Cash Position of Airlines (USA Today Article)

Diesel-9

Well-known member
Joined
May 1, 2005
Posts
527
Total Time
18,885
That's not to say that U.S. airlines suddenly have become pictures of financial health. They have not.

The highest-scoring U.S. carrier among 32 conventional network airlines from around the globe recently ranked by Aviation Week & Space Technology magazine in regards to its financial health was, somewhat surprisingly, Alaska Airlines. Aviation Week's team of aviation financial consultants and analysts considered carriers' liquidity, fuel costs, earnings performance, asset utilization, operating profile and overall financial health. The latter included debt-to-equity ratios, cash balances, access to capital, operating margins and cash flow. Alaska's score was 56. Top-rated Singapore Airlines scored 93.

Southwest, the only U.S. carrier with an "A" credit rating, ranked fifth among 28 discount carriers from around the world, and second among all U.S. carriers, behind Alaska. But as highly regarded as Southwest is in the USA for its consistent profits, its score of 54 was only a little better than average and good enough only for the 20thposition among the total of 60 carriers ranked by Aviation Week.

"The health of the industry remains in question," says Calyon airline analyst Ray Neidl, a member of Aviation Week's team of advisers.

Lower Fuel Prices

Lower fuel prices and the carriers' recent dramatic operational and financial maneuverings have helped ease the crisis, but it has not entirely passed.

Delta and US Airways are moving close to what Neidl calls the bankruptcy/liquidation danger zone based on their cash and short-term investments at the end of June as a percentage of their revenue over the previous 12 months. The danger zone, he says, is a ratio of 10% or less. Delta's cash-to-revenue ratio on June 30 was 16.1%, while U.S. Airways' was 17.4%. Both are addressing that issue.

Balance sheets expected to improve

Delta, where operating costs and performance have improved significantly as a result of its bankruptcy reorganization, should see its ratio rise above 20% upon completion of its pending merger with Northwest, which has a cash-to-revenue ratio of 24.5%. US Airways last week issued $179 million of new shares to shore up its balance sheet.

United, though, remains the closest to Neidl's danger zone, with a 14.1% ratio of cash to revenue. That ratio will rise a few points after United picked up $600 million in cash in July by renegotiating its affinity credit card deal with Chase Bank. Neidl's also concerned that United's projected cash burn for the coming winter will be larger than at most other airlines.

Yet the outlook is not as bad as it was just over a month ago when oil was $147 a barrel and jet fuel was over $4 a gallon on the spot market.

Amazingly, after all they've been through, "airlines still have the ability to raise cash" by issuing stock, negotiating new lines of credit and selling assets, he says.

And they appear able to generate still more revenue.

"All 10 of the large, publicly traded U.S. carriers should be able to make it through this year without defaults (on their loan agreements and covenants), even in a weak economic environment with high fuel costs," he says.

USA Today article.
 

Voice Of Reason

Reading Is Fundamental !
Joined
Sep 21, 2004
Posts
1,369
Total Time
15 min
Delta and US Airways are moving close to what Neidl calls the bankruptcy/liquidation danger zone based on their cash and short-term investments at the end of June as a percentage of their revenue over the previous 12 months. The danger zone, he says, is a ratio of 10% or less. Delta's cash-to-revenue ratio on June 30 was 16.1%, while U.S. Airways' was 17.4%. Both are addressing that issue.

Balance sheets expected to improve

Delta, where operating costs and performance have improved significantly as a result of its bankruptcy reorganization, should see its ratio rise above 20% upon completion of its pending merger with Northwest, which has a cash-to-revenue ratio of 24.5%. US Airways last week issued $179 million of new shares to shore up its balance sheet.
This seems to have been common knowledge to everyone but the DL pilots it seems....
 

