Doubletalk

[Bob Owens]

From Reuters:

"At the end of June, Delta had $1.7 billion in cash, cash equivalents and short-term investments. But the company estimates payments for leases, interest capital expenses, and pension obligations would total at least $2 billion through December."

So? If Delta were to stop operations and go to zero revenue then there really would be a problem. What they failed to include in that little paragraph is what are their expected revenues through December.

I expect to have around $25k in housing, insurance, food and auto costs through December with only around $1500 in cash, does that mean I'm bankrupt? It depends on what I expect to bring in.

Once again we can see how the corporate owned press acts as a spin machine for the airlines.

$1.7billion in cash yet they are broke? BS. The airlines never had such high liquidity requirements before, the banks are simply working with the airlines to slash wages.

 

[FWAAA]

Unfortunately, DL's lenders require it to maintain $1 billion of unrestricted cash, and the new potential credit card processor is talking about requiring a cash deposit of up to $750 million that the lenders would not consider to be "unrestricted cash." Making that deposit would likely throw DL into default unless DL can finesse around it.

Add in the pension contributions, the required debt repayments, the capex spending, and other cash burn between now and 12/31/05 and it is apparent that DL doesn't have enough cash (nor, it appears, the ability to raise it) to avoid defaulting on the $1 billion cash requirement. That $1 billion is a floor that DL cannot go below, not even for one day.

Default ain't a good thing.

Mr Owens, Delta's revenues between now and the end of the year won't even cover the ordinary expenses like wages, fuel, rent, etc. The cash needs you quoted from the article, like "payments for leases, interest capital expenses, and pension obligations would total at least $2 billion through December" are on top of the several billion of ordinary expenses that DL will incur before the end of the year.

DL's expected revenues won't even cover its other expenses; those revenues won't help DL cover this extra $2 billion at all.

Companies don't file for bankruptcy because their bank balance hits zero; they file when they still have enough cash to have a meaningful chance of restructuring. Especially when they don't have unencumbered assets with which to secure DIP financing.

 

[Beer Guzzler]

Quote- FWAAA
DL's expected revenues won't even cover its other expenses; those revenues won't help DL cover this extra $2 billion at all.

You hit the nail on the head. Hmmm $ 1.7 BLN in cash:

1. $750 ML min to keep a credit card processing contract
2. GE requires a min (don't know what it is exactly)
3. Debt Payment on 14+ BLN ?
4. Pension Payment
5. Pilot retiree lump sums of $1 MLN a pop
6. GAS

Plus $$$ needed to file Chapter 11, restructure under Chapter 11 & Emerge from Chapter 11..

All of the sudden $1.7BLN really looks like not very much at all.

I agree, revenues will not come close to covering expenses..

 

[jetmechdelta39]

I think as aviation proffesionals we all need to make sure we take care of each other do our job and let the money people worry about theirs.They have faith in us lets have faith in them

 

[Ch. 12]

From Reuters:

"At the end of June, Delta had $1.7 billion in cash, cash equivalents and short-term investments. But the company estimates payments for leases, interest capital expenses, and pension obligations would total at least $2 billion through December."

So? If Delta were to stop operations and go to zero revenue then there really would be a problem. What they failed to include in that little paragraph is what are their expected revenues through December.

I expect to have around $25k in housing, insurance, food and auto costs through December with only around $1500 in cash, does that mean I'm bankrupt? It depends on what I expect to bring in.

Once again we can see how the corporate owned press acts as a spin machine for the airlines.

$1.7billion in cash yet they are broke? BS. The airlines never had such high liquidity requirements before, the banks are simply working with the airlines to slash wages.

[post="288561"][/post]​

Bob-

You are misguided and always looking to spin something into a "management is full of tyrants trying to make me poor" argument. Fact is DL only generated $63M in positive cashflow from operating activities over the past 6 months (from their filing on Monday) but reduced cash by 166M and 19M for investing and financing activities respectively. What that means is that w/o the unusual obligations coming up, they are losing cash. That INCLUDES $$ from ops so it isn't nearly as simple as your narrow viewpoint. Look at the financials before you rant again.