Frontier goes Chap 11...

[HalinTexas]

Consolidation requires investment capital. USAirways got a $1.5 Billion capital infusion when they merged.
The traditional investment capital came from investment bankers. They're no longer putting up investment capital.
Golman Sachs just sold their Chrysler debt (from the Cerberus takeover) for 63 cents on the dollar. http://www.marketwatch.com/news/sto...x?guid={2DC4D0DC-3355-4F13-9A88-54B8F062E5E4}

I don't know where Delta and Northwest are planning on getting money - they should need at least 3 billion in new capital - to merge. Some talk about Air France; I haven't been able to find a good website to review their financials, but in today's environment, I can't see where they're getting that kind of money.

Bingo! We have a winner. My feeling is that they will only support large airline mergers, not reorganizing small ones. Hence, Aloha, ATA, Champion and Skybus. Hate to say it, but if Frontier isn't bought outright, it may follow the same path.

 

[YourPilotFriend]

Bingo! We have a winner. My feeling is that they will only support large airline mergers, not reorganizing small ones. Hence, Aloha, ATA, Champion and Skybus. Hate to say it, but if Frontier isn't bought outright, it may follow the same path.

That is correct, foreign carriers are working overtime to buy american carriers. The only american owned carrier left will be Southwest.

The government has two choices with the airlines. 1. Huge bailouts and Reregulation. or 2. Foreign ownership.
I think we all know which one they will choose.

American Airlines is running dangerously close to bankruptcy as well.

 

[NEDude]

The only difference between the cruise lines and airlines when it comes to foriegn ownership is that there aren't any foriegn crews available to fly the airplanes. Many foriegn carriers are recruiting Americans because they can't find pilots elsewhere.

 

[On Your Six]

Good luck to all the Frontier guys and gals out there. This summer is going to be a rough period if oil stays above $110.

It's always good to have a plan B. I don't work for the fractionals but I have a number who do and they really enjoy it (very wealthy people tend not to be too concerned about fuel surcharges). So, as a reminder, Netjets, Flexjet and Citationshares all offer a DEN base if Frontier pilots are interested (for those who don't commute). Just something to consider... Here's the link for more information:

http://www.airlinepilotcentral.info/airlines/fractional.html

It never hurts to have a plan B. Plus, the starting salaries at these fractionals all hover in the $60K range. Netjets also offers 100 pilot domiciles including DEN (may be better for commuters not living in Denver). Something to consider - GOOD LUCK.

 

[Kugelblitz]

Seems there is a great deal of misinformation coming out of the Frontier situation, according to the article in USA today an executive said that 'there were no bankruptcy concerns' at the airline earlier this week. This was said with this person apparently in the know about the credit card situation.

Combine that with selling off 4 planes to make ends meet, and I wish you all the very best. It would be a real shame to see a large chunk of the Denver market go to SWA.

 

[DOVPILOT]

So much for your bright spot.....

 

[lowecur]

Unfortunately there will be no savior for F9. Credit markets are dead, and M&A is out of the question as other carriers want to keep their cash reserves high in case of a protracted recession.

Analcysts are saying FL and UAL are next up. FL certainly made a mistake by not leveraging more, but as more capacity comes off-line they will benefit by higher fares. I think they will survive.

UAL is the wild card. They feel that CAL will dance with them, but I have a feeling Kellner will let AMR file chapt 11 and then look to talk to them. Regulators will have a more open mind about an AMR merger if that happens.

imp:​

 

[BrickTop]

Combine that with selling off 4 planes to make ends meet, and I wish you all the very best. It would be a real shame to see a large chunk of the Denver market go to SWA.[/quote]

SW. Just another gang of crooks on top hiding under smiles, pencil whipping, and shiny paint.

 

[Tanker Clown]

Combine that with selling off 4 planes to make ends meet, and I wish you all the very best. It would be a real shame to see a large chunk of the Denver market go to SWA.

SW. Just another gang of crooks on top hiding under smiles, pencil whipping, and shiny paint.[/quote]

But I bet you'd love to be working at SWA right now. They are starting to look like the only guys who will be around in a few years.

 

[suupah]

Consolidation requires investment capital. USAirways got a $1.5 Billion capital infusion when they merged.
The traditional investment capital came from investment bankers. They're no longer putting up investment capital.
Golman Sachs just sold their Chrysler debt (from the Cerberus takeover) for 63 cents on the dollar. http://www.marketwatch.com/news/sto...x?guid={2DC4D0DC-3355-4F13-9A88-54B8F062E5E4}

I don't know where Delta and Northwest are planning on getting money - they should need at least 3 billion in new capital - to merge. Some talk about Air France; I haven't been able to find a good website to review their financials, but in today's environment, I can't see where they're getting that kind of money.

my wild guess would be boeing, airbus or an engine manugacturer. They both have some old planes and will need huge orders for new ones soon.

 

[Andy]

my wild guess would be boeing, airbus or an engine manugacturer. They both have some old planes and will need huge orders for new ones soon.

I guess you missed what happened with GE's earnings this morning? Boeing and Airbus are also going to have troubles moving forward.

 

[learflyer]

This is worse than after 9/11. no?