Voice Of Reason

Reading Is Fundamental !
Joined
Sep 21, 2004
Posts
1,369
Total Time
15 min
Crap, spilled my coffee!
Sorry! :laugh:

::::ducking for all the self-appointed "financial analysts" to chime in with their "...but...but...but...our RASMs, CASMs, SpASMs, OrgASMs are bigger than yours! WAH!" :::::
 
Last edited:

AA717driver

A simpler time...
Joined
Mar 27, 2003
Posts
4,911
Total Time
+/-13k
"I'm not a financial wizzard but I DID stay at a Holiday Inn Express on last night's layover and I DO wear a double-breasted uniform..." :rolleyes: TC
 

rayford steele

Well-known member
Joined
Apr 20, 2006
Posts
155
Total Time
>1200

Soverytired

Well-known member
Joined
Jan 30, 2006
Posts
1,572
Total Time
999999
http://www.usatoday.com/travel/flights/2008-08-20-airlines-with-most-staying-power_N.htm

(article with list located here)

Remember, USA Today airline analysts are the sharpest tools in the shed. Well, they're tools, anyway. For all the DAL-haters out there, despite what the so-called "Voice of Reason" may have meant to imply, DAL is listed as a "LIKELY SURVIVOR", as opposed to the numerous "STRUGGLING" airlines.

Strong = SWA

Likely Survivors = DAL, NWA, AMR, Continental, Alaska

Struggling = USAir, United, AirTran, JetBlue

Some interesting strengths v. weaknesses for every company listed.

Bottom line though, all are expected to survive the year, and all LONG term prospects for all look uncertain (except for SWA, really).
 
Last edited:

Flyer1015

Well-known member
Joined
Dec 13, 2004
Posts
4,502
Total Time
Moola
Sorry! :laugh:

::::ducking for all the self-appointed "financial analysts" to chime in with their "...but...but...but...our RASMs, CASMs, SpASMs, OrgASMs are bigger than yours! WAH!" :::::
LMAO!!!! This is the funniest post I've seen in a LONG time. :D
 

rumrunner300

Old and Bitter
Joined
Feb 15, 2006
Posts
113
Total Time
10K+
Delta and US Airways are moving close to what Neidl calls the bankruptcy/liquidation danger zone based on their cash and short-term investments at the end of June as a percentage of their revenue over the previous 12 months. The danger zone, he says, is a ratio of 10% or less. Delta's cash-to-revenue ratio on June 30 was 16.1%, while U.S. Airways' was 17.4%. Both are addressing that issue.

.
As I read the article, I was puzzled by the use of the Cash vs. Revenue ratio as I had never heard of it and didn't really see what that has to do with anything since revenue is far from stationary.

Not being a fincial whiz by any means, I asked the other F/O (spooky smart with an MBA to boot) about it..... Long pause..... "the what? I've never heard of the use of this ratio"

Be careful when idiots who need their names in the paper come bearing stats.
 
Last edited:

Diesel-9

Well-known member
Joined
May 1, 2005
Posts
527
Total Time
18,885
Cash on Hand as Mulitiple of Monthly exspense is another ratio that is analyzed. *NWA is around 3.4, second best of the 10 biggest carriers and DAL is last at 1.5 DAL has $2.7 Billion debt due 2009-10. NWA has $900 Million. When large corporations hit 10% unrestricted cash on hand to revenue, they are at CH-11 levels. 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
 
Last edited:

Fly4hire

Well-known member
Joined
Mar 6, 2005
Posts
861
Total Time
lots
Cash on Hand as Mulitiple of Monthly exspense is another ratio that is analyzed. *NWA is around 3.4, second best of the 10 biggest carriers and DAL is last at 1.5 DAL has $2.7 Billion debt due 2009-10. NWA has $900 Million. When large corporations hit 10% unrestricted cash on hand to revenue, they are at CH-11 levels. DAL has less than $2.0 Billion unrestricted cash on hand. 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
The fact is DAL Inc needs this deal with NWA far more NWA does with DAL. This analysis vindicates what has been said behind closed ALPA doors for months.

DAL may bring more pilots and more WB aircraft than NWA, but NWA is bringing the cash, operating efficiencies, and liquidity to survive and prosper, and it is obvious NWA is not being "rescued" by DAL

As far as not going further in debt they are not - despite the claims of acquiring NWA it is going to be a swap stock. How that qualifies as an acquisition must be WS speak. For those that still claim that we are being bought, I simply challenge you to show via SEC public documents where (when) the money for the purchase is being exchanged.

We are all bringing different, but equally valuable assets to the deal - let's put this my airline is bigger, better than yours stuff to bed - we are going to be a far stronger airline together than we will be as separate entities.
 
