Spirit at risk of bankruptcy and liquidation

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01-17-2024 | 10:23 AM

#11

LAXtoDEN

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Quote:

Originally Posted by DapperDon

I hope it doesn't happen but Chapter 7 is much more likely in this environment. There will be a bidding war for airplanes and gates between all the carriers. There is a huge shortage of both. No way lessors will negotiate for lower lease payments etc in this environment. Best of luck to all the Spirit pilots.

I agree chapter 7 because of the current environment. What an industry. The judge’s ruling basically just helped grow the Big 3.

01-17-2024 | 10:32 AM

#12

ProPilotBlue

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Joined: Feb 2019

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From: A320 FO

You guys really think that full liquidation is a realistic possibility? Are things really THAT dire over at Spirit? Sorry for my ignorance, that just seems extreme.

Is there any precendent for a carrier aquiring assets and pilots? If so, would they be integrated, or would they be seen as new hires?

What a crappy situation, for absolutely no good reason.

01-17-2024 | 10:41 AM

#13

PineappleXpres

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Quote:

Originally Posted by ProPilotBlue

Integrated. There should be scope clauses for assets sold that they be required to take the crews. It’s independent of what else survives.

01-17-2024 | 10:48 AM

#14

rickair7777

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From: Engines Turn or People Swim

Quote:

Originally Posted by Chimpy

without the pilots? Doesn’t make much sense

I would imagine it would be Ch.11. In addition to cutting some debt & costs, that might also enable a merger... if you're in Ch.11 then Ch.7 is always a possible outcome so a judge would be hard pressed to deny someone who's going to save the business in some form.

01-17-2024 | 10:51 AM

#15

rickair7777

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From: Engines Turn or People Swim

Quote:

Originally Posted by PineappleXpres

Integrated. There should be scope clauses for assets sold that they be required to take the crews. It’s independent of what else survives.

That's a very common scope clause these days (lesson learned the hard way in the olden days).

It's also 100% worthless in bankruptcy... the entire CBA is on the butcher's block. Maybe 90% worthless, the court will have some slight consideration for unsecured creditors and employees, so it's better to have the language than not. Judge might possibly factor it in. But the court and creditors are in no way obligated to honor a CBA in bankruptcy.

01-17-2024 | 11:18 AM

#16

AYLflyer

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I can't imagine they actually go CH 11. Someone out there with money would step in to save them before they even come close to the liquidation phase. Hell, companies like rivian and Lucid get hundreds of millions/billions from outside investors and they barely even have a product to sell.

01-17-2024 | 11:21 AM

#17

drywhitetoast

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From: Earth

Quote:

Originally Posted by AYLflyer

I can't imagine they actually go CH 11. Someone out there with money would step in to save them...

You must be new to this industry.

01-17-2024 | 11:24 AM

#18

Myfingershurt

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From: MD-88 FO

Quote:

Originally Posted by AYLflyer

Yeah, it’s called DIP financing and usually happens as part of the chap 11 process.

01-17-2024 | 11:31 AM

#19

Smooth at FL450

weekends off? Nope...

Joined: Apr 2014

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Quote:

Originally Posted by PineappleXpres

Integrated. There should be scope clauses for assets sold that they be required to take the crews. It’s independent of what else survives.

That fragmentation language went up in smoke when bankruptcy was filed, no?

01-17-2024 | 11:33 AM

#20

Boomer

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Joined: Jan 2008

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From: blueJet

Quote:

Originally Posted by PineappleXpres

Integrated. There should be scope clauses for assets sold that they be required to take the crews. It’s independent of what else survives.

There "should" be scope clauses, but not in this case. The scope clause of the purchasing airline's pilots would override any liquidating group's scope clause. In other words, if Spirit is dumping airplanes, and Frontier is buying them, the Frontier pilot scope clause determines who flies the new airplanes.

I'm not aware of any ALPA group that has such a stipulation: "If the company obtains aircraft from another operator, that operator's pilots will be integrated into our seniority list in a fair way and not be stapled to the bottom of our seniority list."