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[Speculation] Risk of AS Bankruptcy and Liquidity for Ticket Refunds

[Speculation] Risk of AS Bankruptcy and Liquidity for Ticket Refunds

Old Mar 24, 20, 8:33 pm
  #31  
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Originally Posted by Boraxo View Post
That said I would always use a credit card to buy a ticket (why would you not unless you are a narcotrafficker or a terrorist) which comes with certain protections.
There are people who can’t get credit cards who aren’t narcoterrorists: due to medical bankruptcy, job losses that hand out lousy credit.

If you’re doing Dave Ramsey style financial planning you’re not using credit cards either. Some people use debit cards. Oh well.
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Old Mar 25, 20, 12:58 am
  #32  
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Originally Posted by eponymous_coward View Post
There are people who can’t get credit cards who aren’t narcoterrorists: due to medical bankruptcy, job losses that hand out lousy credit.

If you’re doing Dave Ramsey style financial planning you’re not using credit cards either. Some people use debit cards. Oh well.
Of course, but my point is that anyone who has a credit card should never pay cash. Even if it doesn't offer rewards (the horror!). Cash makes sense for small purchases, vendors that don't take credit cards, and things you don't want traced. Otherwise you are giving up 2% cash back or points, plus the chargeback protection.
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Old Mar 25, 20, 8:53 am
  #33  
 
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Originally Posted by eponymous_coward View Post
There are people who can’t get credit cards who aren’t narcoterrorists: due to medical bankruptcy, job losses that hand out lousy credit.

If you’re doing Dave Ramsey style financial planning you’re not using credit cards either. Some people use debit cards. Oh well.
Dave Ramsey is giving bad advice then.
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Old Mar 25, 20, 8:59 am
  #34  
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Originally Posted by billgris View Post
Dave Ramsey is giving bad advice then.
no personal experience, but from what I have heard, Dave Ramsey’s credit advice is for people who have demonstrated that they cannot manage credit and need to work their way out of a load of debt. You and I should definitely use a credit card (preferably with some sort of cash back or rewards program) to buy high ticket items. Someone who is prone to not pay the full monthly bill and piles up thousands of dollars of debt for unnecessary stuff is likely better off paying for stuff with just the cash they have. I am pretty sure that isn’t just Dave Ramsey’s advice, but he just appears to be the most cited debt advice person because of his radio show.
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Old Mar 25, 20, 4:48 pm
  #35  
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Plain and simple, if you are paying for goods or services to be rendered in the future, you should pay with a CC. Covid-19 aside, other issues arise and a chargeback is manageable while the alternative, small claims, is still time-consuming and hard for those who may not be adept at dealing with large systems.
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Old Mar 25, 20, 5:21 pm
  #36  
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In an ideal world where we all have 850+ FICO scores and impeccable ability to manage household finances involving consumer credit and obtain ample credit lines, yes.

In the real world, the one where a majority of those polled in the US report that a $1000 unexpected expense would put their household in serious financial trouble, people might have good reasons to balance the risk of an airline or other business going busto vs. other completely solid reasons that make credit cards problematic. And they’re not wrong.

