DL wants to retain Huron Consulting

[Gilding the Lily]

DL applied to the Bankruptcy Court today to employ and retain Huron Consulting. Under the agreement between DL and Huron, the services will include: Fresh-Start reporting, valuation consulting, and most importantly, adjustments to the financial projections and disclosures.

This type of situation in bankruptcy is common and should not raise much concern. However, you should be aware that DL's financial projections and disclosure statements will likely change. Once DL employs Huron, it will review the financial projections and adjust the projections and disclosure statement to more accurately reflect the value of DL. This will be a factor in determining whether DL was overly optimistic in its original valuation.

 

[Alice Cramden]

DL applied to the Bankruptcy Court today to employ and retain Huron Consulting. Under the agreement between DL and Huron, the services will include: Fresh-Start reporting, valuation consulting, and most importantly, adjustments to the financial projections and disclosures.

This type of situation in bankruptcy is common and should not raise much concern. However, you should be aware that DL's financial projections and disclosure statements will likely change. Once DL employs Huron, it will review the financial projections and adjust the projections and disclosure statement to more accurately reflect the value of DL. This will be a factor in determining whether DL was overly optimistic in its original valuation.

You raised an interesting point about the valuation.


"If" DAL was + or - on their own valuation, they have the books, the plan, the inside information. Seems they wouldn't make the claim if they didn't have the numbers to back it up. My question is...how can LCC make claims that DAL is off on the valuation? LCC hasn't had a look at the books.

Surely LCC had to have some actuaries to work from, but I would think DAL had better actuaries. My guess is Parker is 'shooting from the hip'.

FWIW, Huron has only been in business since 2002. A young company to be doing such an important task...kudos to them for landing the project. Seems like they know their stuff.

Thoughts?

Alice Cramden

 

[Gilding the Lily]

You raised an interesting point about the valuation.


"If" DAL was + or - on their own valuation, they have the books, the plan, the inside information. Seems they wouldn't make the claim if they didn't have the numbers to back it up. My question is...how can LCC make claims that DAL is off on the valuation? LCC hasn't had a look at the books.

Surely LCC had to have some actuaries to work from, but I would think DAL had better actuaries. My guess is Parker is 'shooting from the hip'.

FWIW, Huron has only been in business since 2002. A young company to be doing such an important task...kudos to them for landing the project. Seems like they know their stuff.

Thoughts?

Alice Cramden

Yes, Kudos to Huron... good fees for its services. But I think Huron was chosen, in part, because it is likely one of the only non-conflicted companies left that is able to do such valuations. DL filed for bankruptcy before the recent bankruptcy reforms that allow investment banks to do work on partially-conflicted deals. Nonetheless, kudos to Huron.

Yep, obviously US would not have access to all the up-to-date information that DL management has regarding the valuation. US is not at a total loss though; because of the bankruptcy, and the hundreds of filings, US was able to abstract significant information (such as assets, liabilities, financing, ball-park liquidation range, etc.) Combine that info with the info that is inherent in running an airline (fuel hedging, fixed cost for similar assets, etc) and Parker would have a general idea of what he thinks the accurate value is. Of course, this information pales in comparison to the info that DL has.

I think we will see the original valuation drop a few points; but DL will not say that it overvalued the airline. Rather, DL will say that its valuation has changed now that it has a better estimate of the claims against the estate.

 

[Alice Cramden]

I think DAL's valuation will go up....

IF DAL's valuation does go up, where does that leave LCC? Do they have enough money to up the ante? Or have they been blowin' smoke only to boost their stock price?

Take a look at the lastest SEC 8K. LCC is down 13.9 % on international flights and almost 3% on enplanement. Interesting.

Time will tell....and so will the stock market!

Alice

 

[eckoa6]

I think DAL's valuation will go up....

I'm sorry but there is no way for delta to bring up there valuation as that will discredit there management beyond belief. Most of the analyst are already laughing at Delta for the 15 Billion valuation. If they try to raise it that would then mean that Delta would be worth more than US, United, AA, CO and mabey even NW depending on the number they come out with. I'm sorry but Delta is in no way worth more than every major carrier (sans WN)

 

[luv2fly]

Most of the analyst are already laughing at Delta for the 15 Billion valuation.

I think you are the one artificially inflating the estimation. The last official estimate stands at 9.4 to 12 billion. Not 15 billion.