Moderators: jsumali2, richierich, ua900, PanAm_DC10, hOMSaR

 
User avatar
enilria
Topic Author
Posts: 10256
Joined: Fri Feb 22, 2008 7:15 pm

Delta Pays $62m to Cancel purchase of 4 used A350s from LATAM

Tue May 26, 2020 11:56 am

I’m a little surprised Delta couldn’t find another way out of the deal without paying a fairly huge amount of cash they desperately need.

>>> Delta will pay LATAM $62 million for cancelling their agreement for Delta to purchase four of LATAM’s already delivered Airbus A350 aircraft, LATAM said in a court filing.

https://www.forbes.com/sites/willhorton ... cy-filing/
 
User avatar
GEUltraFan9XGTF
Posts: 385
Joined: Thu Nov 22, 2018 3:31 pm

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 12:04 pm

First of many WB cancellations to come.
© 2020. All statements are my own. The use of my statements, including by journalists, YouTube vloggers like "DJ's Aviation", etc. without my written consent is strictly prohibited.
 
MIflyer12
Posts: 8088
Joined: Mon Feb 18, 2013 11:58 pm

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 12:07 pm

'Fairly huge'? That's less than two days' cash burn, and quite small in the context of the $3.5 Billion they raised April 29.

https://d18rn0p25nwr6d.cloudfront.net/C ... 4f9646.pdf

One can see this in the context of falling used aircraft prices. Prices negotiated in September '19 may look unappealing today.
 
sxf24
Posts: 1001
Joined: Wed Aug 15, 2007 12:22 pm

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 12:18 pm

Great companies always honor their obligations! Promises made, promises kept.
 
fcogafa
Posts: 1273
Joined: Fri May 16, 2008 4:37 pm

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 12:18 pm

Wonder what Latam will do with them now, also what Delta will do with the other part of the order they took over
 
kavok
Posts: 834
Joined: Wed May 11, 2016 10:12 pm

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 12:27 pm

To me, this sounds more like an insurance policy on the JV.

With LATAMs Chpt 11 filing, by definition all creditors are not going to get paid their full amount owed. This “deal” basically tells the judge that Delta will provide $62m to offset some of the creditors losses as long as the JV deal with the “new LATAM” remains. Thus if the bankruptcy judge approves a reorganization without the JV, there is $62m more losses the judge has to account for. Again, it incentivizes that the JV deal still goes through.

Delta values the JV more than the value of 4x A350s frames, especially at a time when there is an abundance of unused planes in the aviation world.
 
User avatar
flee
Posts: 1280
Joined: Mon Oct 12, 2009 8:14 am

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 12:31 pm

MIflyer12 wrote:
'Fairly huge'? That's less than two days' cash burn, and quite small in the context of the $3.5 Billion they raised April 29.

https://d18rn0p25nwr6d.cloudfront.net/C ... 4f9646.pdf

One can see this in the context of falling used aircraft prices. Prices negotiated in September '19 may look unappealing today.

Well, DL can always buy them at a lower price if LATAM holds a firesale. That is, if they really want them.
 
User avatar
Pudelhund
Posts: 261
Joined: Tue Jan 15, 2019 11:06 pm

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 12:36 pm

The article just says this is for the four that LATAM already has... what about the undelivered LATAM A350 that DL also agreed to purchase?
 
User avatar
Polot
Posts: 10637
Joined: Thu Jul 28, 2011 3:01 pm

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 12:40 pm

kavok wrote:
This “deal” basically tells the judge that Delta will provide $62m to offset some of the creditors losses as long as the JV deal with the “new LATAM” remains.

DL can’t make up leverage. If the contract says DL can cancel if LATAM goes bankrupt with the $62 million penalty and DL exercises that option then the deal is canceled. DL can’t add additional strings such as LATAM must then follow JV deal. That is a separate contract.

Delta values the JV more than the value of 4x A350s frames, especially at a time when there is an abundance of unused planes in the aviation world.


You know what would should even greater value towards the JV? Going through with the deal- because that would have provided LA with more money and get rid of their unwanted assets.



In reality the reason for this cancelation is simple and has nothing to do with the JV: DL no longer wants the 4 used A350s (and in this environment who can blame them?) and the LATAM bankruptcy provides DL with an easy and relatively low cost out from the contract.
Last edited by Polot on Tue May 26, 2020 12:59 pm, edited 1 time in total.
 
jayunited
Posts: 2883
Joined: Sat Jan 05, 2013 12:03 am

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 12:57 pm

kavok wrote:
To me, this sounds more like an insurance policy on the JV.

With LATAMs Chpt 11 filing, by definition all creditors are not going to get paid their full amount owed. This “deal” basically tells the judge that Delta will provide $62m to offset some of the creditors losses as long as the JV deal with the “new LATAM” remains. Thus if the bankruptcy judge approves a reorganization without the JV, there is $62m more losses the judge has to account for. Again, it incentivizes that the JV deal still goes through.

Delta values the JV more than the value of 4x A350s frames, especially at a time when there is an abundance of unused planes in the aviation world.



I'm not sure I follow your explanation. LATAM and Delta had an agreement where Delta would buy 4 of LATAMs already delivered A359s, Delta is now backing out which is why they will now pay $62 million dollars. How is does this give Delta leverage during LATAMs bankruptcy proceedings, how are the two related?
 
tphuang
Posts: 5226
Joined: Tue Mar 14, 2017 2:04 pm

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 12:59 pm

This seems to me like DL has given up on JV with Latam. It doesn't seem like something you would do if you want to improve on your partnership with them.
 
User avatar
scbriml
Posts: 19126
Joined: Wed Jul 02, 2003 10:37 pm

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 1:03 pm

GEUltraFan9XGTF wrote:
First of many WB cancellations to come.


How is it a cancellation when the planes have already been delivered to LATAM? DL was supposed to take these four as part of their deal with LATAM. Now DL has decided they don't want/need those four.

Pudelhund wrote:
The article just says this is for the four that LATAM already has... what about the undelivered LATAM A350 that DL also agreed to purchase?


