AAL et alia - Bankruptcy Risk

kmiklas

kmiklas

What probability would you speculate that AAL will declare Chapter 11 by 2025? I’m not saying Chapter 7-sell-everything bankruptcy, I mean take-shareholder-money bankruptcy, aka “restructure,” and come back solvent.

I say probability (p) that one of the big airlines declares chapter 11 by 2025: p = 0.62

- I’m seeing headlines about flight attendants getting $hitcanned [1]
- their stock is in toilet, sinking deeper every day.
- I live near Newark airport in New Jersey USA and there’s few planes in the sky
- In 2001, when planes hit the towers, the airlines declared bankruptcy in 2006–about five years later
- I am not traveling. I wanted to go to Denver for a conference and a couple other places… not this year
- Flights are getting canceled all over. Horrible delays
- Masks on planes are intolerable
- With the oppressive security, masks, cancellations, etc Flying has become a rather miserable experience.
- People are simply not flying… and not planning to fly. They’re taking driving vacations.
- This is dragging on and on and on… they just announced that students in Newark NJ USA still must wear masks. [2]

What do you think?

Now the fun part: how to profit from these observations:

- Anyone have access to the Credit Default Swap price curve in a Bloomberg Terminal?
- If I were to short and/or buy puts, what happens to my instruments if they go bankrupt?

1. https://www.inc.com/bill-murphy-jr/...ing-revelation-heres-why-nobody-is-happy.html

2. https://newark.chalkbeat.org/2022/9...masks-mandate-covid-parents-ignored?_amp=true
 
Last edited:
Very low.

Some points on your post :

masks no longer required
Airline travel is at pre-pandemic levels, but planes and pilots were furloughed and now airlines can’t get them back.

airlines in 2006 were in trouble not because of 9/11 but because of high fuel and substantial competition and price wars. You should remember what Newark, jfk, and lga were like then.
consolidation has solved this while allowing for oligopoly pricing.

Airline service sucks but what are you going to do? Take a train?
 
kmiklas said:
What probability would you give AAL for going into chapter 11 by 2025?

Now the fun part: how to profit
More...

That situation seems too gambley, unknown, unpredictable, and far out there still.
You would have better luck and profit trying to predict/trade directional movement in the S&P with options, daily.

That's like placing a bet on the two teams who will be in Superbowl 2025? Who the fduck reasonably, realistically, knows at this point,
Way too many variables and elements to consider at this point in time, it's a completely futile attempt prediction,
 
Last edited:
newwurldmn said:
Very low.

Some points on your post :

masks no longer required
Airline travel is at pre-pandemic levels, but planes and pilots were furloughed and now airlines can’t get them back.

airlines in 2006 were in trouble not because of 9/11 but because of high fuel and substantial competition and price wars. You should remember what Newark, jfk, and lga were like then.
consolidation has solved this while allowing for oligopoly pricing.

Airline service sucks but what are you going to do? Take a train?
More...
- Can you cite a source on demand being in “pre-pandemic levels? Last I checked they were nowhere close. Reading balance sheets is cumbersome now on my phone, but I will compare 2019 to 2022 when I get home. Total revenue.

- 9/11 played a huge role in their bankruptcy. Some of those “fuel shortage” headlines were little more than horse drop. Nobody was flying!

- Whenever possible, I’m going to scrap the air travel, stay home and attend meetings remotely. Personally, take vacations only within driving distance.
 
MacBookProHo said:
That situation seems too gambley, unknown, unpredictable, and far out there still.
You would have better luck and profit trying to predict/trade directional movement in the S&P with options, daily.

That's like placing a bet on the two teams who will be in Superbowl 2025? Who the fduck reasonably, realistically, knows at this point,
Way too many variables and elements to consider at this point in time, it's a completely futile attempt prediction,
More...
Mmmm… I respectfully disagree. I think it’s on the brink of coming to a head. The “monkeyPox” headlines aren’t helping, and the election will play a big role, but generally air travel is in a deep hole, and bankruptcy is the easiest way out.

It’s an interesting bet!!
 
SunTrader said:
TSA checkpoint travel numbers (current year versus prior year(s)/same weekday)

https://www.tsa.gov/coronavirus/passenger-throughput
More...
Those numbers aren’t terribly useful. Too detailed, and I’m not sure of the relationship between TSA checks and airline profit. How many of those people checked actually bought tickets?

We really need financial numbers. Look at the balance sheets for AAL in 2019 vs 2022. SEC filings. I’ll look when I get home.
 
kmiklas said:
Those numbers aren’t terribly useful. Too detailed, and I’m not sure of the relationship between TSA checks and airline profit. How many of those people checked actually bought tickets?

We really need financial numbers. Look at the balance sheets for AAL in 2019 vs 2022. SEC filings. I’ll look when I get home.
More...
How many actually bought tickets?

Prolly about the same ratio for last year ... and the year before .... and

Sounds like you've made up your mind.
 
kmiklas said:
- I am not traveling. I wanted to go to Denver for a conference and a couple other places… not this year
- Flights are getting canceled all over. Horrible delays
- Masks on planes are intolerable
- With the oppressive security, masks, cancellations, etc Flying has become a rather miserable experience.
More...
What, you actually show ID at boarding? As long as you fly at night, check in as a migrant refugee, no jab, no mask, no cancellations, no delays, the security works FOR you and is helpful and polite. Gift cards, legal aid, social safety nets, etc available as parting gifts. americans! always complaining. Check the income statement and balance sheet? How they look. Maybe there's "pennies from heaven".

 
You must log in or register to reply here.
Back
Top