Chapter 11 Now rather than Later
#1
Original Poster
Join Date: Jul 2005
Posts: 4
Chapter 11 Now rather than Later
For Indy the time to file for bankruptcy should be shortly after Labor Day. Even with the $31 million refund from Airbus that only gives them an extra month of cash to burn through. To avoid liquidation they cannot wait until they are completely depleted of cash and the price of jet fuel is definitely not going down soon. In addition, the new Bankruptcy Law takes effect on October 17. This law will compel a bankrupt airline to reorganize and emerge from Chapter 11 in a stipulated 18 month period. Also, the airline under the new law will have to make faster decisions about whether they want to reject leases of their vendors or partners. Moreover, the new law forbids airlines from offering retention bonuses to executives unless there is a proven job offer. So also expect Delta and Northwest to file next month. I wonder what the management of Jet Blue is making of Indy's situation. Maybe we have an ATA story here with Jet Blue doing what Southwest did for ATA.
Last edited by dax431; Aug 14, 2005 at 12:21 pm
#3
Join Date: Nov 2002
Location: Chicago, IL USA
Posts: 862
Originally Posted by dax431
I wonder what the management of Jet Blue is making of Indy's situation. Maybe we have an ATA story here with Jet Blue doing what Southwest did for ATA.
1) They took over most of their gates at MDW
2) They started code-sharing with ATA out of MDW and PHX to destinations that Southwest did not served
3) ATA dropped all RJ service
4) ATA dropped all service that competed with Southwest
5) ATA reduced the frequency of flights at other airports
6) Secondary focus cities (like IND, SFO) were reduced to minor spokes
7) Provided financing for ATA (primarily in exchange for gates at MDW)
Southwest got access to major business airports (like LGA, DCA) without having to fly their themselves. They also got access to Hawaii. Of greater importance, they were able to obtain additional gates at MDW and prevent a competitor (AirTran or America West) from building up a hub.
However, at IAD, there does not appear to be an acute shortage of gates. B6 also does not operate a connecting hub there. Instead, they provide primarily O/D service for west coast destinations. The best possibility seems to be for B6 to code-share on the short RJ flights out of IAD. However, they are not likely to want to put up financing to do this. The gate at O'Hare and Newark may also be of value, but probably not much.
#4
Original Poster
Join Date: Jul 2005
Posts: 4
L Dude 7, I could not put it better. The purpose of my thread is to explore the options available to Indy. There are options besides liquidation I feel. Without Indy at IAD many of us in Northern Virginia will be forced to drive to BWI for a competitive fare on routes to Boston for example. The travel editor at USA Today brought up Frontier as a possible merger partner.
#5
Join Date: Apr 2005
Location: ORD | Chicago O'Hare
Programs: UA-LifetimePremierGold, PLT: Bonvoy, IHG, GLD: Enterprise, Budget
Posts: 247
Originally Posted by dax431
For Indy the time to file for bankruptcy should be shortly after Labor Day.
I've started flying DH recently, and have been reasonably happy with the service/value. Granted going through IAD adds some time to the commute, but its OK. Hopefully they can hold out long enough for me to cash in on the few "free trips" I've gotten so far.
#6
Suspended
Join Date: Jun 2005
Programs: Continental Gold Elite, United Premier Executive
Posts: 6,766
Pretty much every financial statement from the airline indicates that bankruptcy is around the corner...
#7
Join Date: Aug 2002
Location: WAS, FLL
Programs: AA, B6, CO, DL, FL, UA, US Gold (only took 10k miles), WN, Amtrak
Posts: 1,299
Originally Posted by L Dude 7
3) ATA dropped all RJ service
#8
Join Date: Feb 2005
Location: London, Ontario
Posts: 5,210
Originally Posted by nsx1164
Have there been any official announcements (e.g., poor financials, etc) made that show that Chap 7/11 is coming soon ??
"In a quarterly filing this week, the company offered a dire forecast, saying its cash wouldn't cover obligations for the rest of the year and it might have to file for bankruptcy protection."
That was posted Aug 12.
#10
Join Date: Feb 2005
Location: London, Ontario
Posts: 5,210
Well, most business news articles come from either press releases or in-person interviews. Maybe they didn't put it in a press release, but that came from somewhere.
#11
Join Date: Aug 2004
Location: Fairfield County, CT
Programs: DL Gold Medallion
Posts: 213
Originally Posted by DanJ
Yes, in the press release in the thread about Airbus refunding the $31 million, it says
"In a quarterly filing this week, the company offered a dire forecast, saying its cash wouldn't cover obligations for the rest of the year and it might have to file for bankruptcy protection."
That was posted Aug 12.
"In a quarterly filing this week, the company offered a dire forecast, saying its cash wouldn't cover obligations for the rest of the year and it might have to file for bankruptcy protection."
That was posted Aug 12.
Even so, United has been in CH. 11 for so long now that it's getting hard to remember when they weren't in receivership.
#12
Join Date: May 2003
Location: RDU
Programs: TSA/INS/FBI Platinum (stopped last 12 of 13 int'l returns - the computer broke once)
Posts: 2,638
A quarterly filing is a 10-K or 10-Q submitted to the SEC as an official document and is effectively a press release or official statement of the company about their current state as a business. While it might not be a press release called "We're probably filing for bankruptcy" it is still a public statement about the company made by them.
#13
Join Date: Mar 1999
Location: SFO
Programs: United 1K
Posts: 2,264
Why would another carrier buy DH? Better to have them liquidate and then pick up the routes.
#14
Join Date: Nov 2002
Location: Chicago, IL USA
Posts: 862
[QUOTE=GWU ESIA STUDENT]
Yes - I was referring to those... I guess technically they are propeler-jet planes as opposed to CRJ/ERJ 'jets'... Needless to say, they dropped all planes with <100 seats that flew to smaller communities. (and even terminated announced Gary, Ind. service shortly before it was scheduled to start.)
Originally Posted by L Dude 7
3) ATA dropped all RJ service
QUOTE]
What RJs?? Do you mean the Chicago Express Saab 340s?
QUOTE]
What RJs?? Do you mean the Chicago Express Saab 340s?
#15
Join Date: Jan 2004
Location: DCA
Programs: AA Executive Platinum
Posts: 2,085
Originally Posted by dax431
L Dude 7, I could not put it better. The purpose of my thread is to explore the options available to Indy. There are options besides liquidation I feel. Without Indy at IAD many of us in Northern Virginia will be forced to drive to BWI for a competitive fare on routes to Boston for example. The travel editor at USA Today brought up Frontier as a possible merger partner.
Although we all love low fares, $96 roundtrip to BOS isn't even covering the cost of fuel. DH isn't making money and they're just hurting UA and US, both of which have much better chances of survival. It seems that DH is just trying to bring whoever it can down with it. The airline has suceeded in temporarily lowering the region's fares to unsustainable levels, and when it is bought or liquidates, fares will just come back up again in response. There is overcapacity in the market, and DH's presence is just contributing to this problem.