UAL to maybe buy CAL

[TechBoy]

And airlines have not been able to simply walk away from airplane contracts by the dozens, in case you didn't notice. AMR was able to walk away from so much of TWA's fleet because it was TWA's 3rd bankruptcy and it was pretty apparent to everyone that TWA would be liquidated.

WT was thinking about the same thing when I typed my previous statement that I am thinking now: airlines don't dump dozens of modern, marketable aircraft on their first bankruptcy because debtors would rather restructure debt than accept that many aircraft back. By #2 and #3, things change. US is the only airline that has even gotten to #2 and they seem relatively stable for the time being.

Now, within the context of the current industry restructuring environment, would you like to explain how NW or any other airline will succeed at dumping a significant portion of its modern, operating fleet?

I'm sorry, but you are just plain wrong on this.

First of all, US has terminated a large number of leases in its bankruptcy. Not sure how many exactly, but it was more than 50.

Second, both NW and DL have filed to reject large numbers of leases in their bankruptcies. Over 100 planes for one of them. Now I know that they intend to renegotiate many of these leases and keep the planes, but there is nothing stopping them from rejecting the leases if they choose to do so. So long as there is a business reason for terminating the leases, the judge is going to approve them.

Third, to answer your specific question, it's easy. Just file to reject the leases and get court approval. That's all it takes.

 

[767jetz]

There's plenty more where those came from but those are just off the top of my head.

World, I think the only nervous person on these threads is you. 1300+ posts, plenty of nervous UAL bashing, and a whole bunch of damage control on the DAL threads, especially when your beloved carrier entered bankruptcy. What are you so worried about?

Well said, ualdriver.

 

[WorldTraveler]

Business newbies and simpletons,
US was in its first bankruptcy; no one else is at that point. And US did not predominantly reject leases on new aircraft - in fact a cross section of aircraft. And DL and NW have filed to reject leases on dozens of aircraft because that is how leases are renegotiated. Let me see, on how many leased aircraft did UA reject leases? Just about all of them. And you lost just a handful of modern aircraft because a few lessors weren't willing to be shafted as hard as UA tried but the vast majority of UA's modern fleet is still intact. If you think bankruptcy is so easy and dumping dozens of fleets can be done on such a moment's notice, would you like to explain why UA has spent HUNDREDS OF MILLIONS of dollars in legal and consultant fees during its bankruptcy? And would you also like to post ratios of how many aircraft have been removed from the fleet when compared with the number of leases that were rejected?

I can post plenty of your posts which could easily be interpreted as representing paranoia but no one has accused you of that, me included. I think it's time for you two to do what you do best which is to fly airplanes. I've never questioned your ability on that regard. Making an intelligent business statement, yes.

And hundreds of my posts have been on other forums where their employees recognize the contribution I make. I'll also remind you that your own Mr. Tilton acknowledged that significant cost cutting would continue to be necessary at UA AFTER I posted extensively that UA's post-bankruptcy costs remained too high.

 

[TechBoy]

Business newbies and simpletons,

Name calling does not become you. I'm not sure what your qualifications are, but I'm a business executive with a J.D. and I know that I'm qualified to opine on this topic.

US was in its first bankruptcy; no one else is at that point. And US did not predominantly reject leases on new aircraft - in fact a cross section of aircraft. And DL and NW have filed to reject leases on dozens of aircraft because that is how leases are renegotiated. Let me see, on how many leased aircraft did UA reject leases? Just about all of them. And you lost just a handful of modern aircraft because a few lessors weren't willing to be shafted as hard as UA tried but the vast majority of UA's modern fleet is still intact. If you think bankruptcy is so easy and dumping dozens of fleets can be done on such a moment's notice, would you like to explain why UA has spent HUNDREDS OF MILLIONS of dollars in legal and consultant fees during its bankruptcy? And would you also like to post ratios of how many aircraft have been removed from the fleet when compared with the number of leases that were rejected?

First or second bankruptcy is irrelevant. The difference with UA is that UA wanted to keep most/all of the aircraft in question. They were largely engaged in an expensive game of chicken with the lessors to get better rates on their leases. In some cases, UA lost the game and the lessors took back the aircraft. In most cases, new lease terms were agreed to. But UA was not trying to return a huge number of planes. If they were, they would have spent far less on lawyers and negotiations.

