leasors want to yank them and lease them to the Cargo operators for a considerably higher rate then what the leases to World are at. Let's see if the are pushed into bankruptcy and restructuring or if they can find the money to pay off the leases now that are normally deferred a few months to the summer.

Also in trouble are three caribbean operators....

Air Jamaica is losing money and the government is still holding the line that they do not want to inject more money. The carrier recently pulled back from eastern caribbean expansion.

BWIA... Well let's just say a major public bail out is going to be necessary with a fleet of L10s that is not airworthy and yet are scheduled to begin flying. They have issues with cooked books, corrupt dealings, and leasors who do not want to lease planes to them. A crisis is looming. (Even if the government is doing everythign it can to screw upstarts).

LIAT.. More trouble enough said

Guana 2000... About to lose their 757 aircraft. They blew it before then got the A300s then back to a 757. Ansett leased it to them... They are paying to much, They have a history of maint. issues and grounded planes. I do not expect them to last too long.

Aerolinas Argentinas... Although one of my favorite carriers... Something has to give... It has been on life support for years. Mismanaged by American and Iberia it is in dire need of reform and the employees are not likely to give in. Once the premier airline of South America now teatering on the brink.

Lan Peru, Sorry but, this one is gone for good. Proof positive Peru is not as good as it looks on paper. AeroPeru killed DL and AMs investments and now is rumored to be controlled by drug money but nothing new in the Peruvian airline industry. Anyone remember Faucett Peru... Fly Lan Chile or American to Peru then work it out from there.

Virgin Express is restructuring but, it does not bode well. The low cost European carrier is going back to high cost Brussels and frankly nothing changed. They ran out of money to keep both operations afloat so they kept the high cost one and ditched the low cost operation a very very bad move for a low cost carrier. I think this one is gone in the next six months even with Branson's Virgin name on it. If you own this stock dump it.

Virgin Blue is brought up thru guilt by association... Impulse is rumored to be doing well and Qantas can afford the competition. Can Impulse and Virgin Blue... Well so far.. Impulse has significantly lower cost. More fuel efficent 717s that meet and exceeded all operating cost goals against more expensive to operate QANTAS and Virgin Blue aircraft. It is gonna be a tight race but, my money is that Impulse survives and Qantas does fine but, Virgin Blue washes out.

Jet Blue fans have nothing to fear. The most heavily captilized start up in history is safe. Now reporting profits at less than a year. Bet they wish they could have returned some of the startup money to the investors and made a little more money for the founders... What a novel position for an airline to be in. NYC is going to change as a result of Jet Blue and the losers are clearly going to be American, Delta, TWA, US Airways and United. Jet Blue is a yield killer and with them profitable no one can make money in and out of NYC on competing routes even with Delta Express and Metrojet. Add Southwest everywhere else and the Northeast US is changing a bit fast in terms of dynamics. United are you sure you wanted to buy US Airways because long term this is a very expensive and likely not to pay off move...

That's the view from my seat.. Any comments?
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RE: More Airline Bankruptcies This Week

Mon Dec 18, 2000 1:42 am

One thing that helps Jet Blue is the fact that because they are using a plane with very low seat-mile costs (Airbus A320), they can continue to be reasonably successful in the long run.

They have successfully captured a large fraction of the JFK to Florida market and will continue to be a success just because of that.
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RE: More Airline Bankruptcies This Week

Mon Dec 18, 2000 3:41 am

ATA ordering 777? Where will they utilize these beauties?
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RE: More Airline Bankruptcies This Week

Mon Dec 18, 2000 5:01 am

No surprises here really. This most recent economic boom has been based on, in large part, the availability of cheap gas and cheap money. Neither of which are now in great supply. So it makes sense that the younger start-ups, that started flying near the end of this boom are going to get hit the worst. The older start-ups like Frontier and AirTran seem much better off.

Al, what is your take on the financial situation of the established start-ups like Frontier? How are they weathering all of this.

