As anyone with even passing familiarity with the commercial airline industry is certainly aware, the last decade was extremely challenging for airlines. The result is that there have been 14 chapter 11 filings by large commercial airlines between TWA's 2001 filing and Mesa Air Group's 2010 filing:
- TWA (2001)
- United Airlines (2002)
- US Airways (2002)
- Hawaiian Airlines (2003)
- Aloha Airlines (2004)*
- ATA Airlines (2004)
- US Airways (2004)
- Delta Air Lines (2005)
- Independence Air (FLYi) (2005)
- Northwest Airlines (2005)
- ATA Airlines (2008)
- Frontier Airlines (2008)
- Skybus Airlines (2008)
- Mesa Air Group (2010)
* Aloha filed a second set of chapter 11 cases in 2008, but the cases were subsequently converted to chapter 7 liquidations. As such, the 2008 cases have been excluded from our analysis.
What can creditors and/or shareholders in AMR and Global Aviation learn from the outcomes of these earlier bankruptcies? While the outcomes in those cases do not determine the outcomes in the current cases, the results are instructive and do not paint a particularly rosy picture.
In the two infographics below, we have summarized the recoveries that general unsecured creditors and equityholders received in the 14 chapter 11 cases listed above. It should be noted that some unsecured creditors in each case would have received payment of their claims through first-day orders, assumption of contracts and associated cure payments, or other means that would likely have significantly exceeded the treatment of claims under the plan of reorganization. We have not attempted to quantify the impact of those payments on average creditor recoveries.
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Methodology: To determine the estimated recoveries that creditors received in each case, we have utilized the debtors' own estimates of creditor recoveries from the final, court-approved versions of their disclosure statements. Where the disclosure statements provided a range of potential recoveries, we have used the mid-point of the range. Alternate payment ranges for creditors making a convenience class election have been ignored.
