Moderators: jsumali2, richierich, ua900, PanAm_DC10, hOMSaR

  • 1
  • 2
  • 3
  • 4
  • 5
  • 7
 
Nicknuzzii
Posts: 1153
Joined: Sat Sep 15, 2018 5:57 pm

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 3:00 am

Serious question. Is this thread a joke? AA is not going anywhere anytime soon.
 
santi319
Posts: 1021
Joined: Thu Dec 29, 2005 3:24 pm

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 3:07 am

I think Boeing’s CEO (former independent director) of all people is possibly, the least indicated person to predict ANYTHING..

I present to you the past 2 years at Boeing.

If he was so good at predictions he would have known the disaster his company was getting into no?

While I dont think we will be at 2019 levels. I do believe we are looking at 2015-2016 levels of service. And back then we still had most if not all major airlines.

A reminder that literally almost the same amount of population still exists. And they need to travel. Globalization hasn’t stopped. Loads of knee jerk reaction-fans predict the end of life as we know it but like everything new and life changing, humans will adapt to pandemics.

Bring your own face mask and calm down.
 
User avatar
FLALEFTY
Posts: 778
Joined: Tue Jan 31, 2006 11:33 am

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 3:08 am

The US corporate bankruptcy laws were generous to the Big 3 major airlines in the recent past and will be again. I expect some, if not all are having their lawyers work up pre-packaged Chapter 11 filings to be ready when the CARES Act money runs out in September. The airlines who will use Chapter 11 will be able to cancel leases & purchase orders, end marginally-profitable services and get out of labor contracts. They will emerge from bankruptcy "leaner & meaner", with much smaller fleets and workforces.

The next tier of airlines, such as Southwest, Alaska and Hawaiian, I expect they will all survive, although they too may need a trip to bankruptcy court to wiggle out of debts and leases.

The LCC group is the one to watch. JetBlue was struggling a bit even during the boom times, so I wonder about their long-term viability. Allegiant's reliance on getting local incentives to serve secondary airports has helped them become profitable. Now it remains to be seen if those incentives can help keep them alive. Spirit and Frontier are basically two-sides of the same coin in terms of target markets with similar fleets. But both have over-committed to refleeting with new aircraft that they now cannot afford, so I expect some significant shrinkage (see: Interjet). Could a Spirit/Frontier merger be on the horizon?
Last edited by FLALEFTY on Tue May 12, 2020 3:10 am, edited 1 time in total.
 
IADFCO
Posts: 190
Joined: Sun May 22, 2016 4:20 pm

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 3:10 am

I would keep an eye on CV vaccine developments

https://www.statnews.com/feature/coronavirus/drugs-vaccines-tracker/?utm_campaign=cv_landing

Moderna and Oxford should have results by the end of the summer -- Phase I definitely, maybe some interim Phase II if they start early. Good results could mean that airlines would have to hang in there for 6-12 months (very optimistic, but not out of the question).
 
strfyr51
Posts: 4985
Joined: Tue Apr 10, 2012 5:04 pm

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 3:17 am

MIflyer12 wrote:
CobaltScar wrote:
questions wrote:
- Alaska
- Allegiant
- American
- Delta
- Frontier
- Hawaiian
- jetBlue
- Southwest
- Spirit
- Sun Country
- United


What is considered a “major” airline? What’s a non-major US airline? Commuter airlines?


Neither Allegiant or Sun Country are considered Major airlines.


Allegiant is included in the DOT's list of carriers with at least 0.5 percent of total domestic scheduled service passenger revenues plus any branded codeshare partners.



The fleet of 101 mainline aircraft is not trivial. In mainline domestic destination count Allegiant exceeds AA or UA (but not DL, which was quicker to get off the RJ Kool-Aid.) Allegiant carried 30% more passengers than Hawaiian last year.

**************************************************************************************************************************************************************************
There's quite a bit of speculation going on here. . There might be consolidation before any real Bankruptcies and surely before any shutdowns. But? having said that?
there are opportunities that were it not for COVID19? Might well be unthinkable. Like? Alaska/ JetBlue which would give the both of them the national clout they both need. and a true Hub on both coasts to exploit, SEA and JFK? A pretty good combination. And were it Alaska/JetBlue and Frontier? SEA/DEN/JFK? PHEW!! though it would be one hell of a fight at DEN with Southwest and United having a pretty good chunk of real estate there. Hawaiian/JetBlue? Instant powerhouse. if they met in the middle and built from there. HA has 787's on order and B6 has A321's to combine with the A321's HA has on order. That solves their Trannscon TransPac and Europe and Asia from either Coast, but what they'd need? A central Hub in the Conus with a proper Maintenance Base to Build upon. Like MCI? or even STL?
Trouble is? Which group could see past the ends of their Noses to even attempt such a thing and NOT let their Ego get in the way?
 
