Frontier Files Ch.11

[eolesen]

For the "head in the bucket of sand" crowd.... Frontier's not exactly a tiny airline.

What got these guys was cashflow from the credit card companies -- they started holding back more and more of the float that normally goes to the airlines.

So... when you're looking at AA's cash, keep in mind that the credit card companies wield a lot of power to close down cash coming into the airline. This is the same thing that tipped ATA into bankruptcy back in 2004.

 

[NewHampshire Black Bears]

For the "head in the bucket of sand" crowd.... Frontier's not exactly a tiny airline.

What got these guys was cashflow from the credit card companies -- they started holding back more and more of the float that normally goes to the airlines.

So... when you're looking at AA's cash, keep in mind that the credit card companies wield a lot of power to close down cash coming into the airline. This is the same thing that tipped ATA into bankruptcy back in 2004.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

Not surprised "E",..............sorry to hear that though(I kinda liked FRNT).

SPIRIT should be next(privately held though), followed by Air tran.
(I NOT HOPEING on these "picks", just prognosticating)

 

[mwa]

they were my next guess. though they express optimism about continuing I think people booking away will seal their fate.
next? I would have to know something about cash on hand but I guess Mesa is there now.

 

[ual777fan]

they were my next guess. though they express optimism about continuing I think people booking away will seal their fate.
next? I would have to know something about cash on hand but I guess Mesa is there now.

Or will be shortly. Apparently they have a massive debt payment sometime in June...

 

[Delta Technician]

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

Not surprised "E",..............sorry to hear that though(I kinda liked FRNT).

SPIRIT should be next(privately held though), followed by Air tran.
(I NOT HOPEING on these "picks", just prognosticating)

You've been pretty much right on with your predictions. It will be interesting to see who the first big one is to teeter.

 

[ual777fan]

You've been pretty much right on with your predictions. It will be interesting to see who the first big one is to teeter.

I've got my money on USAir. They have a great group of employees but the management over in Tempe seems intent on running the airline straight into the ground. As for the next ones to go...

1)Mesa (sometime in June because they have a massive debt payment due that no one knows how they will make good on)
2)AirTran (just a gut feeling that the 717, while a massive improvement over the DC-9's, just don't have the unit costs to compete these days)
2.5)Midwest (was teetering looking at an AirTran merger before NWA stepped in and infused some cash)
3)Spirit (completely private so its hard to determine what its financial position is)
4)JetBlue (the economic slowdown will hit the snowbird NE-Florida routes hard; on the plus side they are spinning off LiveTV which will raise some cash)
5)USAir (same reason as JetBlue but combined with completely inept management)

 

[sharonstoneseat]

I've got my money on USAir. They have a great group of employees but the management over in Tempe seems intent on running the airline straight into the ground. As for the next ones to go...

Nope.... not US. 3 Billion in unrestricted cash and a good portion of debt pushed out to 2014. We may be ugly but we're not stupid.....

 

[eolesen]

We may be ugly but we're not stupid.....

Dunno about that last part. I think US is ugly, stupid, and just very lucky to have a cash balance right now...


If credit card issuers start increasing the holdbacks for larger carriers, it's gonna play hell with the cashflow. $3B in cash isn't the number to be focusing on... it's how much unrestricted cash you have before you start triggering defaults on your loan covenants.

AA triggered at $1B back in 2003, and had reasonably good credit. I suspect that US's past might be requiring them to carry at least that much cash before triggering a default.


Some not so idle speculation on Airtran and Mesa this afternoon.

Mesa's market cap dropped to $18M (just under $0.70/share). They were trading at $2.50 last month, but has tanked since the news about their convertible offering coming up in June was made public in an SEC filing.

Airtran lost 34% of their value today, falling from $6.23 down to $4.13..... They went so far as to issue a press release an hour ago defending their $358M in total cash (which of course begs the question of what their unrestricted cash triggers are....)

 

[robbedagain]

I thought US had or has 2.53 bill or mill in unrestricted cash

 

[mwa]

VA cash infusion:
http://us.rd.yahoo.com/finance/industry/ne...mp;siteid=yhoof

 

[Bob Owens]

For the "head in the bucket of sand" crowd.... Frontier's not exactly a tiny airline.

What got these guys was cashflow from the credit card companies -- they started holding back more and more of the float that normally goes to the airlines.

So... when you're looking at AA's cash, keep in mind that the credit card companies wield a lot of power to close down cash coming into the airline. This is the same thing that tipped ATA into bankruptcy back in 2004.

80 airplanes, not exactly a mega carrier either.