34million Profit
- Thread starter us0004us
- Start date
... sorry...How is that possible? Take $85M of operating income, add back $50M of depreciation and amortization, and I would guess that USAir operations generated roughly $135M of positive cash flow in 2Q. Plus USAir apparently sold some assets, which should have brought in some cash. Where did all of this cash go to? Did USAir have a big debt principal payment in 2Q? Has anyone seen the statement of cash flows? It wasn't in the press release.
Thats the problem, we are all experts in our particular jobs, but when it comes to trying to figure out Usairways accounting practices forgetaboutit, they are #1 in the industry in that category. My advice would be to ignore the man behind the curtain and vote yes for more givebacks or the PAIN will be unbearable.LaBradford22 said:
Attachments
Ok... here is the bit on the cash...
US Airways ended 1Q04 with $1.64Bil Cash, $978mil unrestricted cash...
US Airways emded 2Q04 with $1.73Bil Cash, $975mil unrestricted cash...
So net cash increased by $90Mil, while unrestricted cash declined about $3mil...
Here is the skinny... The increase in restricted cash has to do with primarily two things... one... cash becomes restricted leading up to normal ATSB loan payments, and two, increasing revenue means increasing credit card usage, which requires more restricted cash (per agreements with credit card services, which frankly, I don't really understand the details of)...
However, the unrestricted number is important, because, when unrestricted cash reaches $700mil, US Airways will be in default of their ATSB loan covenants. The fact that they company did not gain any breathing room here concerns me.
The end of 3Q and early 4Q are generally loss producing times... And cash should bottom out in 3Q... So we will see soon how close the company comes to that loan covenant.
Overall, I think this was a decent quarter, but the company is far from "out of the woods". I think this probably represents the best that the company could have done this quarter, given the situation (fuel prices, LCCs, broken biz model, etc, etc). I agree with LaBradford's assessment that this simply buys everyone, management and unions/employees, more time to figure out what is next...
Prognosis for the 3rd Quarter is already looking bad... Oil prices seem to have leveled out at $38bbl, air fares are not increasing, and sales for the off-peak season (after Labor Day to before Thanksgiving) have begun earlier this year than years past (meaning more discount seats will be sold by the industry for this time period). All this is leading up to a bad 3Q, so say the analysts... I guess the good news here is that costs should level out or decline, thus US Airways should be able to spend less... The only question is how much can they take in...
Also, the company has YTD, $143Mil loss. Thus a loss for the year is all but guaranteed.
Other developments...
Its nice to see some hedging in place... And new service announcements in competitive, strategic markets... PIT announcements (even though bad for employees, good for the company to start implenting things)... However, the changes are still not fast enough for me, but are probably lightning speed for US Airways.
US Airways ended 1Q04 with $1.64Bil Cash, $978mil unrestricted cash...
US Airways emded 2Q04 with $1.73Bil Cash, $975mil unrestricted cash...
So net cash increased by $90Mil, while unrestricted cash declined about $3mil...
Here is the skinny... The increase in restricted cash has to do with primarily two things... one... cash becomes restricted leading up to normal ATSB loan payments, and two, increasing revenue means increasing credit card usage, which requires more restricted cash (per agreements with credit card services, which frankly, I don't really understand the details of)...
However, the unrestricted number is important, because, when unrestricted cash reaches $700mil, US Airways will be in default of their ATSB loan covenants. The fact that they company did not gain any breathing room here concerns me.
The end of 3Q and early 4Q are generally loss producing times... And cash should bottom out in 3Q... So we will see soon how close the company comes to that loan covenant.
Overall, I think this was a decent quarter, but the company is far from "out of the woods". I think this probably represents the best that the company could have done this quarter, given the situation (fuel prices, LCCs, broken biz model, etc, etc). I agree with LaBradford's assessment that this simply buys everyone, management and unions/employees, more time to figure out what is next...
Prognosis for the 3rd Quarter is already looking bad... Oil prices seem to have leveled out at $38bbl, air fares are not increasing, and sales for the off-peak season (after Labor Day to before Thanksgiving) have begun earlier this year than years past (meaning more discount seats will be sold by the industry for this time period). All this is leading up to a bad 3Q, so say the analysts... I guess the good news here is that costs should level out or decline, thus US Airways should be able to spend less... The only question is how much can they take in...
Also, the company has YTD, $143Mil loss. Thus a loss for the year is all but guaranteed.
Other developments...
Its nice to see some hedging in place... And new service announcements in competitive, strategic markets... PIT announcements (even though bad for employees, good for the company to start implenting things)... However, the changes are still not fast enough for me, but are probably lightning speed for US Airways.
Hello Newman
Senior
- Aug 23, 2002
- 376
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WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,721
These results really are good for US. They do show that the revenue improvement disproportionately came from the regional operations rather than mainline but even mainline’s improvements on both the revenue and cost side are commendable.
US is really in a very perplexing position – they had to show financial improvement to their lenders but labor now has a much less compelling reason to negotiate now that there has been at least a little short-term relief seen. Clearly, however, US is not out of the woods particularly when the majority of WN’s impact at PHL has yet to be reported.