LATAM cancelled 4 x A359 & 6 x A35K in March and "Undisclosed" (aka Delta) ordered 10 x A359 (per the agreement). That leaves LATAM with 5 x A359 and 2 x A35K outstanding.
Time flies like an arrow. Fruit flies like a banana!
There are 10 types of people in the World - those that understand binary and those that don't.
 
User avatar
Pudelhund
Posts: 261
Joined: Tue Jan 15, 2019 11:06 pm

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 1:21 pm

scbriml wrote:
GEUltraFan9XGTF wrote:
First of many WB cancellations to come.


How is it a cancellation when the planes have already been delivered to LATAM? DL was supposed to take these four as part of their deal with LATAM. Now DL has decided they don't want/need those four.

Pudelhund wrote:
The article just says this is for the four that LATAM already has... what about the undelivered LATAM A350 that DL also agreed to purchase?


LATAM cancelled 4 x A359 & 6 x A35K in March and "Undisclosed" (aka Delta) ordered 10 x A359 (per the agreement). That leaves LATAM with 5 x A359 and 2 x A35K outstanding.


Right, so the other undeliverds Delta picked up are still on the books?
 
User avatar
enilria
Topic Author
Posts: 10256
Joined: Fri Feb 22, 2008 7:15 pm

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 1:35 pm

MIflyer12 wrote:
'Fairly huge'? That's less than two days' cash burn, and quite small in the context of the $3.5 Billion they raised April 29.

https://d18rn0p25nwr6d.cloudfront.net/C ... 4f9646.pdf

One can see this in the context of falling used aircraft prices. Prices negotiated in September '19 may look unappealing today.

I’ve never seen a $16m/plane delivery cancellation penalty even on newly built planes. This is a ton of money to cancel a used aircraft sale. And 2 days of cash burn IS a lot in this environment.
 
kavok
Posts: 834
Joined: Wed May 11, 2016 10:12 pm

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 1:35 pm

jayunited wrote:
kavok wrote:
To me, this sounds more like an insurance policy on the JV.

With LATAMs Chpt 11 filing, by definition all creditors are not going to get paid their full amount owed. This “deal” basically tells the judge that Delta will provide $62m to offset some of the creditors losses as long as the JV deal with the “new LATAM” remains. Thus if the bankruptcy judge approves a reorganization without the JV, there is $62m more losses the judge has to account for. Again, it incentivizes that the JV deal still goes through.

Delta values the JV more than the value of 4x A350s frames, especially at a time when there is an abundance of unused planes in the aviation world.



I'm not sure I follow your explanation. LATAM and Delta had an agreement where Delta would buy 4 of LATAMs already delivered A359s, Delta is now backing out which is why they will now pay $62 million dollars. How is does this give Delta leverage during LATAMs bankruptcy proceedings, how are the two related?


Basically, here is the logic:
-DL still wants the JV to happen, and now the JV would have to occur with the “new LATAM” (after Chpt 11 company) as opposed to the “old LATAM” (which basically becomes a holding company through the bankruptcy process). I am not focusing on what the “old LATAM” wants, because it doesn’t matter now as they are bankrupt.

-DL owned a portion of the old LATAM which gave them leverage. That leverage (or a significant portion there of) will be lost, as who knows what (if any) ownership DL will have over the “new LATAM”.

-It could be some ME3 or another entity that swoops in and buys ownership into the new LATAM, and who also has a personal interest in seeing that the DL JV doesn’t happen with the New LATAM. So that is a risk for DL.

-Thus to ensure that the “new LATAM” also goes through with the JV, Delta needs something to help make that happen. This does that. As mentioned, if the judge allows the “new LATAM” to back out of the JV, then that judge will have $62m more in unpaid creditors from the old LATAM. Remember, the judges role is to basically balance and decide which creditors get paid (and how much) from LATAMs current assets. This $62m cash is an easy no-strings attached asset for the judge to use, given its liquidity. Thus the judge will be inclined to make sure the new LATAM follows through with the JV to ensure that $62m is available.

-I would be very surprised if DL doesn’t have those very strings attached, as in if no JV then no $62m. The dropping of the four A350s was likely done as cover to justify the $62m deal.
 
RDUDDJI
Posts: 2222
Joined: Fri Jun 04, 2004 4:42 am

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 1:41 pm

sxf24 wrote:
Great companies always honor their obligations! Promises made, promises kept.


Yup and that's why DL paid the cancellation fee that was in the contract!

Although I suspect that doesn't help your narrative.
Sometimes we don't realize the good times when we're in them
 
usflyer msp
Posts: 3805
Joined: Tue May 23, 2000 11:50 am

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 1:54 pm

kavok wrote:
jayunited wrote:
kavok wrote:
To me, this sounds more like an insurance policy on the JV.

With LATAMs Chpt 11 filing, by definition all creditors are not going to get paid their full amount owed. This “deal” basically tells the judge that Delta will provide $62m to offset some of the creditors losses as long as the JV deal with the “new LATAM” remains. Thus if the bankruptcy judge approves a reorganization without the JV, there is $62m more losses the judge has to account for. Again, it incentivizes that the JV deal still goes through.

Delta values the JV more than the value of 4x A350s frames, especially at a time when there is an abundance of unused planes in the aviation world.



I'm not sure I follow your explanation. LATAM and Delta had an agreement where Delta would buy 4 of LATAMs already delivered A359s, Delta is now backing out which is why they will now pay $62 million dollars. How is does this give Delta leverage during LATAMs bankruptcy proceedings, how are the two related?


Basically, here is the logic:
-DL still wants the JV to happen, and now the JV would have to occur with the “new LATAM” (after Chpt 11 company) as opposed to the “old LATAM” (which basically becomes a holding company through the bankruptcy process). I am not focusing on what the “old LATAM” wants, because it doesn’t matter now as they are bankrupt.

-DL owned a portion of the old LATAM which gave them leverage. That leverage (or a significant portion there of) will be lost, as who knows what (if any) ownership DL will have over the “new LATAM”.

