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

Tue May 12, 2020 3:44 pm

I would be surprised if any of the US3 went under.

However, if one did, think about how much it would drastically alter the landscape of the US3 current hub and spoke network.

Lets say AA went away (I highly doubt they will, but they are the most likely of the US3 to completely go under), UA could grab CLT and get ORD all to themselves, DL could grab DFW and DCA and both would resolve their geographical holes overnight. Both could expand at LAX and UA could get back into JFK.

PHL, PHX and possibly MSP would be the big losers though.
 
FlyingElvii
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Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 3:49 pm

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 think Allegiant survives this....
They have the ability to downsize to demand, suck up subsidies in many of the places they fly to, and sell more than just seats.
No huge infrastructure.

Hawaiian is a wild card. Leisure dependent, but could easily be designated as a “ critical provider” under the Defense Production Act.
 
Palumboism
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Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 3:52 pm

OzarkD9S wrote:
One thing that hasn't dried up is the supply of good drugs some people are taking before they post on this thread. WOW! :hypnotized:


Thanks for the laugh, but not just this thread. :smile:
 
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lightsaber
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Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 3:56 pm

JAMBOJET wrote:
chonetsao wrote:
Everyone think AA is the candidate. But I don't think so. Guess who has the most unsecured assets that is easily slip beneath the radar?

There is one US airlines own stakes in Virgin Atlantic, Korean Air, Aeromexico, LATAM, AF/KL and an oil refinery company (I think China Eastern as well?). That is a lot of money tied to several struggling companies around the world. What damage those other airlines will bring to the parent holding company in the US? How much more money this US airline needs to sink to maintain its investment? And how much loss it can take from the oil refinery while the oil price is below USD$30?

Sometimes the most obvious answer might not be the true answer. When the oil price was high, AA did not hedge and it saved its day when oil price collapse. Maybe in 2020, it is airline that does not have too many investment tied to other airlines and other activities would save itself.


I think you're right that Delta will have to write down a lot of assets on their balance sheet after this is all over and definitely rethink their international strategy depending on who's left, and in what way, at the end of this pandemic. But... their strength domestically (independent of their international partners) is just a bit too strong for me to agree that they're in as much danger as you suggest. Despite the write-down of the assets you mentioned, they still have a relatively strong balance sheet.

At worst, Delta will retrench into more domestic focus and retrench into their existing AF-KL and KE partnerships to keep International connectivity. Their international investments don't require them to prop them up. At worst, they'll just write down those equity holdings and move on.

Their refinery, for instance, has basically zero value to anyone (they've been trying to sell it for how long now?), including Delta. The crack spread just doesn't matter at the moment. All Delta really needs to do is shutter it eventually. I guess there's some expense related to shutting it down with environmental concerns, etc. But nothing that is going to bankrupt Delta.

Delta will have to write down a lot, but has a long way to fall.

Stockholder equity in millions of USD:
DL: 14,309
UA: 11,530
WN: 9,080
JetBlue 4,800 (prior quarter, certainly less today).
Alaska 4,330 (prior quarter, certainly less)
Spirit: 2,260 (prior quarter, again certainly less today).
Allegiant travel: 880 (again prior qtr, certainly less)

AA: (2,636) negative book value due to extreme debt.


I look at the above and the first three to six can borrow enough to survive and in the future recover. Allegiant can control costs enough, IMHO.

Delta had 5,967 million USD in cash or short term investments while AA had 3,576.

I won't worry about DL, but I agree, their investments will drop a few billion USD, but not enough to endanger DL.

Unfortunately, of all the majors, including B6, G4, AS, NK, DL, UA, and AA, we have one clear outlier: AA.

AA management had better be much more proactive due to the debt.

Lightsaber
Winter is coming.
 
FlyingElvii
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Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 3:58 pm

wnflyguy wrote:
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

As I said in my other post, Hawaiian is in a unique position, they could easily be considered critical under DPA.
 
tax1k
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Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 4:02 pm

Doesn’t the government have the right to declare an airline a “strategic asset” and make other (buyer airlines) an offer they can’t refuse - kind of like with banks in 2008?
 
FlyingElvii
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Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 4:06 pm

CRJ5000 wrote:
Large companies keep extending their work from home policies until the end of the year. Places like Facebook and Microsoft have cancelled large meetings involving travel until summer of 2021 already. Essentially every single conference has been cancelled for 2020. No company wants the possible liability and backlash of sending their employees on a business trip.
Meanwhile, beaches in Florida have to be shut down after opening because they are too crowded. Parks are overflowing. People line up for hours at boat launches. Disney Shanghai sold out for the week in minutes. VFR/leisure travelers will be back quickly. Not to 2019 levels, but they will fill more seats until at least early 2021 than higher yielding business travel. The younger generations are not nearly as scared of this as older generations.
The airlines that can cater to that crowd are going to withstand this longer and fare better. It will be tough for any airline with a high CASM to compete for that market. I definitely foresee at least 1 legacy filing chapter 11, and at that point it will be hard for the others to not follow because of the cost advantage gained.
I imagine some consolidation is likely in the industry, but can't imagine 2 legacy airlines being able to merge successfully.
My bet on first to chapter 11 is AA.

The one airline with the most to gain from bankruptcy right now is not American, Delta, or United. It is SOUTHWEST.....
 
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jscottwomack
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Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 4:23 pm

lightsaber wrote:
JAMBOJET wrote:
chonetsao wrote:
Everyone think AA is the candidate. But I don't think so. Guess who has the most unsecured assets that is easily slip beneath the radar?

