Go to main content
Harvard Business School
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Campaign
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions

Faculty & Research

  • HOME
  • FACULTY
  • RESEARCH
    • Global Research Centers
    • HBS Case Collection
    • HBS Case Development
    • Initiatives & Projects
    • Publications
    • Research Associate (RA) Positions
    • Research Services
    • Seminars & Conferences
    Close
  • FEATURED TOPICS
    • Business and Environment
    • Business History
    • Entrepreneurship
    • Finance
    • Globalization
    • Health Care
    • Human Behavior and Decision-Making
    • Leadership
    • Social Enterprise
    • Technology and Innovation
    Close
  • ACADEMIC UNITS
    • Accounting and Management
    • Business, Government and the International Economy
    • Entrepreneurial Management
    • Finance
    • General Management
    • Marketing
    • Negotiation, Organizations & Markets
    • Organizational Behavior
    • Strategy
    • Technology and Operations Management
    Close

Case | HBS Case Collection | November 1993 (Revised April 2007)

Continental Airlines--1992 (Abridged)

by Stuart C. Gilson

  • Print
  • Email

Abstract

The CEO is preparing a recommendation to the board regarding several potential outside investments in the company, which is currently operating in bankruptcy. In making his decision, the CEO has to consider various financial and strategic factors, including possible synergy benefits and support for the company's huge planned expenditures on new aircraft. To assess the relative merits of the competing investment proposals, it is also necessary to value the company's assets and prescribe a new capital structure for the company after it leaves Chapter 11. Tax factors are extremely important in the analysis. The final decision must be acceptable to the company's creditors and be compatible with allowed U.S. bankruptcy practices.

Keywords: Capital Structure; Cash Flow; Cost of Capital; Insolvency and Bankruptcy; Investment; Taxation; Risk and Uncertainty; Valuation; Aerospace Industry; United States;

Language: English Format: Print 17 pages EducatorsPurchase

Citation:

Gilson, Stuart C. "Continental Airlines--1992 (Abridged)." Harvard Business School Case 294-058, November 1993. (Revised April 2007.)

Related Work

  1. Teaching Note | HBS Case Collection | May 1994

    Continental Airlines--1992 & Continental Airlines--1992 (Abridged) (TN)

    Stuart C. Gilson

    Teaching Note for (9-293-132) and (9-294-058).

    Citation:

    Gilson, Stuart C. "Continental Airlines--1992 & Continental Airlines--1992 (Abridged) (TN)." Harvard Business School Teaching Note 294-127, May 1994.  View Details
    CiteView DetailsPurchase Related

About the Author

Photo
Stuart C. Gilson
Steven R. Fenster Professor of Business Administration
Finance

View Profile »
View Publications »

 

More from the Author

  • Supplement | HBS Case Collection | December 2017 (Revised April 2018)

    Tesla Motors (B): Merging with SolarCity

    Stuart C. Gilson and Sarah L. Abbott

    In 2016, electric car manufacturer Tesla announced that it was making an offer to acquire solar panel manufacturer SolarCity in an all-stock offer worth $2.6 billion in Tesla stock. Tesla’s co-founder and CEO, Elon Musk, believed that the merger would generate significant cost and revenue synergies, based on his vision of the future of transportation, energy storage, and a “green” economy. However, most Wall Street analysts were highly skeptical of the deal, voicing concerns that the merger would burden Tesla with excessive debt and that Musk was using the deal to advance his personal interests (at the expense of public shareholders) and bail out Tesla. Concerns were raised over possible conflicts of interest, given that Musk owned over 20% of the stock, and sat on the board of directors of both companies. The viability of the merger was also questioned given that neither Tesla nor SolarCity had ever been profitable.

    Keywords: valuation; M&A; M&A Valuation; Investing; equities; Equity; Valuation; Mergers and Acquisitions; Auto Industry; Energy Industry; United States;

    Citation:

    Gilson, Stuart C., and Sarah L. Abbott. "Tesla Motors (B): Merging with SolarCity." Harvard Business School Supplement 218-038, December 2017. (Revised April 2018.)  View Details
    CiteView DetailsPurchase Related
  • Case | HBS Case Collection | April 2018

    Sabine Oil & Gas Corporation

    Stuart C. Gilson, Kristin Mugford and Sarah L. Abbott

    In 2016, a trial began to determine the future of Sabine Oil & Gas Corporation’s $3 billion chapter 11 reorganization plan. The plan called for first and second lien secured creditors to receive new claims representing approximately 98% of the reorganized company’s enterprise value, leaving unsecured creditors, owed $1.4 billion, to recover less than two cents on the dollar. The plan had the support of the secured creditors, but unsecured creditors were strongly opposed. At the heart of the unsecured creditors’ objections to the plan was a dramatically different view on valuation. How much were Sabine's oil and gas reserves worth today? How much were they worth at the time Sabine filed for chapter 11? And, based on these valuations, what was a fair recovery for Sabine's creditors?

    Keywords: corporate reorganization; chapter 11; oil & gas; restructuring; bankruptcy; bankruptcy reorganization; Insolvency and Bankruptcy; Energy; Restructuring; Valuation; United States;

    Citation:

    Gilson, Stuart C., Kristin Mugford, and Sarah L. Abbott. "Sabine Oil & Gas Corporation." Harvard Business School Case 218-004, April 2018.  View Details
    CiteView DetailsEducators Related
  • Case | HBS Case Collection | December 2017 (Revised March 2018)

    Tesla Motors (A): Financing Growth

    Stuart C. Gilson and Sarah L. Abbott

    The case analyzes the equity market value of Tesla Motors, the electronic car company founded and led by Elon Musk. Wall Street analysts are wildly divided on the future growth prospects for this company, and analysts’ one year share price targets range from $160 to $500. The case explores in detail the valuation case made by two analysts covering Tesla, one a bull on the stock and one who is bearish. Students are asked to consider the arguments and the analytical approaches employed by each. Is Tesla a good investment or not?

    Keywords: valuation; valuation methodologies; Investing; equities; Public Equity; Finance; Valuation; Equity; Auto Industry; Energy Industry; United States;

    Citation:

    Gilson, Stuart C., and Sarah L. Abbott. "Tesla Motors (A): Financing Growth." Harvard Business School Case 218-033, December 2017. (Revised March 2018.)  View Details
    CiteView DetailsEducatorsPurchase Related
ǁ
Campus Map
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→ Map & Directions
→ More Contact Information
→ More Contact Information
→ More Contact Information
→ More Contact Information
  • HBS Facebook
  • Alumni Facebook
  • Executive Education Facebook
  • Michael Porter Facebook
  • Working Knowledge Facebook
  • HBS Twitter
  • Executive Education Twitter
  • HBS Alumni Twitter
  • Michael Porter Twitter
  • Recruiting Twitter
  • Rock Center Twitter
  • Working Knowledge Twitter
  • Jobs Twitter
  • HBS Youtube
  • Michael Porter Youtube
  • Executive Education Youtube
  • HBS Linkedin
  • Alumni Linkedin
  • Executive Education Linkedin
  • MBA Linkedin
  • Linkedin
  • HBS Google Plus
  • Executive Education Google Plus
  • HBS Instagram
  • Alumni Instagram
  • Executive Education Instagram
  • Michael Porter Instagram
  • HBS iTunes
  • Executive Education iTunes
  • HBS Tumblr
  • Executive Education Weibo
  • HBS Snapchat
  • Executive Education Wechat
  • →All Social Media
  • → All Social Media
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Accessibility
  • Terms of Use
Copyright © President & Fellows of Harvard College