Batman's brother

YIKES. Not sure what to think other than YIKES.

lhrsfo

I find it amazing that the CEO of Boeing, which presumably wants its customers to continue buying its planes, and paying for planes that they've bought on finance, is suggesting this. He would be better off discussing such things internally rather than washing the industry's dirty linen in public. It's akin to one airline casting safety aspersions about another carrier - simply not done.

GetSetJetSet

I could see any of them going into ch11, but AA/DL/UA won't be allowed to actually go under. The smaller carriers, who knows.

lowfareair

There are 10 mainline carriers that meet the DOT's definition of major (+3 regionals, but I don't think Calhoun was talking about that as they have zero market there and he would have indicated that): AA, UA, DL, WN / B6, AS, HA / F9, NK, G4 (grouped into mega / niche / ULCC).

I really can't see any of these going out of business THIS YEAR, for several reasons:

1. They have the CARES act funding through 9/30, and the ability to get government-backed loans on top of that
2. Most should be able to get into Chapter 11 without much pushback for a liquidation petition from creditors
3. What creditor would want liquidation? No lessor or financing bank would want planes returned right now, they would sit on the ground doing diddly for 18+ months.
4. Even if someone tried to push for liquidation, it shouldn't be too difficult to convince a judge that the consistent profits in the past several years and the likely travel recovery in the next few years as well should be enough for a re-org

Barring something even more unexpected than COVID, like an airline massively overstating earnings, liquidation seems unlikely. Chapter 11 and/or a merger, sure, but none of them are 'going out of business' this year.

Redmax

Only one???

EricH

I don't think that there is any such thing as too big to fail in the airline industry, but there is certainly too big to not be worth going through some sort of reorganization following bankruptcy.

hfly

If Jetblue is a "major" then they are the one that will fail.

Duke787

Agree -- I had a post along the similar lines in the DL forum and folks didn't see the issue with Calhoun's statements but I agree with you entirely. What in the world was he thinking?? Nothing good comes of that statement and if I'm WN/DL/AA/UA/AS, I'm on the phone demanding better terms on any pending airline purchases to ensure I don't end up being the bankrupt one.

Would be akin to the owner of a car dealership getting up on a table and announcing to all the customers in the shop tomorrow that he expected at least 1-2 of them to go bankrupt by the fall. What exactly are they supposed to do with that? There's two options, they walk out of the dealership and never shop there again (though in Boeing's case the only other option is Airbus) or they demand better terms citing the risk of default/bankruptcy if they don't get attractive terms.

That company seems to have been plagued by idiots (and bean counters) ever since they passed over Mulally.

dodgeflyer

I suppose all the ones which don’t have a MAX on order and are due a Boeing payment could go under given they’ll have less cash...