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Airlines - Which Survive Without Going Through Bankruptcy
Old 04-27-2020, 11:41 AM   #1
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Airlines - Which Survive Without Going Through Bankruptcy

No doubt they have beaten down at some point the demand for travel will increase.

That being said which of the airlines is likely to make it through without going through bankruptcy.
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Old 04-27-2020, 11:52 AM   #2
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In the U.S., the bigger they are, the more likely they will survive - United, American, Southwest, American, Delta.

The ones least likely will be the smaller, more regional airlines.

Here is one perspective on survival: https://www.airfarewatchdog.com/blog...vid-19-crisis/

The article at the link breaks down its opinion on survivors, on-the-fence, ones that may dissolve, and the potential for consolidation and mergers:

Quote:
However, weíve never seen anything quite like the drop in passenger demand that the coronavirus (COVID-19) has brought to the industry. In recent years, weíve seen many airlines come and go, along with several airline mergers following the recession in 2008. If history tells us anything, itís highly likely that we will see more consolidation and mergers following this economic downturn
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Old 04-27-2020, 01:24 PM   #3
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Originally Posted by jollystomper View Post
In the U.S., the bigger they are, the more likely they will survive - United, American, Southwest, American, Delta.

The ones least likely will be the smaller, more regional airlines.

Here is one perspective on survival: https://www.airfarewatchdog.com/blog...vid-19-crisis/

The article at the link breaks down its opinion on survivors, on-the-fence, ones that may dissolve, and the potential for consolidation and mergers:
All the ones you listed will survive, but some will be going through the bankruptcy process along the way - most likely American will be first. Delta may come after that.
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Old 04-27-2020, 01:40 PM   #4
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All the ones you listed will survive, but some will be going through the bankruptcy process along the way - most likely American will be first. Delta may come after that.
They will use it to clean things up as they did after 9/11..my brother who works in Delta ground opps..had his pension frozen as a result of the last one.. They always forget to mention this when they brag about "employee profit sharing bonuses".
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Old 04-27-2020, 04:20 PM   #5
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Southwest has the strongest balance sheet so I bought some last week and will load up more pending earning result tomorrow.
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Old 04-27-2020, 04:25 PM   #6
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Old quote: "If you want to make a small fortune in aviation, start with a large one." I'll stick to index funds.
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Old 04-27-2020, 04:28 PM   #7
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Southwest has the strongest balance sheet so I bought some last week and will load up more pending earning result tomorrow.
They're all dangerous at this time.

Southwest has the biggest exposure, expenses, and risks at this time related to the 737MAX - the company has staked it's future on the plane.
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Old 04-27-2020, 04:52 PM   #8
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Old quote: "If you want to make a small fortune in aviation, start with a large one." I'll stick to index funds.
For years and years Buffett steered clear of the airlines because he lost so badly with US Air decades ago. He said over and over how terrible the business was and he would stay clear of the sector. Fast forward a few years, and he's breaking his own rules. A few weeks ago, he was unloading Delta shares at a hefty loss. He has stakes in a number of airlines at this time, and is losing badly on all of them.

Here's a list of the airline holdings of Berkshire as of Dec 31:

Airline Shares Value (12/31) Value (4/27)
American 42,500,000 $1,218,900,000 $425,850,000
Delta 70,910,456 $4,146,844,000 $1,571,375,704
Southwest 53,649,213 $2,895,985,000 $1,561,728,590
United 21,938,642 $1,932,575,000 $548,466,050
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Old 04-27-2020, 05:37 PM   #9
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In the best of times, airlines are marginally profitable for the extremely capital intensive business they're in.

And it'd be the last industry I'd want to invest in because so few really do a good job at what they do. Think about the customer ratings and opinions of most of the big legacy carriers.

Looks like Virgin Atlantic may be shutting down. Norwegian Air Shuttle's on life support right now. And a number of European carriers have gone out of business in the last year.

And that was before the airline business has essentially been shut down for health reasons.

