Cyio

You can't just file for BK arbitrarily. This company has 5-6 billion in cash sitting around. What reasoning would persuade a judge to ignore that fact and wipe out a contract?

Mozam

Do not underestimate this place. They did quite well burning almost 2 billion in 5 days . I have full confidence that this place can burn 6 billion in a blink of an eye .

REF 5

Closer to 11 Billion. Doesn't matter. They have close to 3 billion in finance debt due in 2025. Which I think is what Elliott holds. That can be converted to stock. Net cash was what you need to watch. So cash next year will dwindle but net cash should stay about the same...hopefully.

sailingfun

You also have to make certain the airline is not worth more dead than alive. The cash can be pocketed and assets sold if they offer more value. Managements really don't like filing chapter 11 as you lose control of the airline. The judge and creditors committee control the airline. Delta was one vote on the creditors committee from going away. Fortunately Parker was so sure he had the vote sewed up he failed to appease Boeing and lost.

VDemerest

At this level, a bankruptcy filing is not about having cash on hand and in the essence of the Federal Code, Chapter 11 filings have not been about a lack of cash on hand in decades. A Chapter 11 filing focuses more on revolving debt, debt-to-asset ratio, future financing committments, credit facitlites, asset lease/purchase aggrements and those valuations rather than the simplistic term of "cash on hand". AA, CO, DL, HP, NW, TW, UA, and US all filed Chapter 11 with millions upon millons of dollars in the bank; cash on hand is, in simplistic terms, considered a short-term asset and not typically indicitive of the complete reasoning and nature of the filing. (When Republic filed in 2016, they had MILLIONS in the bank and were essentially operating in the black were it not for interesting accounting used by Bedford and Wexford -- but that is a discussion left to another time. However, it was the last Chapter 11 filing in the industry for a large, 121 operator and was precedent-setting).

In prior Chapter 11 proceedings, you will note that the employee barganing units are present at more status conferences and hearings than suppliers or vendors. As labor is the number one expenditure on every airline's balance sheet, and pilots being at the top of that expenditure list, the presiding Jurist places much focus on the negotiations between the company and labor groups to arrive at a conensus as to pay rates and work rules. In every Chapter 11 filing of an airline, ALPA/AFA/IAM (and their equivalents) are "first at bat" so to speak.

You as an individual or a corporation can file for Chapter 11 relief at any time for any reason; it need not be related to a zero balance in the coffers. Furthermore, once filed, a company can utilize the Chapter 11 process to drive major changes at the organization and then motion the court to dismiss the proceeding, suspend the matter or convert it to a Chapter 7 or Chapter 13 filing. Given the playbook of Stephen Wolf and his protege Gangwal, and what they did to the workgroups at USAir, I suspect Gangwal's influence on the BOD will bring swift and unpalatable changes to the company before the year is out.

Maybe I'm wrong? Maybe Gangwal, at this stage of his life, is looking at this appointment to the BOD as something that will "get him out of the house" [his mansion next door to Bezos on Indian Creek Island]...maybe he thinks he can toy around with Southwest and garner a nice paycheck from diddling around on the Board of Directors...but my gut tells me, as does a little birdie in my ear, that part of Gangwal's appointment to the BOD is the first step towards major change that will not go over well with your workgroup or those of your coworkers.

Gangwal is dangerous, and, given my experience with him, he is no better than Frank Lorenzo in a Sherwani when it comes to labor relations. When change comes to the C-Suite and the 'Night of The Long Knives' happens in the Southwest management ranks, I hope the change is for the better.

CatPilot1

Any guess as to where these narrowbody Airbus are going to come from?

e6bpilot

I don't think that it is going to happen, but isn't Frontier majority owned by IndiGo? I think that's what this poster was getting at.

REF 5

In almost all cases of Ch 11 filings, it's usually pushed by credit card hold backs. Especially for airlines. The worse the finances are, the more likely the credit card companies will restrict the cash and businesses can't touch it to pay the bills. In the case of SWA, they have more cash than debt. Since Elliott is an equity investor, their whole investment will be lost. SWA has a boring balance sheet, small operating margins and decent cash flows. I don't even think they have credit card hold back at all, if ever. We'll see what the 2nd quarter brings in a couple of weeks.

Avroman

Mesaba had $120 Mil in the bank in October 2005 that they transferred to Mair Holdings. A few days later, they "missed" payroll when NWA "missed" thier payment because NWA was already in CH11 a couple weeks earlier (convienently they didn't miss paying Pinnacle) and wham Mesaba files CH11 and starts parking Avros.

CatPilot1

The airline and the PE firm have no relationship.