Cash Position of Airlines (USA Today Article)

[gutshotdraw]

Twenty posts to chime in General? You've been slacking....

 

[FlyinT]

Wasn't talking about Flight Attendants...

 

[Noserider76]

They are a sinking pirate ship trying to board and takeover NWA's $3.7 Billion (unrestricted $$) ship of gold to stay afloat. *Ref 2008 ALPA E & F A

Riiiiiight........... Motivation for your one-sided post?

 

[FDJ2]

DAL has less than $2.0 Billion unrestricted cash on hand for a $18 Billion Revenue Company9(Cash to Revenue Ratio) Dangerously close to CH-11/7. They brag about $4.0 Billion liquidity because of a $2.0 line of credit. They DON'T need to take on any more debt. They are a sinking pirate ship trying to board and takeover NWA's $3.7 Billion (unrestricted $$) ship of gold to stay afloat. *Ref 2008 ALPA E & F A

Intersting article:


DAL: Revenue for latest 12 months: $20.2 billion
Debt: $10.9 billion
Unrestricted cash and short-term investments: $3.2 billion

NWA: Revenue for latest 12 months: $13.2 billion
Debt: $9.9 billion
Unrestricted cash and short-term investments: $3.2 billion

$9.9B in debt with only $13.2B in revenue doesn't look good. OTOH, DAL has much less debt as a percentage of revenue, $10.9B in debt with $20.2B in revenue. That's $1.B in extra debt, but $7B in additional revenue to service that debt.

And this was surprising:

NWA: "Highest unit costs among big airlines despite bankruptcy reorganization in 2005-2007"

This wasn't so surprising:

NWA: "Long-standing reputation for below-average customer service, despite evidence of recent improvement."

I guess we can all find something in that article.

 

[Widow's Son]

Alaska financially stronger than SWA?

No disrespect to Alaska, but that's ludicrous. Look at the respective profits earned over the last decade.

SWA has an investment grade credit/bond rating. Alaska does not.

I suspect that their analysis on cash position fails to give credit to SWA for the fuel hedge investments it has made. SWA could have either paid down its meager debt or kept cash on hand, but the hedges made more sense and they had the money to it.

Alaska is a great airline and will no doubt be a survivor, but there is no way it can be rated at a higher financial strength than SWA.

 

[Occam's Razor]

Unload, clear, and lock!

The article was a typical McPaper summary that didn't provide a deep enough analysis to cover all the key factors.

The "access to capital" piece is weak. All carriers have different forms of "access" depending on the value of unencumbered assets, loan covenants (with their impairment charges), and the percentage of their adjustable debt. Is their access to capital all debt instruments...or equity? [Hint: Some airline have been writing-down some paper losses in "good faith"...which is corporate-speak for, "We're a good equity risk now!"]

GenLee is correct about AF and the desire of foreign partners to pump equity into the merged DAL. They weren't willing to do it to a stand-alone DAL or NWA. Sniping about who brought the most cash/debt is lame.

 

[Noserider76]

Unload, clear, and lock!

Sniping about who brought the most cash/debt is lame.

I love you man (no, not in that Navy sort of way), but why no post on this until after FDJ2's? He didn't start the flame war after all. He just answered it.

 

[rumrunner300]

Huh? I guess you forgot that we had an offer from Air France to help pay for the merger, and we said no. What does that mean? IF we ever needed help, good ole Air France would fund us. We obviously didn't think it was necessary. That is like having a bank nearby, at anytime. They will help us out if we need help in the future too, but instead we will merge with NWA and financially we will be more sound. And, we will dominate the world and become THE BORG. And best of all, we will all wear hats and double breasted uniforms, and chicks will "dig us."


Don't get tied up in a knot rumrunner, you may poop your pants...


Bye Bye--General Lee

Jesus Christ but you are such a defensive ***********************************.

I never got into a twist, that is your gig. (perhaps testicular torsion, get it looked at since you can lose one that way)

Even though I don't wish ill will towards any competitor, I do take some enjoyment in twisting your tit by mentioning that you are hoping for the FRENCH to bail you out?

Will the south rise again for the reach around?

Bye, bye................

 

[~~~^~~~]

FDJ2 & Occam, good posts.

& everyone take a break and see Tropical Thunder - funny flick. Don't know who's the funniest, Tom Cruise in a fatsuit, or Robert Downey Jr. as a black man.

 

[Occam's Razor]

I love you man (no, not in that Navy sort of way), but why no post on this until after FDJ2's? He didn't start the flame war after all. He just answered it.

I logged on after he'd posted.

[Occam's Razor states that the simplest solution is usually the correct one.]

 

[Noserider76]

I logged on after he'd posted.

[Occam's Razor states that the simplest solution is usually the correct one.]

It's cool. I was just wondering why D-9's pirate fantasy wasn't worth a "keep it in line boys" comment when you logged in earlier today and posted and FDJ2's well thought out, totally pirate-free masterpiece was.

 

[General Lee]

Jesus Christ but you are such a defensive ***********************************.

