Question For The Accountants Out There

[BoeingBoy]

The new ATSB Interim Agreement contains several requirements - minimum weekly unrestricted cash balances, daily minimum unrestricted cash balances starting 1/2/05, etc. Also included is EBITDAR requirements as follows:

September and October 2004 ($209,800,000)
September, October and November, 2004 ($212,900,000)

The definition of EBITDAR in the agreement is:

"Consolidated EBITDAR means, for any period, the sum of (i) the consolidated operating
income of the Debtors for such period, (ii) rental expenses of the Debtors for such period under aircraft operating leases, (iii) depreciation and non-cash amortization expenses and extraordinary charges, including restructuring charges, and other unusual items of the Debtors that were recognized in arriving at the amount of such consolidated operating income for such period, all as determined on a consolidated basis in accordance with generally accepted accounting principles."

Looking at the 2nd quarter results, I come up with EBITDAR of $256 million based on the definition above, but could have well gotten it wrong.

So if anyone has a better number, I'd be more than happy to hear it. I was just wondering how our profitable 2nd quarter stacked up against the requirements.

Thanks in advance...

Jim

 

[usairways_vote_NO]

Does it matter? Nothing is set in stone it has been amended before and it can be amended again

 

[BoeingBoy]

Just curiosity on my part is all. I do suspect that at some point the ATSB will act to protect the tranche A lender (the part they guarantee) if U doesn't get its act together. This new agreement leaves relatively little of that tranche A money at risk, and none at risk if you count the non-cash collateral at even 10 cents on the appraised dollar.

Jim

 

[BoeingBoy]

Since the 3rd quarter numbers are out, I thought I'd update this thread....

If my calculations are anywhere near close, EBITDAR (as defined in the ATSB agreement) for the 3rd quarter was approximately -$100 million - that's negative $100 million.

If that is about right (a big if), then Sep/Oct EBITDAR has to be over $300 million better than 3rd quarter to meet the ATSB requirement.

I'd still like some confirmation from anyone more familiar with this stuff...

Jim

 

[eolesen]

I think it is safe to say that U missed the EBITDAR target by a couple hundred million. But this is political as much as financial, so nothing will happen until after all the election results are final.

Assuming that we know who won, and there aren't a bunch of legal challenges, it isn't out of the question for the ATSB to declare U in default within the next 30-60 days. I know that's not what most of you want to hear, but the numbers are what they are, and business is business.

 

[Imamec.itsmyfault]

I agree, there was no way Bush's boys were going to let this thing die before the election. However, come Wednesday, all bets are off!

 

[BoeingBoy]

Since the 3rd quarter numbers are out, I thought I'd update this thread....

If my calculations are anywhere near close, EBITDAR (as defined in the ATSB agreement) for the 3rd quarter was approximately -$100 million - that's negative $100 million.

[post="196748"][/post]​

The full 3rd quarter report came out today (11/5/04) and I don't know if I punched a wrong button on the calculator or if the earlier press release was just for U, Inc, but I missed the numbers some.

Looks like Q304 EBITDAR was about $0 [-$3 million] instead of the -$100 million I posted before. The ATSB requirement for Sep/Oct is $212 million and change with the report to them required by 11/25/04.

Just wanted to correct the record. And would still like some verification of my math if anyone is interested.

Jim