Bankruptcy Odds Watch

American Airlines

Odds: 1 in 2

American Airlines (AMR) shares have fallen from over $29 to just above $6 during the last year. In the most recent quarter, the company had an operating loss of $187 million and interest expense of $194 million. Long-term debt was over $8.7 billion. Company forecasts fuel expense could rise $790 million over the next year.

Next: United Airlines

United Airlines

Odds: 1 in 4

United Airlines (UAUA) was recently described as an operational mess, and the "worst of the worst" by Portfolio. Shares are off from a 52-week high of $51.60 to $8.25. Like all airlines United faces the potential of a sharp drop in traffic if the economy worsens. In its latest quarterly filing, the airline shows fuel costs up 50%. United's loss from operations was $441 million. Debt service payments hit $135 million.

Next: Northwest Airlines

Northwest Airlines

Odds: 1 in 5

Northwest Airlines (NWA) has watched its stock fall from $24.25 to $6.94. The company is hoping its purchase of Delta will help it save costs. But, it is not clear that its unions will go along with personnel cuts or that the merged company can cut a great deal more capacity. Long-term debt of $6.5 billion and running an operating loss.

Next: Gatehouse Media

Gatehouse Media

Odds: 1 in 5

Gatehouse Media (GHS) is one of the more troubled newspaper companies. Across the industry, ad revenue is falling nearly 10% compared to last year. The company has $1.2 billion in debt. Gatehouse did little better than break even on an operating basis last quarter and its huge dividend it pulling down cash. Shares are at $3.46 compared to a 52-week high of $19.60.

Next: Delta Airlines

Delta Airlines

Odds: 1 in 10

Delta Airlines (DAL) shares are down 60% this year. A merger with Northwest will not help combat the rising price of oil. Long-term debt and capital leases stand at almost $8.4 billion. Company says fuel prices were up almost $1 a gallon last quarter to $2.85. That number could go much higher.

Lee Enterprises

Odds: 1 in 15

Lee Enterprises (LEE) shares have dropped from a 52-week high of $24.97 to $5.57. The company wrote off $841 million in assets last quarter. Advertising revenue dropped almost 6% year-over-year, and that is almost certainly accelerating. Lee is sitting on almost $1.3 billion in debt and, before the end of the year, it probably will not have the operating income to cover debt service.

Next: Lehman Brothers

Lehman Brothers

Odds: 1 in 25

Lehman Brothers (LEH) has been in the headlines for weeks. Most recently its said it would loss $2.8 billion for the last quarter and have to raise $6 billion. The company's shares are down to $27.50 from a 52-week high of $82.05. As one Wachovia analyst said "the larger capital raise at meaningfully lower prices indicates that the company did not have, and potentially still does not have, a complete grasp of its exposures."

Next: Continental Airlines

Continental Airlines

Odds: 1 in 25

Continental Airlines (CAL) share are down less than most airlines, from a 52-week high of $38.79 to $13.60. For the last quarter, the carrier had an operating loss of $66 million and interest expense of $90 million. Long-term debt at $4.7 billion. Recent 10-Q said that a recession could materially harm results.

Next: Wachovia

Wachovia

Odds: 1 in 25

Wachovia (WB) trades near a 52-week low at $19.76 down from its period high of $54.54. Huge mortgage exposure after buying Golden West Financial Deal may have lost Wachovia CEO his job. As one analyst said "We view Wachovia's announcement this morning to remove CEO Ken Thompson as a sign that more bad news will be forthcoming." WB can't take mortgage write-offs forever.

Next: General Motors

General Motors

Odds: 1 in 30

General Motors (GM) trades below where it did in late 2005 when analysts were concerned about a bankruptcy. Lehman recently said GM "needs to raise about $9 billion over the next two years to refinance debt, and may seek more for operational cash burn as it faces production headwinds and commodity price increases." GM may not be able to change its model line away from SUVs and pick-ups fast enough, and domestic vehicles sales have fallen off a cliff.
Next: Ford

Ford

Odds: 1 in 35

Ford (F) may be only slightly better off than GM because it seems to be willing to cut costs beyond the bone. It recently took another 15% out of salaried costs. Kirk Kerkorian may like Ford, but the car-maker's most important line is its pick-ups. Last month, sales of is flagship F-series truck fell 31%. How long can the company survive that?

Next: McClatchy

McClatchy

Odds: 1 in 35

McClatchy (MNI) said its ad revenue dropped 15% in April. In the first quarter, operating income fell to $57 million from $87 million the year before. Revenue went from $567 million down to $488 million. If that topline moves down sharply with the fall-off in advertising, where does the money come from to cover the firm's $2.4 billion in debt.

Next: AIG

AIG

Odds: 1 in 35

AIG has dropped from a 52-week high of $72.91 to $34.28. Large investors are trying to push the CEO out and regulators are looking over how the company valued its mortgage contracts. That is not the worst of it. Citigroup recently wrote that "the insurer's recent offerings that raised $20 billion in capital are insufficient and that its financial position may worsen." The shoes aren't done dropping.
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