By Ross Snel TheStreet.com Staff Reporter 9/16/2005 2:24 PM EDT
US Airways (UAIRQ:OTC BB - commentary - research - Cramer's Take) has cleared the final hurdle to its exit from bankruptcy and merger with America West (AWA:NYSE - commentary - research - Cramer's Take).
Judge Stephen Mitchell of the U.S. Bankruptcy Court for the Eastern District of Virginia Friday confirmed US Airways' plan of reorganization. Under the terms of the merger, the two airlines can merge on the 11th day after court confirmation, which would be Sept. 27.
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The two airlines announced their merger May 19, saying it would create a full-service nationwide airline with discount prices. The deal will significantly increase America West's scale and lift US Airways out of its second trip through bankruptcy since the Sept. 11 terrorist attacks.
At the time the merger was announced, analysts said it faced significant challenges, including meshing two labor groups with different seniority levels.
Since then, oil prices have soared higher, further challenging airlines, and the post-Katrina spike in jet fuel helped prompt Northwest Airlines (NWAC:Nasdaq - commentary - research - Cramer's Take) to file for bankruptcy protection earlier this week. Delta (DAL:NYSE - commentary - research - Cramer's Take) filed for Chapter 11 the same day as Northwest.
America West shares rose 15 cents, or 2.2%, to $7.11. US Airways shares, which will be canceled and rendered worthless when the merger closes, traded at 18 cents.
R1Man
posted
The funny part is....it traded up 33% today and there are still buy orders in for $0.28. Some people just don't learn from K-Mart, Hayes Lemmerz and all the others that did this.
Just like all these idiots buying NWAC and DAL (Northwest Airlines & Delta Airlines) will get burned just like all the rest. The day traders will do ok for now, but those investing in those companies for the long term.....they just don't learn.
Hell, 3 years ago I lost everything in K-Mart and Hayes Lemmerz....I had 34,000 shares of K-Mart @ $0.49 and 550,000 shares of Hayes Lemmerz @ $0.02. And look what happened.....both stocks were cancelled as the companies exited bankrupcy....the stock holders got F*ed and now the reissued stock is worth $$$$!!! Corporations in Bankrupcy are extremely HIGH RISK!!!
Don't think I'm trying to pump or dog these stocks....just stating facts.
G_Ho
posted
good post,
metal1
posted
cancelling the original equity is the norm in bankruptcies
blue_in_MI
posted
i have to agree with you, i was amazed to see NWAC making some runs past $1 friday. what do i know, but - strikes me that playing catch with a lit stick of dynamite would be safer.
amazes me even more that NWAC was trading near $2 the day before the bankruptcy announcement. here in the detroit-area where NWAC is based, was a lot of news coverage of it of course, and - was basically treated as a *foregone conclusion* by the media that NWAC would in fact file for BK. yet - people still bought it up on mini-runs towards $2. amazing, *shakes head*. and people call the OTC risky - i own about 15-20 OTC stocks and consider nearly all of them to be less risky than NWAC.
i dunno, maybe there's something i'm missing, but - i'm not about to touch NWAC.
quote:Originally posted by R1Man: Some people just don't learn from K-Mart, Hayes Lemmerz and all the others that did this. Just like all these idiots buying NWAC and DAL (Northwest Airlines & Delta Airlines) will get burned just like all the rest.
Dustoff101
posted
check out CAFE if ya want another " Head Shaker" It's a Nasdaq, and look what happened there..
BIDU is getting mighty slimy too.
downdraft
posted
Good post R1man..!! You are right, you have to be careful with company stocks in BK. USair is another one to be careful with..!!
R1Man
posted
I learned why NWAC stayed around $1.00 range. They had huge financial groups like Morgan Stanly, Swabb, and a few others load up on the stock because they thought the stock would hit $10.00 a share by doing so. Plus the carrier never filed a PID...or something like that....all memory right now.....but the PID is a form that outlines that the company is in danger and sets up a plan to keep running (buying fuel with credit). NWAC didn't do this because they have lots of CASH! So it threw all the big brokers off when they filed. Nevertheless, they sparked the stock to continue to be hot among buyers. I read this out of the Detroit News 9-18-2005 business section front page. It was titled something like this...."The experts who invest your money come up not very smart at all". It talked about what I typed above in detail and a few quotes from the union.
