Chapter 11 Now rather than Later

 
Old Aug 14, 05, 12:19 pm
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Smile 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, 05 at 12:21 pm
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Old Aug 15, 05, 8:28 am
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Good points

But what did Southwest do for ATA?
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Old Aug 15, 05, 9:28 am
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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.
What did Southwest do 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.
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Old Aug 15, 05, 11:23 am
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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.
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Old Sep 3, 05, 11:38 am
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Originally Posted by dax431
For Indy the time to file for bankruptcy should be shortly after Labor Day.
Have there been any official announcements (e.g., poor financials, etc) made that show that Chap 7/11 is coming soon ??

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.
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Old Sep 3, 05, 12:02 pm
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Pretty much every financial statement from the airline indicates that bankruptcy is around the corner...
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Old Sep 3, 05, 4:48 pm
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Question

Originally Posted by L Dude 7
3) ATA dropped all RJ service
What RJs?? Do you mean the Chicago Express Saab 340s?
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Old Sep 3, 05, 9:48 pm
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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 ??
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.
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Old Sep 4, 05, 7:31 am
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That was a news article, not a press release.

BIIIIIIG difference.
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Old Sep 4, 05, 11:17 am
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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.
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Old Sep 4, 05, 2:47 pm
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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.
Even if DH has to file Ch. 11, it doesn't mean that they'll stop flying. I tihnk it makes it a lot more likely that they'll me merged with/bought by another airline.

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.
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Old Sep 5, 05, 11:39 am
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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.
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Old Sep 5, 05, 12:04 pm
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Why would another carrier buy DH? Better to have them liquidate and then pick up the routes.
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Old Sep 7, 05, 8:34 am
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[QUOTE=GWU ESIA STUDENT]
Originally Posted by L Dude 7
3) ATA dropped all RJ service
QUOTE]
What RJs?? Do you mean the Chicago Express Saab 340s?
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.)
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Old Sep 7, 05, 1:29 pm
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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.
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