 

[ackattacker]

This is worse than after 9/11. no?

I think that's a bit premature. It's not that bad... yet.

Post 9/11 almost all the majors went into BK and many thousands were furloughed. We're not there. Yes there's been lots of bad news but so far it's just relatively small players. That's little consolation for those out of a job, but still, I think there's a good chance that we will pull through this without industry wide furloughs and bankruptcies.

edit:

I meant to also mention that I think the airlines have wised up and are preparing to pass the cost of fuel onto the customer, which they failed to do post 9/11. They were too cocky and everyone felt they had enough cash to still undercut their competitors. This time all the major's are making modest cuts to domestic capacity ahead of time. This is a smart move IMHO. They know they need to drive prices up.

 

[Andy]

This is worse than after 9/11. no?

By a longshot. About a year ago, I thought that we were looking at the worst recession since the Great Depression. I didn't bother posting it here because of the ridicule that you're subjected to by making such a statement.
Last fall, I revised that downward. I think that we're looking at worse times than the Great Depression due to the huge problems in the credit markets. I might've posted that here in the last month; pretty sure that I took a few shots for that statement.

You haven't seen bad yet. After this spring, I expect the housing market to collapse. That's going to trigger a lot of waterfall financial events throughout the world.
If you watch the talking heads on TV, they're going to paint a much brighter picture because it's in their best interest to do so. However, they keep revising every estimate downward.

Failure to plan is planning to fail.

 

[Lear70]

Yeah, you took a few potshots... But gave a few back yourself.

Seriously, Andy may be a little alarmist, but it's going to be bad. Maybe not "Great Depression" bad but not that far off it, IMHO.

This is just the tip of the iceberg. Heard of all the bills being passed around the House and Senate to try to "fix" the housing market? That's because they know the bottom isn't here yet and are trying to shore up the housing market.

It will help a lot of people who are in danger of defaulting on their homes but are otherwise OK for credit by basically letting them refinance their ARM into a fixed-rate FHA loan at 5% or so. That will help, but won't fix the problem for people who are having income problems (low-paying jobs or no jobs with rising fuel, energy, and food costs).

The tax credits for people buying homes they plan to live in is great, but it's not anything NEAR an incentive to buy and won't stimulate the market at all. Those who plan on (and are capable) of buying a new home were going to anyway, regardless of tax cuts. I don't mind, every little bit helps on a personal level, but it will fail miserably as a "stimulus package" (like just about everything else Bush has tried).

I expect the aviation market to get a lot worse as well. Wait until DAL and NWA start consolidating operations... why do you think they'll keep 6 RJ feeders who operate a LOT of money-losing 50-seaters? I'm betting another 2,000+ on the street by the end of the year from furloughs at regionals that may even shut down (maybe even Mesa) plus some furloughs at places like Midwest and Spirit (word on the street is that Spirit is cash-only in some of the cities they serve - not a good sign).

Who knows... airTran is OK for cash but, to preserve that spot, may sell some of their 717's that are coming up on heavy checks which will trigger some furloughs (hopefully enough voluntary to go back on Mil duty to keep from kicking too many people to the curb).

Andy and I may disagree from time to time, but I think he's closer to the truth on this one than most here on FI want to believe.

Plan accordingly. Better safe than sorry.

Best of luck to the fine folks at Frontier. Been on you guys several times, always a class act!

 

[learflyer]

agreed. The first indicator is the housing market.....should've come back by now. Especially in a "transient" state like Florida. Scary stuff.

 

[PCL_128]

I guess you missed what happened with GE's earnings this morning? Boeing and Airbus are also going to have troubles moving forward.

GE has $16 billion in cash and BA has $10 billion. If they think their entire domestic market for aircraft and engines is collapsing, I think you'll see them use a significant portion of their cash to help bail out some key airlines.

 

[Tanker Clown]

Didn't GE do a lot of the "bailing out" last time all the majors went through Ch 11? BTW, GE missed earnings by $.07 a share today. They say around $.05 of that was their credit operation. With their credit operation already under pressure, would you lend money to an airline. Talk about a sub prime borrower...

 

[Lear70]

GE has $16 billion in cash and BA has $10 billion. If they think their entire domestic market for aircraft and engines is collapsing, I think you'll see them use a significant portion of their cash to help bail out some key airlines.

"key" airlines being the defining term.

I don't think Frontier qualifies. All they've had on order as far as I know is Q-400's, and Bombardier is doing OK, but may not be interested in investing a lot of capital, not to mention is restricted by foreign ownership limits (for now).

Frontier isn't exactly a "booming" mecca of aircraft purchases. My bet is G.E. Cap et al. will wait to use their money to shore up Legacy carriers such as AA who I believe will file Ch. 11 and reorganize, using the losses from the recent FAA checks as an excuse to shed some debt.

Tanker, companies such as G.E. Cap don't really have a choice but to bail out their customers. If they don't bail them out, the airlines default on Billions of debt and you lose any future money you will make as well.

It's a lose-lose position, they just have to pick the lesser of two evils.

 

[Charlie Brown]

It would be a real shame to see a large chunk of the Denver market go to SWA.

Yeah what a bunch of bastards for having a solid business plan.

I wish the folks at F9 the best.