This doesn't hurt DAL all that much. What it does it place an extreme amount of pressure on CAL and UAL.
DAL can go into CH11 along with NWA and reorganize under the existing laws. The key to any BK filing is to have exit financing in place. This is where AMR and CAL have ot be careful. You don't want to be the last one left (not going CH11) because their are very few major banks willing to finance a CH11 airline and even fewer willing to finance two.
Most major banks will align with their FF partners for survival. AMEX-DAL AA-Citi. This is where the problem is. UAL had BankOne as a FF partner, CAL has Chase. While with the advent of the big bank mergers JPMorgan Chase and Bankone are now all the same. JPMorgan will have to make a decision, they will not go to bed with both.
Their creditors are in essence a lot of the same players, those players will now have to choose who lives and who doesn't. They will have no interest in supporting 3 CH11 airlines for an additional 3 plus years. Tremendous pressure will be based upon the financial soundness of their exit plans, so far UAL has impressed no one with thier exit plans.
Three years is a long time, now as others begin to enter CH11 the presure will be on UAL to exit. They will have to exit first and operate outside CH11 protection while the others operate under CH11 (the shoe is on the other foot). The problem becomes two fold, if they emerge too quickly or if they can't compete with the other CH11 carriers and have to re enter Ch11, then they will be doing it under the new rules.
DAL can go into CH11 along with NWA and reorganize under the existing laws. The key to any BK filing is to have exit financing in place. This is where AMR and CAL have ot be careful. You don't want to be the last one left (not going CH11) because their are very few major banks willing to finance a CH11 airline and even fewer willing to finance two.
Most major banks will align with their FF partners for survival. AMEX-DAL AA-Citi. This is where the problem is. UAL had BankOne as a FF partner, CAL has Chase. While with the advent of the big bank mergers JPMorgan Chase and Bankone are now all the same. JPMorgan will have to make a decision, they will not go to bed with both.
Their creditors are in essence a lot of the same players, those players will now have to choose who lives and who doesn't. They will have no interest in supporting 3 CH11 airlines for an additional 3 plus years. Tremendous pressure will be based upon the financial soundness of their exit plans, so far UAL has impressed no one with thier exit plans.
Three years is a long time, now as others begin to enter CH11 the presure will be on UAL to exit. They will have to exit first and operate outside CH11 protection while the others operate under CH11 (the shoe is on the other foot). The problem becomes two fold, if they emerge too quickly or if they can't compete with the other CH11 carriers and have to re enter Ch11, then they will be doing it under the new rules.
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