-It could be some ME3 or another entity that swoops in and buys ownership into the new LATAM, and who also has a personal interest in seeing that the DL JV doesn’t happen with the New LATAM. So that is a risk for DL.

-Thus to ensure that the “new LATAM” also goes through with the JV, Delta needs something to help make that happen. This does that. As mentioned, if the judge allows the “new LATAM” to back out of the JV, then that judge will have $62m more in unpaid creditors from the old LATAM. Remember, the judges role is to basically balance and decide which creditors get paid (and how much) from LATAMs current assets. This $62m cash is an easy no-strings attached asset for the judge to use, given its liquidity. Thus the judge will be inclined to make sure the new LATAM follows through with the JV to ensure that $62m is available.

-I would be very surprised if DL doesn’t have those very strings attached, as in if no JV then no $62m. The dropping of the four A350s was likely done as cover to justify the $62m deal.


I'm totally confused. How is Delta an LATAM creditor? They owe LATAM $62M not the opposite
 
Antarius
Posts: 2427
Joined: Thu Apr 13, 2017 1:27 pm

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 2:00 pm

usflyer msp wrote:
kavok wrote:
jayunited wrote:


I'm not sure I follow your explanation. LATAM and Delta had an agreement where Delta would buy 4 of LATAMs already delivered A359s, Delta is now backing out which is why they will now pay $62 million dollars. How is does this give Delta leverage during LATAMs bankruptcy proceedings, how are the two related?


Basically, here is the logic:
-DL still wants the JV to happen, and now the JV would have to occur with the “new LATAM” (after Chpt 11 company) as opposed to the “old LATAM” (which basically becomes a holding company through the bankruptcy process). I am not focusing on what the “old LATAM” wants, because it doesn’t matter now as they are bankrupt.

-DL owned a portion of the old LATAM which gave them leverage. That leverage (or a significant portion there of) will be lost, as who knows what (if any) ownership DL will have over the “new LATAM”.

-It could be some ME3 or another entity that swoops in and buys ownership into the new LATAM, and who also has a personal interest in seeing that the DL JV doesn’t happen with the New LATAM. So that is a risk for DL.

-Thus to ensure that the “new LATAM” also goes through with the JV, Delta needs something to help make that happen. This does that. As mentioned, if the judge allows the “new LATAM” to back out of the JV, then that judge will have $62m more in unpaid creditors from the old LATAM. Remember, the judges role is to basically balance and decide which creditors get paid (and how much) from LATAMs current assets. This $62m cash is an easy no-strings attached asset for the judge to use, given its liquidity. Thus the judge will be inclined to make sure the new LATAM follows through with the JV to ensure that $62m is available.

-I would be very surprised if DL doesn’t have those very strings attached, as in if no JV then no $62m. The dropping of the four A350s was likely done as cover to justify the $62m deal.


I'm totally confused. How is Delta an LATAM creditor? They owe LATAM $62M not the opposite


If Latam declares bankruptcy, their 20% equity stake would make them a creditor.

That said, I don't necessarily agree with the logic. DL is trying to cut cash burn and reduce fleet growth. That's likely the reason to walk away from the new a350s for now.

EDIT - Latam has declared bankruptcy. So DL is a creditor.
Last edited by Antarius on Tue May 26, 2020 2:02 pm, edited 1 time in total.
2020: SFO DFW IAH HOU CLT MEX BIS MIA GUA ORD DTW LGA BOS LHR DUB BFS BHD STN OAK PHL ISP JFK SJC DEN SJU LAS TXL GDL
 
onwFan
Posts: 448
Joined: Wed Feb 03, 2016 4:02 am

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 2:00 pm

kavok wrote:
jayunited wrote:
kavok wrote:
To me, this sounds more like an insurance policy on the JV.

With LATAMs Chpt 11 filing, by definition all creditors are not going to get paid their full amount owed. This “deal” basically tells the judge that Delta will provide $62m to offset some of the creditors losses as long as the JV deal with the “new LATAM” remains. Thus if the bankruptcy judge approves a reorganization without the JV, there is $62m more losses the judge has to account for. Again, it incentivizes that the JV deal still goes through.

Delta values the JV more than the value of 4x A350s frames, especially at a time when there is an abundance of unused planes in the aviation world.



I'm not sure I follow your explanation. LATAM and Delta had an agreement where Delta would buy 4 of LATAMs already delivered A359s, Delta is now backing out which is why they will now pay $62 million dollars. How is does this give Delta leverage during LATAMs bankruptcy proceedings, how are the two related?


Basically, here is the logic:
-DL still wants the JV to happen, and now the JV would have to occur with the “new LATAM” (after Chpt 11 company) as opposed to the “old LATAM” (which basically becomes a holding company through the bankruptcy process). I am not focusing on what the “old LATAM” wants, because it doesn’t matter now as they are bankrupt.

-DL owned a portion of the old LATAM which gave them leverage. That leverage (or a significant portion there of) will be lost, as who knows what (if any) ownership DL will have over the “new LATAM”.

-It could be some ME3 or another entity that swoops in and buys ownership into the new LATAM, and who also has a personal interest in seeing that the DL JV doesn’t happen with the New LATAM. So that is a risk for DL.

-Thus to ensure that the “new LATAM” also goes through with the JV, Delta needs something to help make that happen. This does that. As mentioned, if the judge allows the “new LATAM” to back out of the JV, then that judge will have $62m more in unpaid creditors from the old LATAM. Remember, the judges role is to basically balance and decide which creditors get paid (and how much) from LATAMs current assets. This $62m cash is an easy no-strings attached asset for the judge to use, given its liquidity. Thus the judge will be inclined to make sure the new LATAM follows through with the JV to ensure that $62m is available.

-I would be very surprised if DL doesn’t have those very strings attached, as in if no JV then no $62m. The dropping of the four A350s was likely done as cover to justify the $62m deal.

I think you are thinking about it the wrong way around. It is DL (not LA) that is getting out of the contract for the A350s, and the penalty is for that. Basically LA has already ended up with the liability (A350s).

