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dstblj52
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What assets have the US3 not yet leveraged

Sat Sep 19, 2020 9:45 pm

With Skymiles, AAdvantage, and Millage plus already leveraged what exactly is left for them to leverage if they need more cash, most of the fleet is morgaged I suspect most of the slots are so what is left exactly? This to me will be the defining fact to determine how long until we see a major bankruptcy cash and assets to leverage are your run time.
 
32andBelow
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Re: What assets have the US3 not yet leveraged

Sat Sep 19, 2020 9:53 pm

They could sell gates or slot pairs
 
Nicoeddf
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Re: What assets have the US3 not yet leveraged

Sat Sep 19, 2020 10:02 pm

32andBelow wrote:
They could sell gates or slot pairs


To whom?
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32andBelow
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Re: What assets have the US3 not yet leveraged

Sat Sep 19, 2020 10:07 pm

Nicoeddf wrote:
32andBelow wrote:
They could sell gates or slot pairs


To whom?

I dunno. I could see JetBlue interested in more European slot pairs.
 
Nicoeddf
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Re: What assets have the US3 not yet leveraged

Sat Sep 19, 2020 10:08 pm

32andBelow wrote:
Nicoeddf wrote:
32andBelow wrote:
They could sell gates or slot pairs


To whom?

I dunno. I could see JetBlue interested in more European slot pairs.


Yeah, maybe. In this business climate, hard to see though who might be interested in more than a pair or two. But who knows.
Enslave yourself to the divine disguised as salvation
that your bought with your sacrifice
Deception justified for your holy design
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MIflyer12
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Re: What assets have the US3 not yet leveraged

Sat Sep 19, 2020 10:53 pm

Nicoeddf wrote:
32andBelow wrote:
They could sell gates or slot pairs


To whom?


That's the problem. It's not like a transaction for a few slots dramatically improves a cash situation. You can look at the LGA/DCA US/DL transaction and the dozens of slots that changed hands yet the cash piece was only $68.5 million -- maybe 3 days cash burn at AA.

A 'big' transaction - let's say AA selling everything at LGA to DL - would run into anti-trust issues and delays. In this environment delays will be fatal.

IIRC carriers have until the end of the month to take CARES Act loans. WN and DL said that wasn't their plan. I believe AA said it would secure its government loan against AAdvantage. As for the rest I don't recall.

I don't believe the big 3 will invite B6 into LHR with a slot sale.
 
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DL747400
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Re: What assets have the US3 not yet leveraged

Sat Sep 19, 2020 11:19 pm

MIflyer12 wrote:
I don't believe the big 3 will invite B6 into LHR with a slot sale.


Unless doing so allows them to gain regulatory approval for a larger deal. Perhaps a deal that is strategically very advantageous. There will be windows of opportunity opening over the next 2-3 years which may never be repeated, or at least not repeated again until there is another black swan event in the future which creates a huge industry shakeup. Those who dare to take measured risks may see huge payouts down the road.

Tick, tock... This will be interesting to watch.
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Midwestindy
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Re: What assets have the US3 not yet leveraged

Sat Sep 19, 2020 11:40 pm

AA
Image
https://americanairlines.gcs-web.com/st ... 4cb614d7db

DL
"It still has unencumbered assets worth $6 billion to $7 billion, primarily in the form of spare aircraft parts and engines, if needed, officials said"
https://www.cbs46.com/news/delta-airlin ... 57d2f.html

32andBelow wrote:
They could sell gates or slot pairs


All the US3 have already leveraged at least some (if not most) of their slot pairs, AA for example with LGA/DCA slots.

Not sure why they would sell in this environment and if they even could.....

Assuming they could sell those slots, you wouldn't do that unless you were absolutely flat broke or believed you would never need them again in the future.
Status for 2019/2020: AAdvantage Platinum, Delta Gold, Southwest A-List
 
MIflyer12
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Re: What assets have the US3 not yet leveraged

Sat Sep 19, 2020 11:55 pm

DL747400 wrote:
MIflyer12 wrote:
I don't believe the big 3 will invite B6 into LHR with a slot sale.


Unless doing so allows them to gain regulatory approval for a larger deal. Perhaps a deal that is strategically very advantageous. There will be windows of opportunity opening over the next 2-3 years which may never be repeated, or at least not repeated again until there is another black swan event in the future which creates a huge industry shakeup. Those who dare to take measured risks may see huge payouts down the road.

Tick, tock... This will be interesting to watch.


What deals do you have in mind? What does one tie to an LHR slot sale that would be useful to getting regulatory approval for another big deal? I accord no value to low-probability fantasies.
 