Prost
Posts: 2575
Joined: Wed Oct 03, 2012 6:23 pm

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 3:20 am

So 6 months or so ago when we talked about debt levels, the consensus was it was foolish not to have a healthy debt load when capital was so cheap. Now, after a pandemic, cash is king. I’m absolutely we’re discussing which carrier may fail.
 
Max Q
Posts: 8430
Joined: Wed May 09, 2001 12:40 pm

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 3:27 am

No one really knows where this is all going


I do think the Cares act was in the National interest but it should have been for 12 months rather than 6 allowing more time for a recovery


Another financial ‘booster shot’ for the industry may well be necessary for the industry in October and I think all the airlines should start lobbying for that now
The best contribution to safety is a competent Pilot.


GGg
 
umichman
Posts: 141
Joined: Sun Apr 07, 2019 2:42 am

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 3:31 am

N292UX wrote:
ehaase wrote:
Can the experts see AA downsizing to hubs in PHL, CLT, DCA, MIA, and DFW?

They'd keep one of their western hubs (probably PHX). And I doubt they'd totally de-hub ORD too. That's a 500+ daily operation right before COVID-19. LAX and NYC could definitely see some deep cuts, though.


The fact that LAX is basically just a spoke for AA right now (plus a flight to HNL and a couple flights to Mexico), while PHX is still being used as a hub suggests they might keep PHX and jettison LAX as a hub. I also agree ORD is too big to simply close down.
 
ctrabs0114
Posts: 1080
Joined: Mon Oct 09, 2017 8:09 am

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 3:32 am

LawnDart wrote:
PHL and PHX? Who cares, really. Maybe WN would expand at both. LAX? UA may want to consolidate in SFO, keep LAX status quo. DL grows LAX.


PHX might be a logical spot for WN to grow under this hypothetical example. PHL, not so much; remember, pre-WN/FL merger, WN was considering PHL taking on the role that BWI currently holds as their main East Coast station. Between not being able to crack the US/AA stranglehold at PHL and the acquisition of FL and their BWI operations, that pretty much ended any dreams of growing WN's footprint at PHL, from what I recall.
2019: DAL, MCI, PHX, LAS, DFW, SAT, ORD, SLC, SEA, DTW, PHL, MIA, LAX; B73G (WN x3), B738 (WN, AA, DL), A20N (NK), MD83 (AA), B788 (AA x2), CS1 (DL), B739 (DL), B712 (DL), B752 (AA), B763 (AA), B77W (AA), B789 (AA)
Next: TBA
 
32andBelow
Posts: 4969
Joined: Mon Sep 03, 2012 2:54 am

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 3:41 am

Why would contracting airlines merge. Who needs MORE plane rn?
 
OB1504
Posts: 3962
Joined: Tue Jul 27, 2004 5:10 am

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 3:46 am

32andBelow wrote:
Why would contracting airlines merge. Who needs MORE plane rn?


I don’t see a merger in the short term either.

Like another poster mentioned, there’s no need to merge and go through that headache when they can just wait for an airline to collapse and buy only the things they really want.
 
strfyr51
Posts: 4985
Joined: Tue Apr 10, 2012 5:04 pm

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 3:52 am

umichman wrote:
N292UX wrote:
ehaase wrote:
Can the experts see AA downsizing to hubs in PHL, CLT, DCA, MIA, and DFW?

They'd keep one of their western hubs (probably PHX). And I doubt they'd totally de-hub ORD too. That's a 500+ daily operation right before COVID-19. LAX and NYC could definitely see some deep cuts, though.


The fact that LAX is basically just a spoke for AA right now (plus a flight to HNL and a couple flights to Mexico), while PHX is still being used as a hub suggests they might keep PHX and jettison LAX as a hub. I also agree ORD is too big to simply close down.[/qe]
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^6
if AA were going to downsize they could do with PHL DCA and CLT being downsized slightly. DFW/ORD/NYC and MIA? would be hard to lose if a recovery were to happen. With the allure of a SEA hub with AS? AA could have the west coast hub of their Dreams, Especially if Delta is the Odd man Out! which? remains to be seen.
 
User avatar
par13del
Posts: 10337
Joined: Sun Dec 18, 2005 9:14 pm

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 3:59 am

santi319 wrote:
I think Boeing’s CEO (former independent director) of all people is possibly, the least indicated person to predict ANYTHING..

I present to you the past 2 years at Boeing.

