Airlines, will they survive?

Status
Not open for further replies.
Messages
3,016
I'm trying to see if at some point in the near future investing in blue chip airlines. At this point I'm not sure all of them will be able to avoid bankruptcy, even with the bailouts they have received. I think South West Airlines may survive but am not very confident. What do fellow bitogers think? This about owning stock, I want to avoid the value of my investment becoming zero.
 
Messages
11,290
Bankruptcy doesn't mean they disappear. Bankruptcy means they get a chance to figure out how to pay their debts. It often holds off creditors and a payment plan is agreed upon in the courts. Some MAY disappear instead of reorganizing. Creditors would rather get paid, even if later, than not, so they tend to work with the debtor to restructure the debt. Even the creditors don't want the airlines to disappear. They want them to figure out how to pay off the debt. That cannot happen if they go out of business.
 
Messages
8,815
If they can survive, it just means they're going to have to charge more per plane ticket if the most they can sell is 60-70% occupancy.
 
Messages
24,440
Yes. They will survive after restructuring is done. It won't be pretty..... but lots of cuts will have to be made.
 
Messages
2,895
Why invest in airlines when there are sectors of the economy that are expected to survive and even thrive? I love Ford cars and trucks but I would not put 1 penny in F stock right now, the next few years for the auto industry could be really tough....same with airlines. On the other hand, MSFT, GOOG, AMZN, drug companies, food companies, etc should do just fine regardless of how long we have to live with this virus.
 
Messages
2,895
yeah, I remember a couple of politicians saying they wanted an end to air travel.....just wait until they realize it takes days to drive from LA, Denver, or Seattle to DC.
 

NO2

Messages
938
Airlines are a great wealth destroyer, and stock purchases are speculative. You have a huge upside if conditions improve rapidly. I would only invest with money you can afford to lose.
 
Messages
1,658
Originally Posted by javacontour
Bankruptcy doesn't mean they disappear. Bankruptcy means they get a chance to figure out how to pay their debts. It often holds off creditors and a payment plan is agreed upon in the courts.
Likely true. But in a bankruptcy the investors/stockholders come after lenders (the banks) and bond-holders and generally lose their money. If Warren Buffet is selling I wouldn't be buying, not at this time anyway.
 
Messages
1,825
The value of the stock held by the BOD and executives should be cancelled first. Including any future payments held in escrow etc. That is supposed to be incentive to do a good job, If that is not enough then the rest of the stock should be canceled. The company can go to debtor in possession financing. It is only released when the bankrupts is complete. Cancelling the BOD and executives stock first never happens The stock should become worthless before any of the debtors are not paid. We have been legally stiffed by several companies via bankruptcy, and I know the executives did OK on on of them AND their stock was not canceled. Rod
 
Messages
15,885
If you want to avoid value becomes zero you can't take on too much risk, and right now buying airlines stocks is a speculation with high risk and high reward.
 
Messages
629
I wouldn't touch airline stocks. Some airlines will survive some won't. Government won't let all go out of business we do need them to move forward. I just don't see corporate America buying tickets for business travel most are broke now and vacation flight's I don't see rebounding anytime soon. Airlines is a very tough business. Trump airlines didn't last to long just saying.
 
Messages
17,302
Originally Posted by Alfred_B
I'm trying to see if at some point in the near future investing in blue chip airlines. At this point I'm not sure all of them will be able to avoid bankruptcy, even with the bailouts they have received. I think South West Airlines may survive but am not very confident. What do fellow bitogers think? This about owning stock, I want to avoid the value of my investment becoming zero.
It's not so much a matter of whether as which. Southwest is probably a good bet for survival without a trip through bankruptcy court which would kill shareholder equity. I have my favorite candidate for Chapter 11 just based on balance sheet fundamentals. Still early days, though. I expect airline stocks to decline farther before any real rebound. Airlines provide a vital service. The question is just how much of that service will be met with what some economists call felt demand. Others would argue that there is no distinction and that demand means no more than people being willing to spend their money on the service.
 
Messages
134
An educated guess, First; in a bankruptcy the investors always get hurt. I have painful financial scars to prove this maxim. Second; short term the airlines are going to contract, stockholders will pay the freight. Travelers will be reluctant to go to an airport and get on an airplane for a short flight. Too much risk. Instead they will opt to social distance on the highway in their COVID-19 friendly POV for trips <2 days. Third; this increased reliance on surface travel will be a boon to all things related to cars like gasoline, tires oil etc. I'd move your money from commercial aviation to anything that produces petroleum. Life is going to change. We won't be returning to the status quo ante in our lifetimes. Adapt
 
Messages
1,837
In my not so humble opinion, one of the last areas I would invest in right now are the airlines. Now of course, they are dirt cheap. But we don't know when business will be back and I am pretty sure, it's going to be a long, long time. I see most of the carriers, as in over 50% going bankrupt. Lots of fixed costs and revenue down huge. Couple weeks back I read they were flying just 7% of their flights.
 
Messages
3,016
I guess I'll wait until the first and second bankruptcy and assess the ones remaining as to who will survive. I made the mistake of thinking Does was going to follow FCA and GM and didn't buy some F stock at lower $1 per share in 2009
 
Messages
13,605
This is not investing but speculation and dangerous too. When a company goes bankrupt their stock bottoms and will get delisted. That is before the company reissues new stock. You would be stick with worthless shares. Most of the airlines will restructure and continue on. There may be one major that doesn't survive as it is now. Which one? I'll let you guess. If you really want to invest, buy broad based index funds or ETFs.
 
Messages
1,079
How many of you that are worried about "common stock" becoming worthless continue to buy General Motors vehicles after 2008?
 
Status
Not open for further replies.
Top