There is one US airlines own stakes in Virgin Atlantic, Korean Air, Aeromexico, LATAM, AF/KL and an oil refinery company (I think China Eastern as well?). That is a lot of money tied to several struggling companies around the world. What damage those other airlines will bring to the parent holding company in the US? How much more money this US airline needs to sink to maintain its investment? And how much loss it can take from the oil refinery while the oil price is below USD$30?

Sometimes the most obvious answer might not be the true answer. When the oil price was high, AA did not hedge and it saved its day when oil price collapse. Maybe in 2020, it is airline that does not have too many investment tied to other airlines and other activities would save itself.


I think you're right that Delta will have to write down a lot of assets on their balance sheet after this is all over and definitely rethink their international strategy depending on who's left, and in what way, at the end of this pandemic. But... their strength domestically (independent of their international partners) is just a bit too strong for me to agree that they're in as much danger as you suggest. Despite the write-down of the assets you mentioned, they still have a relatively strong balance sheet.

At worst, Delta will retrench into more domestic focus and retrench into their existing AF-KL and KE partnerships to keep International connectivity. Their international investments don't require them to prop them up. At worst, they'll just write down those equity holdings and move on.

Their refinery, for instance, has basically zero value to anyone (they've been trying to sell it for how long now?), including Delta. The crack spread just doesn't matter at the moment. All Delta really needs to do is shutter it eventually. I guess there's some expense related to shutting it down with environmental concerns, etc. But nothing that is going to bankrupt Delta.

Delta will have to write down a lot, but has a long way to fall.

Stockholder equity in millions of USD:
DL: 14,309
UA: 11,530
WN: 9,080
JetBlue 4,800 (prior quarter, certainly less today).
Alaska 4,330 (prior quarter, certainly less)
Spirit: 2,260 (prior quarter, again certainly less today).
Allegiant travel: 880 (again prior qtr, certainly less)

AA: (2,636) negative book value due to extreme debt.


I look at the above and the first three to six can borrow enough to survive and in the future recover. Allegiant can control costs enough, IMHO.

Delta had 5,967 million USD in cash or short term investments while AA had 3,576.

I won't worry about DL, but I agree, their investments will drop a few billion USD, but not enough to endanger DL.

Unfortunately, of all the majors, including B6, G4, AS, NK, DL, UA, and AA, we have one clear outlier: AA.

AA management had better be much more proactive due to the debt.

Lightsaber



100% spot on. The only thing AA has going for them is they do have a couple of fortress hubs. Bad part about their home turf at DFW is a good chunk of the economy in Texas is tied to oil and oil is not expected to recover till Q2 2022. Can AA last that long wait on oil to recover to swing the Texas economy?
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jholio
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Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 4:30 pm

FlyingElvii wrote:
Max Q wrote:
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

Not going to happen...
Hundreds of thousands of unemployed people hitting the streets, and headline bankruptcies is already being perceived as helping one US political party, and hurting another. That is why CARES could only be supported as it was until October.


The October bit is because the US government's fiscal year ends September 30 and the act only provided funding through that date. I don't think it had anything to do with the election. If f it looks like it will be necessary based on demand recovery, they would be smart to extend those funding provisions until after the election.
 
chonetsao
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Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 4:36 pm

jscottwomack wrote:
100% spot on. The only thing AA has going for them is they do have a couple of fortress hubs. Bad part about their home turf at DFW is a good chunk of the economy in Texas is tied to oil and oil is not expected to recover till Q2 2022. Can AA last that long wait on oil to recover to swing the Texas economy?


Don't want to hijack the thread, but when was the last time you visited Austin, TX?
 
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lightsaber
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Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 4:38 pm

To build on the cash, AA really sticks out:

https://seekingalpha.com/article/434462 ... ly-winners

They will be the first to run out of cash by a large margin with the least ability to raise cash.

JetBlue has cut cash burn to $10 million/day with Alaska at a lower $8 million/day (lowest).

AA has a cash issue.

Lightsaber
Winter is coming.
 
9Patch
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Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 4:39 pm

jetawayusa wrote:
....but can companies that have gone thru Chapter11 file again? I


YES. They're called 'frequent filers'.
 
LAXdude1023
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Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 4:39 pm

chonetsao wrote:
jscottwomack wrote:
100% spot on. The only thing AA has going for them is they do have a couple of fortress hubs. Bad part about their home turf at DFW is a good chunk of the economy in Texas is tied to oil and oil is not expected to recover till Q2 2022. Can AA last that long wait on oil to recover to swing the Texas economy?


Don't want to hijack the thread, but when was the last time you visited Austin, TX?


Not only that, DFW isn’t tied to oil.

Houston is tied to oil but comparing unemployment claim numbers from city to city, Houston and DFW are no worse off than Atlanta, LA, Chicago right now.
Last edited by LAXdude1023 on Tue May 12, 2020 4:42 pm, edited 1 time in total.
FOR THE LOVE OF GOD BRING BACK THE PAYWALL!!!!
 
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lightsaber
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Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 4:42 pm

To build on the cash, AA really sticks out:

https://seekingalpha.com/article/434462 ... ly-winners

They will be the first to run out of cash by a large margin with the least ability to raise cash.

JetBlue has cut cash burn to $10 million/day with Alaska at a lower $8 million/day (lowest).

AA has a cash issue.

DL and UA will need more cash, but can pledge assets.

B6 and AS are as OK as an airline can be in the USA. (Let the merger speculation begin). :devil:

Lightsaber
Winter is coming.
 
jholio
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Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 4:48 pm

chonetsao wrote:
jscottwomack wrote:
100% spot on. The only thing AA has going for them is they do have a couple of fortress hubs. Bad part about their home turf at DFW is a good chunk of the economy in Texas is tied to oil and oil is not expected to recover till Q2 2022. Can AA last that long wait on oil to recover to swing the Texas economy?


