Will we really see a Chapter 7 with a major?

[dlredline]

I liken this to the roulette wheel. You put your money on a number(s). If you don't win, you need to put more down to cover previous bets. How many creditors are going to line up and help bring them out? Taking what they can now is easier than putting more in and getting screwed. The people that wanted to repo the 76's have the right idea. They see this won't work, like a previous post said, the numbers don't add up. Get your airplanes out and back on the market before you have U and/or UA's fleet all sitting around looking for another carrier.

One of the arguments made by the aircraft lessors in the UAL case was that the assets they loaned to UAL, their aircraft, where continued to be used by the lessee, UAL, without making the required loan payments (with help from the BK judge). The continued use of these assets depreciated future resale/loan values on these assets. This is why you saw GECAS demand the return of about a dozen USAirways aircraft over the next year in return for restructuring their loan agreement, and subsequently demand a Ch. 11 exit by June '05, or else they'd repossess all their aircraft. At USAirways, if certain ATSB covenants aren't met in late January, early February, their recent agreement for cash access to the remaining $750 million loan agreement (please keep in mind that this taxpayer-backed money) allows them to take possession of aircraft as well.

A snowball rolling downhill gathers it's own momentum as it gets larger.

Red

 

[Publishers]

These are always cash issues. Airlines have considerable hidden reserves, ticket revenues, and other monies that enable them to keep moving long after the silver bullet strikes home.

They can limp along for some time as the cash flow does not necessarily follow losses.

 

[Boeingman]

One of the arguments made by the aircraft lessors in the UAL case was that the assets they loaned to UAL, their aircraft, where continued to be used by the lessee, UAL, without making the required loan payments (with help from the BK judge). The continued use of these assets depreciated future resale/loan values on these assets. This is why you saw GECAS demand the return of about a dozen USAirways aircraft over the next year in return for restructuring their loan agreement, and subsequently demand a Ch. 11 exit by June '05, or else they'd repossess all their aircraft. At USAirways, if certain ATSB covenants aren't met in late January, early February, their recent agreement for cash access to the remaining $750 million loan agreement (please keep in mind that this taxpayer-backed money) allows them to take possession of aircraft as well.

A snowball rolling downhill gathers it's own momentum as it gets larger.

Red

This has repo issue has major implications for all the airlines. If the judge lets UAL get away with this it will be interesting.

http://biz.yahoo.com/rb/041210/airlines_ratings_sp_1.html

 

[Boeingman]

The might not get to the point of Chap 7. But their best assests will be sold off/ or bought i.e. Gates and slots at LGA, DCA, route authorities over the pond, aircraft and parts.

I dont know if a sale counts as chap 7

There is nothing left to sell since all of their prime assets are already leveraged from BK 1 and for the ATSB/ RSA loans. Plus, CAL gets the entire terminal in LGA if USAIR defaults.

 

[shroomwell]

I think that the UAL repo deal has significant implications. You will probably see Congress getting pressure for some kind on Bankruptcy reform. The judge just basically through out the whole concept of collaterlized loans. Whats nexts, if they let UAL get away with it than others will try. I believe it sets a bad precedent when contracts aren't worth the paper their written on.

 

[FoxHunter]

Whats nexts, if they let UAL get away with it than others will try. I believe it sets a bad precedent when contracts aren't worth the paper their written on.

Sort of like ALPA contracts, Pilot pensions?

 

[Boeingman]

Sort of like ALPA contracts, Pilot pensions?

And not like executive benefits and golden parachutes.

ALPA, Hello...Hello...Duane.....anybody listening in Herdon?

 

[ThisistheDream]

I agree 100% with you foxhunter, but i think that the gov't with the way the economy is, they will allow current and future airlines to remain around for along time!!! in chapter 11, and long enough to change the industry so bad with outsourcing, forced concessions that a career in the airlines will be dwindling for many and for any future people thinking about this career. In the near future when you buy a ticket on UAL, AA, DAL you will be buying a ticket on 5 different outsourced airlines with 10 different unions all whipsawing eachother.

Do you recall Braniff, EAL, PanAM? Sorry to say, but the best thing to happen in the airline industry today would be for both UAL and USAIR to go Chapter 7. I just bought a ticket on American for January, PHL-ABQ round trip, $227.50. If I had bought a discounted ticket for duty travel the price was $354 ONE WAY. If they both stay around you will see a slow bleed for the rest of the industry and those employees that do not work for either UAL or USAIR.

 

[ThisistheDream]

good idea but he is furloughed. jk

Let's ask Kit Darby!

 

[Cyclone]

wild kingdom

Not much water...all the animals are thirsty, tired, and hungry. The wounded zebra can walk but cannot run. The lion circles...easy prey...soon she will go in for the kill and offer fresh meat to her pride.

The lame will survive for a while...but the long hot days will make it harder for them...so difficult to move, let alone escape the predators. They might make it through another day...possibly survive...but soon carcasses will litter the landscape. No one can say how many. The weakest will perish...and this will make the strongest stronger...for a while. Then, another season, and new surprises. But the sun will still rise. Another day.