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Old January 3rd, 2006, 12:56 AM   #101
Lee
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^Bankruptcy enables airlines to cut costs and to come out "leaner." A great example would be UA, which is starting to make a profit.
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Old January 3rd, 2006, 01:21 AM   #102
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Quote:
Originally Posted by Lee
^Bankruptcy enables airlines to cut costs and to come out "leaner." A great example would be UA, which is starting to make a profit.
I agree. I don't think many people understand the US Bankruptcy laws. Chapter 11 "Reorganization" is not a shield meant to protect inept airlines. If an airline successfully emerges from chapter 11 it has to have a plan for operating that is approved by its creditors. Creditors can deny the plan and if no agreement is reached, the company is liquidated with assets being divided mainly among creditors, who receive only a percentage on the dollar.
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Old January 3rd, 2006, 02:54 AM   #103
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Quote:
Originally Posted by Lee
^Bankruptcy enables airlines to cut costs and to come out "leaner." A great example would be UA, which is starting to make a profit.
Cummon most US airlines are making a loss. If one was allowed to go down there would be room for all of the others to make profits.
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Old January 4th, 2006, 03:16 AM   #104
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Quote:
Originally Posted by Monkey
Cummon most US airlines are making a loss. If one was allowed to go down there would be room for all of the others to make profits.
Independence Air, a 14 month old carrier based out of Washington's Dulles Airport, which is in chapter 13 bankruptcy protection, announced yesterday that it has not options but to cease operations this Thursday, January 5.

This may end up helping other airlines a little, but it's not a happy day for the thousands of Independence Air employees who will soon be out of work.
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Old January 4th, 2006, 05:12 AM   #105
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^ The industry needs a bigger loss than just Independence Air. One of the majors has to go - probably Delta or US Airways.
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Old January 4th, 2006, 05:26 AM   #106
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Quote:
Originally Posted by Monkey
^ The industry needs a bigger loss than just Independence Air. One of the majors has to go - probably Delta or US Airways.
How about niether? If they all cut costs, and raise prices for int. routes, they will surely make profits. AA, CO, and UA are now profitable. Not that bad.
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Old January 4th, 2006, 05:42 AM   #107
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I dont think the majors are going anywhere soon, especially with US joining with America West, since US was the worst off. There is enough traffic in the US to justify all the majors, pretty soon i think well see most of them return to profitability
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Old January 4th, 2006, 09:21 AM   #108
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Quote:
Originally Posted by Monkey
^ I can see why people in Atlanta want it to stay afloat but the US aviation industry as a whole is suffering from the overcapacity made possible by the seemingly endless protection of unprofitable airlines under Chapter 11.
exactly, you took words out of my mouth
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Old January 4th, 2006, 09:29 AM   #109
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Quote:
Originally Posted by Nick in Atlanta
Hey, there's a part of me that agrees with you. When Delta was a strong airline they definitely protected their hub cities from other carriers. They played a little dirty at times by using their huge network to overwhelm a new airline just starting service. (e.g., AirTran.)

But they do provide Atlanta with a ton of flight options to various cities all over North American and the world. It would hurt Atlanta to lose that and it would hurt the 30,000 people who would be out of a good job too.
I know very sad for 30 000 jobs, but...

I think Delta needs to reorganise, say reduce its fleet substantially, keep only newest planes and models, a fleet of say 150-200 most modern and efficient aircraft can do good job, also reduce number of routes especially international, ones, minimise costs and overheads and overstaffing... I'd sack at least half of workforce all in effort to minimise the costs and increase productivity (I'd increase pay for remaining staff by 5%). Also sell some of the unprofitable assts as well along with surplus aircrafts...

Anyways my measures would be very stringent and effective in long run, after all Delta is most likely to do exactly this in the end anyways...

BTW I agree with Monkey, to many cooks in the kitchen usually spoils the broth...
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Old January 4th, 2006, 09:47 AM   #110
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Quote:
Originally Posted by Nick in Atlanta
I agree. I don't think many people understand the US Bankruptcy laws. Chapter 11 "Reorganization" is not a shield meant to protect inept airlines. If an airline successfully emerges from chapter 11 it has to have a plan for operating that is approved by its creditors. Creditors can deny the plan and if no agreement is reached, the company is liquidated with assets being divided mainly among creditors, who receive only a percentage on the dollar.
Reorganization... to the absolute point of ridiculousness. United has been operating under bankruptcy protection for more than three years now. Where should the line be drawn, if not before this?
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Old January 4th, 2006, 10:18 PM   #111
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Quote:
Originally Posted by OhmehawJ
Reorganization... to the absolute point of ridiculousness. United has been operating under bankruptcy protection for more than three years now. Where should the line be drawn, if not before this?
Well as you can see by the news that Independence Air is going away for good, the lines are [usually] drawn by how big your airline is. The bigger the airline, the longer it has to fix its problems before it dies.
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Old January 4th, 2006, 11:45 PM   #112
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I think there is room in the US aviation market for five strong legacy airlines. I think by the merging of AWA and US Airways, and the disappearance of Independence and most of ATA, there's a chance for them. Plus, there's a rebound in international air traffic and the labor concessions and chopping of frills seem to making a difference. Is UA in the black now? Wow!
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Old January 5th, 2006, 01:56 AM   #113
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Quote:
Originally Posted by Kai Tak
Well as you can see by the news that Independence Air is going away for good, the lines are [usually] drawn by how big your airline is. The bigger the airline, the longer it has to fix its problems before it dies.
In a way yes. If you go into chapter 11 with very little cash you can't pay your employees and your airplane lease and fuel costs. Not even ch.11 protection will take care of that for you. That's basically what happened with Independence Air. They had very little operating cash coming in or available to them to pay their expenses. After making a short attempt to fix things (which may have been impossible), it realized it was going to run out of money.