In fact, as per the Forbes article, it is LA that has had to ask in return for DL’s promise that they will not terminate the agrement for JV.
 
Cointrin330
Posts: 2015
Joined: Sat Jul 16, 2016 12:23 pm

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 2:06 pm

enilria wrote:
I’m a little surprised Delta couldn’t find another way out of the deal without paying a fairly huge amount of cash they desperately need.

>>> Delta will pay LATAM $62 million for cancelling their agreement for Delta to purchase four of LATAM’s already delivered Airbus A350 aircraft, LATAM said in a court filing.

https://www.forbes.com/sites/willhorton ... cy-filing/


Very much agreed and that is a significant amount of cash. The comparison to the daily cash burn rate others have made isn't quite apples to apples. Seems like Delta made a big splash with the LATAM and signed a deal at the worst possible time. Not that they could see it coming, but the huge upside to this deal will take years for Delta to capture and the costs of its investments are beginning to pile up a bit.
 
usflyer msp
Posts: 3805
Joined: Tue May 23, 2000 11:50 am

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 2:18 pm

Antarius wrote:
usflyer msp wrote:
kavok wrote:

Basically, here is the logic:
-DL still wants the JV to happen, and now the JV would have to occur with the “new LATAM” (after Chpt 11 company) as opposed to the “old LATAM” (which basically becomes a holding company through the bankruptcy process). I am not focusing on what the “old LATAM” wants, because it doesn’t matter now as they are bankrupt.

-DL owned a portion of the old LATAM which gave them leverage. That leverage (or a significant portion there of) will be lost, as who knows what (if any) ownership DL will have over the “new LATAM”.

-It could be some ME3 or another entity that swoops in and buys ownership into the new LATAM, and who also has a personal interest in seeing that the DL JV doesn’t happen with the New LATAM. So that is a risk for DL.

-Thus to ensure that the “new LATAM” also goes through with the JV, Delta needs something to help make that happen. This does that. As mentioned, if the judge allows the “new LATAM” to back out of the JV, then that judge will have $62m more in unpaid creditors from the old LATAM. Remember, the judges role is to basically balance and decide which creditors get paid (and how much) from LATAMs current assets. This $62m cash is an easy no-strings attached asset for the judge to use, given its liquidity. Thus the judge will be inclined to make sure the new LATAM follows through with the JV to ensure that $62m is available.

-I would be very surprised if DL doesn’t have those very strings attached, as in if no JV then no $62m. The dropping of the four A350s was likely done as cover to justify the $62m deal.


I'm totally confused. How is Delta an LATAM creditor? They owe LATAM $62M not the opposite


If Latam declares bankruptcy, their 20% equity stake would make them a creditor.

That said, I don't necessarily agree with the logic. DL is trying to cut cash burn and reduce fleet growth. That's likely the reason to walk away from the new a350s for now.

EDIT - Latam has declared bankruptcy. So DL is a creditor.


Yes but I meant in regards to the $62M. Anyway, that poster is linking the JV and the $62M too closely. JV or not, Delta owes LATAM $62M and the credits committee will make sure they pay up.
 
User avatar
Antaras
Posts: 839
Joined: Thu Aug 15, 2019 6:18 am

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 2:20 pm

Couldn't Latam-Delta find a better solution that cancellation? Could they simply transfer the order to other carriers (who needs the A350) or to the lessors?
Edit signature
This is a block of text that can be added to posts you make. There is a 255 character limit.
 
kavok
Posts: 834
Joined: Wed May 11, 2016 10:12 pm

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 2:21 pm

onwFan wrote:
kavok wrote:
jayunited wrote:


I'm not sure I follow your explanation. LATAM and Delta had an agreement where Delta would buy 4 of LATAMs already delivered A359s, Delta is now backing out which is why they will now pay $62 million dollars. How is does this give Delta leverage during LATAMs bankruptcy proceedings, how are the two related?


Basically, here is the logic:
-DL still wants the JV to happen, and now the JV would have to occur with the “new LATAM” (after Chpt 11 company) as opposed to the “old LATAM” (which basically becomes a holding company through the bankruptcy process). I am not focusing on what the “old LATAM” wants, because it doesn’t matter now as they are bankrupt.

-DL owned a portion of the old LATAM which gave them leverage. That leverage (or a significant portion there of) will be lost, as who knows what (if any) ownership DL will have over the “new LATAM”.

-It could be some ME3 or another entity that swoops in and buys ownership into the new LATAM, and who also has a personal interest in seeing that the DL JV doesn’t happen with the New LATAM. So that is a risk for DL.

-Thus to ensure that the “new LATAM” also goes through with the JV, Delta needs something to help make that happen. This does that. As mentioned, if the judge allows the “new LATAM” to back out of the JV, then that judge will have $62m more in unpaid creditors from the old LATAM. Remember, the judges role is to basically balance and decide which creditors get paid (and how much) from LATAMs current assets. This $62m cash is an easy no-strings attached asset for the judge to use, given its liquidity. Thus the judge will be inclined to make sure the new LATAM follows through with the JV to ensure that $62m is available.

-I would be very surprised if DL doesn’t have those very strings attached, as in if no JV then no $62m. The dropping of the four A350s was likely done as cover to justify the $62m deal.

I think you are thinking about it the wrong way around. It is DL (not LA) that is getting out of the contract for the A350s, and the penalty is for that. Basically LA has already ended up with the liability (A350s).

In fact, as per the Forbes article, it is LA that has had to ask in return for DL’s promise that they will not terminate the agrement for JV.


To me, that is more a formality than a critical part of the deal. Here is how I see it:

There soon will be two LATAMs. The first LATAM (I will call LA1) is the airline that was flying around South America a month ago and who now doesn’t have enough assets to pay their debts. LA1 will stop flying planes at some point in the next couple years. The second LATAM (I will call LA2) is the restructured “new” airline that (likely) retains the LATAM logo, hubs, staff, etc. and who will be (hopefully) flying around South America in 2022. LA2 starts flying planes (hopefully) the day after LA1 stops flying planes,

DL has a proposed JV with LA1. DL has no agreement with LA2. LA2 could end up being owned by anyone, including entities such as the ME3 or others who don’t want LA2 to have a JV with DL. If DL didn’t want a JV with LA2, the bankruptcy would be an easy way to get out of that, as again LA2 is a new company.

