Airlines/Liquididity.Strongest..to..Weakest

[NewHampshire Black Bears]

Would one of my fellow posters(this site),....WHO is a "Financial Wizard Extraordinaire",.....compile a "Liquidity" list of the 9 company's....as they stand today ?

(Strongest..to Weakest)..(AA/UA/DL/CO/NW/WN/US/AS/B6)

What prompted my curiosity was , a report that CO, who gets a Lot of good press, has Liquidity concerns !

Thanx in advance !!

 

[Crapdog]

http://www.usatoday.com/travel/columnist/grossman/2008-05-12-higher-oil-prices_N.htm

 

[NewHampshire Black Bears]

http://www.usatoday.com/travel/columnist/grossman/2008-05-12-higher-oil-prices_N.htm

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Hey CRAP,

Thanx for the link.

One problem though, I can't get to open.

 

[Crapdog]

http://www.usatoday.com/travel/columnist/g...il-prices_N.htm

 

[Hi-C-Camp]

http://www.usatoday.com/travel/columnist/g...il-prices_N.htm

This is one of the most ridiculous and horribly written pieces I have seen in a long time. You can not divide revenues from the first quarter into cash on hand and get the liquidity of a company.. If this were the case we could all just sit back and relax, as we would know for sure what would happen, and who would be the next to fall... For example, AMR will likely post much larger losses the 2nd quarter due to the grounding of its aircraft.. Then will they take that number then re-divide it into cash on hand and come up with a new figure??? Not credible at all.... SAD...

 

[Crapdog]

But fuel cost for grounded airplanes is zero......

 

[TechBoy]

Some analyst was just on CNBC and predicted the following chances on bankruptcy this winter:

AA - 1 in 3
UA - 1 in 4
DL - 1 in 10
CO - 1 in 25

For what it's worth . . .

 

[FrequentFlierCA]

Some analyst was just on CNBC and predicted the following chances on bankruptcy this winter:

AA - 1 in 3
UA - 1 in 4
DL - 1 in 10
CO - 1 in 25

For what it's worth . . .

AA is the only major player left that stands to gain from reorganizing. The others have been down the court-led road before (a few of them more than once) and there's little fat left to trim.

All things being equal, I would put UA over AA in the "most likely to file this year" category because their cash burn is greater with falling margins.

 

[Winglet]

AA is the only major player left that stands to gain from reorganizing. The others have been down the court-led road before (a few of them more than once) and there's little fat left to trim.

All things being equal, I would put UA over AA in the "most likely to file this year" category because their cash burn is greater with falling margins.

If UA goes, it'll likely be a Chapter 7. There's nothing left to mortgage and Tilton's management team is even more clueless than DAL, AA, NWA, and LCC combined.

 

[Hi-C-Camp]

If UA goes, it'll likely be a Chapter 7. There's nothing left to mortgage and Tilton's management team is even more clueless than DAL, AA, NWA, and LCC combined.

Actually, you couldn't be more wrong... It is posts and posters such as this that believes anything they read by the clueless... UAL actually has dozens of a/c that they own outright, such as the 737s that they want to get rid of, that they may be able to sell if they so choose. Also they have their FF program worth between 4-7 billion... If they just spun off the FF program alone they will have almost 8 billion in cash... They also have their maint.. facility they are thinking about selling... Burning furniture isn't a good thing, but UAL has options my friend, carriers like US, does not.. Do a little research b/f your next post please.. Thanks...

 

[FrugalFlyerv2.0]

Actually, you couldn't be more wrong... It is posts and posters such as this that believes anything they read by the clueless... UAL actually has dozens of a/c that they own outright, such as the 737s that they want to get rid of, that they may be able to sell if they so choose. Also they have their FF program worth between 4-7 billion... If they just spun off the FF program alone they will have almost 8 billion in cash... They also have their maint.. facility they are thinking about selling... Burning furniture isn't a good thing, but UAL has options my friend, carriers like US, does not.. Do a little research b/f your next post please.. Thanks...

I wonder how UA's or any airline's FF loyalty program value is affected by its performance? For UA maybe last year they would be able to fetch $4-$7 billion, but I wonder if there is a sucker who TODAY would be willing to pay that much? Half as much? Let's just play advocate here and assume that today, UAL finds a sucker to pay $4 billion for Mileage Plus what does that do for UAL? Buys them a bit more time, but for how long? And once that money runs out or is spent, what is sold off next? And then what?

This is not to pick on UA, but I would be shocked and amazed if there was an investor who would pour billions of dollars TODAY into any United States airline loyalty program (except maybe for SW, but that one is not for sate).

 

[luv2fly]

An article explaining why AA may be at greater risk.

Link

That will be soon at AMR and it puts the company at great peril.

 

[BigBangTheory]

UAL actually has dozens of a/c that they own outright, such as the 737s that they want to get rid of, that they may be able to sell if they so choose.

Who do you think is going to be able to buy these a/c from UAL? Nobody has enough cash floating around to buy planes, especially old beat up 737-300's.

I think UAL is headed for Ch. 7 and they will be first back into court to file.

 

[eolesen]

To answer the original poster, liquidity is a sticky wicket. You can look at the financials to figure out available cash and short-term securities, but they don't typically disclose other relevant things like encumbered/unencumbered aircraft & assets.


I don't see UAL being in a Ch.7 -- they still have a valuable franchise that someone will try to acquire. Likewise for AS, HA, and to a lesser degree, B6.

US? Forget it. They'll rot on the courthouse steps. Likewise for YX, F9, FL, and NK. They're disposable capacity and not exactly unique networks.


If UAL tries to sell MP for billions, they seriously risk having someone's ass hauled into court for perjury, because they claimed a far lower value when they were dumping their pensions on PBGC. And it's not out of the question that the PBGC would try to attach the proceeds of a sale to UAL's claim...

UAL did wind up with about 100 unencumbered aircraft following their emergence from bankruptcy, but as mentioned, if they're the 2nd gen 733's and 735's, they're not exactly marketable. It just means they're free and clear. Nothing more than that. If they still have a few 777's which are unencumbered, they might be able to get into a sale/leaseback to generate cash, or they might be able to sell the shell. But as you said, burning the furniture has consequences.

 

[FWAAA]

I really doubt that MP is worth anywhere near $4 billion to $7 billion.

The only other legacy that tried really hard to avoid Ch 11 was Delta. It sold ASA for a few hundred million, but it was too little, too late. It borrowed about $500 million from AMEX (accelerated sale of frequent flyer miles) but that wasn't enough. If frequent flyer plans were really worth billions to outside buyers, I'm convinced that Delta would have sold its Skymiles program and avoided Ch 11.

My guess? MP might bring a few hundred million. Not a billion, and certainly not $4 or $7 billion.

But I've been wrong before.

The good news is that if MP is worth $4 billion to $7 billion, then what's AAdvantage worth? $8 billion to $12 billion? AA doesn't have to sell it all - just sell a minority stake to the public in an IPO and AA can avoid bankruptcy PLUS grant all labor groups their wage wish lists.