Don't want to hijack the thread, but when was the last time you visited Austin, TX?


Since the topic is implicitly about AA as that is the airline most people think is most at risk, discussing the underlying demand at their hubs is probably within the thread topic, albeit a little of a stretch. I'll just add this link. https://en.wikipedia.org/wiki/List_of_c ... _metroplex

The DFW area has a very large mix of F1000 companies and industries. Our fate is not directly tied to oil like Houston is.
 
winginit
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Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 4:49 pm

SEPilot wrote:
ewt340 wrote:
oxonrow wrote:
In endless pursuit of efficiency, one is most optimal? Late stage capitalism? Bring back regulation? Given environmental concerns, not unfathomable anymore?


Merge the 3 airlines and then have the government run it.

A guarantee of disaster. Government is fundamentally incapable of efficiency; name one thing ANY government runs well. And the ONLY force that leads to efficiency is competition.


Ah yes, because government run SQ and EK are just known globally for being total shite airlines.
 
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aemoreira1981
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Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 4:53 pm

kavok wrote:
The other aspect that is being overlooked is the impact Chpt 11 filing by one airline would have on the other airlines.

Let’s say hypothetically AA does go through Chpt 11 and sheds much of its liabilities, and emerges a leaner carrier on the other side. What then happens with DL and UA? Basically, they would be at a huge disadvantage because DL/UA still have their debts, and are then competing with a future post Chpt11 AA who is at an advantage without those debts.

Basically, if one airline goes (and emerged out of) Chapter 11, then that negatively impacts everyone else because all of the other competitors are significantly disadvantaged.


That could depend on how far an airline decides to go in its bankruptcy. The basis of the bankruptcy would be financial-based (especially for AA), but an airline could also use that opportunity to redo things like scope clauses if the union contract is discharged in the bankruptcy. That would put pressure on DL, UA, and to a lesser extent, AS and B6, to redo their scope clauses.
 
winginit
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Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 4:59 pm

jscottwomack wrote:
lightsaber wrote:
JAMBOJET wrote:

I think you're right that Delta will have to write down a lot of assets on their balance sheet after this is all over and definitely rethink their international strategy depending on who's left, and in what way, at the end of this pandemic. But... their strength domestically (independent of their international partners) is just a bit too strong for me to agree that they're in as much danger as you suggest. Despite the write-down of the assets you mentioned, they still have a relatively strong balance sheet.

At worst, Delta will retrench into more domestic focus and retrench into their existing AF-KL and KE partnerships to keep International connectivity. Their international investments don't require them to prop them up. At worst, they'll just write down those equity holdings and move on.

Their refinery, for instance, has basically zero value to anyone (they've been trying to sell it for how long now?), including Delta. The crack spread just doesn't matter at the moment. All Delta really needs to do is shutter it eventually. I guess there's some expense related to shutting it down with environmental concerns, etc. But nothing that is going to bankrupt Delta.

Delta will have to write down a lot, but has a long way to fall.

Stockholder equity in millions of USD:
DL: 14,309
UA: 11,530
WN: 9,080
JetBlue 4,800 (prior quarter, certainly less today).
Alaska 4,330 (prior quarter, certainly less)
Spirit: 2,260 (prior quarter, again certainly less today).
Allegiant travel: 880 (again prior qtr, certainly less)

AA: (2,636) negative book value due to extreme debt.


I look at the above and the first three to six can borrow enough to survive and in the future recover. Allegiant can control costs enough, IMHO.

Delta had 5,967 million USD in cash or short term investments while AA had 3,576.

I won't worry about DL, but I agree, their investments will drop a few billion USD, but not enough to endanger DL.

Unfortunately, of all the majors, including B6, G4, AS, NK, DL, UA, and AA, we have one clear outlier: AA.

AA management had better be much more proactive due to the debt.

Lightsaber



100% spot on. The only thing AA has going for them is they do have a couple of fortress hubs. Bad part about their home turf at DFW is a good chunk of the economy in Texas is tied to oil and oil is not expected to recover till Q2 2022. Can AA last that long wait on oil to recover to swing the Texas economy?


One thing that I'm surprised hasn't been mentioned in this thread is the Big 3, especially AA's, ability to raise an absolutely massive chunk of cash through the spinning off and selling of their loyalty program if need be, which I suspect might happen before a bankruptcy if that were the path they were on. I believe this was brought up as recently as AAL's last earnings call, and valuations for the AAdvantage program have been as high as double digit billions, which would carry them well into next year given current cash on hand and a declining cash burn rate.

Point being, while I jested earlier about AA being carved up, I really do think the US3 are safe here.
 
freakyrat
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Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 5:26 pm

aemoreira1981 wrote:
I see American as most likely to file for bankruptcy. The question then remains as to which of the regionals will survive. AA currently fully owns 3 regionals: Envoy, PSA, and Piedmont.

As for regionals, I could see Mesa and Air Wisconsin as being in big trouble, and I only expect one of ExpressJet or CommutAir to survive. SkyWest is going to be the real beneficiary under CARES Act, although they will end DL CRJ2 flying this year (the DL-owned CRJ2s are headed back to DL while the OO-owned frames will likely be permanently retired.)

Sun Country will be an interesting case, as they're transitioning to a hybrid passenger and cargo airline (with B738 freighters).