Again, it is DL who wants the JV with LA2. Who knows what LA2 wants because they don’t exist yet, and more importantly their ownership is undecided at this point. DL is trying to work the process such that LA2 is committed to a JV with DL. The whole A350 “Deal” just provides cover to the bigger arrangement, which is ensuring LA2 is forced into a commitment to a JV with DL, once LA2 is created.
Last edited by kavok on Tue May 26, 2020 2:25 pm, edited 2 times in total.
 
User avatar
Polot
Posts: 10637
Joined: Thu Jul 28, 2011 3:01 pm

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 2:23 pm

Antaras wrote:
Couldn't Latam-Delta find a better solution that cancellation? Could they simply transfer the order to other carriers (who needs the A350) or to the lessors?

Sure. If you know someone who wants to buy used A350s right now let LATAM know.
 
Antarius
Posts: 2427
Joined: Thu Apr 13, 2017 1:27 pm

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 2:23 pm

Antaras wrote:
Couldn't Latam-Delta find a better solution that cancellation? Could they simply transfer the order to other carriers (who needs the A350) or to the lessors?


Latam still can do that. And lessors won't take a frame back for free. There is no market for new leases right now.

DL pays LA and sends back the frames. LA likely returns to lessors and pays them.
2020: SFO DFW IAH HOU CLT MEX BIS MIA GUA ORD DTW LGA BOS LHR DUB BFS BHD STN OAK PHL ISP JFK SJC DEN SJU LAS TXL GDL
 
User avatar
Polot
Posts: 10637
Joined: Thu Jul 28, 2011 3:01 pm

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 2:28 pm

Antarius wrote:
Antaras wrote:
Couldn't Latam-Delta find a better solution that cancellation? Could they simply transfer the order to other carriers (who needs the A350) or to the lessors?


Latam still can do that. And lessors won't take a frame back for free. There is no market for new leases right now.

DL pays LA and sends back the frames. LA likely returns to lessors and pays them.

That is assuming the planes are leased and not owned (well, financed) frames.
 
atlflyer
Posts: 726
Joined: Wed Jan 11, 2006 11:13 am

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 2:29 pm

How many A350s does Delta have in its fleet and on order? It’s changed so many times...
 
Lootess
Posts: 463
Joined: Sun May 13, 2018 6:15 am

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 2:30 pm

tphuang wrote:
This seems to me like DL has given up on JV with Latam. It doesn't seem like something you would do if you want to improve on your partnership with them.


Wrong, Delta and LATAM signed the contract earlier this month, and Delta will continue to take the 10 LATAM orders, it's already reflected on Airbus's order book.
 
User avatar
Polot
Posts: 10637
Joined: Thu Jul 28, 2011 3:01 pm

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 2:32 pm

atlflyer wrote:
How many A350s does Delta have in its fleet and on order? It’s changed so many times...

13 in fleet, 22 on order. 12 from the original DL A350 order, 10 from DL takeover of LATAM order (currently on order book as undisclosed, we will have to see if deals are being made behind the scenes regarding that order).
 
VolvoBus
Posts: 230
Joined: Fri Sep 30, 2016 5:47 pm

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 2:37 pm

Another poster,another opinion.

My interpretation of the Forbes article is that ,in consideration for DL not taking delivery of the 4 A359s, LATAM would accept DL's undertaking not to cancel the JV and payment of US$ 62m. I imagine both airlines feel the JV is mutually beneficial, and avoids a bankruptcy judge deciding that there was a valid contract for the purchase, and DL must take delivery and pay the agreed price.

Depending on how the frames were financed, a lender's lawyer would undoubtedly put this argument forward, especially in the timing of the agreement and the filing for bankruptcy.
 
tphuang
Posts: 5226
Joined: Tue Mar 14, 2017 2:04 pm

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 2:37 pm

kavok wrote:
jayunited wrote:
kavok wrote:
To me, this sounds more like an insurance policy on the JV.

With LATAMs Chpt 11 filing, by definition all creditors are not going to get paid their full amount owed. This “deal” basically tells the judge that Delta will provide $62m to offset some of the creditors losses as long as the JV deal with the “new LATAM” remains. Thus if the bankruptcy judge approves a reorganization without the JV, there is $62m more losses the judge has to account for. Again, it incentivizes that the JV deal still goes through.

Delta values the JV more than the value of 4x A350s frames, especially at a time when there is an abundance of unused planes in the aviation world.



I'm not sure I follow your explanation. LATAM and Delta had an agreement where Delta would buy 4 of LATAMs already delivered A359s, Delta is now backing out which is why they will now pay $62 million dollars. How is does this give Delta leverage during LATAMs bankruptcy proceedings, how are the two related?


Basically, here is the logic:
-DL still wants the JV to happen, and now the JV would have to occur with the “new LATAM” (after Chpt 11 company) as opposed to the “old LATAM” (which basically becomes a holding company through the bankruptcy process). I am not focusing on what the “old LATAM” wants, because it doesn’t matter now as they are bankrupt.

-DL owned a portion of the old LATAM which gave them leverage. That leverage (or a significant portion there of) will be lost, as who knows what (if any) ownership DL will have over the “new LATAM”.

-It could be some ME3 or another entity that swoops in and buys ownership into the new LATAM, and who also has a personal interest in seeing that the DL JV doesn’t happen with the New LATAM. So that is a risk for DL.

-Thus to ensure that the “new LATAM” also goes through with the JV, Delta needs something to help make that happen. This does that. As mentioned, if the judge allows the “new LATAM” to back out of the JV, then that judge will have $62m more in unpaid creditors from the old LATAM. Remember, the judges role is to basically balance and decide which creditors get paid (and how much) from LATAMs current assets. This $62m cash is an easy no-strings attached asset for the judge to use, given its liquidity. Thus the judge will be inclined to make sure the new LATAM follows through with the JV to ensure that $62m is available.

