BobbyLeeSwagger

I believe customers will be more willing to try a new brand that promises to be nice to them, yes. It's all recovery dependent, of course. But smaller and more nimble is a huge competive advantage for next year if the recovery happens fast. Breeze will launch right before a hopefully decent summer. The legacies have all made their educated guesses for next summer, if they're right, they'll be adequately staffed, if they go into an understaffed situation with furloughed pilots, they will be forced to give up market share and that's where breeze will have an open hunting season. Remember breeze was modeled to be the "forgotten" airport airline, so now they have that plus big airport opportunities.. I think the odds are very favorable to them to be a big success.

Lucifer

Of course, I'm an Angel after all....
I'm always insightful, here's a freebie; we are still eons from Zoroastrianism.
Blow that out your Shofar.

Lucifer

Debt matters not; so long as revenue exceeds the servicing of the debt..... Still, even then, creditors will often revise and restructure the debt rather than face getting pennies on the dollar in bankruptcy. I'd expect them to use the COVID crisis as cover to renegotiate first; then a bankruptcy if that fails. Their BOD will be satisfied that it wasn't their fault, it was COVID's, and they made every reasonable effort to save the company prior to Ch.11

In the end however, all debts must be paid.

HulkaBurger

They're not competing with legacies. Their entire business plan is more along the lines of the ULCCs and the secondary airports a la Allegiant. Who, along with SWA, are more than ready to be nimble. I'm quite sure their "hunting season" isn't going to be nearly as open as you think (or hope).

APCHCLIMB

Some of this is a little bit of a stretch. The big advantage they have is they're able to grow with the demand. As opposed to everyone else who seem to be contracting with lack of demand (and bleeding millions in doing so).

Not a big success at first? Then they can taper/tailor their growth.

The big issue is where they're going, and with what frequency. If they don't have gates, slots, and destinations people are willing to travel to then their model is going to struggle. Doesn't matter what mommy and toddler are thinking. Neelman says he sees all these untapped markets. But that's yet to be seen.

Don't forget they're also a startup airline. Think about EVERY complaint you've had about your regional/legacy/LCC/etc. and why they suck. (How inefficient schedules are, the operation sucks, ground crews, IT outdated, sim training/time, pay, snack baskets, whatever....) Magnify all those things by x100. That's what a startup will look like.

BobbyLeeSwagger

Right, but that's kind of my point. They still have the secondary airport market plus the big markets since there is now availability all over the place -obviously there is a reason for that. If the speed of the recovery outpaces the legacies ability to staff the flying, then there may be a window. Just my opinion, we will all have to just see. A lot of people have been rooting for breeze to fail since day 1, which seems as per usual when it comes to Neeleman, but I wouldn't bet against him

TransWorld

I agree with all you said except for this. Except if they go into Chapter 11. In addition to renegotiating debt structure, some will be willing to negotiate something less, rather than getting say pennies on the dollar in Chapter 7 liquidation.

Excargodog

Well, when you are borrowing money at 12% for 5 years (at the same time I’m refinancing my mortgage to a 15 year at 2.4%) it says something about what the market thinks your chance of doing that is. Granted, most of the earlier debt is around 8%, but even so...$40 billion at 8% is still $3.2Billion a year in debt service and currently they are Not making ANY profit just going deeper in debt.

TransWorld

Now, if I can only find a male ram.

Clear Right

I’m no financial wizard; but according to public data AAL has over $67B in total liabilities, and assets are about $60B. I imagine you can’t just look at the $42B in debt, but also need to consider total liabilities, that’s well over 110% leveraged. Or, am I missing something?