United, on the other hand, entere ch.11 with a lot of cash on hand. They were able to reorganize and pay to keep the airline running. I believe they have been in ch.11 for more than 2 years, and will emerge sometime early this year.
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Old January 5th, 2006, 11:36 PM   #114
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Jan. 4, 2006, 11:36PM
AIRLINES
Delta plans big foray into Latin America
Expansion into more than 28 markets part of carrier's goal to overtake Continental for No. 2 spot in service to region

By BILL HENSEL JR.
Copyright 2006 Houston Chronicle

ATLANTA - Delta Air Lines is throwing down the gauntlet, and it is landing squarely in the lap of Continental Airlines.


"By next summer, we will be the No. 2 carrier to Latin America," Jim Whitehurst, Delta's chief operating officer, declared in a recent interview.

To do that, Delta would have to push aside Continental. Currently second in service to Latin America, the Houston airline is in the midst of its own big international expansion, including some recently added flights to Latin America.

For its part, Delta plans to expand to more than 28 new markets throughout Latin America and the Caribbean by 2006. True, industry analysts point out, Delta is starting from a smaller base than many competitors.

In terms of passengers, Fort Worth-based American Airlines carries far more people to Latin America than any other U.S. airline. In 2004, American carried 12.1 million passengers to Latin America, compared to about 4.8 million for Continental. Delta carried 2.7 million passengers to the region in the same period.

One reason for the push to expand into Latin America is the domestic dominance of Southwest Airlines.

Dallas-based Southwest recently became the leader in terms of passengers carried on domestic routes. Latin America offers a Southwest-free zone for the other major carriers to compete in.

Aviation industry consultant Alan Sbarra noted that most U.S. carriers are on an international expansion binge because there is far less competition and they can charge higher fares. "Latin America is becoming more deregulated, but there still is not a lot of competition in a lot of markets and there is no Southwest competition."

He said Delta apparently is expanding in Latin America because it is a region the Atlanta-based carrier hasn't penetrated as much.

Latin America, in particular, remains an important focus for a number of U.S. airlines, including Continental. The Houston-based carrier unveiled a "Latinization" program in the late 1990s featuring bilingual services.

"We take all competition very seriously," Continental spokesman Ned Walker said. "There are some carriers that are trying to catch up to where we are."

Delta is undergoing a pretty big expansion, however, starting seven new Latin American routes between Nov. 17 and Dec. 18 alone. Among the rollouts from its hub in Atlanta were service to Santo Domingo in the Dominican Republic; Barbados; Managua, Nicaragua; Puerto Vallarta in Mexico; and Antigua.

All that is part of a restructuring Delta announced last year before it was forced into bankruptcy on Sept. 14 as it battled to wrangle more concessions from its employee unions.

Continental isn't sitting still. It just introduced nonstop flights between Houston and Buenos Aires, Argentina, Continental's ninth destination in South America and its 77th Latin American-Caribbean destination. Continental launched five other new routes to Latin America and the Caribbean in mid-December.

Delta, which already flew to Buenos Aires, has an average of 51 daily flights to Latin America and the Caribbean. But Whitehurst said it has launched a "significant expansion" into Mexico, asking for approval for service for more than 15 new routes from the U.S. Department of Transportation.

Sbarra questions some aspects of Delta's big foray into Latin America, at least based on geography. American has a hub in Miami, which is a true gateway to Latin America, and both Houston and Dallas already are big gateways based on location.

"Those are just natural, strong cities with strong communities of interest to Latin America, just natural places that people want to fly to," he said. "Atlanta is not Miami and it is not Houston and not Dallas in terms of a destination. Delta seems to be stretching it a little bit here."

Nevertheless, Delta has a "fair number" of international aircraft it can still tap, according to Whitehurst. It recently has made changes domestically, including dropping a significant number of routes where it can use the large aircraft from those routes to fly internationally, he said.

The fact that it reached a new deal for more cuts from its pilots several weeks ago also works in Delta's favor, said Anthony Sabino, an airline industry expert and professor at the Peter J. Tobin School of Business in New York.

