UAL burns through 10% of cash in 1 mo

[GoABX]

UAL has $2.2 billion in cash and burned through >$250million in January. How is this going to last?

The company says it is an improvement and the stock is up 10%. Go figure.

================================

UAL Has $191 Million Jan. Operating Loss
Thursday February 26, 1:57 pm ET


CHICAGO (Reuters) - United Airlines parent UAL Corp. (OTC BB:UALAQ.OB - News) on Thursday reported an operating loss of $191 million for the month of January.
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Elk Grove, Illinois-based United, the world's second-biggest airline, filed the largest bankruptcy in aviation history in December 2002, and hopes to emerge from court protection around the middle of this year.

UAL said its net loss for January, including $26 million in reorganization expenses, was $252 million. It ended the quarter with $2.2 billion in cash, of which $650 million was restricted for existing obligations.

The cash balance was down $131 million from December, the carrier said, adding that it met special bankruptcy financing requirements for the 12th consecutive month.

The change in the cash balance included a retroactive, $63 million quarterly wage payment to the International Association of Machinists. The airline reports the monthly statistics as a result of its Chapter 11 bankruptcy case.

"Our financial results show progress compared to January a year ago, and United continued to outpace our competitors in passenger unit revenue improvement, despite the seasonally weak demand across the industry, which we expect to continue in February as well," said Chief Financial Officer Jake Brace in a statement.

Mainline unit revenue, which represents the amount of revenue taken in per available seat mile, rose 8 percent year-over-year, United said, above the industry average.

A similar cost measure excluding special charges and fuel improved 14 percent, the company said.

 

[FlyBoeingJets]

Frontier looks better every month.

 

[General Lee]

If they continue to burn that much cash even during the busier Spring and very busy Summer--I would be surprised.....

Bye Bye--General Lee

 

[fracflyer]

The cash balance was down $131 million from December, the carrier said, adding that it met special bankruptcy financing requirements for the 12th consecutive month.

The change in the cash balance included a retroactive, $63 million quarterly wage payment to the International Association of Machinists. The airline reports the monthly statistics as a result of its Chapter 11 bankruptcy case.

Did you even read it? Cash was down 131 million not 250 million. If you exclude the $63 they gave to the IAM employees then cash was only down 68 billion or 3.1%

Not that it's good, but your thread title is not correct.

 

[GoABX]

Frac,

Cash on hand was 2.2B and their 'net' loss was $250M, which is greater than 10%. Net loss was a 1/4 billion dollars that really went out of the window, they're gone.

In your zeal to prove me wrong you focus on the cash balance that only went down by $113M. This is a number that can be easily be manipulated to make loan covenants (i.e. shift receivables to this month & pay your bills next month or converting assets to cash on a sale-leaseback,etc.etc.).

The net can also be tinkered with but UAL probably isn't trying to overstate their red right now.

(Sure one could ignore $63 million just because it is a one time payment, but that is like saying a car is free b/c you pay cash for it. The money is gone and it was real money.)

BTW, the 2.2 is really 1.6 because 650M is already spoken for.

 

[T-Bags]

"This is a number that can be easily be manipulated to make loan covenants (i.e. shift receivables to this month & pay your bills next month or converting assets to cash on a sale-leaseback,etc.etc.)"

Factually incorrect. This is the reason the DIP's utilize an EBIDTR mechanism.

"BTW, the 2.2 is really 1.6 because 650M is already spoken for"

Not necc. In some cases the restricted cash is an amount that is required to be held to meet certain loan covenents.

"Sure one could ignore $63 million just because it is a one time payment, but that is like saying a car is free b/c you pay cash for it."

It wasn't ignored, it was merely put into "context". This was a PAST debt, so in essence, UAL paid down debt. On that topic, how much more of the DIP loan did UAL pay down in Jan?

 

[dane]

G'day gentlemen,

those of us without insight into accounting simply sit back and say "now I know why I became a pilot".

In all seriousness, I am glad that some of us(pilots) actually know something about numbers and accounting. It is hugely valuable when management comes asking for concessions spouting the "if you want to keep your jobs you need to give us 10% of your pay, pension and per diem".

Brgds,


dane

 

[crashpad]

Great point Dane.

When the football season ended I thought there'd be nothing to watch, but this is truely entertainment.

 

[tbkane]

As a former pilot and now an accountant waiting to be recalled let me chime in.

252m net loss is a paper loss. This includes non cash transactions that DO NOT effect cash. Depreciation, and goodwill being two of the biggest. Although it does effect net income or loss it is not something you pay for so that it does not have cash effect. That is why all public traded companies have to report both an income statement and a statement of cash flows.

IS tells the whole picture, while the SCF shows where the true dollars are going. If you read the press release it spicifically states that they burned through 131m in CASH. That is how you can be cash flow positive and still show an net operating loss.

 

[TonyC]

In all seriousness, I am glad that some of us(pilots) actually know something about numbers and accounting. It is hugely valuable when management comes asking for concessions spouting the "if you want to keep your jobs you need to give us 10% of your pay, pension and per diem".

That's one of the reasons I pay monthly dues.

 

[Andy]

IS tells the whole picture, while the SCF shows where the true dollars are going. If you read the press release it spicifically states that they burned through 131m in CASH. That is how you can be cash flow positive and still show an net operating loss.

TBKane, please define IS and SCF. I was able to follow up to the point where you used abbreviations.
Thanx

 

[T-Bags]

Income statement and I think "statement of Cash flow" (consolidated cashflow...)

 

[Andy]

Thanks T-bags, it's been almost 15 years since I took a college accounting class.

 

[tbkane]

Sorry but T Bags is correct IS = income statement SCF = statement of cash flow