-I would be very surprised if DL doesn’t have those very strings attached, as in if no JV then no $62m. The dropping of the four A350s was likely done as cover to justify the $62m deal.


I have to say that your argument does not make a lot of sense here. My guess is that the $62 million is how much they are required to pay for a cancellation in the original agreement.

If DL is losing leverage and other creditors like QR are gaining leverage over LA in this BK filing, I don't see why this would make them more likely to join JV with DL.
 
danipawa
Posts: 466
Joined: Sat Oct 01, 2016 1:18 am

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 2:38 pm

2 of that 4 A359 to be returned to lessors by Latam..
 
FluidFlow
Posts: 707
Joined: Wed Apr 10, 2019 6:39 am

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 2:38 pm

kavok wrote:
onwFan wrote:
kavok wrote:

Basically, here is the logic:
-DL still wants the JV to happen, and now the JV would have to occur with the “new LATAM” (after Chpt 11 company) as opposed to the “old LATAM” (which basically becomes a holding company through the bankruptcy process). I am not focusing on what the “old LATAM” wants, because it doesn’t matter now as they are bankrupt.

-DL owned a portion of the old LATAM which gave them leverage. That leverage (or a significant portion there of) will be lost, as who knows what (if any) ownership DL will have over the “new LATAM”.

-It could be some ME3 or another entity that swoops in and buys ownership into the new LATAM, and who also has a personal interest in seeing that the DL JV doesn’t happen with the New LATAM. So that is a risk for DL.

-Thus to ensure that the “new LATAM” also goes through with the JV, Delta needs something to help make that happen. This does that. As mentioned, if the judge allows the “new LATAM” to back out of the JV, then that judge will have $62m more in unpaid creditors from the old LATAM. Remember, the judges role is to basically balance and decide which creditors get paid (and how much) from LATAMs current assets. This $62m cash is an easy no-strings attached asset for the judge to use, given its liquidity. Thus the judge will be inclined to make sure the new LATAM follows through with the JV to ensure that $62m is available.

-I would be very surprised if DL doesn’t have those very strings attached, as in if no JV then no $62m. The dropping of the four A350s was likely done as cover to justify the $62m deal.

I think you are thinking about it the wrong way around. It is DL (not LA) that is getting out of the contract for the A350s, and the penalty is for that. Basically LA has already ended up with the liability (A350s).

In fact, as per the Forbes article, it is LA that has had to ask in return for DL’s promise that they will not terminate the agrement for JV.


To me, that is more a formality than a critical part of the deal. Here is how I see it:

There soon will be two LATAMs. The first LATAM (I will call LA1) is the airline that was flying around South America a month ago and who now doesn’t have enough assets to pay their debts. LA1 will stop flying planes at some point in the next couple years. The second LATAM (I will call LA2) is the restructured “new” airline that (likely) retains the LATAM logo, hubs, staff, etc. and who will be (hopefully) flying around South America in 2022. LA2 starts flying planes (hopefully) the day after LA1 stops flying planes,

DL has a proposed JV with LA1. DL has no agreement with LA2. LA2 could end up being owned by anyone, including entities such as the ME3 or others who don’t want LA2 to have a JV with DL. If DL didn’t want a JV with LA2, the bankruptcy would be an easy way to get out of that, as again LA2 is a new company.

Again, it is DL who wants the JV with LA2. Who knows what LA2 wants because they don’t exist yet, and more importantly their ownership is undecided at this point. DL is trying to work the process such that LA2 is committed to a JV with DL. The whole A350 “Deal” just provides cover to the bigger arrangement, which is ensuring LA2 is forced into a commitment to a JV with DL, once LA2 is created.



Are you sure about that? For me it sounds more like Delta paying $62m now instead of having to pay the full agreed price for the four A350s, because the bankruptcy judge will make Delta buy them to get money into the bankruptcy process.

Chances are, that who ever provides the most money will have the chance for a JV and $62m is by far not enough. If Delta would have taken up $1B+ of liabilities, then maybe but the $62m is just an easy way out of the liability that is 4 A350s. The JV for Delta is 99% dead. All Delta can hope for now is to write down the investment made into LATAM (The 20%? share) + the $62m fee for not having to pay $300m+ for the 4 A350s.
 
Vicenza
Posts: 127
Joined: Sun Apr 19, 2020 3:21 pm

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 2:41 pm

enilria wrote:
MIflyer12 wrote:
'Fairly huge'? That's less than two days' cash burn, and quite small in the context of the $3.5 Billion they raised April 29.

https://d18rn0p25nwr6d.cloudfront.net/C ... 4f9646.pdf

One can see this in the context of falling used aircraft prices. Prices negotiated in September '19 may look unappealing today.

I’ve never seen a $16m/plane delivery cancellation penalty even on newly built planes. This is a ton of money to cancel a used aircraft sale. And 2 days of cash burn IS a lot in this environment.


Possibly, but because you haven't seen something is not entirely relevant. DL, for whatever reason they have, chose to cancel the contract/agreement with LATAM. If doing so requires payment of a $62million penalty then it is what is. Less than 2 days of cash burn for DL may indeed seem like a lot (only) in this environment, but aren't you forgetting the need LATAM also have for cash I'm finding it curious why you feel DL should be able to cancel a contract and simply walk away. If the situation was reversed would you feel the same?
 
n9801f
Posts: 229
Joined: Tue Apr 13, 2004 8:29 am

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 2:41 pm

Interesting argument, Kavok.

Although maybe it’s simpler? Here’s my thought:

None of the three airlines (Delta, LATAM, Qatar) wants the 4 A350’s right now.

QR dumps them back to LA at lease end.

DL sheds its obligation to buy them by paying a $62M break fee.

Now LA can probably get rid of them in Chapter 11.

(Edited to fix spelling.)
Last edited by n9801f on Tue May 26, 2020 2:55 pm, edited 1 time in total.
 
catiii
Posts: 3591
Joined: Mon Mar 31, 2008 1:18 am

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 2:42 pm

RDUDDJI wrote:
sxf24 wrote:
Great companies always honor their obligations! Promises made, promises kept.