The Skywest Maintenance base at SBN handles a lot of their Delta CRJ2 overnight maintenace however they can also work on any of their CRJ7 or 9 fleet there. When the ATL flights return they are most likely going to all CRJ9 and the MSP flights either CRJ7 or CRJ9 leaving only the DTW flights to CRJ2's. This was Delta's plan long ago and I think when flying returns this transition will be accelerated and could be taken over by Endeavor. Presently 1/2 of Skywest's Delta Connection large RJ fleet is parked at SBN.
 
LJ
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Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 5:26 pm

JAMBOJET wrote:
Speedbird52 was clearly talking about the big three airlines which are the only "long haul" carriers in the US in the sense that no other major US carrier has planes that can fly to Australia, deep South America (at present before someone starts on the XLR), interior Europe, or Pacific.


There are also airlines from Australia, South America, Asia and Europe who can fly to the US. It's not unlikely a new Norwegian could enter the European market (and I recall there will be a new entrant iin the South - Korea market this year). Moreover, how many destinations does AA serve (not routes) which cannot be served by either DL or UA? If it's planes, than that can be solved over time.
 
JAMBOJET
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Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 5:44 pm

LJ wrote:
JAMBOJET wrote:
Speedbird52 was clearly talking about the big three airlines which are the only "long haul" carriers in the US in the sense that no other major US carrier has planes that can fly to Australia, deep South America (at present before someone starts on the XLR), interior Europe, or Pacific.


There are also airlines from Australia, South America, Asia and Europe who can fly to the US. It's not unlikely a new Norwegian could enter the European market (and I recall there will be a new entrant iin the South - Korea market this year). Moreover, how many destinations does AA serve (not routes) which cannot be served by either DL or UA? If it's planes, than that can be solved over time.

If you recall, MIFlyer12's initial Statement was "You overlook (or willfully ignore?) the fact that AA is primarily a domestic airline... AA could sink tomorrow and be little missed by the flying public. "
My reply was reminding that, under his geographic revenue description, Delta is also primarily a domestic airline, like AA. Even United is primarily a domestic airline if you look at ~62% of their revenues. Of course any number of airlines could eventually backfill/replace Delta, AA, or United domestically or internationally. That doesn't mean any of them would be "little missed".
I'm not trying to say any are too big to fail, but to rip out major hub carriers from the cities that have built entire infrastructures and economies around that inland connectivity like ATL, CLT, DFW, MSP, etc would certainly mean that would have an enormous impact and also means the airlines have created enormous lobbying clout on their behalf at the federal level.
 
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aemoreira1981
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Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 6:01 pm

BNAMealer wrote:
I would be surprised if any of the US3 went under.

However, if one did, think about how much it would drastically alter the landscape of the US3 current hub and spoke network.

Lets say AA went away (I highly doubt they will, but they are the most likely of the US3 to completely go under), UA could grab CLT and get ORD all to themselves, DL could grab DFW and DCA and both would resolve their geographical holes overnight. Both could expand at LAX and UA could get back into JFK.

PHL, PHX and possibly MSP would be the big losers though.


PHL may be a loser on long-haul, but on short-haul, I see it becoming an LCC hub, possibly at the expense of BWI.

As for PHX, WN would likely expand there. I honestly don't see how MSP, a Delta fortress hub, is a big loser. However, the biggest loser would probably be DFW on long-haul. However, for consumers, prices would probably crater as it would be a free-for-all on getting gates and slots into DFW.

As for UA, I can't see them going back to JFK when they have a fortress hub at EWR. Rather, I see B6 expanding on slots.
 
fly4ever78
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Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 6:08 pm

I think he should probably be more worried about whether BOEING is going to exist after this!! They have more issues than the US Majors do at this point!
 
MohawkWeekend
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Re: Boeing CEO: A major US airline likely will go out of business this year,

Tue May 12, 2020 6:18 pm

Does history repeat itself? The last time I flew AA I had a flashback to the final year of Eastern. Maybe CH11 and new management is what they need.
    300 319 320 321 707 717 720 727 72S 737 73S 734 735 73G 738 739 747 757 762 ARJ B11 C212 CRJ CR2 CR7 CR9 CV5 D8S DC9 D9S D94 D95 D10 DH8 DTO EMB EM2 E135 E145 E190 FH7 F28 F100 FTRIMTR HRN L10 L15 M80 M90 SF3 SWM YS11
     
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    NWAROOSTER
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    Re: Boeing CEO: A major US airline likely will go out of business this year,

    Tue May 12, 2020 6:27 pm

    fly4ever78 wrote:
    I think he should probably be more worried about whether BOEING is going to exist after this!! They have more issues than the US Majors do at this point!

    Yes, I have to agree with you. Boeing is in TROUBLE. This is what I alluded to in my post number 69 in this thread. Boeing has been living in the past and Corvid 19 may be a near fatal blow... :old:
    Procrastination Is The Theft Of Time.......
     
    BNAMealer
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    Re: Boeing CEO: A major US airline likely will go out of business this year,

    Tue May 12, 2020 6:46 pm

    aemoreira1981 wrote:
    BNAMealer wrote:
    I would be surprised if any of the US3 went under.

    However, if one did, think about how much it would drastically alter the landscape of the US3 current hub and spoke network.

    Lets say AA went away (I highly doubt they will, but they are the most likely of the US3 to completely go under), UA could grab CLT and get ORD all to themselves, DL could grab DFW and DCA and both would resolve their geographical holes overnight. Both could expand at LAX and UA could get back into JFK.

    PHL, PHX and possibly MSP would be the big losers though.


    PHL may be a loser on long-haul, but on short-haul, I see it becoming an LCC hub, possibly at the expense of BWI.

    As for PHX, WN would likely expand there. I honestly don't see how MSP, a Delta fortress hub, is a big loser. However, the biggest loser would probably be DFW on long-haul. However, for consumers, prices would probably crater as it would be a free-for-all on getting gates and slots into DFW.