Now go back and remember the point that you tried to make -- that NW couldn't give back a large portion of its leased fleet that wasn't compatible with AA's fleet in the event of an AA acquisition of NW assets. That remains incorrect. I don't know why you continue to defend the indefensible in this case. Even though you have a strong DL bias (just like the pilots have a UA bias), you often have insightful posts. Just not this one.

 

[FWAAA]

Business newbies and simpletons,
US was in its first bankruptcy; no one else is at that point. And US did not predominantly reject leases on new aircraft - in fact a cross section of aircraft. And DL and NW have filed to reject leases on dozens of aircraft because that is how leases are renegotiated. Let me see, on how many leased aircraft did UA reject leases? Just about all of them. And you lost just a handful of modern aircraft because a few lessors weren't willing to be shafted as hard as UA tried but the vast majority of UA's modern fleet is still intact. If you think bankruptcy is so easy and dumping dozens of fleets can be done on such a moment's notice, would you like to explain why UA has spent HUNDREDS OF MILLIONS of dollars in legal and consultant fees during its bankruptcy? And would you also like to post ratios of how many aircraft have been removed from the fleet when compared with the number of leases that were rejected?

WT: Techboy is right. You seem to misunderstand (and underestimate) the benefits to the debtor in a Ch 11 bankruptcy proceeding. The whole point is to slash costs in an attempt to continue as a going concern and if unable to do so, then to liquidate and pay off what creditors you can. I don't know why you disagree with the reality that Ch 11 provides debtors with the ability to walk away from expensive obligations they no longer see as beneficial, but that's the way it works.

My partners who practice in the creditors rights area (fancy-pants name for Bankruptcy Attorneys) would tell you that the reason UAL paid hundreds of millions of fees was in renegotiating the rejected leases, not in rejecting the contracts. Rejecting the leases isn't the expensive part. Once rejected (which the judge is almost always gonna allow), the airlines could simply walk away if they choose. But instead, they rejected the executory contracts and then tried to squeeze the lessors for cheap deals on the airplanes.

The fact that UA hasn't let go of hundreds of aircraft has nothing to do with the legal right of a bankrupt to do just that. I doubt that NW or DL is gonna trim their fleets by hundreds of airplanes, but you can be certain that both airlines will reject any leases in which the companies see some possibility of negotiating downward. And if the companies and lessors can't agree, then the airline has no continuing financial obligation to the lessor. That's the result of rejecting the leases under Section 365 of the Bankruptcy Code.

In short, NW is free to reject any and all leases if it determines rejection would benefit the estate. Expensive lease payments on relatively new aircraft are obligations that the bankruptcy judge is gonna allow the debtor to shed. Has nothing to do with whether the debtor is in round 1 or is on its third or fifth bankrutpcy.

 

[WorldTraveler]

Of course they're free to reject contracts and certainly can reject all the contracts they want but the practical reality is that the creditors do have tremendous say-so in the outcome of a bankruptcy and it is just about impossible to reject contracts on a large scale and expect the creditors to sign off on it because they get virtually nothing. Creditors would rather take even 50 cents on the dollar than get their assets back - and for most debtors that is an attractive enough option.

In reality, there are few companies that file for C11 and decide that they want to dramatically shrink the business and get out. Legally, they could shrink the business to a small fraction of its former size but C11 provides enough hope to companies that they want to try a fresh start. The 2nd and 3rd bankruptcy is evidence that a company is probably not capable of successfully restructuring since the odds of survival decrease with each filing and those odds are well known to all parties involved in bankruptcies.

Legally you are right. Practically I am.

 

[A737lvr]

I understand from the news that United Airlined is going to shut down. Chapter 7. Any updates?

 

[whlinder]

I understand from the news that United Airlined is going to shut down. Chapter 7. Any updates?

WorldTraveler has a news show now? Sponsored by FlyI?



No, United Airlines is not going to shut down.

 

[A737lvr]

WorldTraveler has a news show now? Sponsored by FlyI?



No, United Airlines is not going to shut down.

Why do you think that?

 

[FWAAA]

Why do you think that?

That was just whilinder's excellent sense of humor showing, poking fun at WorldTraveler. B)

 

[A737lvr]

Merry Christmas and Happy New Year, it should prove to be a very good one indeed and I certainly do hope that you have some good seniority in what ever position you hold...
....as for me, it'll feel much like the Hun of old felt, that is, after it's all said and done, I'm sure I'll be seeing you eventually.

UA / CAl. Just comments to drive stock prices up. I think.