pete2800
'Member?
It's pretty easy to increase your load factor if you pull half of the seats out of your airplanes...
Great Lakes limps further
- Thread starter FloridaLarry
- Start date
jwp_145
GhostRider in the Sky
THis is a question I ask myself too.
In "Shygods", a book about PanAm by an ex-captain, he raises the same question... PanAm was losing over a million dollars a day for basically the better part of 15 years. How is it possible for companies like that to stay afloat for so long, and even more crazy, to find people stupid enough to lend them more money!
FloridaLarry
Well-Known Member
Buried in the fine print...
Each time GLA busts the requirements of their big loan covenants and enters into a modification, their interest rate on the big loans goes up, and the lender charges 'Bad Boy' fees. Last batch = about $365K.
Giving them rope but paying the hangman?
July traffic is up, but this is their higher season. Taking out seats does help the Load Factor numbers but not RASM, Revenue per AVAILABLE Seat Miles. Seats piled in the hanger are only available for tired A&Ps.
Pilots: 69 hired, 49 of whom are flying the line. They don't give attrition figures, but whaddya bet that's continuing. Any insider info on this?
Each time GLA busts the requirements of their big loan covenants and enters into a modification, their interest rate on the big loans goes up, and the lender charges 'Bad Boy' fees. Last batch = about $365K.
Giving them rope but paying the hangman?
July traffic is up, but this is their higher season. Taking out seats does help the Load Factor numbers but not RASM, Revenue per AVAILABLE Seat Miles. Seats piled in the hanger are only available for tired A&Ps.
Pilots: 69 hired, 49 of whom are flying the line. They don't give attrition figures, but whaddya bet that's continuing. Any insider info on this?
killbilly
Vocals, Lyrics, Triangle, Washboard, Kittens
The short answer is cashflow. If you hold the note on a failing company, they're worth more to you alive than dead because they are still servicing the note. PanAm had a lot of cashflow for a lot of years even if they weren't profitable.
It's the same reason why credit card companies don't want you to pay off the card.
jwp_145
GhostRider in the Sky
True, we studied this when I was an exchange student in a business/marketing school up in Vancouver. The question was asked how a company can keep losing money yet still continue. Basically, as long as they keep up to date on the interest, the lenders are willing to hold off on the note. I guess ideally this would go on for years, then if they ever do implode, the lender can write down the loss, all the while having made a substantial profit in interest.
At this point though, GLA has zero leverageable assets. Zero.
Any armchair QB ideas of how they might turn this around? I just don't see how they can make this next loan obligation. That's what killed Braniff... they had a MASSIVE loan obligation due on a certain date, and despite all efforts, they had no way of meeting it (this was before airlines figured out that they could shed all responsibility in CH11, and took the honorable way out in CH7 iquidation).
KSCessnaDriver
Well-Known Member
Convince a major to bring them on board as a regional FFD carrier. Other than that, no.
jwp_145
GhostRider in the Sky
That would have to come along with a massive cash infusion so that GLA could accomplish a great many things that are much needed... money that I'm sure no major wants to provide them. And now that they are a 135 outfit, do they still have and maintain their 121 cert?
I think the most likely outcome is that they are forced into liquidation by their creditors, the flight ops department is purchased for pennies on the dollar by another FFD carrier, and the 121 eligible pilots are rolled to the bottom of someones seniority list.
Inverted
mmmmmm wine
That would literally never happen. I will tell you who is a PERFECT cantidate for for buying GLA and taking over their flying is AMF.
hook_dupin
Well-Known Member
It's not cash on hand that's valuable... It's the assets and how those assets are turned into income that's important.
Many start-ups don't have $3M in the bank, but getting $30M isn't that hard....
In looking at a business, you have to separate how the business operates with how it is financed. This business lost $1.4M this quarter through operations and $200K through financing activities.
FloridaLarry
Well-Known Member
Loans: pay the interest (or vigorish) and 'Uncle Guido' is happy and you get to keep your kneecaps. Principal? Don't want no stinkin' principal.
GLA has both 121 and 135 certs. Some aircraft have seats pulled and some don't.
Time will tell whether they can pull it off. I expect their bankers will be happy either way: going concern to sell, or tons of fees & interest plus losses to offset gains elsewhere. That's why they're bankers!
GLA has both 121 and 135 certs. Some aircraft have seats pulled and some don't.
Time will tell whether they can pull it off. I expect their bankers will be happy either way: going concern to sell, or tons of fees & interest plus losses to offset gains elsewhere. That's why they're bankers!
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