Us Airways February Net Loss $119.2 Million

[700UW]

US Airways February net loss $119.2 million
Wed Mar 30, 2005 12:01 PM ET

NEW YORK, March 30 (Reuters) - Bankrupt US Airways Group Inc. (UAIRQ.OB: Quote, Profile, Research) said on Wednesday it posted a net loss of $119.2 million for the month ended Feb. 28.

US Airways, the No. 7 U.S. domestic airline, also said in a regulatory filing that its operating revenue for the month was $506 million.

 

[sfb]

The regulatory filing with the SEC is here:

Monthly Operating Report for the Period February 1, 2005 through February 28, 2005

Just a few observations:

Month-end unrestricted cash balance was $405.5 million, down $137.5 million from January 31. Operating cash flow was negative $30.6 million. I suspect that the other $101 million of cash outflow is accounted for by various lease/debt/cure payments. The ATSB minimum cash numbers were $371 million on 2/25 and $325 million on 3/4. I am unable to tell if the company's cash position on 2/28 incorporated the AWAC DIP financing; current maturities of debt and capital lease obligations by about $12 million for the month (cure and lease payments may have offset some of the liability incurred with the AWAC financing, if it closed on or before 2/28 -- I see the motion was approved on 2/28). If the numbers reflect the cash from AWAC on 2/28, they would have been extremely close to blowing the ATSB minimum cash numbers without it. Somewhat worrisome is that the company's traffic liability increased $96 million for the month.

 

[funguy2]

If I am reading that right... There is $294mil in unrestricted cash... I thought the minimum Unrestricted Cash Balances were greater than $300mil? Maybe I am remembering wrong? (probably)

 

[700UW]

There is also $300 Million in recievables.

 

[FWAAA]

If I am reading that right... There is $294mil in unrestricted cash... I thought the minimum Unrestricted Cash Balances were greater than $300mil? Maybe I am remembering wrong? (probably)

[post="259390"][/post]​

I'm reading $405 million in unrestricted cash, but I may be wrong (and often am indeed mistaken).

700UW: Receivables are never counted in Cash.

 

[jack mama]

Anybody have Feb 04 numbers to compare the numbers to.

Revenue 04 vs 05? Personnel costs 04 vs 05? Fuel?

 

[BoeingBoy]

jack mama,

We'll have to wait for the 1st qtr report to answer those questions. We only file monthly reports in bankruptcy.

Jim

 

[700UW]

I don't think, you will see that much of a differance in labor costs, granted pay rates are down, but the mass layoffs did not occur until the 27th.

And there will be an increase in outsourcing costs due to aircraft overhaul and then later this year the 21 stations that the ramp will be outsourced.

 

[jack mama]

Yeah, I'm interested to see how labor cost go down in comparison to increased outsourcing cost....we need some finanical analyst to show if outsourcing is cheaper....

 

[funguy2]

I'm reading $405 million in unrestricted cash, but I may be wrong (and often am indeed mistaken).

700UW: Receivables are never counted in Cash.

[post="259396"][/post]​

I think you are right...

$405mil Unrestricted cash
$111mil Restricted cash
$516mil Total cash

I was subtracting the $111 from $405, but that does not make sense in this case... duh!

So it looks like they are comfortably above the limitations, but still dangerously low on cash... I wonder how little cash the company can truly operate on.

 

[700UW]

Historically it is cheaper then having your own workers, you don't pay wages, vacation, sick time or benefits, but the variables is the quality, extra down-time and lack of parts in the supply chain.

Phantom Fixer can elaborate more on that.

 

[genejockey]

An unrestricted cash balance of $405M is extremely dangerous, and is on the verge of being lethal. Cash is king in the airline industry. It is my understanding that an airline the size of US cannot conduct daily operations on a balance of less than $200 - $300M (closer to $200M if my memory serves me correct). I do not know what the exact figure is, but this development is very concerning. :down:

 

[acfconnect]

Historically it is cheaper then having your own workers, you don't pay wages, vacation, sick time or benefits, but the variables is the quality, extra down-time and lack of parts in the supply chain.

Phantom Fixer can elaborate more on that.

[post="259408"][/post]​

I think a lot of the expenses went to severance packages and bonuses, to get rid of employees. Also, fuel cost increases, and FFL opening and quickly closing and, country club and green fees increases for V/P's..........Or could it be their high cost of Pensions and Medical costs to retirees? Gee! Sure is confusing isn't it?

 

[FWAAA]

An unrestricted cash balance of $405M is extremely dangerous, and is on the verge of being lethal. Cash is king in the airline industry. It is my understanding that an airline the size of US cannot conduct daily operations on a balance of less than $200 - $300M (closer to $200M if my memory serves me correct). I do not know what the exact figure is, but this development is very concerning. :down:

[post="259414"][/post]​

I agree. February cash burn was over $137 million which is over 27% of the revenue for the month. Not quite as bad as Flyi, but a close second. Not a recipe for long-term survival. Add the horrendous March Fuel expenses of at least $120 million or so, and it isn't good at all.

 

[sfb]

Not to be overly pessimistic, but there's something else I just don't get. US Airways Group filed for bankruptcy in September with an unrestricted cash position somewhere in the neighborhood of $800 million. Now, let's say that US gets $350 million in emergence financing (as countenanced by the Republic agreement) and is modestly cash-positive (~$25 million per month) through the end of August, sells the Midatlantic assets to Republic for $110 million, and add all that to the Feb. 28 cash balance. That gets you to $1015 million on August 31 -- when revenue starts to crater out for nearly three months until the Thanksgiving holidays. That doesn't seem like a terribly comfortable position given that the company has bled at least $450 million in cash from mid-September 2004 through 2/28/2005 -- and this is the best possible scenario I can paint.

By the same token, if you start from the minimum cash of $341 million on 6/30 (when the company is supposedly due to emerge, and round up to $350 million), assume that the Midatlantic assets were sold and incorporate $125 million of financing from Eastshore/AWAC all as part of that $350 million, and then add $225 million in additional emergence funding, along with $25 million/month in cash flow for July and August, we get a cash balance on 8/31 of $625 million. I doubt that US could survive the winter on that if fuel stays high.

I guess what I don't "get" is how US makes it to 3/30/2006 even if the company manages to emerge some time this summer.