Us Airways Posts $720m Net Income For January
- Thread starter avek00
- Start date
jimntx
Veteran
mweiss said:
However, Michael, I think it important to be sure that people understand that when it comes to corporate accounting, net income does not necessarily equal money in the bank.
If I come to you and say that I can't afford to pay you the $10 I owe you and you forgive the debt, it does not put $10 in my pocket. It just means that when I do my budget, the income vs. expenses math looks $10 better.
Not paying the $881 million in future pension payments (that I doubt UAIR had the money to pay anyway) does not mean that they now have $720 million (net the operating loss) to spend/invest/stuff in the mattress for a rainy day.
It's like gains (or losses) from currency conversions resulting from the fact that yesterday's dollars do not have the exact same value as today's dollars. It's funny money. Legal, but still funny.
Absolutely. I certainly wouldn't suggest that it does. It's just that people read "$720M net income," followed by "less cash on hand," and assume someone's hiding something somewhere. This is all out in the open; it just requires that you understand what's being said.jimntx said:
Or, to use the lingo of investing, it's the difference between unrealized gains/(losses) and realized gains/(losses).
Dog Wonder
Veteran
The "cash on hand' at the end of January, according to the bankruptcy filing, is now below the 'cash on hand' without concessions.
Dog Wonder
Veteran
and before you ask it is also below the 'cash on hand' after concessions too
Headhunter
Member
- Jan 30, 2004
- 42
- 0
"As I mentioned much earlier in this thread, revenue continued to drop. However, cargo revenue dropped 50% in Jan compared to Oct/Nov/Dec. No idea why except for the post office announcement and a $5 to $5.5 million drop seems large for that."
US Airways got rid of its commission-incented General Sales Agents in Europe and replaced it with the supposedly lucrative Lufthansa deal (where LH now markets US flights for cargo).
US Airways got rid of its commission-incented General Sales Agents in Europe and replaced it with the supposedly lucrative Lufthansa deal (where LH now markets US flights for cargo).
jimntx
Veteran
Dog Wonder said:
And, lest anyone forget, for an airline "cash on hand" is critical to the survival of said airline. When a vendor wants paid, it does no good to show him your latest net income statement with its one-time gains from pension terminations. He wants you to "show him the money."
It will be interesting to see the February results since they decided to take the entire credit for pension termination in January.
BoeingBoy
Veteran
- Nov 9, 2003
- 16,512
- 5,865
- Banned
- #53
jimntx said:
And not to put too fine a point on it, but our "cash on hand" is not exactly the same as other's "cash on hand", thanks to the ATSB cash collateral requirements. If we emerge from BK this summer, what will the ATSB require as far as minimum cash collateral levels?
Jim
BoeingBoy said:
Great question Boeing Boy... If history is a guide, then it will require an amount equal to the amount of the loan... Since that was the pre-BK deal, and that is the deal with HP. We already know US Airways made a pig pay down last year... Any idea of what the loan balance is supposed to be on 6/30/05? I am guessing somewhere in the $650-700mil range, assuming no further pay-down during BK...
That would be more evidence of $250mil in exit financing being too little.
Keep in mind that, at least in my opinion, you now have to dig up an extra $125mil + interest to payoff AirWis, or suffer the potential issue of adding 70 unwanted post-BK RJ's.
BoeingBoy
Veteran
- Nov 9, 2003
- 16,512
- 5,865
- Banned
- #55
Without digging around to dig it up, I think the required balance before BK2 was $720 - $725 million, or more than the outstanding balance of about $717 million.
My point was (as you grasped) that even if we exit BK with $500 million in "unrestricted cash" and the ATSB only requires the last pre-emergence minimum of roughly $350 million, we really only have $150 million of "spendable" cash to operate with.
We better be making a profit, or better yet be cash flow positive, or that money won't last long.....
Jim
My point was (as you grasped) that even if we exit BK with $500 million in "unrestricted cash" and the ATSB only requires the last pre-emergence minimum of roughly $350 million, we really only have $150 million of "spendable" cash to operate with.
We better be making a profit, or better yet be cash flow positive, or that money won't last long.....
Jim
Yeah... I am sure that the situation is a "roughly equal" as opposed to "exactly equal"...
But if the Company maintains $100mil more than the current June limit of $341mil, that means the company will has $441mil + $250mil of new financing from who knows where = $691 in total unrestricted cash... If the ATSB covenent goes back to "roughly equal to the loan balance", then we are talking a required unrestricted cash balance of at least $600mil...
US Airways cannot operate on $91mil.
(I chose $100mil more than the 6/30/05 requirement because I beleive they are at about $100mil more than the 1/31/05 requirement established on 1/13/05.)
But if the Company maintains $100mil more than the current June limit of $341mil, that means the company will has $441mil + $250mil of new financing from who knows where = $691 in total unrestricted cash... If the ATSB covenent goes back to "roughly equal to the loan balance", then we are talking a required unrestricted cash balance of at least $600mil...
US Airways cannot operate on $91mil.
(I chose $100mil more than the 6/30/05 requirement because I beleive they are at about $100mil more than the 1/31/05 requirement established on 1/13/05.)