"The market for pilots and other airline professionals is soft, and that's an understatement," Sabino said. "They played it down to the wire, but there is still hope for Delta, and we will see what happens next few months."
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Old January 6th, 2006, 07:27 PM   #115
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Here's an example of some tough negotiation tactics that can occur. It's also a some insight into one form of "reorganization" that occurs in Chapter 11. Renegotiations on plane leasing contracts.

I couldn't help but put my comments in brackets within the news article.

_________________________________________
Delta agrees to resolve lease dispute

Thu Jan 5, 2006 05:09 PM ET

NEW YORK, Jan 5 (Reuters) - Delta Air Lines Inc. and a group of aircraft owners on Thursday tentatively resolved a lease dispute involving three aircraft after a bankruptcy court judge urged the two sides to "work it out."

"I don't understand how expensive it can be to fly one of these aircraft across the country," Judge Prudence Beatty told the lawyers. "I think you ought to work it out."

Delta agreed to "expeditiously" return three aircraft to a facility in California [most likely an airplane parking lot already loaded with planes in the California desert] as the lessors -- Tokyo Leasing (USA) Inc., Natexis Banques Populaires SA, HSH Nordbank AG and Morgan Stanley & Co. -- had wanted.

Two of the aircraft are disassembled [how inconvenient!] and stored at an airport in Atlanta, while one is in California. Delta will refit the engines and fly the two planes to California.

The lessors had alleged earlier that Delta had disassembled and abandoned two aircraft in Atlanta to "make matters difficult," [say it isn't so] as it sought concessions from its lease obligations, according to court documents.

The No. 3 U.S. carrier, which filed for Chapter 11 bankruptcy protection in September, is seeking about $3 billion in savings, including costs reduction by renegotiating aircraft leases.

The airline has reworked or rejected more than 90 percent of the leases for its mainline fleet, bringing some of them down by as much as two-thirds, the carrier's officials have said.

The judge also extended the time Delta has to exclusively file a reorganization plan to July 11 from Jan. 12, and the deadline to solicit acceptances for the plan to Sept. 9 from March 13.

Competing plans cannot be filed during the exclusive period.
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Old January 7th, 2006, 02:00 AM   #116
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Capacity, lease rates, seat miles... they are all just abunch of numbers that get juggled around. In many ways, that's all bankruptcy is, too - another way to juggle around numbers. The problem is, the major airlines (and in fact many of the smaller ones), have gotten so far away from running an airline and so involved in running a business and managing an investment and playing on the stock market that they forgot about the airline.

If the passengers aren't there - then the real answer is - get them! Make people want to fly your airline. Make people want to fly, for that matter.
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Old January 7th, 2006, 03:37 AM   #117
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US Airlines are so protected from global competition. They got massive subsidies after 9/11 which European Airlines did not get on the scale US airlines did. Yet that subsidy only covered up massive problems that pre-existed 9/11.

The airlines have used chapter 11 to further delay the inevitable, some have been in protection for years, how long does it take?

The US market is protected from foreign competition, no non-US owned airline can compete on domestic routes. So for example a European Airline couldn't merge with a US won unless the merged company stock was 75% of US owned.

At the same time the US govt has been trying to prisze open Heathrow to other US airlines rather than just American and United.

Delta for example has been using European routes to prop up its massively loss making US business.

Its really hypocritical that BA which made a massive profit last year is losing business to US airlines that have been aided by govt money and protected in they own back yards and from competitive pressures thru chapter 11.

Let Delta go to the wall, like European airlines have been doing.
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Old January 7th, 2006, 04:19 AM   #118
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I agree with you on quite a few things pricemazda, but the grip that BA has on Heathrow allows it to serve the choicest American markets, where it makes a substantial part of its revenue.

Other airlines deserve to be able to fly into Heathrow. When an airline like Delta goes to a major company headquartered in any city in the US, they try to sell them on using Delta exclusively for their transatlantic travel. If they choose Delta then the company will receive a good discount on all its bookings on Delta to Europe. But guess what? They want to fly into Heathrow because it is much closer in to London's business areas. (Gatwick, as I've been told by many UK forumers, is thought of as a charter airport.) So without the Heathrow flights, Delta can't make a lot of sales to major corporations with operations in Europe, while American Airlines and United can.
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Old January 7th, 2006, 05:50 AM   #119
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Quote:
Originally Posted by Nick in Atlanta
Other airlines deserve to be able to fly into Heathrow.
If Delta wanted Heathrow so badly, they should've bought the rights from PanAm or TWA a while back. Instead, United and American have them.

Bermuda II isn't going away until UK carriers are allowed more freedom to fly to and inside the United States. It's Delta's own government that is prohibiting such an agreement.

Even if B2 was lifted, Heathrow doesn't have room for another focus hub. You'll go bankrupt again to pay off another airline to give you space there.
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Old January 7th, 2006, 11:03 AM   #120
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^ lol good point
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