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enilria
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Re: What assets have the US3 not yet leveraged

Sun Sep 20, 2020 12:18 am

Nicoeddf wrote:
32andBelow wrote:
They could sell gates or slot pairs


To whom?

Banks. But a lot are already mortgaged.
 
dstblj52
Topic Author
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Re: What assets have the US3 not yet leveraged

Sun Sep 20, 2020 12:38 am

enilria wrote:
Nicoeddf wrote:
32andBelow wrote:
They could sell gates or slot pairs


To whom?

Banks. But a lot are already mortgaged.

so your not going to get a lot more for that then you already have but seriously after things start improving a lot of money is going to have to be spent improving the balance sheets and trying to refinance debts at lower interest rates
 
PSU.DTW.SCE
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Re: What assets have the US3 not yet leveraged

Sun Sep 20, 2020 12:52 am

That’s the part I am curious and to all of the broader ramifications. The amount of debt to pay down coming out of this is going to be insane.
 
MKIAZ
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Re: What assets have the US3 not yet leveraged

Sun Sep 20, 2020 1:47 am

It's interesting that AA needed the money more urgently, so they used their FF program as collateral for the government loan, but as the markets improved UA/DL were able to tap the private markets with their FF program.

I'm not sure who in their right mind would have bought that debt, backed by united's FF plan. Maybe only parties politically influential enough to be able to advocate for further bailouts.

The problem is, when no airlines are buying planes, the value of a fleet of used planes is quite a bit lower. So is the value of say LHR slots. And of course, without business travel, the FF programs also get much less valuable.

That being said, AA has very few not yet leveraged assets.

I believe they're all waiting until after the election for Bk. AA will certainly go first. But once they do UA and DL won't be able to afford NOT doing it.
 
MKIAZ
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Re: What assets have the US3 not yet leveraged

Sun Sep 20, 2020 1:48 am

PSU.DTW.SCE wrote:
That’s the part I am curious and to all of the broader ramifications. The amount of debt to pay down coming out of this is going to be insane.


Everyone involved knows that's not going to happen.
 
SWADawg
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Re: What assets have the US3 not yet leveraged

Sun Sep 20, 2020 1:54 am

MKIAZ wrote:
PSU.DTW.SCE wrote:
That’s the part I am curious and to all of the broader ramifications. The amount of debt to pay down coming out of this is going to be insane.


Everyone involved knows that's not going to happen.

Bankruptcy laws all changed after the last round of industry Bankruptcies. Airlines won’t have the same ride through Bankruptcy this time that they did before. Assets will be forced to be sold to other Airlines to pay back their debt, you can bet on that.
My posts are my opinion only and do not reflect the views of Southwest Airlines
 
dstblj52
Topic Author
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Re: What assets have the US3 not yet leveraged

Sun Sep 20, 2020 2:52 am

SWADawg wrote:
MKIAZ wrote:
PSU.DTW.SCE wrote:
That’s the part I am curious and to all of the broader ramifications. The amount of debt to pay down coming out of this is going to be insane.


Everyone involved knows that's not going to happen.

Bankruptcy laws all changed after the last round of industry Bankruptcies. Airlines won’t have the same ride through Bankruptcy this time that they did before. Assets will be forced to be sold to other Airlines to pay back their debt, you can bet on that.

The problem with that is who is in good enough shape to buy I suspect the US3 will be more like the EU market after 9/11 where they were obviously the stronger parties than their overseas rival due to the better financial position they have in the domestic market.
 
scoping2008
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Re: What assets have the US3 not yet leveraged

Sun Sep 20, 2020 3:02 am

SWADawg wrote:
MKIAZ wrote:
PSU.DTW.SCE wrote:
That’s the part I am curious and to all of the broader ramifications. The amount of debt to pay down coming out of this is going to be insane.


Everyone involved knows that's not going to happen.

Bankruptcy laws all changed after the last round of industry Bankruptcies. Airlines won’t have the same ride through Bankruptcy this time that they did before. Assets will be forced to be sold to other Airlines to pay back their debt, you can bet on that.


There's been no significant change to chapter 11 or chapter 7 proceedings for large corporations in decades. You're confusing it with the 2005 BAPCA reform that applies to consumer bankruptcies.
 
dstblj52
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Re: What assets have the US3 not yet leveraged

Sun Sep 20, 2020 4:52 am

scoping2008 wrote:
SWADawg wrote:
MKIAZ wrote:

Everyone involved knows that's not going to happen.

Bankruptcy laws all changed after the last round of industry Bankruptcies. Airlines won’t have the same ride through Bankruptcy this time that they did before. Assets will be forced to be sold to other Airlines to pay back their debt, you can bet on that.