If he was so good at predictions he would have known the disaster his company was getting into no?

Interesting that it took 52 post to get this little nugget out, I guess it goes to show that the message is what is important, not the messenger, so much for the CIA mantra.
Not sure the CEO of Boeing has done enough to vindicate himself and his company for so many to follow him down this rabbit hole of thinking, but it is what it is.
 
User avatar
MoKa777
Posts: 1081
Joined: Fri Oct 21, 2016 11:47 am

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 4:00 am

questions wrote:
An interesting follow-on question in the interview would have been...

Given the drastic reduction in demand, your prediction of a major US airline shutting down and the fact the US aviation environment is not dissimilar to the global aviation market, what is the impact to Boeing’s commercial airline business? Who will need the 737MAX, 777 and 787? The global inventory of fairly young used aircraft could satisfy airlines’ needs for quite some time. How are Boeing’s order books impacted?


:checkmark:

You ask all the right questions...
Never be proud. Always be grateful.
 
flilot
Posts: 22
Joined: Sun Aug 12, 2007 1:45 am

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 4:14 am

Is the Boeing CEO's alter ego called Captain Obvious?
 
CaptainObvious1
Posts: 50
Joined: Sat Apr 11, 2020 11:22 pm

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 4:19 am

flilot wrote:
Is the Boeing CEO's alter ego called Captain Obvious?


Hmmmmm....
 
chrogb43
Posts: 9
Joined: Wed Apr 29, 2020 3:40 am

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 4:27 am

LawnDart wrote:
Quote
You know I never thought we'd see another carving of the cooked pig like we did with Pan Am but here we are. Let's see here...

UA: ORD? Nah, just let them fail, and we'll pick up the traffic there. CLT, however, looks interesting. We need a SE US hub. DCA slots would complement our IAD operation nicely, also, and make us the largest carrier in WAS....


IAD is United’s SE hub. Unless Virginia suddenly isn’t a southeastern state anymore?
 
tpaewr
Posts: 723
Joined: Sat May 19, 2001 9:01 am

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 4:33 am

dcajet wrote:
questions wrote:
- Alaska
- Allegiant
- American
- Delta
- Frontier
- Hawaiian
- jetBlue
- Southwest
- Spirit
- Sun Country
- United


What is considered a “major” airline? What’s a non-major US airline? Commuter airlines?


An airline is considered a major one when it posts over US$1B in revenue in a fiscal year. So all of the above make the cut except for Sun Country,

Additionally, the following regionals & freight ones made the cut in 2019

Envoy Air (subsidiary of American Airlines Group)
Republic Airways (subsidiary of Republic Airways Holdings)
SkyWest Airlines (subsidiary of SkyWest, Inc.)

Freight

Atlas Air
FedEx Express
Kalitta Air
Polar Air Cargo
UPS Airlines



God bless you!

I was afraid I was going to read this whole thing and no one actually would ever know the definition of a Major!!


This is a forum about airliners, right?
 
User avatar
NWAROOSTER
Posts: 1336
Joined: Mon Feb 14, 2005 2:29 pm

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 4:40 am

reltney wrote:
Mmmm a major US carrier....... he should be more worried about a major aircraft manufacturer going out of business... what a flake... next....

Before David Calhoun makes statements that a "major" US airline will go out of business he better mind his own company as Boeing is in dire states. There are about 400 737 MAX aircraft that a major number may NOT be delivered to the airlines that ordered them and customers.will be needed so they do not continue being the property of Boeing. I should note that metal shavings are being found in new build 737s and 787s. Of Boeing's civilian aircraft that may find new owners there are only the 777 an 787 and about a dozen 747-8F aircraft. The four major US airlines will be permanently parking aircraft of which some may be operated until they are due major maintenance.
All four major airlines may possibly threaten Bankruptcy or file Bankruptcy to return leased aircraft or those that have high mortgages on them or reduce the monies being spent on them. The airlines may want to shed leases at airports they no longer want to operate to or reduce flights to them. Existing carriers may want employee concessions and furlough others. They also may not take any new aircraft orders until the dust has settled and they know where they stand financially. Delta MAY continue taking some of it's A220s that are on order if the price is right. IMO Alaska Airlines will do a major shrink concentrating on Alaska flights and those on the west coast going to Alaska. Also Boeing needs to find a 737/757 replacement aircraft as I think the 737MAX is seeing the end of its production. The low cost airlines are also in trouble especially if their aircraft are leased under long term leases or heavily mortgaged. Airbus may also find itself in a position of greatly reduced sales. Just because a new aircraft has a lower operating and maintenance cost it may not offset the higher cost of acquisition. Both Boeing and Airbus need to rethink how they are going to build new aircraft. :old:
Last edited by NWAROOSTER on Tue May 12, 2020 4:56 am, edited 1 time in total.
Procrastination Is The Theft Of Time.......
 