https://www.cbsnews.com/news/most-am...-1000-expense/

These people are going to take occasional trips on airplanes. Also, I recall that as part of the US->AA wind down, less than 10% or so of tickets purchased are purchased more than 90 days out. So... for a lot of people, the impact is pretty minimal, we’re talking about risk that your $200 ticket to visit Grandma in a couple months as a casual traveler might be impacted by a black swan event that takes an airline from “we’re paying dividends and doing fine” to “chapter 7 full liquidation”. Because that is what we’re talking about- airline tickets will be honored if the airline is allowed to continue operating debtor in possession aka Chapter 11, the case where they do NOT get honored is when the whole shebang gets liquidated Thomas Cook style, chapter 7.
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Last edited by eponymous_coward; Mar 25, 20 at 5:29 pm
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Old Mar 25, 20, 6:55 pm
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Originally Posted by eponymous_coward View Post
Because that is what we’re talking about- airline tickets will be honored if the airline is allowed to continue operating debtor in possession aka Chapter 11, the case where they do NOT get honored is when the whole shebang gets liquidated Thomas Cook style, chapter 7.
That's assuming the filing carrier can secure DIP financing, and not every airline would be able to do that.
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Old Mar 25, 20, 7:29 pm
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Originally Posted by Snowdevil View Post
That's assuming the filing carrier can secure DIP financing, and not every airline would be able to do that.
I was going to say that sudden shutdown and liquidation of a major US carrier a la Thomas Crook would not be permitted due to the economic disruption. But I'm not so sure now given the current state of affairs. That said I expect that all carriers will receive bailouts and resume service (perhaps temporarily reduced) when this crisis has passed. Even with millions temporarily unemployed, people are not going to give up business and personal travel once they are allowed to resume. And there is not sufficient overlap (or political support) to "sacrifice" airlines to maintain the purity of capitalism. We are well beyond that now in Washington.
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Old Mar 25, 20, 7:43 pm
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Originally Posted by Snowdevil View Post
That's assuming the filing carrier can secure DIP financing, and not every airline would be able to do that.
Right, that’s what I mean. “Tickets are no good because we’re shutting you down. Ticket holders are now unsecured creditors.”
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Old Mar 25, 20, 10:39 pm
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Originally Posted by Boraxo View Post
I was going to say that sudden shutdown and liquidation of a major US carrier a la Thomas Crook would not be permitted due to the economic disruption. But I'm not so sure now given the current state of affairs. That said I expect that all carriers will receive bailouts and resume service (perhaps temporarily reduced) when this crisis has passed. Even with millions temporarily unemployed, people are not going to give up business and personal travel once they are allowed to resume. And there is not sufficient overlap (or political support) to "sacrifice" airlines to maintain the purity of capitalism. We are well beyond that now in Washington.
The Senate just approved nearly $25B in salary payment grants to the airlines. And another $25B in loans and loan guarantees.
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Old Mar 26, 20, 9:12 am
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For those of us (I expect a majority of forum regulars) that plan to continue flying Alaska after the current Zombie apocalypse, can afford the float on our credit cards: I for one am more than happy to take a credit rather than demand a refund; consider it a no-interest loan to help keep ALK solvent, viable. Admittedly, this will require much more than FT AS forum participants, but I consider it is much better than a government bailout.
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Old Mar 26, 20, 9:21 am
  #42  
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Originally Posted by diver858 View Post
For those of us (I expect a majority of forum regulars) that plan to continue flying Alaska after the current Zombie apocalypse, can afford the float on our credit cards: I for one am more than happy to take a credit rather than demand a refund; consider it a no-interest loan to help keep ALK solvent, viable. Admittedly, this will require much more than FT AS forum participants, but I consider it is much better than a government bailout.
just booked multiple flights through August.

with the low interest environment not much of a difference in spread by me giving AS a float.
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Old Mar 26, 20, 9:22 am
  #43  
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Originally Posted by Boraxo View Post
I was going to say that sudden shutdown and liquidation of a major US carrier a la Thomas Crook would not be permitted due to the economic disruption. But I'm not so sure now given the current state of affairs.
That will depend somewhat on the scope of the operation. After 9/11, Midway shut down completely within days IIRC, ATA within weeks, and it was considered acceptable loss given their less-than-integral role in the US transportation system. Hopefully the federal bailout funds make this a moot point, but if the emergency continues through 2021, who knows.
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Old Mar 26, 20, 9:56 am
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Originally Posted by Xrayman View Post
just booked multiple flights through August.

with the low interest environment not much of a difference in spread by me giving AS a float.
Still not very smart to do right now as you have no idea if any of those flights will even operate. Give them a chance to figure that out first. Otherwise you are just adding onto the problems as they have even more people to rebook.
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Old Mar 26, 20, 10:14 am
  #45  
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Originally Posted by sfozrhfco View Post
Still not very smart to do right now as you have no idea if any of those flights will even operate. Give them a chance to figure that out first. Otherwise you are just adding onto the problems as they have even more people to rebook.
I’m continuing my travel plans and booking as I’ve always done for the last 5 years. If they cancel flights in the future, my schedule has always been flexible.

I’ve had 2 flights cancelled in the last 1 week and they rebooked me onto a half empty plane for the following day which was fine.

Alaska has been invaluable for my business travel needs for the last 10+ years. Me and my family have benefited so much more from Alaska air then they from us.

My best interest is in their viability and success. If I’m floating them 5K at any given time so be it. If I lose 5K it’s the cost of doing business as I know it and the 5K would be one of the smaller issues to me compared to other more pressing needs if this arose.
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