- Nov 15, 2002
- Total Time
During the past several years, we materially increased our borrowings to fund our operations and to meet our other obligations. Our debt and capital lease obligations totaled $14.1 billion at June 30, 2005 compared to $6.0 billion at December 31, 2000. Because substantially all of our assets are encumbered and our credit ratings are low, we believe we will not be able to obtain any material amount of additional debt financing. Except for commitments to finance our purchases of regional jet aircraft in 2005 and 2006, we have no available lines of credit.
At June 30, 2005, our cash and cash equivalents and short-term investments were $1.7 billion. However, we have significant obligations due in the six months ending December 31, 2005 and thereafter. We estimate that our aggregate obligations during that period will be approximately $2.0 billion for operating lease obligations, interest payments, debt maturities, capital expenditures and funding of our defined benefit and defined contribution pension plans. In addition to these obligations, there are other factors, many of which are outside of our control, that may negatively impact our liquidity. As discussed below, these factors include (1) the replacement of our existing Visa/MasterCard processing contract; (2) the financial covenants in our GE Commercial Finance Facility and American Express Travel Related Services Company, Inc. (“Amex”); and (3) potential early retirements by our pilots
The reserve component is in the neighborhood of about $750,000,000 that the credit card processor wants up front (with extension to OCT 05).