airhansa
Posts: 380
Joined: Wed Jan 08, 2020 3:18 pm

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 4:44 am

How on earth do people expect low-cost airlines to survive when full service airlines can't even survive?
 
ferminbrif
Posts: 116
Joined: Sat Dec 18, 2010 7:04 pm

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 5:05 am

Because of covid-19 coronavirus some major airlines likely will go out of business soon.... :banghead: :airplane:
 
santi319
Posts: 1021
Joined: Thu Dec 29, 2005 3:24 pm

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 5:07 am

par13del wrote:
Not sure the CEO of Boeing has done enough to vindicate himself and his company for so many to follow him down this rabbit hole of thinking, but it is what it is.


Historically, human beings have EXTREMELY short term memories....
 
User avatar
seahawk
Posts: 9645
Joined: Fri May 27, 2005 1:29 am

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 5:08 am

NWAESC wrote:
Why merge when you can just shop for assets at a Ch.11 fire sale?


Why would you want additional assets with load factors low and slots freely available? Merging only makes things worse, as you now have even more capacity and assets.

Imho likely to go are:

- Sun Country
- Allegiant
- Hawaiian
- Spirit
- American
 
Moosefire
Posts: 145
Joined: Wed Aug 15, 2018 12:47 pm

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 5:11 am

seahawk wrote:
NWAESC wrote:
Why merge when you can just shop for assets at a Ch.11 fire sale?


Why would you want additional assets with load factors low and slots freely available? Merging only makes things worse, as you now have even more capacity and assets.

Imho likely to go are:

- Sun Country
- Allegiant
- Hawaiian
- Spirit
- American


Doesn’t spirit have one of the best balance sheets in the business?
MD-11F/C-17A Pilot
 
User avatar
TWA772LR
Posts: 7283
Joined: Thu Nov 17, 2011 6:12 am

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 5:19 am

Sooner787 wrote:
winginit wrote:
Opus99 wrote:
I thought it would be AA. I wasn’t sure for a while


You know I never thought we'd see another carving of the cooked pig like we did with Pan Am but here we are. Let's see here...

- United bring your plate right over here we're going to give you the rest of ORD, yes congratulations on your new fortress hub
- Delta there you go step right up here's your significant slice of LAX get it while it's hot and here's some JFK to top you off
- Southwest here you go son you enjoy that steaming slice of Phoenix heat


I was thinking the same thing, If AA files CH 11, they get carved up like you said,

with UA and DL taking over the best hubs. I can imagine quite a dogfight for the MIA hub and their
S. American hub.

I could also see UA taking the chance to bolt from Chicago and set up a new HQ in AA's palatial new campus that
was recently completed. Cost of living and taxes are a helluva lot lower in Texas then ORD

I see UA taking LAX CLT and ORD if AA collapses and DL taking JFK DFW and DCA. MIA and PHX are interesting because DL has the LA stake and UA has history in MIA which can complement IAH and PHL and PHX are the wildcards.

I dont see UA moving CSC to Dallas especially since they redid the lease on Willis a couple years ago. IMO if they move it anywhere it'll be Houston (as much as i would love to see that happen).
When wasn't America great?


The thoughts and opinions shared under this username are mine and are not influenced by my employer.
 
User avatar
stl07
Posts: 2468
Joined: Mon May 01, 2017 8:57 pm

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 5:21 am

airhansa wrote:
How on earth do people expect low-cost airlines to survive when full service airlines can't even survive?

Because in an economic downturn, people can still afford a low-cost ticket I would say.
Instead of typing in "mods", consider using the report function.
Love how every "travel blogger" says they will never fly AA/Ethihad again and then says it again and again on subsequent flights.
 
winginit
Posts: 2879
Joined: Sat Feb 23, 2013 9:23 pm

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 5:27 am

stl07 wrote:
airhansa wrote:
How on earth do people expect low-cost airlines to survive when full service airlines can't even survive?

Because in an economic downturn, people can still afford a low-cost ticket I would say.


Because in this particular predicament your cash + unencumbered asset to cash burn ratio is all that matters.
 
UA444
Posts: 2997
Joined: Sun Mar 09, 2014 7:03 am

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 5:33 am

Sooner787 wrote:
winginit wrote:
Opus99 wrote:
I thought it would be AA. I wasn’t sure for a while


You know I never thought we'd see another carving of the cooked pig like we did with Pan Am but here we are. Let's see here...