There's been no significant change to chapter 11 or chapter 7 proceedings for large corporations in decades. You're confusing it with the 2005 BAPCA reform that applies to consumer bankruptcies.

BAPCA made changes to business bankruptcy to most notably making it more challenging for an executive team to remain in control of a company and those making it easier for a company to enter chapter 7
 
SWADawg
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Re: What assets have the US3 not yet leveraged

Sun Sep 20, 2020 7:44 pm

scoping2008 wrote:
SWADawg wrote:
MKIAZ wrote:

Everyone involved knows that's not going to happen.

Bankruptcy laws all changed after the last round of industry Bankruptcies. Airlines won’t have the same ride through Bankruptcy this time that they did before. Assets will be forced to be sold to other Airlines to pay back their debt, you can bet on that.


There's been no significant change to chapter 11 or chapter 7 proceedings for large corporations in decades. You're confusing it with the 2005 BAPCA reform that applies to consumer bankruptcies.

I’m not actually......but thanks.
My posts are my opinion only and do not reflect the views of Southwest Airlines
 
MIflyer12
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Re: What assets have the US3 not yet leveraged

Sun Sep 20, 2020 8:57 pm

SWADawg wrote:
MKIAZ wrote:
PSU.DTW.SCE wrote:
That’s the part I am curious and to all of the broader ramifications. The amount of debt to pay down coming out of this is going to be insane.


Everyone involved knows that's not going to happen.

Bankruptcy laws all changed after the last round of industry Bankruptcies. Airlines won’t have the same ride through Bankruptcy this time that they did before. Assets will be forced to be sold to other Airlines to pay back their debt, you can bet on that.


Since you're so confident, who will force those asset sales? Who do you think is in operational control in a Ch 11? What's the process for initiating and completing asset sales?

Even post BAPCPA, corporate bankruptcy law hasn't changed much since the 1978 reform - and that's Elizabeth Warren's assessment. There have been plenty of corporate Chapter 11s - and Chapter 7s - since BAPCPA, including filings by Delta, Northwest, Aloha, ATA, Frontier, Sun Country, Mesa, Pinnacle, AA, and Republic. What's your reason for thinking things are going to be different? Not the law...
 
SWADawg
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Re: What assets have the US3 not yet leveraged

Sun Sep 20, 2020 11:07 pm

The banks are going to want at least some of their money back. The post 9/11 phenomenon of declaring Chapter 11 every few years and keeping all of your toys are going to be quickly coming to an end. Think TWA, PanAm, Eastern, and Braniff. Routes, Slots, Gates, and even Planes may have to be parted with to keep the lights on.
My posts are my opinion only and do not reflect the views of Southwest Airlines
 
777Mech
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Re: What assets have the US3 not yet leveraged

Sun Sep 20, 2020 11:15 pm

SWADawg wrote:
MKIAZ wrote:
PSU.DTW.SCE wrote:
That’s the part I am curious and to all of the broader ramifications. The amount of debt to pay down coming out of this is going to be insane.


Everyone involved knows that's not going to happen.

Bankruptcy laws all changed after the last round of industry Bankruptcies. Airlines won’t have the same ride through Bankruptcy this time that they did before. Assets will be forced to be sold to other Airlines to pay back their debt, you can bet on that.


In this era, who could afford what the asset owner wants for said asset? Who is going to enforce this?
 
Airlinerdude
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Re: What assets have the US3 not yet leveraged

Mon Sep 21, 2020 6:16 am

MKIAZ wrote:
The problem is, when no airlines are buying planes, the value of a fleet of used planes is quite a bit lower. So is the value of say LHR slots. And of course, without business travel, the FF programs also get much less valuable.


Building on your point...

Even more concerning is the possible impairment that all these airlines have to start considering on their assets. Going by the accounting standards, these airlines will have to be guessing what the value of their planes/other PP&E will be to generate cash. We've already seen it with SQ/QF with regards to their 380 fleets, but one has to starting wondering how productive all these planes will be in the next three or four years until air travel demand recovers. If there have to be some big asset impairment, that could seriously hamper AA's (or any other airline's) ability to secure their debt or maintain their covenants. A worrying prospect.
 
Lootess
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Re: What assets have the US3 not yet leveraged

Mon Sep 21, 2020 6:51 am

Sale leasebacks were already happening at AA since bankruptcy. Southwest and Delta started this process with some aircraft. Southwest raised $800+ million doing so, that's enough to weather a few seasons. Yes, airlines are still buying planes as necessary. It's not like those two new shiny A359s for appeared out of nowhere. Near-term delivery obligations still have to be adhered to but that also played into the strategy to just retire the 777 fleet.

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