I never got into a twist, that is your gig. (perhaps testicular torsion, get it looked at since you can lose one that way)

Even though I don't wish ill will towards any competitor, I do take some enjoyment in twisting your tit by mentioning that you are hoping for the FRENCH to bail you out?

Will the south rise again for the reach around?

Bye, bye................

Do you really think you are "twisting my tit?" Really? I think not. I've never even heard of you until your previous post. You never have been on my radar screen. And, I never said I was HOPING for the French to bail us out, since they won't have to. I said they COULD if we needed it, but thanks to a merger, we likely won't need it. Seems like the only twisting you do are words from a "competitor". And we'll leave the "reach arounds" to you, since you are likely an expert in that field.


Bye Bye--General Lee

 

[Occam's Razor]

It's cool. I was just wondering why D-9's pirate fantasy wasn't worth a "keep it in line boys" comment when you logged in earlier today and posted and FDJ2's well thought out, totally pirate-free masterpiece was.

My reply wasn't directed at anyone. The time for chirping about pre-merger stuff is past. I've had 20-years of listening to that sort of bunk.

 

[Noserider76]

My reply wasn't directed at anyone. The time for chirping about pre-merger stuff is past. I've had 20-years of listening to that sort of bunk.

You're right, of course, and I apologize for the tone of my post. I realize you are trying to keep the conversation constructive, or at least not too destructive, on both sides. There are just some posts that demand a response or they sit there and are taken as the truth by many. I'm sure there will be many more as we go through the SLI process. Hopefully we can come out the other side and still talk to one another. Thanks for your good input here over the years. Take care.

 

[QCappy]

Alaska financially stronger than SWA?

No disrespect to Alaska, but that's ludicrous. Look at the respective profits earned over the last decade.

Look at the respective size of the companies. You need to look at profit as a function of revenue. However, I agree with you. Southwest is in very good financial shape.

Remember though, hedges are a gamble. Southwest hedges 80%, Alaska only 50% of their fuel.

 

[Diesel-9]

Delta tapping $1B credit line to deal with merger

By KELLY YAMANOUCHI

The Atlanta Journal-Constitution

Monday, August 25, 2008

Delta Air Lines is borrowing $1 billion with an existing credit line to increase its cash balance as it nears the close of its acquisition of Northwest Airlines.

Atlanta-based Delta expects to close its deal with Eagan, Minn.-based Northwest by the end of the year.

Delta president and chief financial officer Ed Bastian said in a memo to employees that drawing down the full amount of the companys $1 billion credit line will provide us with the utmost in flexibility as it prepares to close the merger. He said he believes :-O the company has more than sufficient cash to manage the integration of the two airlines and run the business. Delta has estimated the integration will cost $600 million over three years.

Its not being done out of any financial duress or any operating needs for cash, (Sure Ed, we beleive you) Bastian said in an interview Monday. It is more of an offensive move to align our bank agreements with that of Northwest as the companies enter discussions with bankers, he said, adding that he could not elaborate further.

Delta said it had $3.7 billion in liquidity at the end of July, including the $1 billion credit line, down from $4.3 billion at the end of June.

Delta took out a $1.5 billion loan when it exited from bankruptcy last year, along with the $1 billion credit line that it has pointed to as evidence of its liquidity.

Delta also said Monday it has amended its Visa/MasterCard credit processing agreement with U.S. Bank to run through 2011 with no cash holdback required. The agreement also covers Northwest after the close of the merger.

Unrestricted cash/short term investments are approaching 10% cash to revenue.

 

[Fly4hire]

My reply wasn't directed at anyone. The time for chirping about pre-merger stuff is past. I've had 20-years of listening to that sort of bunk.

Correction - it's been 20 yrs of post-merger bunk.

And the most recent AJC article doesn't sound like bunk.

It sounds more like "we'll borrow against home equity to pay our mortgage while we wait for our house to sell since we are burning more than we make and then we can buy a bigger house with a larger mortgage, but we'll make up the difference because it will cost less to heat......"

I just hope DAL's plans are not to use NWA as another line of credit to exhaust.

Who was it who said "DAL's salvation lies in MSP"?

 

[jetflier]

EVERYTHING! NWA average F/A bra size is 38DD. Average DAL F/A is 34B, all natural.

Diesel,

"Don't you mean 38 LONG

 

[Noserider76]

This thing is going to take an enormous amount of cash to get done at probably the worst possible time to burn cash but nobody asked our opinions. If it goes down in flames, we're all going with it.

Here's the coolaid video the managers are showing at their leadership conferences. Some good old footage, but somehow they left a few other less illustrious milestones out of the thing.

http://vidego.multicastmedia.com/player.php?v=70382

 

[NuGuy]

This thing is going to take an enormous amount of cash to get done at probably the worst possible time to burn cash but nobody asked our opinions. If it goes down in flames, we're all going with it.

As far as the NWA guys are concerned, it's like being tossed into the water to save someone (ie DAL), only to have them drag you down, too.

Yippie...

Nu