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.]