Last edited:

B747FR8DAWG

GIANT 747
Joined
Jan 23, 2005
Posts
465
Total Time
> 1
Freight Is Great!

Where Is The Ranking???????
USA Today got this info from Aviation Week & Space Technology, the reporter neglected to report the strengths of the Cargo sector.



By James Ott
Publicly held air cargo companies outshined their passenger-carrying peers in the 2008 Top-Performing Companies study, and they appear to be better prepared for a hazardous future of fuel highs and economic lows.

United Parcel Service (UPS) heads the cargo rankings over rival FedEx and growing freight operator Atlas Air Worldwide Holdings. UPS scored a remarkable 99 out of 100 in the financial health category, as it has in each of the past eight years. The company ended the year with a cash and accounts receivable balance of $10.4 billion.

FedEx concluded the year with a $5.5-billion cash stockpile. Its financial health score of 92 ranks it second just above Atlas at 88. The financial strengths of these companies lead Aviation Week's panel of experts to predict that UPS and FedýýEx in particular will continue to make acquisitions in cargo, freight and related sectors.

Further consolidation is expected this year. DHL is negotiating with UPS to handle its lift needs, which would shift DHL express and cargo from AStar Air Cargo and ABX Air.

In general, operators are already feeling a revenue pinch from slowed economic activity as seen in reports from the first two quarters of this year. Unlike passenger carriers, freight companies have demonstrated an ability to adjust capacity more quickly to meet demand. In the recent past surcharges to compensate for fuel hikes have been applied, but managers may be testing the limits of price elasticity.

Despite economic lulls, express shipments are still a necessity, though airlift costs may cause some businesses to opt for surface transportation.

[FONT=Arial, Helvetica, sans-serif]Copyright � 2008 Aviation Week, a division of The McGraw-Hill Companies. [/FONT]
[FONT=Arial, Helvetica, sans-serif]All rights reserved. Terms of Use | Privacy Policy [/FONT]
 
Last edited:

Diesel-9

Well-known member
Joined
May 1, 2005
Posts
527
Total Time
18,885
EVERYTHING! NWA average F/A bra size is 38DD. Average DAL F/A is 34B, all natural.
 

rumrunner300

Old and Bitter
Joined
Feb 15, 2006
Posts
113
Total Time
10K+
Cash on Hand as Mulitiple of Monthly exspense is another ratio that is analyzed. *NWA is around 3.4, second best of the 10 biggest carriers and DAL is last at 1.5 DAL has $2.7 Billion debt due 2009-10. NWA has $900 Million. When large corporations hit 10% unrestricted cash on hand to revenue, they are at CH-11 levels. 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
I can't tell if you are responding to my post or not.
What you write makes complete sense.

The point I was trying to make is who cares what any ratio is when it used past information? Is revenue from the past 12 months necessarily a predictor of future results? This Neidl guy is simply creating statistics in an effort to prove what he believes.

I do agree that this is going to be a scary deal for DAL/NWA to pull off. In my mind (soaked with rum as it is) this is not a good time to be taking on the added expense of a merger.

Hopefully, I am wrong but this merger could easily end up a complete disaster.

No flame intended. (I'm using all of mine to burn United to the ground)
 

Voice Of Reason

Reading Is Fundamental !
Joined
Sep 21, 2004
Posts
1,369
Total Time
15 min
EVERYTHING! NWA average F/A bra size is 38DD. Average DAL F/A is 34B, all natural.
Actually I was referring to the mid-section girth accentuated by the pilot DB blazer...thought that was the "wide bodies" he was invoking.
 

General Lee

Well-known member
Joined
Aug 24, 2002
Posts
20,442
Total Time
A lot
I can't tell if you are responding to my post or not.
What you write makes complete sense.

The point I was trying to make is who cares what any ratio is when it used past information? Is revenue from the past 12 months necessarily a predictor of future results? This Neidl guy is simply creating statistics in an effort to prove what he believes.

I do agree that this is going to be a scary deal for DAL/NWA to pull off. In my mind (soaked with rum as it is) this is not a good time to be taking on the added expense of a merger.

Hopefully, I am wrong but this merger could easily end up a complete disaster.

No flame intended. (I'm using all of mine to burn United to the ground)
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
 
Top