I would encourage you to look at the SEC filings along with what is reported in press releases since SEC filings are more detailed. The 10Q will have even more info when it is posted.
http://investor.usairways.com/edgar.cfm
US is really in a very perplexing position – they had to show financial improvement to their lenders but labor now has a much less compelling reason to negotiate now that there has been at least a little short-term relief seen. Clearly, however, US is not out of the woods particularly when the majority of WN’s impact at PHL has yet to be reported.
I would encourage you to look at the SEC filings along with what is reported in press releases since SEC filings are more detailed. The 10Q will have even more info when it is posted.
http://investor.usairways.com/edgar.cfm
OldGuyinPA
Veteran
Why not use the $$$ profits and offer buyouts.
I'm sure people will leave....in a heartbeat.
Then they could go to McDonald's and or WalMart for new hires.
Go USAir....ways.
I'm sure people will leave....in a heartbeat.
Then they could go to McDonald's and or WalMart for new hires.
Go USAir....ways.
ITRADE
Veteran
Same old doom and gloom on Lakefields weekly message post. Not a thank you or kudo's for our hard work..just more gimme, gimme, gimme's. It is the frontline, hardworking people that helped this company make a profit this quarter, but that is not to be acknowledged by those in CCY. Only we must rush to the negotiating tables to give more blood, sweat and tears.. Oh my, it sounds as if the sky is truly falling.....
EyeInTheSky
Veteran
Get to the important numbers; PRASM went up CASM went down. That is good. Buy planes, sell planes; those are a whole lot less important than the operating statistics. The quarter was a huge improvement over last year. Good but not good enough to get this airline past the fall ATSB dates. The numbers show the airline moving in the right direction just not fast enough. Unfortunately more pain for the employees is coming in the near future.
BoeingBoy
Veteran
- Nov 9, 2003
- 16,512
- 5,865
funguy2,
Since you mentioned credit card processors in a post somewhere above, I thought you might be interested in this from the 1Q report....
"On May 4, 2004, US Airways amended its agreement with American Express Travel Related Services Company, Inc. (American Express) to provide additional cash collateral to reduce the exposure borne by American Express against potential customer liabilities relating to unflown tickets purchased by our customers using the American Express card. US Airways has deposited $40 million in additional cash collateral in connection with the amendment, and will deposit an additional $20 million in cash collateral if US Airways’ unrestricted cash, cash equivalent and short-term investment balance falls below $850 million at any time. Additional cash collateral of up to $55 million may be required in the event that US Airways’ regional jet financing programs are terminated or if the Company fails to successfully implement its transformation plan. This amendment effectively aligns the American Express agreement with the arrangements currently in place for certain other credit card processors."
So we have another "cash" threshold to meet, although this one will only result in a cash drain, not default.
Also, you mentioned "unrestricted" cash. This also from the 1Q report...
"The Company, in the ordinary course of business, withholds from employees and collects from passengers funds that are required to be paid to applicable governmental authorities, which include withholding for payroll taxes, transportation excise taxes, passenger facility charges, transportation security charges and other related fees, and has established trust accounts to fund these obligations. The increase in restricted cash reflects additional collateral deposits related to the Company’s third-party credit card processor, letters of credit and trust accounts, partially offset by a reduction in the balance related to the fuel hedging program. For the first three months of 2003, investing activities included cash outflows of $8 million related to capital expenditures, an increase to short term investments of $19 million, and increases in restricted cash, primarily associated with the trust accounts, of $57 million."
Jim
Since you mentioned credit card processors in a post somewhere above, I thought you might be interested in this from the 1Q report....
"On May 4, 2004, US Airways amended its agreement with American Express Travel Related Services Company, Inc. (American Express) to provide additional cash collateral to reduce the exposure borne by American Express against potential customer liabilities relating to unflown tickets purchased by our customers using the American Express card. US Airways has deposited $40 million in additional cash collateral in connection with the amendment, and will deposit an additional $20 million in cash collateral if US Airways’ unrestricted cash, cash equivalent and short-term investment balance falls below $850 million at any time. Additional cash collateral of up to $55 million may be required in the event that US Airways’ regional jet financing programs are terminated or if the Company fails to successfully implement its transformation plan. This amendment effectively aligns the American Express agreement with the arrangements currently in place for certain other credit card processors."
So we have another "cash" threshold to meet, although this one will only result in a cash drain, not default.
Also, you mentioned "unrestricted" cash. This also from the 1Q report...
"The Company, in the ordinary course of business, withholds from employees and collects from passengers funds that are required to be paid to applicable governmental authorities, which include withholding for payroll taxes, transportation excise taxes, passenger facility charges, transportation security charges and other related fees, and has established trust accounts to fund these obligations. The increase in restricted cash reflects additional collateral deposits related to the Company’s third-party credit card processor, letters of credit and trust accounts, partially offset by a reduction in the balance related to the fuel hedging program. For the first three months of 2003, investing activities included cash outflows of $8 million related to capital expenditures, an increase to short term investments of $19 million, and increases in restricted cash, primarily associated with the trust accounts, of $57 million."
Jim
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