Airlines expected to make it through 2009
Bankruptices unlikely, though could change if downturn extends to 2010
AP, 2-23-09
ATLANTA - Plunging airline stocks suggest investors worry a few carriers may wind up in bankruptcy, victims of the country's financial crisis. Analysts say there's no immediate danger of that for any major carriers, although it could be the fate of one or two by this time next year if credit markets stay tight or the economy weakens further.
Tempe, Ariz.-based US Airways Group Inc. is considered the most vulnerable among legacy carriers, according to analysts.
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"We got some problems potentially in early 2010 if some airlines cannot raise additional cash," Calyon Securities airline analyst Ray Neidl said Monday in an interview.
US Airways said in regulatory filing Wednesday that its high level of fixed obligations limits its ability to fund general corporate requirements and to obtain additional financing. Its fixed obligations include debt, aircraft leases and financings and aircraft purchase commitments.
US Airways said its "existing indebtedness is secured by substantially all" of its assets. It also said the terms of a credit facility it has with Citicorp and other financing arrangements require the company to maintain consolidated unrestricted cash and cash equivalents of not less than $850 million.
Neidl currently projects US Airways will end 2009 with $1.4 billion in unrestricted cash and short-term investments.
US Airways spokesman Morgan Durrant said Monday that his carrier has proven its ability in the past to raise significant cash when others didn't think it could.