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Airlines, will they survive? #5429008 05/14/20 10:44 AM
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Alfred_B Offline OP
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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.

Re: Airlines, will they survive? [Re: Alfred_B] #5429015 05/14/20 10:49 AM
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javacontour Offline
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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.


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Re: Airlines, will they survive? [Re: Alfred_B] #5429023 05/14/20 10:56 AM
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Alfred_B Offline OP
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. I'm concerned about the value of common stock becoming worthless

Re: Airlines, will they survive? [Re: Alfred_B] #5429030 05/14/20 11:03 AM
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Wolf359 Offline
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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.

Re: Airlines, will they survive? [Re: Alfred_B] #5429033 05/14/20 11:10 AM
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Mr Nice Offline
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Yes. They will survive after restructuring is done.

It won't be pretty..... but lots of cuts will have to be made.

Re: Airlines, will they survive? [Re: Alfred_B] #5429037 05/14/20 11:12 AM
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Barkleymut Offline
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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.


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Re: Airlines, will they survive? [Re: Alfred_B] #5429044 05/14/20 11:22 AM
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Barkleymut Offline
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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.


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Re: Airlines, will they survive? [Re: Alfred_B] #5429057 05/14/20 11:36 AM
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NO2 Offline
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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.

Re: Airlines, will they survive? [Re: javacontour] #5429077 05/14/20 11:54 AM
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ecotourist Offline
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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.


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Re: Airlines, will they survive? [Re: Alfred_B] #5429092 05/14/20 12:11 PM
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ragtoplvr Offline
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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

Re: Airlines, will they survive? [Re: Alfred_B] #5429099 05/14/20 12:21 PM
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Astro14 Offline
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We’ve been talking about this for a while.

Take a look here:

https://www.bobistheoilguy.com/forums/ubbthreads.php/topics/5400880/1

This thread is a duplication, of that discussion, so, I encourage you all to read through that one.

Last edited by Astro14; 05/14/20 12:22 PM.

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Re: Airlines, will they survive? [Re: Alfred_B] #5429160 05/14/20 01:43 PM
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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.


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Re: Airlines, will they survive? [Re: Alfred_B] #5429227 05/14/20 03:38 PM
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ZZman Offline
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Of course. How could they not?


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Re: Airlines, will they survive? [Re: Alfred_B] #5429252 05/14/20 04:02 PM
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nickaluch Offline
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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.


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Re: Airlines, will they survive? [Re: Alfred_B] #5429298 05/14/20 05:18 PM
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fdcg27 Offline
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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.


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