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Old 12-01-2011, 04:21 PM
  #21  
Bucking Bar
Can't abide NAI
 
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Joined APC: Jun 2007
Position: Douglas Aerospace post production Flight Test & Work Around Engineering bulletin dissembler
Posts: 11,989
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Sailing,

You went way far out on a limb with your claim that SWA's hedges caused Delta's bankruptcy.

First of all, lets call these legal maneuvers what they are ... strategic default. American has 4 billion in cash (nearly the liquidity of Delta at the end of the third quarter). American likely will not need DIP financing, they have the cash to get through this. Unlike our neighbors, these corporations can screw the bank and keep their house (and bonuses).

There is an awful lot of evidence to show Delta's bankruptcy was in the planning stages as far back as pre-9/11. Look at Leo Mullin's resume for starters. He was a banker. Hollis Harris was an airline guy and was passed over. Mr. Harris went on to make other carriers relatively successful and they had a lot less going into his tenure than Delta had going for it. McKinsey was publishing that they were helping United as far back as 2000 with the planning it had developed at Delta Air Lines. As history shows, United filed in 2002 and Delta's roadmap, as well as Northwest's was nearly as similar as two different crews reading the same checklist.

At 28 to 37 million each, Delta's RJ fleet required the commitment of more than 22 Billion. Add to that the cost of the corporate acquisitions and repairs (4 to 5 Billion) and Delta was into the RJ experiment for about American's total debt load ... and you're stating that had nothing to do with the "bankruptcy."

SWA in many ways is not a direct competitor for Delta. Sure they used their hedges in a competitive manner, but Delta would have gone bankrupt without SWA's influence. Heck, I think they might go there again as a competitive response if American's trip to the Courthouse makes them too tough a competitor.

... or you can believe as Jamie Baker says, that Delta's stock is going to $17.50. His Company has some bonds they would like to sell you.

Major airlines have mostly gone "bankrupt" because they don't keep their promises to bond holders, share holders, or employees. They go "bankrupt" because the Courts let them.
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