Frontier goes Chap 11...

[Andy]

Key Labor Market Statistics in 1996 and 2008 March 1996 March 2008
1. U.S. Unemployment Rate 5.5% 5.1%
2. Number of Long-Term Unemployed 1.33 million 1.28 million
3. Average Weeks Unemployed 17.3 weeks 16.2 weeks
4. Median Weeks Unemployed 8.3 weeks 8.1 weeks
5. Not in Labor Force because discouraged over job prospects 451,000 401,000

The sky is not falling.

Now, reach back into your stats file and find a time when the credit markets have been this dysfunctional.
Hint: Never in history.
After being frustrated by trying to find a parallel time, google 'dutch tulip mania.' It's ageless and the same stuff, just a bit different tweak.

 

[Andy]

In some jurisdictions, mortgage loans are non-recourse loans: if the funds recouped from sale of the mortgaged property are insufficient to cover the outstanding debt, the lender may not have recourse to the borrower after foreclosure. In other jurisdictions, the borrower remains responsible for any remaining debt, through a deficiency judgment.

Basically, Joe 6-pack figures out that he won't lose his car, bass boat, or gun collection if he defaults on the mortgage, puts the keys and a letter in an envelope, mails it back to the mortgage holder, then RENTS a house or an apartment for a few years until he repairs his credit enough to buy a house again.

Not all states have this ability - it varies. But, in the areas that do, they're predicting the housing market to be worse than everywhere else.

I haven't dug very deeply on this; do you know of any states where mortgages are recourse? I've read that there are some states, but haven't checked.
I expect mortgages to be recourse in the future - once we've recovered from this - but I don't see it any time soon.

 

[Andy]

Hate to sound ignorant and I think I know what point you're trying to make, but that was a little too much metaphor for me to follow...you mind elaborating?

Already explained, but if you decide to stop paying the mortgage due to being upside down on your loan, you simply put the keys in the mail and send them back to the bank. You walk away and the bank can't go after you for any shortfalls between what they sell the house for and what you owed. This is non-recourse. I haven't dug into it, but I've been told that almost all mortgages are non-recourse.
Yes, your credit rating tanks, but how valuable is a credit rating if you're out of a job?

 

[StaySeated]

The Gods work in mysterious ways....just as I was finding out about my most recent journey through chapter 11 the UPS truck stopped in front of my house and dropped off a case of some of my favorite wine. I am just about done with bottle number 2....any fellow F9 brothers, actually brothers stay home, any fellow F9 sisters that need a shoulder to cry on come on by and share the pain!

 

[Cardinal]

When you run out of wine, send the Lady Animals my way

 

[Cardinal]

First day motions have been approved by Judge Drain. Quite the name, inspires confidence.

 

[Coool Hand Luke]

The sky if falling! The sky is falling! You guys are killing me.

So far all we have here is a bunch of niche players going Tango Uniform. Which half you were predicting anyway. Relax. Take a deep breath. They want you to panic, it gives them leverage at the bargaining table to to drive down wages, in the mean time management will be patting themselves on the back for doing such a good job during in these difficult times by increasing their golden parachute clauses, executive retirement plans and bonus incentives, so don't make thier jobs easier by buying into all this hype. You should know better.

 

[MALSR]

Hell, you are smokin something if you didn't think Potter knew it....when he left months ago....

Anyone could have looked at F9's balance sheet and made the same assumption Potter obviously made.

 

[CitationUltra]

Anyone could have looked at F9's balance sheet and made the same assumption Potter obviously made.

You're right. In the "big picture" this has been in the making for months, and no one should be surprised. All of the "we have a new CEO and he's working on it" and "Frontier employees have a great attitude" doesn't carry much weight when the creditors start pounding on the door.

 

[Lear70]

The sky if falling! The sky is falling! You guys are killing me.

So far all we have here is a bunch of niche players going Tango Uniform. Which half you were predicting anyway. Relax. Take a deep breath.

That's very true, most of us had been worried about those carriers for a while, but it doesn't change the fact that 1,000+ highly-qualified pilots are on the street looking for jobs.

That kind of pilot supply, coupled with $110+ a brl oil and the resultant higher fuel prices, coupled with the biggest credit crunch from lenders we've ever seen are making things a little... "snug"; probably the best word to describe it.

Doesn't mean we should all roll over and cave to management (NOT saying that AT ALL and I don't think anyone else has either), but I'd certainly advise people to start planning for the downturn we're starting to enter, don't look for upgrade anytime soon, nor look for big pay raises to just be given away, and financially trim back (which pilots have a hard time doing unless forced into it).

If anything, the fight for good contracts simply became harder and is going to be drawn out 2-3 years.