Yup and that's why DL paid the cancellation fee that was in the contract!

Although I suspect that doesn't help your narrative.


Exactly. It's not like they did it out of some noble obligation.
 
User avatar
Revelation
Posts: 24388
Joined: Wed Feb 09, 2005 9:37 pm

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 2:56 pm

enilria wrote:
MIflyer12 wrote:
'Fairly huge'? That's less than two days' cash burn, and quite small in the context of the $3.5 Billion they raised April 29.

https://d18rn0p25nwr6d.cloudfront.net/C ... 4f9646.pdf

One can see this in the context of falling used aircraft prices. Prices negotiated in September '19 may look unappealing today.

I’ve never seen a $16m/plane delivery cancellation penalty even on newly built planes. This is a ton of money to cancel a used aircraft sale. And 2 days of cash burn IS a lot in this environment.

Taking the planes would also require a lot of cash flow to be burned, via securing financing, transaction fees, then refurbishing to DL's standards. All this to get more airplanes at a time less airplanes are desired. Seems this is the lesser of the two evils.
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
 
ScottB
Posts: 6996
Joined: Fri Jul 28, 2000 1:25 am

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 2:56 pm

Antarius wrote:
If Latam declares bankruptcy, their 20% equity stake would make them a creditor.

That said, I don't necessarily agree with the logic. DL is trying to cut cash burn and reduce fleet growth. That's likely the reason to walk away from the new a350s for now.

EDIT - Latam has declared bankruptcy. So DL is a creditor.


Nope. Having an equity stake does not make you a creditor. Equity investors are subject to being wiped out completely unless all the creditors are made whole.

tphuang wrote:
This seems to me like DL has given up on JV with Latam. It doesn't seem like something you would do if you want to improve on your partnership with them.


If they had given up on the JV, they had an easy path to do so -- LATAM's Chapter 11 filing was apparently an event under which the contract would have allowed Delta to terminate the JV. They might still have been required to take the four used A350s -- but it's tough to say whether the difference between the current value of those assets and the negotiated purchase price would be greater or less than $62 million.
 
Yonderlust
Posts: 52
Joined: Sat Jun 02, 2018 8:32 am

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 2:58 pm

If Latam declares bankruptcy, their 20% equity stake would make them a creditor.

That said, I don't necessarily agree with the logic. DL is trying to cut cash burn and reduce fleet growth. That's likely the reason to walk away from the new a350s for now.

EDIT - Latam has declared bankruptcy. So DL is a creditor.[/quote]

Not true, equity owners are not creditors. While they might have a vote in reorg plans and possibly get some liquidation of their investment, they are a distinct class from creditors. Equity owners are at the bottom in chapter 11 reorgs.
 
panamair
Posts: 4332
Joined: Fri Oct 12, 2001 2:24 am

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 3:01 pm

Think about this as Delta's way of providing some liquidity to LATAM without violating any CARES Act provisions or any reputational issues with giving money to a foreign entity while taking US government aid!

As mentioned in the article, Delta has committed to continuing with the JV process as a result of this new agreement. They could have walked away from the JV as the contract included a material change clause (which Ch 11 would be).
 
Lootess
Posts: 463
Joined: Sun May 13, 2018 6:15 am

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 3:16 pm

n9801f wrote:
Interesting argument, Kavok.

Although maybe it’s simpler? Here’s my thought:

None of the three airlines (Delta, LATAM, Qatar) wants the 4 A350’s right now.

QR dumps them back to LA at lease end.

DL sheds its obligation to buy them by paying a $62M break fee.

Now LA can probably get rid of them in Chapter 11.

(Edited to fix spelling.)


There is likely another Delta motive to not take delivery of those heavier LATAM A350s since expansion is off the radar, when they need the higher tonne for the 77L ULH routes when they come back.
 
JAMBOJET
Posts: 293
Joined: Tue Dec 11, 2018 6:23 pm

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 3:17 pm

panamair wrote:
Think about this as Delta's way of providing some liquidity to LATAM without violating any CARES Act provisions or any reputational issues with giving money to a foreign entity while taking US government aid!

As mentioned in the article, Delta has committed to continuing with the JV process as a result of this new agreement. They could have walked away from the JV as the contract included a material change clause (which Ch 11 would be).

This seems like an incredibly optimistic way of viewing it.
Delta accepted federal bailout gift money.
Delta is applying for the federal loan.
Delta involuntarily reduced the salaries of their frontline employees unilaterally via reduced Hours -- Prompting some Senators to view it as a violation of the CARES act intent
Delta clearly had a contract that stipulated payment if they no longer want the A350s.

And you're trying to argue that this is some secret, hush-hush funding to LATAM from Delta funded by the US government and Delta employee salaries?
Give me a break. Delta wouldn't have that $62M to spend if it weren't for the federal government and their employee's salaries. This is a contractual obligation. Nothing more.

LATAM got funding for Chapter 11, it's called Qatar and the major Latin American owning families.
 
Boof02671
Posts: 2110
Joined: Sun Jul 10, 2016 12:15 am

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 3:31 pm

kavok wrote:
jayunited wrote:
kavok wrote:
To me, this sounds more like an insurance policy on the JV.

With LATAMs Chpt 11 filing, by definition all creditors are not going to get paid their full amount owed. This “deal” basically tells the judge that Delta will provide $62m to offset some of the creditors losses as long as the JV deal with the “new LATAM” remains. Thus if the bankruptcy judge approves a reorganization without the JV, there is $62m more losses the judge has to account for. Again, it incentivizes that the JV deal still goes through.

Delta values the JV more than the value of 4x A350s frames, especially at a time when there is an abundance of unused planes in the aviation world.



I'm not sure I follow your explanation. LATAM and Delta had an agreement where Delta would buy 4 of LATAMs already delivered A359s, Delta is now backing out which is why they will now pay $62 million dollars. How is does this give Delta leverage during LATAMs bankruptcy proceedings, how are the two related?