- United bring your plate right over here we're going to give you the rest of ORD, yes congratulations on your new fortress hub
- Delta there you go step right up here's your significant slice of LAX get it while it's hot and here's some JFK to top you off
- Southwest here you go son you enjoy that steaming slice of Phoenix heat

UA is not leaving Chicago.

I was thinking the same thing, If AA files CH 11, they get carved up like you said,

with UA and DL taking over the best hubs. I can imagine quite a dogfight for the MIA hub and their
S. American hub.

I could also see UA taking the chance to bolt from Chicago and set up a new HQ in AA's palatial new campus that
was recently completed. Cost of living and taxes are a helluva lot lower in Texas then ORD

UA is not leaving Chicago. They’ve had numerous tax breaks from the City of Chicago to move from Elk Grove Village to the Sears Tower. They also just extended their lease and it’s where their operations control center is.
 
airhansa
Posts: 380
Joined: Wed Jan 08, 2020 3:18 pm

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 5:35 am

stl07 wrote:
airhansa wrote:
How on earth do people expect low-cost airlines to survive when full service airlines can't even survive?

Because in an economic downturn, people can still afford a low-cost ticket I would say.


But can a low-cost airline afford the social distancing and health measures required for coronavirus? That expenditure in itself might be worse than mid-term low demand.
 
2175301
Posts: 1870
Joined: Wed May 16, 2007 11:19 am

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 5:37 am

I actually think that there is a very real chance of at least one of the noticeable airlines in the USA going totally out of business unless there is a significant uptick in traffic by fall.

They would start by entering Chapter 11 (reorganization) Bankruptcy.... which has no guarantee that a reorganization will be approved. In a low demand market the creditors may feel that they have a better chance of recovering what they can with a liquidation... and companies do transition to a Chapter 7 (liquidation) bankruptcy that are already in a Chapter 11. Not the most common result out of a Chapter 11 filing. But, very possible - especially if there does not seem to be a lot of future value in the reorganized airline.

Have a great day,
 
slcdeltarumd11
Posts: 4758
Joined: Fri Jan 09, 2004 7:30 am

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 5:43 am

seahawk wrote:
NWAESC wrote:
Why merge when you can just shop for assets at a Ch.11 fire sale?


Why would you want additional assets with load factors low and slots freely available? Merging only makes things worse, as you now have even more capacity and assets.

Imho likely to go are:

- Sun Country
- Allegiant
- Hawaiian
- Spirit
- American


I feel like Spirit is the least likely airline to go under period. They will survive over anyone.

I don't think the government will allow it but Hawaiian and AA seem the most likely IMHO. Hawaii tourism probably isn't coming back for a while, and AA wasn't really a tiger before this.

Allegiant and sun country being ULCC leisure airlines could turn it around quicker than legacy carriers. Still hard to say. I think they just need the general "joe smith" feeling comfortable to fly ASAP. Hard for everyone right now!
 
Yonderlust
Posts: 52
Joined: Sat Jun 02, 2018 8:32 am

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 5:54 am

santi319 wrote:
I think Boeing’s CEO (former independent director) of all people is possibly, the least indicated person to predict ANYTHING..

I present to you the past 2 years at Boeing.

If he was so good at predictions he would have known the disaster his company was getting into no?

While I dont think we will be at 2019 levels. I do believe we are looking at 2015-2016 levels of service. And back then we still had most if not all major airlines.

A reminder that literally almost the same amount of population still exists. And they need to travel. Globalization hasn’t stopped. Loads of knee jerk reaction-fans predict the end of life as we know it but like everything new and life changing, humans will adapt to pandemics.

Bring your own face mask and calm down.


Thank you! I can't take the panic porn anymore!! It's the great Panic-19 Pandemic...lots of screaming mimis about the "new normal" -- blech, if I hear that one more time...
 
PHLspecial
Posts: 652
Joined: Sun Aug 12, 2018 4:11 pm

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 5:57 am

Nicknuzzii wrote:
Serious question. Is this thread a joke? AA is not going anywhere anytime soon.

Agreed I don't see AA going under. Sure they have tons of debt but they have enough cash to survive
 
n9801f
Posts: 229
Joined: Tue Apr 13, 2004 8:29 am

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 5:58 am

Pretty sure that a 2020 airline bankruptcy would be unlike previous cases for two reasons.

First, bankruptcy laws were changed around 2005. (Maybe knowledgeable others can comment on this aspect?)

Second, DIP (Debtor-in-Possession) financing may be unavailable now. This was the "usual" way of getting working capital needed to run the airline while it was in Chapter 11.