    As for UA, I can't see them going back to JFK when they have a fortress hub at EWR. Rather, I see B6 expanding on slots.


    DL would move MSP’s operation to DFW in a heartbeat if DFW became available. A combination of ATL/DFW would be much more valuable than DTW/MSP.
     
    UWPAviation
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    Re: Boeing CEO: A major US airline likely will go out of business this year,

    Tue May 12, 2020 6:52 pm

    NWAROOSTER wrote:
    fly4ever78 wrote:
    I think he should probably be more worried about whether BOEING is going to exist after this!! They have more issues than the US Majors do at this point!

    Yes, I have to agree with you. Boeing is in TROUBLE. This is what I alluded to in my post number 69 in this thread. Boeing has been living in the past and Corvid 19 may be a near fatal blow... :old:


    If any of you seriously think Boeing is in TROUBLE then you know nothing. The only major that's in trouble is AA. And they probably will file for chapter 11. And who knows, that could be a good thing for AA. They have been in a downward spiral for so long, they need a complete brand overhaul. WN might be in the best position out of any US airline. As for the non-majors? Who knows. I wouldn't be surprised to see a merger between some of them. But again, a merger is not a short term fix and mergers do not happen over night.
     
    RWRCAS
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    Re: Boeing CEO: A major US airline likely will go out of business this year,

    Tue May 12, 2020 6:55 pm

    aemoreira1981 wrote:
    kavok wrote:
    The other aspect that is being overlooked is the impact Chpt 11 filing by one airline would have on the other airlines.

    Let’s say hypothetically AA does go through Chpt 11 and sheds much of its liabilities, and emerges a leaner carrier on the other side. What then happens with DL and UA? Basically, they would be at a huge disadvantage because DL/UA still have their debts, and are then competing with a future post Chpt11 AA who is at an advantage without those debts.

    Basically, if one airline goes (and emerged out of) Chapter 11, then that negatively impacts everyone else because all of the other competitors are significantly disadvantaged.


    That could depend on how far an airline decides to go in its bankruptcy. The basis of the bankruptcy would be financial-based (especially for AA), but an airline could also use that opportunity to redo things like scope clauses if the union contract is discharged in the bankruptcy. That would put pressure on DL, UA, and to a lesser extent, AS and B6, to redo their scope clauses.



    AS does not have a scope clause.
     
    NW
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    Re: Boeing CEO: A major US airline likely will go out of business this year,

    Tue May 12, 2020 6:59 pm

    NWAESC wrote:
    tphuang wrote:
    DL will probably have $12 billion by end of Q2 without additional CARES loans based on the recent successful bond offerings. They are burning somewhere between AA and UA. It seems like unlikely they will need chapter 11 unless they can't be cash neutral by Q2 next year. Let's say they get $5 billion additional loans from gov't and public market, since they have more unencumbered assets. They'd have $18 billion by end of Q2. Let's say they burn $40 million a day in Q3. And with some layoffs on Oct (probably not as aggressive as UA), they get that down to $25 million a day for Q4 + Q1. They'd be down to $10 billion by end of 2020 Q1.


    DL is already offering voluntary leaves of up to 1 year. I can easily see an 18 or even 24 month offering coming soon. Those coupled with a solid Early Out offer should (?) mitigate layoffs somewhat.


    I think a big driving force behind the large amount of leaves Delta has secured to date is the additional unemployment stimulus and Delta covering health insurance premiums. I don't see Delta offering premiums for up to 24 months and once unemployment cuts off or even halves a big majority of those currently on leave will need to return. It will be cheaper for Delta to begin to furlough October 1.
     
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    Re: Boeing CEO: A major US airline likely will go out of business this year,

    Tue May 12, 2020 7:18 pm

    That's a fair point, but I do think there's an appetite for those longer-term leaves (paid premiums or not).
    I'm also not saying there won't be furloughs come October- there will. I just think that leaves might offset them some.
    "Nothing ever happens here, " I said. "I just wait."
     
    NW
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    Re: Boeing CEO: A major US airline likely will go out of business this year,

    Tue May 12, 2020 7:38 pm

    NWAESC wrote:
    That's a fair point, but I do think there's an appetite for those longer-term leaves (paid premiums or not).
    I'm also not saying there won't be furloughs come October- there will. I just think that leaves might offset them some.


    Agree. It's going to be very interesting to see how Delta handles furloughs. Delta has never had so many Ready Reserves during a downturn.
     
    ScottB
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    Re: Boeing CEO: A major US airline likely will go out of business this year,

    Wed May 13, 2020 4:24 am

    chonetsao wrote:
    There is one US airlines own stakes in Virgin Atlantic, Korean Air, Aeromexico, LATAM, AF/KL and an oil refinery company (I think China Eastern as well?). That is a lot of money tied to several struggling companies around the world. What damage those other airlines will bring to the parent holding company in the US? How much more money this US airline needs to sink to maintain its investment? And how much loss it can take from the oil refinery while the oil price is below USD$30?


    While Delta will likely record paper losses on virtually all these investments save AF/KL and China Eastern, which will IMO not be permitted to fail by their governments, they are only paper losses. They're unlikely to throw significant cash into these investments to save them if they need that cash to keep their own business afloat. There's little point in throwing good money after bad if that money won't be recouped. The loss of multiple partners is a future strategic problem which pretty much every one of their peers will face.

