13 Freedom E145s parked at Florence, SC today

[johnsonrod]

Here's something negative.......

$6.7 BILLION!!!!!!!!!
-And don't give me that stupid "paper loss" crap, general!!! You can't post a "paper loss" any more than you can post a "paper profit." The value was on the books, now it is gone...... Not a good thing!

-May I suggest an Intro to Business Accounting course so you will one day understand how badly this mgmt. is hosing the company.....

A significant portion of that amount was a write-down on goodwill. How does that exactly impact cash flow? Hmmmmmm. Sounds like a paper loss to me.

 

[Jmoney]

A significant portion of that amount was a write-down on goodwill. How does that exactly impact cash flow? Hmmmmmm. Sounds like a paper loss to me.

Ever have a college-level accounting course? I thought not........

Goodwill is hard for most people to understand, but here goes:

"Goodwill" is something you can claim as an asset-just not a tangible asset.... The best example I can think of would be a brand name..... Let's say P&G makes "huggies." Well, P&G can choose to assign a certain value to the name "huggies" since they own it and market items under that name (name recongition, market share, etc.-all due to that name)..... There is no denying that certain brand names have value-you can choose to take an accounting credit for that value. That credit is called a "Goodwill valuation..." Not a hard asset, but something of value nonetheless.

Now, what DAL did was a bit trickier-they claimed a "goodwill" valuation related to an assumed future stock value. I believe this assumed value was probably close to $25 per share.... In other words, after emerging from "BK" as "General Retard" consistently refers to the process, DAL thought the stock would shoot right to that level. A stock trading above a certain level has a value or "street cred" with employees, investors, creditors, and even credit card processors. All these people are important in keeping DAL out of "BK'" in the future. I am assuming that the "goodwill" write-off DAL took in relation to its stock value was due to the fact that the stock tanked as soon as the merger was announced. In other words, the stock never reached the assumed level of valuation, so you have to write off the credit you had placed on the books. I am guessing that some accounting rules allow you to keep this type of thing on the books for a limited amount of time unless the related stock price was reached... This price clearly was not.

Bottom line-this was an asset... DAL could in effect count on a better position with creditors, debt rating people, etc. because of the value of having a good stock price. This asset is now gone. DAL's credit rating is now more questionable. I have even read that there is doubt about them being able to raise the capital needed to finance the merger... If their rating is further downgraded, game over-"BK" again in short order.

BTW-"Cash Flow" is only a small piece of the DAL picture right now. If the regulatory approval hits a snag or if access to capital markets is restricted (can't find a favorable loan,) DAL will be in deep, stinky stuff PDQ. I do wish things were not so dire, but they are.... It is a shame that many people don't see the crappy job mgmt. is doing because terms like "goodwill" confuse the issue.

-I'm no CPA, but I do know what "Goodwill" write-offs are, and they have nothing to do with "pretend," or "just because." Just because you don't understand this type of thing doesn't mean that it's not as real as the room you are sitting in.

 

[crjdxr]

pwnd.