Basically, here is the logic:
-DL still wants the JV to happen, and now the JV would have to occur with the “new LATAM” (after Chpt 11 company) as opposed to the “old LATAM” (which basically becomes a holding company through the bankruptcy process). I am not focusing on what the “old LATAM” wants, because it doesn’t matter now as they are bankrupt.

-DL owned a portion of the old LATAM which gave them leverage. That leverage (or a significant portion there of) will be lost, as who knows what (if any) ownership DL will have over the “new LATAM”.

-It could be some ME3 or another entity that swoops in and buys ownership into the new LATAM, and who also has a personal interest in seeing that the DL JV doesn’t happen with the New LATAM. So that is a risk for DL.

-Thus to ensure that the “new LATAM” also goes through with the JV, Delta needs something to help make that happen. This does that. As mentioned, if the judge allows the “new LATAM” to back out of the JV, then that judge will have $62m more in unpaid creditors from the old LATAM. Remember, the judges role is to basically balance and decide which creditors get paid (and how much) from LATAMs current assets. This $62m cash is an easy no-strings attached asset for the judge to use, given its liquidity. Thus the judge will be inclined to make sure the new LATAM follows through with the JV to ensure that $62m is available.

-I would be very surprised if DL doesn’t have those very strings attached, as in if no JV then no $62m. The dropping of the four A350s was likely done as cover to justify the $62m deal.

DL has no leverage being an owner of stock. They are going to lose that equity in bankruptcy as stock is canceled.
 
Westerwaelder
Posts: 241
Joined: Fri Apr 03, 2020 12:27 pm

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 3:52 pm

kavok wrote:
To me, this sounds more like an insurance policy on the JV.

With LATAMs Chpt 11 filing, by definition all creditors are not going to get paid their full amount owed. This “deal” basically tells the judge that Delta will provide $62m to offset some of the creditors losses as long as the JV deal with the “new LATAM” remains. Thus if the bankruptcy judge approves a reorganization without the JV, there is $62m more losses the judge has to account for. Again, it incentivizes that the JV deal still goes through.

Delta values the JV more than the value of 4x A350s frames, especially at a time when there is an abundance of unused planes in the aviation world.


Really? Nothing to do with DL actually not needing these frames in the short term? Where do you get that DL can pull out of the pull out? They have simply done the math and decided to cut their losses on these frames. The JV will or will not happen after CH11 regardless of these four frames.
 
Prost
Posts: 2575
Joined: Wed Oct 03, 2012 6:23 pm

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 4:01 pm

sxf24 wrote:
Great companies always honor their obligations! Promises made, promises kept.


It sounds to me like there were contractual provisions for this, so they did follow the contractual obligations.
 
User avatar
scbriml
Posts: 19126
Joined: Wed Jul 02, 2003 10:37 pm

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 4:12 pm

Pudelhund wrote:
Right, so the other undeliverds Delta picked up are still on the books?


Airbus still shows DL with 25 x A359 on order, 13 of which have already been delivered.

Additionally, an undisclosed customer ordered 10 x A359 in March, the same month that LATAM cancelled 10 x A350s (-900s and -1000s). Given DL announced they were taking over 10 of LATAMs outstanding orders, it doesn't need Sherlock Holmes to work out that the 10 ordered in March are 99.9999% certainly for DL.

Eventually, Airbus will show DL with a total of 35 A359 on order with 22 still to be delivered (as of today).

atlflyer wrote:
How many A350s does Delta have in its fleet and on order? It’s changed so many times...


I think you're confusing DL with UA. :yes:

DL ordered 25 x A359 in November 2014. They very likely ordered an additional 10 in March per their agreement with LATAM. So, just the one change from the original order.
Time flies like an arrow. Fruit flies like a banana!
There are 10 types of people in the World - those that understand binary and those that don't.
 
frmrCapCadet
Posts: 4255
Joined: Thu May 29, 2008 8:24 pm

Re: Delta Pays $62m to Cancel purchase of 4 used A350s from LATAM

Tue May 26, 2020 4:33 pm

Aren't 4 350s even with discount about a billion $$? If they are 4 you don't need, $62 million is a lot less to 'waste'. Given corporate high finance and peculiar bankruptcy things this might be overly naive?
Buffet: the airline business...has eaten up capital...like..no other (business)
 
Antarius
Posts: 2427
Joined: Thu Apr 13, 2017 1:27 pm

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 5:15 pm

ScottB wrote:
Antarius wrote:
If Latam declares bankruptcy, their 20% equity stake would make them a creditor.

That said, I don't necessarily agree with the logic. DL is trying to cut cash burn and reduce fleet growth. That's likely the reason to walk away from the new a350s for now.

EDIT - Latam has declared bankruptcy. So DL is a creditor.


Nope. Having an equity stake does not make you a creditor. Equity investors are subject to being wiped out completely unless all the creditors are made whole.


Which still makes you a creditor. Unsecured and at the bottom of the totem pole, yes, but still a creditor.
2020: SFO DFW IAH HOU CLT MEX BIS MIA GUA ORD DTW LGA BOS LHR DUB BFS BHD STN OAK PHL ISP JFK SJC DEN SJU LAS TXL GDL
 
nascar1
Posts: 88
Joined: Tue Jun 14, 2016 10:32 pm

Re: Delta Pays $62m to Cancel A350 Purchase from LATAM

Tue May 26, 2020 5:20 pm

danipawa wrote:
2 of that 4 A359 to be returned to lessors by Latam..


No that's not true. The 2 A359 to be returned to lessors are PR-XTA/B already in LATAM fleet. Planned A359 for Delta were supposed to be last frames to LATAM and operated by Qatar.
 
MSPNWA
Posts: 3698
Joined: Thu Apr 23, 2009 2:48 am

Re: Delta Pays $62m to Cancel purchase of 4 used A350s from LATAM

Tue May 26, 2020 5:21 pm

I have my doubts DL wanted these four aircraft in the first place. LATAM needed out of excess aircraft, but that doesn't mean DL would fly them. I was expecting DL move on from them in some way, but who knows if this was the original plan.

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