I live in Detroit area and my buddy works there....Northwest has 2 divisions here. The larger division is the one in trouble....the smaller division is the one my buddy works at....they're not in danger at all....I think the smaller is called Northwest Air Link or something in that nature.
Now since I have doged the stock....I'm looking to buy Tuesday. Stocks have a history of getting delisted, openning with the same symbol with a "Q" at the end, they open at 95% less value before the delistment and usually aways get bought up then sold back the following day.
Example: MM...Mutual Risk Management...."mlrmlf/mlrmlq"....this stock was around $0.65 and delisted about 3 years ago...opened at $0.02 then ran to $0.195 or 875% gain, then crashed and burned.
Example: WCOM(E)....World Com...This stock was delisted don't remember the price when delisted but it opened at $0.055 and it ran to $0.27-0.29....or 420% gain. I bought $8,000 worth at $0.065 and dumped that one at $0.245.
Example: MCI...."MCITE"....branch of World Com....this stock did the same thing as world come. It was delisted around $0.50 I think and opened around $0.07....not sure but it did a very nice run....300-400% from new open.
Like I said....I'm gonna dump a few thousand if I like what I see and put in a limit buy/sell order and see what happens....I see this as an opportunity right now and you all have a 1 day advance before it happens. Just don't get GREEDY!!!! GREED KILLS!!
R1Man
posted
Lets see...stock delisted at $0.82....watch it open at $0.05....any guesses....that is mine. I see it running to $0.22 range within 2 days of open with ticker NWACQ....then it will CRASH and BURN.
If I'm right...Drinks are on me....I'll have lots of $$$. I might risk as much as $10,000 on this....I'll post Tuesday with updates.
JL
posted
i bot UAIRQ .21 last week sold today .42. forgot to post here...got flak from postin UALAQ which also doubled from .36 to .71 now.
R1Man
posted
quote:Originally posted by JL: i bot UAIRQ .21 last week sold today .42. forgot to post here...got flak from postin UALAQ which also doubled from .36 to .71 now.
What the hell are they thinking....they already said it was going to cancel all its stock....some people just don't learn. I see it gained another 42% today. Just don't make sense.
"Northwest Airlines urges that appropriate caution be exercised with respect to existing and future investments in its common stock," the airline said in a statement. "It is entirely possible that ultimately no value will be ascribed to the company's existing common stock or other equity securities."
"Northwest Airlines urges that appropriate caution be exercised with respect to existing and future investments in its common stock," the airline said in a statement. "It is entirely possible that ultimately no value will be ascribed to the company's existing common stock or other equity securities."
Thanks Blue.....I was wondering WTH was going on....if the stock follows what happens to most companies, then we should see it dip less then $0.10 then shoot up around $0.22. I really thought when I read the news it said the stock was delisted and traded today (Tuesday)....guess I assumed it would be otcbb since they said delisted. Never seen this action happen before. But thanks again, this gives me more time to get my finances in order so I can be ready for the dip.
<moephunk>
posted
Hey everybody,
I'm pretty new to this and I was wondering if anybody could tell me when uairq and ualaq began trading on the OTC BB...I wanna see what price they opened at and how high they went..
thanks and keep the posts comin!!
<moephunk>
posted
anybody know?
R1Man
posted
UAIRQ will cancel their stock....that means all stock = WORTHLESS!!! Does that answer your question?
R1Man
posted
quote:Originally posted by <moephunk>: Hey everybody,
I'm pretty new to this and I was wondering if anybody could tell me when uairq and ualaq began trading on the OTC BB...I wanna see what price they opened at and how high they went..
thanks and keep the posts comin!!
Look at NWACQ on 9-26-2005. It should hit rock bottom that day....then take a hefty bounce.
RagsToRiches
posted
can't believe people still invest in airline stocks that are almost bankrupt even if there is good news.
I did the mistake of investing in UAIRQ the day after it first announced the merger. I bought in with the frenzy the day after it went up like 60%. After going up 10 % that day I bought, it went straight down the same day. The next day, I hopelessly watch as it went down further. That trade taught me a lesson to never invest in airline stocks again and to never buy when it has gone up that high. Always buy low and sell high. Never be too greedy.
posted ![[Smile]](smile.gif)