AA avoided the need of a DIP loan in 2014 by filing while it had lots of cash on hand.

Bottom Line: In today's environment, I'm having a hard time imagining why banks would be incentivized to fund Chapter 11 when revenues and collateral values are low. And because capacity is so far above demand, creditors will have weak prospects of a reorganized company paying them back in the future and might want to liquidate now instead.

So a 2020 airline bankruptcy seems more likely to lead to a liquidation than previous ones.

Calhoun's comments seem to make good sense to me.
 
FluidFlow
Posts: 706
Joined: Wed Apr 10, 2019 6:39 am

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 6:02 am

airhansa wrote:
stl07 wrote:
airhansa wrote:
How on earth do people expect low-cost airlines to survive when full service airlines can't even survive?

Because in an economic downturn, people can still afford a low-cost ticket I would say.


But can a low-cost airline afford the social distancing and health measures required for coronavirus? That expenditure in itself might be worse than mid-term low demand.


Low cost airlines have a big advantage in downturns like this, their cost base is already as low as possible. They have relatively low gate counts, low staff costs, often flexible staff contracts, no lounges, small overhead, etc. Their biggest problem right now is aircraft costs. But as seen with Norwegian, lessors can not afford to get 100+ NB aircraft back on property that no one will lease out. So there is also more room to reduce additional costs.

On the other side, legacy carriers have a really high fixed cost block. I would not be surprised, that if you break it down, that a legacy carrier has double the costs of running an A320 than a low cost carrier if you include everything, from network planning to joint venture expenditures.
 
wnflyguy
Posts: 1962
Joined: Thu Feb 10, 2011 7:58 pm

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 6:09 am

Going off balance sheets

Big airlines Hawaiian is on thin ice.
If Hawai'i stays locked down by September Hawaiian going to be very cash depleted.
14 day quarantine and inter island not going to cut it for the long term.

Small airlines it's going to be Sun Country or Allegiant.

Regionals I don't see Mesa lasting long with their cost structure.

Flyguy
My Wings are clipped just another Retired Airline person. The Ultimate Armchair out of the loop airline industry geek. Aloha Mr Hand!
 
ELBOB
Posts: 322
Joined: Sun Jun 21, 2015 6:56 am

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 6:16 am

whywhytee wrote:
I just cannot imagine AA going out of business entirely.


Neither could he:

"I don't think we're ever going to lose money again," Parker said. "We have an industry that's going to be profitable in good and bad times."

And here are the bad times. Where is that $19.2 billion in pre-tax profit now?

Chapter 11 shouldn't be permitted, it's only intended for the reorganisation of a business which has the possibility of a viable future afterwards. Let AA fail; if it leaves a market gap then competition will fill it. Isn't that the American way, instead of propping-up old dinosaurs?
 
questions
Posts: 2337
Joined: Thu Sep 15, 2011 4:51 am

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 6:23 am

Dang! Some of you need to put down the crack pipe!

Assuming Calhoun’s industry assessment that the market will be at 25% of pre-COVID-19 levels in September and 50% by the end of the year:

- Demand is severely down
- Industry capacity and capability are significantly greater than needed

In other words, there are too many seats, too many aircraft and too many airlines. And... this scenario is GLOBAL, not just in the US.

The only “consolidations” in the industry will be within an existing legal entity. For example, Delta consolidating operations at select airports (e.g., OAK to SFO). Two or more airlines “consolidating” is a merger or acquisition. These transactions are extremely expensive, complex, disruptive and carry a lot of risks. Their business cases are built on 1) increasing revenue through greater market share; entry into new markets; increasing margins by reducing capacity and increasing prices; and some combination of the three and 2) reducing costs by rationalizing corporate functions, real estate, and fleets; and optimizing the route network.

Given the current demand in the market and the long road to “full” recovery the last things any airline needs today are 1) more of anything (other than cash) and 2) the expense of a merger/acquisition.

Several airlines in the US will declare Chapter 11 bankruptcy. During Chapter 11 reorganization, they *may* attempt to sell some assets, e.g., aircraft, routes, real estate.

To the point of this thread, we may see one or more US airlines shut down and liquidate.

Will either scenario be like like Pan Am, TWA and Eastern selling routes and divisions that were historic in changing the US aviation landscape? I don’t think we know enough yet. Perhaps in the coming months.

So no need for jetBlue to acquire Alaska and all of the costs associated with the transaction, assumed debt and legacy labor obligations. Just let Alaska shut down and the remaining market players with cash and credit/financing can acquire the parts and pieces that make sense for them. There will be plenty on the buffet.