I was looking at the U.S. map of airplanes in the air last night. Within 150 miles of me, there was a medivac helicopter in the air, and not a single airplane of any kind was up. That speaks badly of the industry. I checked on a famous industrialist's tail numbers of his Gulfstream 450, and that plane has not been flown in two weeks.
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Old 04-27-2020, 10:54 PM   #10
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Yesterday I saw a plane flying towards Ohare airport, it was the only one I saw or heard that day...
Normally I can look up and see 1 -> 4 planes heading there.
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Old 04-28-2020, 12:00 AM   #11
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I've never viewed airlines as anything more than a trade, other than Southwest.
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Old 04-28-2020, 04:39 AM   #12
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I don't have much concrete information to add here but, having been on an airplane a few times each month for almost my entire 32 year career, I really don't like airlines a whole lot. It's a tough business....watched many come, go, merge, bankrupt, you name it. I'm staying away....I will concede that there is likely some big money to be made if you select the right ones. Doing serious analysis of the financial strength of one vs. the other will help, but the way I see it, luck will play just as important a role. As it is so often said, "It's better to be lucky than good".
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Old 04-28-2020, 05:41 AM   #13
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Depends on how long this episode goes on. I hope they fare well but some states reopening doesn’t mean we’ve seen the light at the end of the tunnel. If there’s a brutal second wave, this could go on much longer than many think - again I hope not. There’s so much we still not sure about regarding SARS-CoV-2.
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Old 04-28-2020, 06:38 AM   #14
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Originally Posted by Sunset View Post
Yesterday I saw a plane flying towards Ohare airport, it was the only one I saw or heard that day...
Normally I can look up and see 1 -> 4 planes heading there.



I am close to Midway air port, no more early morning noise from planes
lately.
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Old 04-28-2020, 09:46 AM   #15
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This morning Southwest filed to issue 55 million new common shares plus $1B in senior convertible notes.

It's guaranteed that they will also post a big loss in Q2...if your load factor is at/below 10%, there's no reason to be flying - every flight is a money loser.

11:41 AM EDT, 04/28/2020 (MT Newswires) -- Southwest Airlines(LUV) warned that operating revenue could plunge up to 95% in May after a drop of a similar magnitude in April amid sharp decreases in bookings that hit results for the first quarter as the COVID-19 pandemic took hold.

Demand dropped off and the carrier said it sees operating revenue down 90% to 95% this month and again in May. Available seat miles, the measure of capacity, are seen sliding 60% annually in April with a load factor of just 6%. Capacity is poised to drop 60% to 70% in May, with a load factor of 5% to 10%.

"The revenue environment remains uncertain, and the company is unable to reasonably estimate trends beyond May 2020," the Dallas-based airline said on Tuesday.

===

Moody's Assigns Baa1 Rating To Southwest Airlines' New Convertible Senior Notes Due 2025; All Ratings Are On Review For Downgrade
DOW JONES & COMPANY, INC. 11:49 AM ET 4/28/2020
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Old 04-28-2020, 10:19 AM   #16
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If an airline goes bankrupt or merges there go affiliated credit cards.
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Old 04-28-2020, 10:27 AM   #17
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Airlines are pretty high on my stay away from list.

IMO a Bankruptcy pool in potential order of likelihood of sectors getting culled down in size - and which will be avoided in my tiny but personal investing largesse of individual stocks or bonds.

Energy, Oil Exploration, suppliers and rail freight.
Retail Department stores, malls and commercial real estate overall
AIRLINES (only the majors survive and are badly mauled for 3-4 years)
Cruise Lines
Hotel Chains
Car Rental agencies
Restaurant chains
Movie Theaters
Heavily indebted amusement parks
Municipal bonds lacking general revenue taxation
Ship building (Tankers, cruise and freight)
Civilian (small) Airplane manufacture and suppliers
Steel makers
Residential real estate
and hopefully we don't get here again - Financial Institutions
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Old 05-02-2020, 04:58 PM   #18
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Live from the Berkshire Hathaway shareholders meeting, Buffett just said they have sold their entire holdings of all of those airlines mentioned in my post above.

Yes, they took a huge loss, which he admitted and took responsibility for.
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Old 05-03-2020, 02:07 AM   #19
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Quote:
Originally Posted by njhowie View Post
Live from the Berkshire Hathaway shareholders meeting, Buffett just said they have sold their entire holdings of all of those airlines mentioned in my post above.

Yes, they took a huge loss, which he admitted and took responsibility for.
FWIW. Adding to njhowies insights.
WB seeks value investment opportunities as I’m sure history reflects.

Ive heard of airlines referred to as busses in the sky.
I’d never invest in ‘greyhound’.
But that’s me.

Good luck & best wishes......
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Old 05-03-2020, 07:52 AM   #20
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Live from the Berkshire Hathaway shareholders meeting, Buffett just said they have sold their entire holdings of all of those airlines mentioned in my post above.

Yes, they took a huge loss, which he admitted and took responsibility for.
He lost 5 billion on those trades. Berkshire total worth is something like 500 billion (from shareholders meeting yesterday), so that is a 1% loss.

My NW was down a lot more than that in the month of March and April.
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