Delta CEO on CNBC

[Linedriver]

What "possible opportunities" was Anderson speaking of concerning AA bankruptcy?

 

[ACL65PILOT]

I will be very brief.

Assets in a fragmentation of AMR

A purchase of another airline (ALK/B6) while AMR is tied up.

 

[Captain Fulough]

RJs at Eagle?

 

[ZeroThRUST]

Look for larger DL presence in MIA.

 

[johnsonrod]

What "possible opportunities" was Anderson speaking of concerning AA bankruptcy?

Simple. He was talking about cheaper London real estate...

 

[Schwanker]

Good deal on "near new" ERJs!!!

 

[Diesel-9]

DFW Base

 

[Andy]

Assets in a fragmentation of AMR

Fragmentation of AMR? ... I'll take some of what you're smoking ...

 

[fam62c]

Fragmentation of AMR? ... I'll take some of what you're smoking ...

If the creditors get a better deal from a competing plan that breaks AMR up and sells the pieces to several carriers that could happen. An airline like LCC could introduce a plan to aquire most of AMR but divest some parts to other carriers to simplify the fleet, reduce route overlap and avoid antitrust issues. The creditors want the best deal they can get and a plan that competes with AMR management's plan may give them that.

I'll be amazed of one or more carriers don't jump into the process with plans to aquire all or part of AMR. If nothing else, these carriers can make it more difficult and expensive for AMR management to get a sweetheart deal with the creditiors and come out of bankruptcy with too many cost advantages.

AMR management has already said that AMR will come out of this as a smaller airline, they may be the ones willing to sell off some parts if push comes to shove to fend off outside offers and give more to the creditors. I would say that fragmentation is a very real possibility here. For many of these creditors an equity stake in a new AMR that will be smaller than DAL and UAL may not be that attractive, cash is king.

 

[msmb]

Alaska purchase would cost more than even "Mother Delta" could afford.

 

[jetflier]

Alaska purchase would cost more than even "Mother Delta" could afford.

I don't know, but there is the "Wings Club" airline exec private club where ideas are floated to each other, just not on airfares. And then there is the Air Transport Association where all airline exec's are members too, I am sure deals are made long before we ever find out.

And money floats, from Wall Street to airlines, as long as Wall Street gets a piece of the pie.

 

[jdubya]

I think it's important to keep in mind that CEO's are cheerleaders. I'm not bashing Delta at all, as that is management at any corporation.

 

[C-150ETOPS]

I don't know, but there is the "Wings Club" airline exec private club where ideas are floated to each other, just not on airfares. And then there is the Air Transport Association where all airline exec's are members too, I am sure deals are made long before we ever find out.

And money floats, from Wall Street to airlines, as long as Wall Street gets a piece of the pie.

Don't forget Aircon which is their version of a highway rest stop mens restroom where they linger by the stalls waiting for members of airline labor to enter.

 

[Boxboy]

I think it's important to keep in mind that CEO's are cheerleaders. I'm not bashing Delta at all, as that is management at any corporation.

IMHO, the .1% control the governments which makes our so called presidents and leaders "puppets". The rest (ie. CEOs) are just their beeeeaaaahches!

 

[ACL65PILOT]

Fragmentation of AMR? ... I'll take some of what you're smoking ...

Andy, Parker cannot keep himself out of the process. Use DAL and his attempt as an example. He has learned and will jump in well before AMR presents their plan. If he is still sitting on the sidelines by the end of Feb, I will be floored. I would expect to see something sooner.

As soon as he acts, the other airlines will jump in and this will go sideways for AMR. Even if the other airlines offer the same value for the debt, they offer better risk.

As to what would work for DAL. MIA, Parts of DFW, gates in LAX and anything in NYC. UAL would love ORD, and LAX gates. LCC wants MIA route authorities.

 

[fam62c]

Andy, Parker cannot keep himself out of the process. Use DAL and his attempt as an example. He has learned and will jump in well before AMR presents their plan. If he is still sitting on the sidelines by the end of Feb, I will be floored. I would expect to see something sooner.

As soon as he acts, the other airlines will jump in and this will go sideways for AMR. Even if the other airlines offer the same value for the debt, they offer better risk.

As to what would work for DAL. MIA, Parts of DFW, gates in LAX and anything in NYC. UAL would love ORD, and LAX gates. LCC wants MIA route authorities.

SW would probably like to have some 737NG's and delivery positions to replace older 737's and 717's quickly. LCC is an Airbus carrier and probably doesn't want 737's but they could use AMR's Airbus orders. SW would probably like slots and gates in various places as well. Obviously LCC is the one carrier that has to find additional scale to survive but plenty of carriers would like to have various parts of AMR. I'm sure one of the uber-regionals would like to have Eagle once all the small planes are jettisoned if it comes with a nice subservice contract. Maybe Republic can trade Frontier to LCC for Eagle and LCC will have some more busses to replace 737's or AMR MD-80's with.

The possibilities here are almost endless if AMR creates a feeding frenzy among the other players. I could see LCC taking the core (brand, majority of gates in the hubs and majority of international widebody system) of AMR in a bid with several other airlines who would take various parts. This is probably the last opportunity for a long time where this amount of assets will be available from a bankruptcy proceeding.

When DAL, NWA and UAL were bankrupt nobody had the money to really go after them or their assets (LCC tried with DAL), everybody else was just trying to survive in a very uncertain environment and there was no financing available for raiding. Things are different now, AMR management just isn't going to have the leverage over the creditors that the other big carriers had when they were in bankruptcy. This time there is going to be alternatives to the management plan, I would bet on that.

 

[Hamfighter]

As to what would work for DAL. MIA, Parts of DFW, gates in LAX and anything in NYC. UAL would love ORD, and LAX gates. LCC wants MIA route authorities.

Don't get my hopes up.

 

[Frank Lorenzo]

It sounds like it's time for me to jump back into the fray. I think I will have to get the band back together. Airlines being broken up, feeding frenzy, golden parachutes..... this has my name written all over it. I'll lead the new "management" team and I'll get the backing of a few of my honest, hard working Wall Street hedge fund managers and a handful of Chicago politicians.

This is what America is all about!

 

[Andy]

fam62c and ACL65, I suggest you take a look at the composition of the creditors' committee. Fragmentation? You're smoking crack.
I clearly remember guys like the two of you licking their chops over various UAL fragmentation scenarios when we went through BK. AMR's BK is very different than previous airline BKs because they are self-funding their DIP financing, giving AMR much more control over the process. And 1/3 of the seats on the creditors committee are representatives of AMR's unions. Not to mention that PBGC has a seat on the committee. Fragmentation? Not likely.

AMR will shed nonproductive and marginally productive assets. They may sell off Eagle and dump all of their mad dogs but I doubt that you'll see any routes or newer aircraft being sold off. This is not a distress BK where crown jewels will be sold off; this is one where they need to shed nonproductive assets.
For what it's worth, I have no idea which AMR assets fall in the nonproductive/marginally productive category; I'm merely taking a stab in the dark with respect to Eagle and the mad dogs.

Perhaps the two of you will get the joy of experiencing a BK at your respective airlines and can report first hand which assets you expect to be sold off.

To all at AMR, best of luck to you. Hopefully this won't be much more painful than passing a gallstone. Painful yes, but not amputation as is being suggested by others.

 

[ACL65PILOT]

fam62c and ACL65, I suggest you take a look at the composition of the creditors' committee. Fragmentation? You're smoking crack.
I clearly remember guys like the two of you licking their chops over various UAL fragmentation scenarios when we went through BK. AMR's BK is very different than previous airline BKs because they are self-funding their DIP financing, giving AMR much more control over the process. And 1/3 of the seats on the creditors committee are representatives of AMR's unions. Not to mention that PBGC has a seat on the committee. Fragmentation? Not likely.

AMR will shed nonproductive and marginally productive assets. They may sell off Eagle and dump all of their mad dogs but I doubt that you'll see any routes or newer aircraft being sold off. This is not a distress BK where crown jewels will be sold off; this is one where they need to shed nonproductive assets.
For what it's worth, I have no idea which AMR assets fall in the nonproductive/marginally productive category; I'm merely taking a stab in the dark with respect to Eagle and the mad dogs.

Perhaps the two of you will get the joy of experiencing a BK at your respective airlines and can report first hand which assets you expect to be sold off.

To all at AMR, best of luck to you. Hopefully this won't be much more painful than passing a gallstone. Painful yes, but not amputation as is being suggested by others.

Andy;
In response to your first statement about the creditors committees:
Those labor groups are on the Unsecured Creditors Committee, and not the one that gets first crack, the Secured Creditors Committee.
It was the same at UAL and at DAL when they went though. Labor does not hold assets, and therefore in a CH11 filing goes second. The same holds true for those labor groups at AMR. They may get some money for their pensions, but the creditors with assets that they can remove are the ones that first crack at AMR and their money.

These secured creditors have assets that they can pull if they choose to. AMR is sitting on a pile of cash and that cash is going to make AMR negotiating anything less than 70 cents on the dollar very hard. Yes, they opted not to file for DIP, and that does give them some control, but until they cancel off of the stock, the stakeholders that own that stock, and the secured creditors that hold the assets can take this thing sideways, no matter what Labor or AMR have to say. They are still a publicly traded company that can have their board replaced in a hostile takeover of their common and preferred stock.

If you do not think that if the creditors will not attempt that if they feel AMR does not have a sustainable plan going forward you are fooled.

You used AMR and DAL's CH11 filings as a template and that is a mistake. Even when these two airlines filed they did not have a revenue problem. Yes, AMR looked like these two airlines did back then, but the airline world has changed to one with JV's and code shares along with domestic RJ lift. AMR has not morphed. That would be great to go back to, but that will never happen. Their inaction has left them with five hubs that are in good geographical locations but lack the revenue lift and connecting traffic revenue to give them a revenue plan that many creditors will sign on to. Yes, that can change, but given what Horton has stated, they want to shrink and keep the same plan. The pilots are balking at a B6 code share, and with good reason, and they are in the infancy of JV's among their OneWorld partners.

If you watch their feet, they want to dump old lift, and kill Eagle. That sounds all well and good from a pilot perspective, but from a revenue standpoint that the creditors are singularly worried about, they see a lot of jets that will get parked, and no lift that can replace it within two to three years. That leads to a PanAm sort of network, and as we know that will not sustain itself. A merger is needed at a min.

Parker will want to control that, and he learned from DAL that he cannot wait until the creditors sign off on the company's plan. He will strike earlier, and it is very plausible that UAL and DAL along with LUV will be vying for assets. Heck, LUV would probably be more than happy to take their place within Oneworld.

Horton knows this, Dave Bates knows this and last week they addressed this. If you watch the Bloomberg interview with their head attorney, he knows it to. They are expecting a buyout, hostile takeover, or offer of assets. The creditors ears are open, and given AMR's revenue plan, it is quite possible that these players will be successful.

That said, I agree, this sucks for the employees, because, as always, they will take it in the shorts to keep their paychecks coming.