USAirways accounting ???

[dually]

Ref. the article below.
Can anyone explain how USAirways can lose $188.9 million but end up
with more cash on hand by $16 million ?
Posted on Thu, Dec. 02, 2004

US Airways has lost $188.9 million between its Sept. 12 filing for bankruptcy protection and Oct. 31, according to documents filed with the bankruptcy court. The company must file regular financial progress reports with the court. In the reports, creditors are keeping an especially keen eye on US Airways' cash reserves.As of Oct. 31, the airline had $791 million in cash and cash equivalents, up from $677 million on Sept. 30. The company did not make some payments for leases and other payments because it is under the court's protection.

The company has incurred $3.3 million in fees and expense for lawyers and consultants between Sept. 12 and Sept. 30, including $201,240 to Lazard Freres & Co., the financial advisor for the Air Transportation Stabilization Board. US Airways has promised to pay the bills for Lazard to study the airline's numbers for the ATSB, a government body whose $900 million loan guarantee helped US Airways out of its last bankruptcy.

US Airways lost $232 million in its last quarter, over the three months ending Sept. 30. -- STAN CHOE

Ongoing union talks

US Airways continued negotiating with its unions Wednesday, as it simultaneously prepared to go to court today to ask a judge to throw out their labor contracts.

The airline is making the request for the three unions that have not yet come to consensual cost-cutting agreements: those representing its customer-service agents, its flight attendants, and its mechanics and fleet-service workers.

Voluntary cost-cutting deals could still come in the next few days or weeks. The company and unions will continue to negotiate, even as the judge hears arguments on whether to abrogate the labor contracts. The hearings are scheduled to last through the next few weeks. -- STAN CHOE

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[chperplt]

Can anyone explain how USAirways can lose $188.9 million but end up with more cash on hand by $16 million ?

Didn't the feds allow them to use some of the ATSB loan as cash on hand when they went BK?

 

[JetMonkey]

The article says they didn't make some lease and other payments. If I didn't have to pay my mortgage, I'd have more in my bank account too....

 

[buzzfly]

The difference is cash flow versus income statement. Typical accounting is accrual basis versus cash basis. You can be positive cash flow (statement of cash flow) versus have more expenses than revenue (income statement). Check out the statement of cash flow in the filing.

 

[dually]

Thanks for the nice explanation Buzz !

Makes sense.
It leads me to belive that as long as you have positive cash flow
you can stay in business irregardless of profit or loss.
Im sure thats a false statment. Can you explain why ?

 

[buzzfly]

Cash is king, baby. All rules change under the protection of Chp 11. Deferred lease payments, side deals with creditors. Thus, USAir, UAL, HAL and now ATA are hard to analyze. Airlines in Bankruptcy file monthly financials with the SEC. With airlines, I look at the S of cash flow first. Next, dig into the 10Q/K and have a look at future lease payments. Basically, debt not held on the Balance sheet. These numbers are the future cash payments for aircraft leases.

Pops always said become a CPA and then a lawyer and figure it out on your own.

 

[Mr. Irrelevant]

To add to Buzz's comments.....when analyzing financial statements, it's not a big deal to have a quarter where you may see positive cash flow but a loss on the income statement. This scenario doesn't occur for very long typically because most payables don't last more than 180 days or 270 days or a year. If you're looking over a year span of time, keep a wary eye out for positive earnings but flat cash flow (see Enron for this one). Receivables should eventually be collected which in turn improves cash flow. When they aren't collected, CPA's (particularly the auditing types) get angry!!!

Mr. I.

 

[jayme]

If I take a $5000 cash advance on my credit card I'll have more cash on hand at the end of that month. Doesn't mean I'm making money. Trust me.