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


    Huh? You don't think he's getting regular, if not near-daily, reports on conditions in the commercial air travel industry, both domestic and for various regions around the world? You don't think he or one of his direct reports is in regular contact with DoUgIe/Ed/Scott/Gary or some of their direct reports? Boeing Commercial Airplanes (as does Airbus Commercial Aircraft) will be reliant on up-to-date market intelligence to inform difficult decisions to be made about how quickly to ramp production back up and/or reduce planned delivery rates. So um yeah he's probably got better info about his customers than pretty much anyone else outside those customers with the possible exception of some folks at Airbus.

    jholio wrote:
    FlyingElvii wrote:
    Max Q wrote:
    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

    Not going to happen...
    Hundreds of thousands of unemployed people hitting the streets, and headline bankruptcies is already being perceived as helping one US political party, and hurting another. That is why CARES could only be supported as it was until October.


    The October bit is because the US government's fiscal year ends September 30 and the act only provided funding through that date. I don't think it had anything to do with the election. If f it looks like it will be necessary based on demand recovery, they would be smart to extend those funding provisions until after the election.


    Honestly I think the airline industry bailout was for approximately six months because no one really had or has any idea how long or how deeply Covid-19 will impact travel demand. The government undoubtedly did not want to give the airlines a generous bailout if the recovery were to be V-shaped as some had expected. I think both political parties will be willing to extend further financial support to the industry because interests on both sides -- investors and lenders as well as politically-active labor unions -- will vocally lobby for additional money. Given that the government is already running the printing presses at warp speed, what's another couple hundred billion dollars?
     
    LH658
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    Re: Boeing CEO: A major US airline likely will go out of business this year,

    Wed May 13, 2020 4:26 am

    American... if it's the US Major 3.
     
    KlimaBXsst
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    Re: Boeing CEO: A major US airline likely will go out of business this year,

    Wed May 13, 2020 5:23 am

    LH658 wrote:
    American... if it's the US Major 3.


    American has B R A N D “capital” and will just be absorbed by some other company seeking broader market exposure if AA’s circumstances took things down this unfortunate path. American will be around.

    The remnants of American might persevere with some other “Wild Card” parent company using the name TWA but with American’s management structure and downsized employee core in an integration and an integration of some struggling LCC or someone like JetBlue.

    Never underestimate AMR ahhh I mean American Airlines Group.
    Aesthetically the A 340 got it right!
     
    chonetsao
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    Re: Boeing CEO: A major US airline likely will go out of business this year,

    Wed May 13, 2020 9:07 am

    ScottB wrote:
    While Delta will likely record paper losses on virtually all these investments save AF/KL and China Eastern, which will IMO not be permitted to fail by their governments, they are only paper losses. They're unlikely to throw significant cash into these investments to save them if they need that cash to keep their own business afloat. There's little point in throwing good money after bad if that money won't be recouped. The loss of multiple partners is a future strategic problem which pretty much every one of their peers will face.


    When Delta uses its CASH to buy the shares from other airlines, the share price is down, it is paper loss when Delta is CASH RICH.

    However, when other airlines got cash injection and issued new shares, (i.e. KE), Delta's holding is reduced, it is no longer a paper loss. Delta could either join the cash injection (more cash out) to keep its holdings or recognise it as a loss in investment.

    What is worse, Delta has to borrow money, in today's environment, its holdings in other airlines is part of investments that constitutes its assets. And that is part of the collateral that Delta is borrowing money from. Its valuation is no longer on paper, but will become a decisive factor in judging Delta's ability to repay the debt. Let us say the value of its share holding on other airlines is down by $2 billion by the quarter ends, then Delta's cash and equivalent will be down by $2 billion too. And its collateral to repay the debt is down as well.

    Plus, its holding in the oil refinery business is not PAPER LOSS.

    Historically, airline that invested in multiple airlines from multiple countries never ended too well. People seems to forget that very often. Short memories in aviation industry indeed.
     
    Ziyulu
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    Re: Boeing CEO: A major US airline likely will go out of business this year,

    Wed May 13, 2020 10:38 am

    Strong financials is just one factor. When I was in college, I did a financial statement analysis on two airlines, DL and CO. DL had weaker numbers and negative equity. However, 10 years down the road, who ceased to exist? DL is still strong and running today.
     
    ewt340
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    Re: Boeing CEO: A major US airline likely will go out of business this year,

    Wed May 13, 2020 11:53 am

    KlimaBXsst wrote:
    LH658 wrote:
    American... if it's the US Major 3.


    American has B R A N D “capital” and will just be absorbed by some other company seeking broader market exposure if AA’s circumstances took things down this unfortunate path. American will be around.

    The remnants of American might persevere with some other “Wild Card” parent company using the name TWA but with American’s management structure and downsized employee core in an integration and an integration of some struggling LCC or someone like JetBlue.

    Never underestimate AMR ahhh I mean American Airlines Group.


    LOL, sure they have the brand for "the Americana". It's not always good for big percentages of the population though. The American brand became a joke on International market. Why did you think many people says US3 are bad?

    It's famous and Passé at the same time. I say Southwest have way better image than American.

    We are talking about American Airlines. Not Singapore Airlines, not Emirates, not ANA.
     
    ozark1
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    Re: Boeing CEO: A major US airline likely will go out of business this year,

    Wed May 13, 2020 1:12 pm

    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....

    I agree with this. The credibility of any quote from a Boeing executive makes me really hesitant about the source. Let’s let some of the financial airline analysts weigh in. The fact that he would say something that would harm his own company doesn’t make sense to me. Right now, even if it’s questionable, positive PR propaganda would give some sense of hope. Airlines are very good at doing that, at least I know AA is. So I don’t understand why he would say anything while his own customers are out there trying to put some kind of positive spin on anything they can grab hold of.
     
