Us Airways Posts $720m Net Income For January

[BoeingBoy]

Not to be too optimistic (don't want to ruin my image), but there are some reasons for the cash drop in Dec & Jan. Most of the 1110 agreements were reached in December and the cure payments were due in Dec/Jan. Presumably those were responsible for a good chunk of the drop in unrestricted cash.

Jim

 

[Fatherknowsbest]

mweiss, thank you for your answers, especially how the goodwill was handled. The accounting IMHO is slight of hand because the Company is trying to paint a picture that things are improving, when it is pretty obvious that they are not.

No slight to you is inferred, I mean that for Company mismanagment only.

 

[funguy2]

Not to be too optimistic (don't want to ruin my image), but there are some reasons for the cash drop in Dec & Jan. Most of the 1110 agreements were reached in December and the cure payments were due in Dec/Jan. Presumably those were responsible for a good chunk of the drop in unrestricted cash.

Jim

[post="251751"][/post]​

I am with you Boeing Boy... I know aircraft lease payments are often annual and semi-annual, thus when looking at only one month, in which they occur, may be deceiving. That, or something similar, is likely occuring here.

Of course, the other hand, is that according to this, the unrestricted cash balance can be as low as $341mil on 6/30/05 and be ok per the ATSB, but I am not sure how the company can operate on that, since they've declared BK twice at around $500mil unrestricted cash... That means, with minimum ATSB unrestricted cash + investments of $250mil, they will be at $591mil in unrestricted cash... Even if they beat this minimum by $100mil its still a very similar cash position as when the company entered BK... Doesn't seem like much of an exit strategy.

 

[FWAAA]

Unless the revenue turns around in a hurry, it's gonna get a lot worse for the remaining employees. Massive pay cuts already enacted won't matter without revenue. Fuel keeps climbing as well. Bleak is just too optimistic a word.

 

[BoeingBoy]

funguy,

Some surprising (and not so surprising) tidbits from the Jan financials...

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.

Personnel expenses jumped $13 million over Dec - strange considering that the cuts (interim or permanent) were in place after Oct. Could there have been that much overtime paid?

Fuel expense (not surprisingly) jumped back to nearly Oct's level. I suspect that Feb will be as bad or worse.

Selling expenses jumped $9 million. Selling all those tickets at heavy discounts seems to have had a cost.

The dreaded "other" expense jumped $9 million from Dec.

Jim

 

[mweiss]

mweiss, thank you for your answers, especially how the goodwill was handled.

You're welcome. I far prefer to have the mistrust of management be based solely on their chosen actions (of which there are many), rather than confusions that result from the complexities of business accounting (of which there also are many).

The accounting IMHO is slight of hand because the Company is trying to paint a picture that things are improving, when it is pretty obvious that they are not.

There were no press releases on USAirways.com regarding this topic. Dow Jones Newswire reported the filing in the same way they always report them. In that sort of story, the overall net number always gets the headline, not the operating net. You'll see different wording in the analysis articles.

No slight to you is inferred, I mean that for Company mismanagment only.

[post="251763"][/post]​

I didn't hear any in your post. While I agree that company mismanagement has resulted in the continued operating losses, I don't see any evidence of book cooking here. With the sort of scrutiny that a company has while in bankruptcy, it'd be mighty hard to imagine it happening right now, anyway.

 

[a320av8r]

"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.

Personnel expenses jumped $13 million over Dec - strange considering that the cuts (interim or permanent) were in place after Oct. Could there have been that much overtime paid?"

Just fishing here but:
Couldn't the cargo reduction be due to the fact that shipping drops significantly after the holidays?
Didn't a large number of people retire on Dec 31, carryed over to Jan?

Just looking for some sunshine :huh:

 

[mweiss]

...unrestricted cash balance can be as low as $341mil on 6/30/05 and be ok per the ATSB, but I am not sure how the company can operate on that, since they've declared BK twice at around $500mil unrestricted cash...

The point at which an airline files depends on loan covenants. Don't read too much into the previous $500M floor. It sounds like the ATSB (who has the most restrictive covenants, if my understanding of US's current debt is correct) is willing to let it drop much lower this time. I'm really at a loss (no pun intended) to explain why...perhaps it's because of the three-strikes law?

...cargo revenue dropped 50% in Jan compared to Oct/Nov/Dec.

It'd be interesting to compare this to the other legacies to see if this is an industry trend, rather than something unique to US.

Personnel expenses jumped $13 million over Dec - strange considering that the cuts (interim or permanent) were in place after Oct. Could there have been that much overtime paid?

Would severance-related costs show up here?

Selling expenses jumped $9 million. Selling all those tickets at heavy discounts seems to have had a cost.

Perhaps. Might some of the marketing also come from this bucket? What about the costs associated with closing some of the res facilities?

 

[BoeingBoy]

Just fishing here but:
Couldn't the cargo reduction be due to the fact that shipping drops significantly after the holidays?
Didn't a large number of people retire on Dec 31, carryed over to Jan?

Just looking for some sunshine :huh:

[post="251789"][/post]​

Both are logical reasons for at least some of the change....

On the cargo, the numbers were pretty consistent in Oct/Nov/Dec, while I would presume that holiday shipping would ramp up before Christmas. My first thought was that it could be the aftereffects of the "holiday meltdown" - causing shippers to look elsewhere.

I know we had a spike in pilot retirements in Dec - meaning official retirement on Jan 1. Don't know about the other groups, but that would certainly have had an effect, but I have no way of quantifying it.

Jim

 

[700UW]

People were not laid-off yet, so I doubt severence led to any increase in costs.

 

[funguy2]

The point at which an airline files depends on loan covenants. Don't read too much into the previous $500M floor. It sounds like the ATSB (who has the most restrictive covenants, if my understanding of US's current debt is correct) is willing to let it drop much lower this time. I'm really at a loss (no pun intended) to explain why...perhaps it's because of the three-strikes law?

I probably won't discount the roughly $500mil floor based on this... When entering BK #1, there was no ATSB loan to US Airways, thus no covenents...

Now, the company was somewhat larger at that time, and that may have an effect on what the "floor" is... However in this environment everyone knows "cash is king". If US Airways exits BK hastily without enough cash... trouble won't be far off... again.

So, while the environment is changing, I would argue that the floor is actually increasing vs. history... Since US Airways has been shrinking it should need less cash, thus lowering the floor... The overall effect... about even... That's my opinion anyways...

And, in March 04, I predicted BK#2 for October 04 using that same floor... I came within a month... Not bad as far as predictions go...

 

[usairways_vote_NO]

And, in March 04, I predicted BK#2 for October 04 using that same floor... I came within a month... Not bad as far as predictions go...

[post="251808"][/post]​

So are you saying bankruptcy #3 within a month and before they even get out of #2?

 

[funguy2]

No... more like predicting that $250mil won't be enough to complete BK emergence by 6/30/05, unless there is some strong cash generation in March-June... Or US Air digs up more exit financing....

 

[mweiss]

I probably won't discount the roughly $500mil floor based on this... When entering BK #1, there was no ATSB loan to US Airways, thus no covenents...

No ATSB covenants. I can assure you that they had covenants on their existing debt at the time.

And, in March 04, I predicted BK#2 for October 04 using that same floor... I came within a month... Not bad as far as predictions go...

[post="251808"][/post]​

True. Just don't consider that number to be magical.

 

[Vikedog64]

They slashed the pensions..you call that a profit?>??
:down: