FlyI Files Ch. 11 BK

[Mugs]

I think Delta has a lot more pricing power than they think, but they have squandered $6 bil trying to fight AirTran for the bottom customers. I said three years ago that if they didn't stop doing that, that Mullin would be bye-bye, and the end result could be bankruptcy. Even a broken clock is right twice a day, right?


None of us at Airtran are happy that you guys are taking (more) pay cuts. That just makes things worse for everyone. However, our union has done their research and we have found that concessions will not be necessary from our pilot group, in fact, we are looking for modest increases. Also, we have conducted multiple pollings of the membership, and find that the vast majority of our pilots are looking for improvements in pay, QOL and benefits.


Sorry you feel that way, General. That would just be a losing game for you guys, because you'll never get your costs lower than ours- we are hedged, our equipment is new and mostly waranteed, our employees junior. If I were you, I'd be hoping the AirTran pilots stand tall and get an improved contract, not a concessionary one.

I don't believe that Delta had more pricing power than they believed. The fatal flaw of the legacy carriers was the large amount of total revenue that was generated from a fairly small percentage of their customers. At UAL, it used to be some bizzare number close to 50% of revenues coming from less than 10% of the customers (the high yield folks). This lack of diversification in a razor thin margin business proved to be the undoing. That small group of customers providing the largest chunk of overall revenue eventually split into three groups. One group went to the lower fare alternative, one group stayed with the legacy, and the price doesn't matter at all types went more towards the Netjets route. Therefore, each of the high yield customers that were lost resulted in a disproportionately large loss of revenue. Continuing to set fares in ATL higher than Airtran would not have filled the large revenue hole.

 

[lowecur]

This doesn't even make any sense. What are you talking about? Are you dyslexic? From a tax standpoint? I was thinking more from a perspective standpoint. If you're talking taxes, once either a Ch. 7 or Ch. 11 is filed, the IRS treats capital gains differently, when assets are written down and transferred--also, they no longer consider the cancelling of debt to be "income", but I'm not sure I have a clue what you're asking. Talking to you is like asking the waiter for a pizza and getting a half hour lecture on the recipe.

My original question still stands: Does the IRS recognize both liquidation and reorganization under Chapt 11? See below for the answer.

5.9.2.3 (08-01-2005)
Chapters in Bankruptcy

1. 1. 1. Bankruptcy Options. Bankruptcy is separated into two general categories:
         1. Liquidation — Chapter 7 and liquidating Chapter 11 — liquidation of assets to pay off debts; or
         2. Reorganization — Chapters 11, 12, 13 — reorganizing to pay creditors over a period of time through a plan. plan.

How 'come you never learned how to properly quote? How come you never learned how to spell? Anyway, this question, too, doesn't make any sense, unless you're talking about the tax treatment for transferring assets, as discussed above. The IRS doesn't "define" Chapter 11, that's part of the US Code. Let me rephrase. Is the IRS perspective of Liquidation under Chapters 7 and 11 bogus?

The IRS does have a set of rules for a reorganization under bankruptcy laws, but they're not very interesting. They mostly just allow you to change values/cancel debts with no adverse tax treatments. As far as the IRS is concerned, you're either in bankrutpcy or not. If you're in, you use these sets of rules. If you're not, you use those sets of rules. The IRS has no responsibility for "defining" bankruptcy. But they do show their perspective by classifying both Chapters 7 and 11 under liquidation, don't they!

You found an IRS web page dealing with assets being sold by bankrupt companies. How bout that?

Sure a hell of alot better than those grimy marketing adds by those slimy attorneys.

 

[radarlove]

could you expand a bit on an S363 sale to liquidate under chapter 11 outside of a reorganization and how it would differ from a chapter 11 prepack? .

I know you're just yanking my chain, but if I remember correctly, a section 363 sale simply has to do with selling assets outside of the "normal course of business". If you are planning on doing this while in bankruptcy, you must file a petition and have a hearing.


I guess if you arrange to sell all assets and all of the creditors agree, that would be very similar to a Ch.7 liquidation. But we're talking Flyi here--where is the section 363 filing for Flyi that turns this into a liquidation, as lowcur was referring?

Here's the difference: in a Ch. 7 "liquidation", a guy (trustee) makes all of the decisions for selling off assets. Under Chapter 11, every time an asset is sold, not in the normal course of business, there must be a hearing and agreement (or not, judge decides) from the creditors. Flyi is not in a "liquidation" and Ch. 11 363 sales are not "liquidations" as the term is used.

 

[Carl_Everett]

I have to side with Lowcur. It's quite apparent from the timing that they have no intension of reorganization. If they had wanted to try and save the company they would have filed prior to the 10/17 law change (like NWA and DAl did) Once the BK laws went into effect I air lost all of their leverage. Form here on in it just a matter of putting the remainng assets up for sale and slowly part out the airline (like Pan Am did).

I feel for the Iair folks, good luck.

Everyone seems to think the the new bankruptcy laws will affect FLYI adversely. In reality new laws or old laws, it would NOT matter. The major change in the law was to limit bankruptcy proceedings to 18 months. There is no way in hell that FLYI would last 6 months let alone 18 under Ch. 11.

 

[BeCareful!]

Concerning these new BK laws: Aside from the 18 month period, isn't one of the biggest changes that of executive compensation? Execs can only make 10 times the average salary of the line employees now in BK....

That would be good for the company's chance of survival, bad for the executive's children's trust funds.

Lowecure? Someone? Can you shed light on this? What is the downside of the new laws for the companies other than the shorter duration of BK?

 

[Traderd]

I know you're just yanking my chain, but if I remember correctly, a section 363 sale simply has to do with selling assets outside of the "normal course of business". If you are planning on doing this while in bankruptcy, you must file a petition and have a hearing.


I guess if you arrange to sell all assets and all of the creditors agree, that would be very similar to a Ch.7 liquidation. But we're talking Flyi here--where is the section 363 filing for Flyi that turns this into a liquidation, as lowcur was referring?

Here's the difference: in a Ch. 7 "liquidation", a guy (trustee) makes all of the decisions for selling off assets. Under Chapter 11, every time an asset is sold, not in the normal course of business, there must be a hearing and agreement (or not, judge decides) from the creditors. Flyi is not in a "liquidation" and Ch. 11 363 sales are not "liquidations" as the term is used.

Actually, I yank some things but never one's chain.

I was curious if a liquidation can be accomplished in chapter 11 or at least outside of chapter 7. I understand that the asset sale in the normal course of business is not termed a liquidation, but at some point it appears to be the functional equivalent.

And per an earlier post concerning semantics. You were not arguing semantics with a pilot; the individual I referenced is a practicing bankruptcy attorney. And while he may be a pilot as well, he didn't utilize the terminology "chapter 11 liquidation" while representing himself as an aviator. I for one have no idea if a corporation can liquidate all of its assets while in chapter 11 and if so, if it would constitute a "chapter 11 liquidation".

Thanks for the info.

 

[luv2fly]

Also, we have conducted multiple pollings of the membership, and find that the vast majority of our pilots are looking for improvements in pay, QOL and benefits..

Wow!! You guys aren't wanting much. I am not sure there is anything you guys aren't looking for.

 

[Ty Webb]

Wow!! You guys aren't wanting much. I am not sure there is anything you guys aren't looking for.

Thanks for your support. We sure appreciate it. Farghin' Corksmoker.

 

[mdf]

Farghin' Corksmoker.

Johnny Dangerously.......Would you believe the mouth on that guy!

 

[densoo]

Tell us how you feel

THE BRANCATELLI FILE: THE DUMBEST AIRLINE IN AMERICAN HISTORY
None of the carriers in my Library of Dumb Dead Airlines has
outdone newly bankrupt Independence Air for sheer stupidity. It has
flown the wrong planes to the wrong places with the wrong schedules at
the wrong prices. It has failed in big cities and small towns. Failed
flying North to South and East to West. Failed flying big, new jets and
small, old ones. In just 18 months, Flyi has gone from profitable
commuter carriers to a start-up failure and blown $500 million or so
along the way.

 

[Sharmoota]

THE BRANCATELLI FILE: THE DUMBEST AIRLINE IN AMERICAN HISTORY
None of the carriers in my Library of Dumb Dead Airlines has
outdone newly bankrupt Independence Air for sheer stupidity. It has
flown the wrong planes to the wrong places with the wrong schedules at
the wrong prices. It has failed in big cities and small towns. Failed
flying North to South and East to West. Failed flying big, new jets and
small, old ones. In just 18 months, Flyi has gone from profitable
commuter carriers to a start-up failure and blown $500 million or so
along the way.

Yeah but we had fun doing it!!!!NahNahNah Nah Naaaaaaaa!