Plus I find the JetBlue situation interesting. I guess it goes to show with a good business plan and a lot of venture capital you can do good things.
Stop drop and roll will not save you in hell. --- seen on a church marque in rural Virginia
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RE: More Airline Bankruptcies This Week

Mon Dec 18, 2000 5:28 am

My take on Frontier is that things are good and are only going to get better. The 737 classics being replaced by the new Airbus aircraft will keep costs low. They have a niche they grew it well and they will be around for the foreseeable future.

As for Jetblue. You are correct. The most important thing is good management, good capitalization, a good business plan and you are good to go.

Vanguard is a perfect example of bad management, and bad business plan leading to a capital problem.

Legend had a good concept but, the war with AA killed the capital. I believe another 6 months would seen them profitable.

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RE: More Airline Bankruptcies This Week

Tue Dec 19, 2000 1:20 am

I think Activale is correct on Virgin Blue. I think Branson rushed to stake his claim before too many others did, but didn't think too much about specifics. The only routes ripe for competition in Oz are the MEL-SYD-BNE triangle and possibly out of OOL (Gold Coast) but AN and QF have got this tied up with effectively give away accomodation. Virgin Blue is effectively locked out of Sydney, because of slots, which Impulse got round by manipulating the slot game (which it now attacks AN and QF for trying to do with Hazleton), severely limiting his ability to seriously compete. Also there are cultural issues, Australians nothing more pashionately than self promotion, the Branson style has gone down like a lead ballon. Aussie don't like him and will hold it against his airline. The aircraft is right sized for Europe, but not Australia, with a much smaller population, the 100-110 category is right, as with Impulse's 717's. Plus Virgin Blue is linked so closely with Virgin Express, I cannot see one side surviving the collapse of another, which as was pointed out, is the dog of the low fares game in Europe. Virgin Trains II. Life is sh+1 sometimes.
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Tue Dec 19, 2000 1:43 am

Did I miss something? ATA ordering 777's, do you mean 757-300? Jeff
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RE: More Airline Bankruptcies This Week

Tue Dec 19, 2000 6:30 am

Nope ATA is supposed to order 777s to replace L1011s on charter work. Watch for it to happen within the next 5-6 months.
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RE: More Airline Bankruptcies This Week

Tue Dec 19, 2000 8:05 am

Where the heck is ATA going to get the cash to buy 777's?? Surely they aren't doing THAT well...

This would be VERY surprising if it happens.
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RE: More Airline Bankruptcies This Week

Tue Dec 19, 2000 1:12 pm

Why? ATA is a solid carrier (not a start-up), and it's not as if they are going to buy the planes like Braniff bought their first 707 (briefcase of cash).

ATA is an established and viable carrier, with loads appropriate for the triple-7; they'll improve their bottom line with them in place of the L-10's in the long run.
...three miles from BRONS, clear for the ILS one five approach...
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RE: More Airline Bankruptcies This Week

Tue Dec 19, 2000 1:44 pm

Let's not forget that ATA is a 27 year old carrier. They are now considered a major airline (11th in the US) and let us not forget that Boeing now has an equity position in ATA. Enough said...
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RE: More Airline Bankruptcies This Week

Tue Dec 19, 2000 2:17 pm

Thanks for what I consider stock tips.. Vanguard is VNGD, and World Airways appears to be WLDAC, both on the NASDAQ. Or is WLDAC the holding company for World Airways?

I'm probably going to short both of these soon -- I read over some of their filings and it looks interesting.
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RE: More Airline Bankruptcies This Week

Tue Dec 19, 2000 2:54 pm

I do not give stock advice but, will tell you this be careful out there. Never trust a board do your own research. That being said.

Vanguard will probably be delisted tomorrow. The hearing is slated for the morning with the NASDAQ. It is not pretty if that happens... An OTC airline stock!

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RE: More Airline Bankruptcies This Week

Tue Dec 19, 2000 2:57 pm

Re: ATA L1011s...

do you folks realize how much ATA makes on the round-the-world charters?? these suckers sell at $45,000 STARTING, last an entire month, and have about 100 First Class SEATS!!! Granted the airline won't see all of it.. but still it's a large chunk.
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