bankruptcy

Tag Archives for bankruptcy.

$10 Billion Embezzled From Bankrupt Airline Group

by Gary Leff on January 31, 2021

Jan 31 2021

China’s HNA Group began with Hainan Airlines and then acquired brands like Radisson Hotels; airline caterer Gate Gourmet; 25% of Hilton; nearly 10% of Deutsche Bank; and 29% of NH Hotels. They acquired stakes in Red Lion Hotels; Virgin Australia; TAP Air Portugal: South Africa’s Comair; Azul Brazil and much more. The company’s corporate structure sometimes makes it difficult to discern what they own, what they’ve sold off, and what they’ve merely sold to themselves.

Before the pandemic they worked to reduce a debt load that exceeded $100 billion by selling off assets, but continued to face problems paying for fuel, problems paying employees, and problems paying investors. HNA even offered investors airline airline tickets in lieu of interest payments.

Norwegian Drops All Transatlantic Flights, Liquidates Long Haul Subsidiaries

by Gary Leff on January 14, 2021

Jan 14 2021

Norwegian helped drive low cost transatlantic travel with its Boeing 787s, much to the chagrin of legacy carriers. British Airways even considered buying the airline in order to quash it as a competitor. Now it will focus on domestic and regional flying with its narrowbody aircraft.

None of this is surprising but it’s disappointing for consumers who benefited from the competition, whether they flew Norwegian or not.

Is American Airlines Still At Risk Of Bankruptcy?

by Gary Leff on December 31, 2020

Dec 31 2020

American is at a cost disadvantage relative to the industry. Management won’t want to seek a strategic restructuring. Chairman and CEO Doug Parker owns approximately 2.4 million shares of the airline’s stock. However American remains at greater risk of bankruptcy than rivals, that hasn’t ended with the close of 2020 (though vaccines improve the carrier’s prospects), and talk of bankruptcy risk certainly hasn’t been “nonsense” as veteran airline journalist Ted Reed claims at Forbes.

Frequent Flyer Miles Are The Only Reason United And American Haven’t Filed Bankruptcy

by Gary Leff on December 4, 2020

Dec 04 2020

How important are airline frequent flyer programs? United, Delta, and American Airlines have each mortgaged their frequent flyer programs for between $6.5 billion and $9 billion apiece. Stifel analyst Joe DeNardi says that without the ability to attract this cash, both American Airlines and United Airlines would be in bankruptcy.

Speaking on a panel at the Loyalty Summit online conference on Wednesday, DeNardi made this bold claim – but one that’s backed squarely by the numbers around cash burn and how much airlines have raised.

Airline Lobby Group Warns Something Entirely Normal May Happen If Governments Don’t Fork Over Money

by Gary Leff on November 22, 2020

depressed businessman leaning his head below a bad stock market chart

Nov 22 2020

The head of world airline trade group IATA says so far governments have provided subsidies to carriers totaling $160 billion. But that’s not enough and they believe governments need to hand over more.

And what’s the terrible thing that will happen if they don’t? Something that is entirely and completely normal and happens all the time during normal times: some airlines may go out of business. That’s ok.

Which Airlines Are At Greatest Risk Of Shutting Down Due To Covid?

by Gary Leff on November 3, 2020

Nov 03 2020

I’ve written that in the U.S. the major airlines at the most risk are American Airlines (by a wide margin) followed by United. American is likely to end the pandemic with over $45 billion in debt to service, far more than their next-closest competitor. And they underperformed the industry financially to begin with. Unsecured American Airlines debt is a risky bet over the coming years.

Looking at “liquidity, solvency, profitability, leverage and recent financial performance” Bloomberg ranked the 8 biggest airline insolvency risks. After significant subsidies, no U.S. or European airline makes the list.

The American Airlines Bankruptcy Scenario

by Gary Leff on October 8, 2020

Oct 08 2020

JP Morgan, in an investor note, says American Airlines would have to file for Chapter 11 bankruptcy protection if they get down to $8 billion in cash. The airline has shared its loan covenants require it to retain $2 billion in liquidity, but that’s not the trigger for a filing.

Court Blocks Government Aid To Bankrupt Avianca

by Gary Leff on September 13, 2020

Sep 13 2020

While the government announced the backing of a $370 million loan to the airline as part of its bankruptcy restructuring, a Colombian court has now blocked the government aid. This matters to Americans invested in the LifeMiles frequent flyer program, which provides access to cheap purchase of miles and reasonably priced awards on Star Alliance airlines.

American Airlines Employees Are Worried About Losing Pensions, Health Care In Bankruptcy

by Gary Leff on August 2, 2020

Aug 02 2020

What I keep hearing over and over from American Airlines employees is that they’re worried about bankruptcy. They’re reluctant to take early retirement, and are concerned about their pensions, because they’re afraid the promised money isn’t going to be there for them. And much of that is the fault of Congress as much as the airline itself.

After Winning Credit Card Disputes, Passengers Are Getting Bills From One Airline’s Trustee

by Gary Leff on July 4, 2020

Jul 04 2020

The advice when an airline goes bankrupt is to get your money back for future tickets from your credit card company. If a business doesn’t provide the services you paid for, your credit card company will get you your money back (usually).

German law has an interesting quirk though. Apparently people who pay for services they haven’t received are considered unsecured creditors in bankruptcy, and getting your money back via a credit card chargeback is considered ‘queue jumping’.