    ScottB
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    Re: Boeing CEO: A major US airline likely will go out of business this year,

    Wed May 13, 2020 1:28 pm

    chonetsao wrote:
    However, when other airlines got cash injection and issued new shares, (i.e. KE), Delta's holding is reduced, it is no longer a paper loss. Delta could either join the cash injection (more cash out) to keep its holdings or recognise it as a loss in investment.

    What is worse, Delta has to borrow money, in today's environment, its holdings in other airlines is part of investments that constitutes its assets. And that is part of the collateral that Delta is borrowing money from. Its valuation is no longer on paper, but will become a decisive factor in judging Delta's ability to repay the debt. Let us say the value of its share holding on other airlines is down by $2 billion by the quarter ends, then Delta's cash and equivalent will be down by $2 billion too. And its collateral to repay the debt is down as well.

    Plus, its holding in the oil refinery business is not PAPER LOSS.


    No. Shareholdings in other companies aren't considered cash and equivalents because these can fluctuate wildly in value and may be relatively illiquid. A cash equivalent is something like a Treasury bond which can be readily sold at a relatively predictable value. If they're being honest in their financial statements (and there are severe civil and criminal penalties if they're not) then they have already written down their holdings in other airlines and the refinery to fair market value so they're not reported as assets which can be borrowed against; i.e. collateral. Maybe the holding in MU still has some value.

    The refinery is held in an LLC (Monroe Energy) to help shield the parent company from future liability if they decide to just shut it down and walk away. Again, the potential impact on their cash would be very limited.
     
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    Revelation
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    Re: Boeing CEO: A major US airline likely will go out of business this year,

    Wed May 13, 2020 1:34 pm

    KlimaBXsst wrote:
    LH658 wrote:
    American... if it's the US Major 3.

    American has B R A N D “capital” and will just be absorbed by some other company seeking broader market exposure if AA’s circumstances took things down this unfortunate path. American will be around.

    The remnants of American might persevere with some other “Wild Card” parent company using the name TWA but with American’s management structure and downsized employee core in an integration and an integration of some struggling LCC or someone like JetBlue.

    Never underestimate AMR ahhh I mean American Airlines Group.

    Pan Am was the biggest name in the airline world, now their B R A N D is on some locomotives and box cars for an obscure northeast US railroad.

    Eastern was the biggest name in the US East Coast market, their branding got applied to a one airplane charter outfit that failed.

    TWA seems to have sunk beneath the waves with nary a mention.

    Personally, I have more negative feelings about AA than positive. The HP take over of AA has really damaged the brand. I doubt a reboot using the current management and employee core would be a step forward. To do this you would need a lot of financing, and there simply is none available in the current economic climate.
    Wake up to find out that you are the eyes of the world
    The heart has its beaches, its homeland and thoughts of its own
    Wake now, discover that you are the song that the morning brings
    The heart has its seasons, its evenings and songs of its own
     
    CobaltScar
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    Re: Boeing CEO: A major US airline likely will go out of business this year,

    Wed May 13, 2020 2:26 pm

    Revelation wrote:
    TWA seems to have sunk beneath the waves with nary a mention.
    .


    The new hotel (old) across from T5 in JFK.
     
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    Revelation
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    Re: Boeing CEO: A major US airline likely will go out of business this year,

    Wed May 13, 2020 2:38 pm

    CobaltScar wrote:
    Revelation wrote:
    TWA seems to have sunk beneath the waves with nary a mention.

    The new hotel (old) across from T5 in JFK.

    Ahh, indeed! I guess that's mainly to capture the nostalgic traveler. I would think it'd be a while before people would become too nostalgic over AA, and if so, we could keep an AA 738 in its current configuration to cure them of their nostalgia.
    Wake up to find out that you are the eyes of the world
    The heart has its beaches, its homeland and thoughts of its own
    Wake now, discover that you are the song that the morning brings
    The heart has its seasons, its evenings and songs of its own
     
    WaywardMemphian
    Posts: 1497
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    Re: Boeing CEO: A major US airline likely will go out of business this year,

    Wed May 13, 2020 3:49 pm

    I could see AA going under and WN and DL moving in to DFW to pick up the pieces and it would certainly alleviate the Love Field Saga. Southwest could expand PHX to cover most. In a post AA world, Would Southwest finally get a smaller planes to back fill some major AA stations like TUL and XNA?

    I could see Allegiant and other LCCs jumping into Love if such a senario unfolded
     
    BigPlaneGuy13
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    Re: Boeing CEO: A major US airline likely will go out of business this year,

    Wed May 13, 2020 4:31 pm

    Q: What's biggest takeaway from this economic downturn among Fortune 500 companies?
    A: Everyone is seeing a steep reduction in capital expenditure.

    What does this tell us? Airlines with high debt are in the most trouble. Bankruptcy is more likely than anything. But regardless of financial standing, no airline is investing in their networks or fleets at their old rates for a long while.

    No airline can afford to take on the liabilities of one of its competitors right now. And with current and future demand, there simply isn't a need for the present supply of airplanes. If two airlines merged, they'd still need to reduce their fleet. Who's going to buy up those jets in this marketplace? It serves an airline like DL no purpose to merge with an AS or B6 when when their capacity is still going to be at best 50% by year end per Boeing's boss.

    In this climate it makes more sense for an airline to simply fold. And even then, there will still be too much capacity. A.netters act like this is some opportunistic time for the industry. Everyone is white-kuckling this crisis.
     
