Delta Airlines Chapter 11?

MichaelMeister said: "I've been trading for over a year now and have been doing very well. Lately I've concentrated on lower priced S&P companies and had the huge misfortune to buy quite a few shares of Delta (DAL) before the stock price started to plummet over all the Chapter 11 talk. For the first time since I started trading I'm not sure whether to hold onto the stock hoping that Delta will not file and the stock will rebound or...sell it now, cut my losses rather than waiting for the stocks to become worthless and lose a bundle. Anyone have thoughts on this?"

bobjitsu said: "[QUOTE=MichaelMeister]I've been trading for over a year now and have been doing very well. Lately I've concentrated on lower priced S&P companies and had the huge misfortune to buy quite a few shares of Delta (DAL) before the stock price started to plummet over all the Chapter 11 talk. For the first time since I started trading I'm not sure whether to hold onto the stock hoping that Delta will not file and the stock will rebound or...sell it now, cut my losses rather than waiting for the stocks to become worthless and lose a bundle. Anyone have thoughts on this?[/QUOTE] Personally I would sell, I got rear ended by Kmart this same way."

MichaelMeister said: "So I'm assuming K-Mart did not exchange new stock for old? I think even if Delta did issue new shares, their value would be significantly lower in addition to their trading off the NYSE. I did some calculating and although the loss would be significant, it wouldn't be devastating. I just hate to lose ya know? I'm batting around .850 for the year, and this would be the biggest loss I've had by far. :eek: Michael"

bobjitsu said: "[QUOTE=MichaelMeister]So I'm assuming K-Mart did not exchange new stock for old? Michael[/QUOTE] They just wiped out my stock and issued the new ones at $40. :mad:"

trickynick said: "As someone who works in an air-travel related field, I will tell you this. Eventually some of the major carriers are going to have to be allowed to fail. I see this point in time as the beginning of an era of the airline industry where there is just not going to be enough revenue to go around to support the number of large firms that have existed in the past and exist today. If this is correct than the question becomes which major airlines will survive and which will not? Delta doesn't appear to be a candidate for long run survival under these new conditions. They are a badly managed company that has only avoided Chapter 11 because of the money being loaned to them by General Electric from whom they have large amount of aircraft lease contracts. The mechanics are being rewarded very poorly for their efforts considering they have been saving the company's ass for many years due to the heavy maintainence way above competive levels Delta's aging fleet of aircraft require. So here we have an inefficient company, in a competitive troubled industry, with a balance sheet that looks like Jack the Ripper got a hold of it and falling productivity and labor disputes looming. Gee...ummm...sounds like the next IBM! :D Yeah, I have to say I'd be running for my life."

HappyHarry said: "The airline industry turns me off in every way."

bobjitsu said: "[QUOTE=HappyHarry]The airline industry turns me off in every way.[/QUOTE] Did I ever tell you about my USAir stock. Yikes."

Airelon said: "[QUOTE=MichaelMeister]So I'm assuming K-Mart did not exchange new stock for old? I think even if Delta did issue new shares, their value would be significantly lower in addition to their trading off the NYSE. I did some calculating and although the loss would be significant, it wouldn't be devastating. I just hate to lose ya know? I'm batting around .850 for the year, and this would be the biggest loss I've had by far. :eek: Michael[/QUOTE] If you're batting .850, then you're doing well enough. Then it becomes a matter of risk and money management, which I think is what you're looking at here yes? I've learned (the hard way) that "mental stops" always have a way of backing up, sliding more and more as time passes. Losses are inevitable. Fix a S/L solidly based off of risk and money management principles, and then let the trade do what it's going to do. I agree with the above posts in that you need to take a look at where you are going to exit this train . ."

HappyHarry said: "[QUOTE=bobjitsu]Did I ever tell you about my USAir stock. Yikes.[/QUOTE] I can't imagine! I flew on that "airline" last year. They need help bad :)"

trickynick said: "It's mostly the BIG airlines that are in trouble. Guys, check out Sky West (SKYW). Great value play, my position in them has done well so far."

MichaelMeister said: "[QUOTE=Dan]If you're batting .850, then you're doing well enough. Then it becomes a matter of risk and money management, which I think is what you're looking at here yes? I've learned (the hard way) that "mental stops" always have a way of backing up, sliding more and more as time passes. Losses are inevitable. Fix a S/L solidly based off of risk and money management principles, and then let the trade do what it's going to do. I agree with the above posts in that you need to take a look at where you are going to exit this train . .[/QUOTE] This was such an unusual trading situation. I've hardly deviated from my risk management procedures since I started, but for some reason, I ignored the abort price. Money lost (probably) and lesson learned. I've set my stop point to limit the loss on this one, but am still checking the news. On to better trades... I appreciate all the responses and feedback."

Liviu said: "I'm not a new investor but this is my first post on an investing forum. I was looking at Delta to invest/speculate but I think anyone who bets on Delta would have better odds betting on a horse race. Delta had a loss of over 5 [B]b[/B]illion last year! And I don't see how they can avoid going under. This is their fifth year in a row that they're in the red, they haven't made significant changes in the way they do business, and fuel prices are killing them. In addition, I think Warren Buffett would get nightmares from just a peak at their balance sheet. Someone mentioned GE loaning them some cash. That seems odd... I'm going to take a look at it. I'd guess it was a very short-term secured loan, right? Or does GE see something nobody else does? I shall see..."