And while all of the above is going on, Boeing, with it’s product lineup of 737MAX, 777 and 787, will be facing a market glut of fairly young used aircraft easily available to its financially ailing customers.
 
jetwet1
Posts: 3222
Joined: Thu Jun 14, 2007 4:42 am

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 6:26 am

FLALEFTY wrote:
Allegiant's reliance on getting local incentives to serve secondary airports has helped them become profitable. Now it remains to be seen if those incentives can help keep them alive.



It's reliance is on ancillary and commissions from sales of hotel rooms etc

The incentives are a tiny part of the total revenue stream.

With that said, with so much of their business coming from bringing people to LAS and MCO, they are going to have issues, but, the management team over there know what they are doing.
 
LJ
Posts: 5334
Joined: Wed Nov 17, 1999 8:28 pm

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 6:29 am

n9801f wrote:
Second, DIP (Debtor-in-Possession) financing may be unavailable now. This was the "usual" way of getting working capital needed to run the airline while it was in Chapter 11.

AA avoided the need of a DIP loan in 2014 by filing while it had lots of cash on hand.


Yet there is a big oversupply of money in the world (the oversubscription on Boeing and Spirit speaks for itself) which can either be stalled at banks with none to negative interest rates invested in business.
 
questions
Posts: 2337
Joined: Thu Sep 15, 2011 4:51 am

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 6:36 am

ELBOB wrote:
whywhytee wrote:
I just cannot imagine AA going out of business entirely.


Neither could he:

"I don't think we're ever going to lose money again," Parker said. "We have an industry that's going to be profitable in good and bad times."

And here are the bad times. Where is that $19.2 billion in pre-tax profit now?

Chapter 11 shouldn't be permitted, it's only intended for the reorganisation of a business which has the possibility of a viable future afterwards. Let AA fail; if it leaves a market gap then competition will fill it. Isn't that the American way, instead of propping-up old dinosaurs?


Agree.

The US market doesn’t really need AA, DL and UA. If one of them fails, let them go. The market will adjust. Healthier players will move in.

Same with AS, B6, WN, HA.

And with Spirit, Frontier, Allegiant, Sun Country.
 
User avatar
Midwestindy
Posts: 5280
Joined: Sun Mar 12, 2017 3:56 am

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 6:43 am

questions wrote:
ELBOB wrote:
whywhytee wrote:
I just cannot imagine AA going out of business entirely.


Neither could he:

"I don't think we're ever going to lose money again," Parker said. "We have an industry that's going to be profitable in good and bad times."

And here are the bad times. Where is that $19.2 billion in pre-tax profit now?

Chapter 11 shouldn't be permitted, it's only intended for the reorganisation of a business which has the possibility of a viable future afterwards. Let AA fail; if it leaves a market gap then competition will fill it. Isn't that the American way, instead of propping-up old dinosaurs?


Agree.

The US market doesn’t really need AA, DL and UA. If one of them fails, let them go. The market will adjust. Healthier players will move in.

Same with AS, B6, WN, HA.

And with Spirit, Frontier, Allegiant, Sun Country.


Feds more than likely wouldn't let it happen, AA has close to 150k employees & their operations likely support hundreds of thousands more.
Status for 2019/2020: AAdvantage Platinum, Delta Gold, Southwest A-List
 
LJ
Posts: 5334
Joined: Wed Nov 17, 1999 8:28 pm

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 7:04 am

Midwestindy wrote:
Feds more than likely wouldn't let it happen, AA has close to 150k employees & their operations likely support hundreds of thousands more.


The number of employees should not be a determining factor when classifying a company as too big to fail. The question is can the ecnomy function without AA? If the answer is YES, then helping a company preventing from going under is distorting the market. It's logical that the Feds do not want all big airlines to go under, However, one airline going down may be good for the market (though not so good for its employees). Anyway, cur 20% - 30% from the number of employees AA currently has and you'll have the number which will be there when the government support ends (we already see in Europe airlines cutting this amount of employees to become healthier). The current number of employees is not sustainable short and medium term.
 
acentauri
Posts: 308
Joined: Wed Jun 22, 2016 12:35 am

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 7:17 am

Midwestindy wrote:
............................................
Feds more than likely wouldn't let it happen, AA has close to 150k employees & their operations likely support hundreds of thousands more.

Agree, unless the Government intends to re-Regulate Fares after it lets AA (or UA, or DL) "go under"; otherwise, it'll likey have a significant negative effect on the U.S. economy for years after Cornhole dissipates.
 
US319
Posts: 16
Joined: Thu Oct 17, 2019 7:33 am

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 7:33 am

Wait...the same CEO who just recently stated that the MAX will reach parity with the NEO? So much credibitlity...
 