    CRJ5000
    Posts: 146
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    Re: Boeing CEO: A major US airline likely will go out of business this year,

    Wed May 13, 2020 5:11 pm

    BigPlaneGuy13 wrote:

    In this climate it makes more sense for an airline to simply fold. And even then, there will still be too much capacity. A.netters act like this is some opportunistic time for the industry. Everyone is white-kuckling this crisis.


    Yeah, you're right... In this climate. The fact of the matter is that the climate is changing rapidly and NO ONE knows what the climate will be like in 6 months, 12 months, 18 months, etc.
    Is it still possible (not saying likely) that next year we approach 2019 levels of traffic again? Of course its possible. In that scenario it makes a lot of sense for an airline in an advantageous financial situation to eliminate a competitor and acquire their assets. Being that it's a speculative forum, of course people like to play what if. By the end of 2021, the industry will undoubtedly look different than today, and it likely won't just be due to a bunch of airlines folding. There's always someone who is able to capitalize on a crisis.
     
    LAXdude1023
    Posts: 6174
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    Re: Boeing CEO: A major US airline likely will go out of business this year,

    Wed May 13, 2020 5:40 pm

    CRJ5000 wrote:
    BigPlaneGuy13 wrote:

    In this climate it makes more sense for an airline to simply fold. And even then, there will still be too much capacity. A.netters act like this is some opportunistic time for the industry. Everyone is white-kuckling this crisis.


    Yeah, you're right... In this climate. The fact of the matter is that the climate is changing rapidly and NO ONE knows what the climate will be like in 6 months, 12 months, 18 months, etc.
    Is it still possible (not saying likely) that next year we approach 2019 levels of traffic again? Of course its possible. In that scenario it makes a lot of sense for an airline in an advantageous financial situation to eliminate a competitor and acquire their assets. Being that it's a speculative forum, of course people like to play what if. By the end of 2021, the industry will undoubtedly look different than today, and it likely won't just be due to a bunch of airlines folding. There's always someone who is able to capitalize on a crisis.


    This. There is one thing that I remain completely convinced of: there is NO WAY IN HELL the US government lets one of the big four (AA, UA, WN, and DL) fold. They employee way too many people and no politician wants that on their hands. You also have to consider that no government that has means will let a massive company fail for a temporary situation. People like to scoff at the notion of "too big to fail" but its true. The comparisons to Pan Am are unfounded too.

    There is a 0% chance any of those four go under.
    FOR THE LOVE OF GOD BRING BACK THE PAYWALL!!!!
     
    Insertnamehere
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    Re: Boeing CEO: A major US airline likely will go out of business this year,

    Wed May 13, 2020 5:47 pm

    winginit wrote:
    SEPilot wrote:
    ewt340 wrote:

    Merge the 3 airlines and then have the government run it.

    A guarantee of disaster. Government is fundamentally incapable of efficiency; name one thing ANY government runs well. And the ONLY force that leads to efficiency is competition.


    Ah yes, because government run SQ and EK are just known globally for being total shite airlines.


    Those airlines are put relatively at arm's length in terms of government oversight. It's easy to cherry-pick successes, its also easy to cherry-pick failures such as Alitalia, Etihad, and most notably, South African.

    Why should the government be in charge of air travel?
     
    CRJ5000
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    Re: Boeing CEO: A major US airline likely will go out of business this year,

    Wed May 13, 2020 5:49 pm

    LAXdude1023 wrote:

    This. There is one thing that I remain completely convinced of: there is NO WAY IN HELL the US government lets one of the big four (AA, UA, WN, and DL) fold. They employee way too many people and no politician wants that on their hands. You also have to consider that no government that has means will let a massive company fail for a temporary situation. People like to scoff at the notion of "too big to fail" but its true. The comparisons to Pan Am are unfounded too.

    There is a 0% chance any of those four go under.


    Agreed about any of those four going under. In addition to that, I'd say there's a near 0 chance that any of those specific brands cease to exist after any sort of merger or acquisition. There won't be mergers between the 4 powerhouses, and the brands of all 4 are too valuable to lose in a merger. Every other airline is on the table, depending on how things shake out, IMO.
     
    winginit
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    Re: Boeing CEO: A major US airline likely will go out of business this year,

    Wed May 13, 2020 5:59 pm

    Insertnamehere wrote:
    winginit wrote:
    SEPilot wrote:
    A guarantee of disaster. Government is fundamentally incapable of efficiency; name one thing ANY government runs well. And the ONLY force that leads to efficiency is competition.


    Ah yes, because government run SQ and EK are just known globally for being total shite airlines.


    Those airlines are put relatively at arm's length in terms of government oversight. It's easy to cherry-pick successes, its also easy to cherry-pick failures such as Alitalia, Etihad, and most notably, South African.

    Why should the government be in charge of air travel?


    I never said the government should, as they have been in the past, be in charge of travel. I was simply pushing back on the claim that government is fundamentally incapable of efficiency and that they run nothing well. The military comes to mind as well.
     
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    einsteinboricua
    Posts: 8503
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    Re: Boeing CEO: A major US airline likely will go out of business this year,

    Wed May 13, 2020 7:04 pm

    winginit wrote:
    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

    According to Wiki, UA was the 4th largest carrier at LAX, preceded by WN, DL, and AA at #1. If AA goes under, I'll bet UA will want to carve a bit of AA's share so that it's not totally eclipsed by DL and WN. However, maybe it'll let the airport be and let DL and WN battle it out while it sets its sights on bigger fish. Perhaps some coveted JFK slots and either CLT or MIA (more likely to complement a South American and Caribbean network with partners instead of launching it from IAH while keeping some distance from IAD and EWR).

    Don't think any of this will happen, but it's a nice mental exercise :)
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