HappyHarry said: "The airline industry just destroys investor wealth."

Liviu said: "For some irrational reason I keep checking up on Delta every day. :o Perhaps it's because of the speculative part of my brain. I noticed [URL=http://finance.yahoo.com/q/it?s=DAL]this[/URL] today though. Karl J. Krapek (director) bought 20,000 shares at $5.46/share back in February of this year. He spent [B]$109,200 [/B] out of his pocket! In addition, there's no insider selling within the last 6 months. Does this make sense for a company that's supposedly going bankrupt? Can anyone shed some light on this insider activity for me? It seems highly unlikely a director would throw away 100 grand just for the heck of it."

Liviu said: "According to Terry Trippler, an airline analyst, Delta may even liquidate! There's a link to the interview within [URL=http://www.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&guid=%7B746F2C96%2DE5FB%2D4BEC%2D9ED4%2DE2B2EC972043%7D]this[/URL] article. I'm still hoping someone will touch on my previous post as to why a director would spend over $100,000 to buy stock in Delta if Delta's prospects are so bleak."

AlfredSokol said: "Let's be realtistic, insiders can be idiots too. Sometimes they may have an overly bullish view of the company they work for."

chahinemm said: "the only reason they want to do that is to give the investor the impression that somthing good is going to occur and invest and us investors would follow them and pump the stock up in hope of the home run which = price skyroketing and they get out before we can say ooooffff and then we loose all our money,,, airline industry is big red dot dont even thing of coming close to it,,, chahine"

HappyHarry said: "Also, $100K is a pretty small investment for an executive. These guys usually make millions."

LanceJ said: "[QUOTE=Liviu]I noticed [URL=http://finance.yahoo.com/q/it?s=DAL]this[/URL] today though. Karl J. Krapek (director) bought 20,000 shares at $5.46/share back in February of this year. He spent [B]$109,200 [/B] out of his pocket! In addition, there's no insider selling within the last 6 months. Does this make sense for a company that's supposedly going bankrupt? Can anyone shed some light on this insider activity for me? It seems highly unlikely a director would throw away 100 grand just for the heck of it.[/QUOTE] Sure. That's easy. The airlines were doing really well, especially Delta, at the end of 2004. Then in January of 2005, we had a downward movement for the first 3 weeks or so of the month. The final week in January, there was a nice bounce. The bounce formed a nice upward trend from the November lows, a classic head and shoulders pattern. With the 50 day MA above the 200 day MA, the director thought his company would rally. Even J.P. Morgan's Jamie Baker, who had forecast a 2.5% to 3.0% decline, said in a research note that the November results should be sufficient to bring about "modest upside" to analysts' fourth-quarter forecasts. And then a January news story reads: "Delta Air Lines reportedly plans to roll out a nationwide expansion of the simplified fare experiment it's been conducting in Cincinnati." In which this quote appears: "Such an expansion could help Delta attract more customers -- the airline's chief executive has said simplified fares in Cincinnati caused traffic there to increase by one-third." Even Ross Snel reported on March 1, 2005: "At last, an airline industry attempt to offset high, profit-killing fuel prices with a fare hike is holding firm, providing welcome relief."... and "the industry's increases will bolster airline revenue, which has been under pressure from too much capacity and intense competition from the low-cost carriers." So I don't see anything strange at all about that insider purchase at that particular point in time. Keep in mind, hindsight is 20 - 20. A chart is a measure of confidence at a particular point in time of a stock. So in order to understand that past point in time, you must travel back in time to understand past behavior. This time travel is possible by researching news stories of that time both of the company, and the industry as a whole. The concensus at that time was that airlines would continue their rally that began at the end of 2004, and that Delta would benefit from their new simplified fare. Both turned out to be wrong."

Heather said: "Here is something that you might find interesting. Hundreds of flights have been cancelled because they [URL=http://www.wkyc.com/news/news_article.aspx?storyid=40117]ran out of gas[/URL] That can't be helping the airline industry at all."

HappyHarry said: "This could be the end for Delta."

Liviu said: "Officialy: [B]The End[/B]"

HappyHarry said: "Is anyone going to miss them? LOL"

Liviu said: "Why is the stock up 25% the day they file bankruptcy? Is it possible the stock will still be good?"

thezster said: "The stock goes on up filing because, all of a sudden, they are protected from creditors. Their assets balance out their liabilities to enough of a degree that investors (that's you n me) feel it's a good play. Personally........ Sell Short! Two weeks ago! Woulda/coulda/shoulda.... famous last words"

SHIFTY101EASY said: ""This is the end Beautiful friend This is the end My only friend, the end..." The Doors nailed it about Delta...seeeee ya."

poldo said: "[QUOTE=bobjitsu]Personally I would sell, I got rear ended by Kmart this same way.[/QUOTE] me too kmart really did it"

poldo said: "[QUOTE=AlfredSokol]Let's be realtistic, insiders can be idiots too. Sometimes they may have an overly bullish view of the company they work for.[/QUOTE] yes on top of that $109.000 is not that much it could be a simple gesture to boost the hopes of some investor that maybe he knows better and the company will be great once again....Delta is finished, in a different wold someone would buy all their asset but honestly what airline can affor that today ??"