Airline deathwatch: place your bets, please
Now that Frontier Airlines has filed for bankruptcy protection, it’s time to get serious about a game we bloggers haven’t played since 2002. It’s called airline deathwatch.
I’ve hinted at it in my MSNBC column, as have columnists like Scott McCartney and my blogging colleague Jeanne Leblanc. But now it it’s time for all of you to join in the fun.
Place your bets, please.
United Airlines. Business is down, fares are up. Is the end near? (Odds: 1,500 to 1)
American Airlines. The world’s largest air carrier has been paralyzed by inspection-related cancellations this week, including more than 500 flights today. Compensating passengers will cost it millions. Is it enough to push it into bankruptcy? (Odds: 1,000 to 1)
AirTran. Its top executive is overpaid, it recently added surcharges for a second checked bag, and its core customers — budget travelers — are becoming even more penny-pinching. Can high ratings save it? (Odds: 50 to 1)
Alitalia. Deal to rescue ailing Italian carrier fell apart last week. Is the end near? (Odds: 6 to 1)
Sun Country. This struggling airline replaced its CEO, furloughed 30 percent of its pilots and is facing an embezzlement scandal. (Odds: 2 to 1)
What do you think? Am I missing any other candidates? Spirit Airlines? Delta Air Lines? Northwest Airlines?
Step right up.
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22 Responses to “Airline deathwatch: place your bets, please”
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Isn’t United on permanent life support?
Spirit has got to be up there — they’re even more dependent on budget and leisure travelers than Airtran (which, by the way, I think will survive).
Also throw Virgin America up there — their load factors just aren’t cutting it, even with new, relatively efficient aircraft.
Finally, MidwestExpress probably deserves to be up there, though given its partial ownership by NW, that may be unlikely.
[...] to Chris Elliott on his blog here are his current odds: United Airlines. Business is down, fares are up. Is the end near? (Odds: [...]
I’m sad to see Frontier has filed for bankruptcy protection. When I’ve flown that airline, they always had pleasant flight attendants and clean aircraft. I hope they are able to resolve their financial troubles and stay in the business.
The reason why Frontier filed should be of interest to everyone here:
“The low-fare carrier said it was forced into bankruptcy after its principal credit card processor said it would begin withholding a greater share of proceeds from ticket sales.
The Chapter 11 filing in U.S. Bankruptcy Court in New York prevents the credit card processor from increasing its “holdback,” Frontier CEO Sean Menke said.”
As I have said in prior posts, the credit card processors and issuers hold back a portion of advance purchase revenue until they are certain the passenger is going to get to travel so they do not have to refund the money.
I’m pretty sure there is probably an insurance market like reinsurance for this market for the banks - maybe not anymore after the recent defaults on bond and other ‘industrial’ insurers -= which would lead to the issuers raising the amount they hold back.
Is there a reason you didn’t mention Virgin America? I can certainly see a defense as to why they wont go under but think there is a pretty good argument as to why they could fold given the current situation as well.
Allegiant probably deserves to be considered as well.
While this one is obscure, Olympic Airlines can’t last much longer. They are (or were, anyway) the national carrier of Greece. The EU has ruled that the government of Greece was illegally subsidizing the airline, and while the subsidies have since stopped, it was also ruled that the airline needs to pay the subsidies back. They have no money to do so. Attempts to find a buyer have been unsuccessful, and they have been having their lunch eaten by the relative upstart of Aegean Airlines.
SirWired
Since you’re making book, I’d like an exacta box of SunCountry and Alitalia, with a separate bet on the as-yet-unnamed Mesa. A small side bet on Virgin America for the long-shot.
Do the odds reflect chapter 11 filing, or liquidation? After all, Frontier is still flying.
Gambling is illegal, Chris. ;)
I predict Southern Skyways, a recent startup flying between no-name
airports (except Denver). won’t make it to Christmas.
Mesa. Stock at $0.67, lost nearly 20% of their business which was with Delta, shaky situations in both China and Hawaii, three draining lawsuits (HA, AQ and DL).
Only possible salvation is the 58 planes we believe they own which will likely soon be leased-back.
I’ve been repeatedly posting on their precarious situaiton on my blog.
I doubt AirTran would go any place any time I have flown with them they have always been friendly and clean. Also anytime I fly with them the plane is always full.
Mark, you’re right, gambling is illegal. But I’m not gambling — just offering some uninformed conjecture for entertainment value. Yeah, that’s it …
Virgin won’t go down. Owner Branson has too much money. 4 or 5 billion pounds or so. The Air Colbert may be down due to maintenance, but Branson’s in for the long run.
Mesa, fo’ sho’!
I see that Champion, a Northwest subsidiary charter carrier, will cease operations at the end of May.
Speaking of gambling, add my vote for Allegiant. They fly gas guzzling MD-80s and depend on Las Vegas tourism. It would be interesting to see if LAS visitor numbers are down. (LA-LAS traffic on I-15 is noticeably lighter.)
Express Jet- They should have a good presence here in So Cal, but the typical reaction is “who??”
Frontier- I heard they were removing 24 (of 62) aircraft from their fleet. It’s hard to confirm. If true that’s almost a 40% reduction which sounds like a last ditch pullback.
On a happier note I predict Alaska will do OK. Good fares, not much competition on many routes, modern fleet, acceptable service, a lot of loyal customers. Could be a takeover target though.
I have been hearing rumors that Southwest is going to be the next.
[...] Link: Elliott.org [...]
[...] will be next to fall? Chris Elliott may be making book on which airline will fold next, but it won’t be Virgin America. (I put an exacta box on [...]
I’m placing my bet on Silverjet, and if Mark Ashley is taking parlay bets, I’ll parlay that with Sun Country.
Though several people above have mentioned Allegiant, the airline is consistently profitable, and will continue to be so. It’s not so much an airline as a travel packager that owns an airline. It has virtually no competition (I believe they have nonstop competition on fewer than 10 of their routes), and generates something like 15% of their revenue from anciallary sources. They’ve done an amazing job.
AirTran will also be fine — solid cash position, though for whatever reason it’s gotten wrapped up in the Frontier situation, which is completely different. And with Delta focusing on the merger, I think they’ll be able to strengthen their position at ATL.
[...] latest bankruptcy comes just two weeks after Chris Elliott suggested reviving the “deathwatch list.” EOS wasn’t on the last list’s radar screen, but then again perhaps we need more [...]