User avatar
DL717
Posts: 2153
Joined: Wed May 23, 2018 10:53 pm

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 7:48 am

I don’t think it’s AA. I think it’s UA. Both lost 2 billion, but UA is getting absolutely hammered. United is closer to Boeing than AA is. If Boeing is talking about a customer, it’s one they are close to. DL and AA aren’t so close anymore and it’s probably a carrier trying to get out of MAX orders. Alaska is fairing better than I expected, but they could be having troubles as well. Alaska doesn’t have many MAX orders and there are none to park, but the VX merger could still Ha pave some hangovers we don’t know about. Lots of mainline being parked compared with E-Jets being used all over the place shoring up service with reduced demand. Southwest seems to be weathering things pretty well, all things considered. That leaves UA or AS. IA also has the tightest scope clauses which would be making it difficult to replace mainline with some regional flying to offset lost demand. Everyone else is predominantly Airbus these days. We’ll know when someone files.

Forget dumping deregulation. That will be a nail in the coffin for everyone.

If an airline goes down, there is a very low probability of a merger with the lack of demand that will be there for a while.

What a dumpster fire this is at a time when the airlines have been doing better than ever.
Welcome to Nothingburgers. May I take your order?
 
speedbird52
Posts: 1013
Joined: Sat Nov 26, 2016 5:30 am

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 8:12 am

Plot twist this isn't a prediction this is a threat
 
speedbird52
Posts: 1013
Joined: Sat Nov 26, 2016 5:30 am

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 8:16 am

ELBOB wrote:
whywhytee wrote:
I just cannot imagine AA going out of business entirely.


Neither could he:

"I don't think we're ever going to lose money again," Parker said. "We have an industry that's going to be profitable in good and bad times."

And here are the bad times. Where is that $19.2 billion in pre-tax profit now?

Chapter 11 shouldn't be permitted, it's only intended for the reorganisation of a business which has the possibility of a viable future afterwards. Let AA fail; if it leaves a market gap then competition will fill it. Isn't that the American way, instead of propping-up old dinosaurs?

What competition? There is no competition besides UA and DL. Consolidation is always a bad thing for consumers.
 
Jomar777
Posts: 557
Joined: Tue Oct 20, 2015 8:45 am

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 8:43 am

I find it hard to believe that any of the US3 (AA, UA and DL) would go C11... But it might be feasible to consider JetBlue, Allegiant and others on this level just below the big 3. The former can still, despite the current situation, remodel their operations and still pull investments to a level which the others can't. I would not rule out he being right in what regards those major regional airlines but more towards maybe a merger/asset disposal than a C11/liquidation altogether
 
LJ
Posts: 5334
Joined: Wed Nov 17, 1999 8:28 pm

Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 8:56 am

speedbird52 wrote:
What competition? There is no competition besides UA and DL. Consolidation is always a bad thing for consumers.


Having an unhealthy business is bad for all taxpayers. Yields have to go up and a liquidation of an airline makes it healthier for the remaining airlines. Moreover, with much lower entry barriers than in the past, excess profits will .probably mean new entrants
  • 1
  • 2
  • 3
  • 4
  • 5
  • 7

Who is online

Users browsing this forum: Baidu [Spider], bar1, Bing [Bot], DartHerald, EIEIDW, F9LASDEN, hummingbird, Jack, jbmitt, jomur, Lufthansa411, Lusitanian, MarcusG, mbroekhans, MD80MKE, Noshow, Opus99, qf789, Rifitto, runway24r, TropicalSky, TTJonas, VolvoBus, xwb777, YVRing and 329 guests

Popular Searches On Airliners.net

Top Photos of Last:   24 Hours  •  48 Hours  •  7 Days  •  30 Days  •  180 Days  •  365 Days  •  All Time

Military Aircraft Every type from fighters to helicopters from air forces around the globe

Classic Airliners Props and jets from the good old days

Flight Decks Views from inside the cockpit

Aircraft Cabins Passenger cabin shots showing seat arrangements as well as cargo aircraft interior

Cargo Aircraft Pictures of great freighter aircraft

Government Aircraft Aircraft flying government officials

Helicopters Our large helicopter section. Both military and civil versions

Blimps / Airships Everything from the Goodyear blimp to the Zeppelin

Night Photos Beautiful shots taken while the sun is below the horizon

Accidents Accident, incident and crash related photos

Air to Air Photos taken by airborne photographers of airborne aircraft

Special Paint Schemes Aircraft painted in beautiful and original liveries

Airport Overviews Airport overviews from the air or ground

Tails and Winglets Tail and Winglet closeups with beautiful airline logos