If they go ch11, USAir will get in there (virtually no overlap) and try to merge. Eventually we will be down to 3 total majors, and a bunch of domestic LCCs. The 3 Majors will have to compete with Emirates or other well funded World airlines that have better service and newer airplanes. That will happen eventually.

 

 

Very true AA and UAL have hubs and route maps far superior to anything Delta has. Also both of their fleet efficiency (now UAL future AA ) blows Delta away. Seriously Delta has the most diverse fleet in the world, which = the least efficient fleet in manitance and training cost.

 

You are right, with a CH11 filing, and only 6 months as DIP, they will lose control of their company and its assets in CH11. The only way they do not is if there is an external force that prevents airlines like DAL and SWA from making better deals to the creditors, and they can. Just the fact that they can take one competitor off the map would probably be enough for the creditors to bite. DAL has shown it can make money in a horrible economy, and do it will while shrinking. Not fun for us, but awesome for the Street.

 

I think that AMR was brilliant in placing large orders with both Boeing and Airbus. They now have two great sources of DIP financing.

We'll see them file CH11, shred contracts and leases, and emerge under a new management team. Their hubs are much better than ours, and they will be formidable competition.

 

Thank you. This will be a prepackaged deal with the financing in place. Hell, its probably already lined up. Just trying to spin it that its labor's fault.

 

Unless they have labor onboard and agreements on the contracts hammered out its not a pre packaged deal. Most creditors are not going to supply financing without seeing signed labor contracts or contracts that have been put in place by the judge. After fuel labor is your biggest expense. Its the key point in any chapter 11 filing. If labor is not onboard then a pre packaged bankruptcy can't happen with a airline. How do you even put out a business plan not knowing your labor costs to sell the package?
There is one big difference between AMR and Delta in a chapter 11 filing. Delta management because of the massive number of stock and options they held fought to keep the airline out of Chapter 11 far longer then they should have. As a consequence Delta came very close to a shutdown and had under a 90 day cash supply. AMR is not cash poor and in fact might not even need DIP financing like Delta. The downside of filing with a lot of cash however is the creditors may decide your worth more dead then alive or in pieces rather then whole.

 

Again. As ****ed off as labor is at AA, don't discount the fear of survival. Jmho, labor will do whatever it takes when it comes to nut cutting time. To borrow a cute little slogan from another group, "keep AA our AA" will rule the day. They will be lean and mean with great hubs, a new fleet and labor contracts that make LCC look highly compensated.

 

It is funny when you compare hubs between DAL, UAL and AMR. It just seems whatever we have is a tie or they one up us. That's not always bad though.

 

..... fear of survival.

Actually, we know what you meant.

Scoop