Where Does U Stand Financially?

[BoeingBoy]

Per the 2nd quarter report, U had $975 million in unrestricted "cash" (cash, cash equivalents, and short-term investments).

Per the BK2 filing, U had $750.3 million in unrestricted "cash" (cash, cash equivalents, and short-term investments) on Sept. 10.

72 days elapsed, $250 million gone...almost $3.5 million a day.

The amounts of unrestricted "cash" at week end per the bridge motion:

The Debtors shall, during the Interim Cash Collateral Period, maintain Unrestricted Cash (as defined in the Loan Agreement) in amounts, measured as of the close of business Friday of each week, not less than the weekly minimums of Unrestricted Cash as set forth below:
Week Ended 9/17/04 $600,000,000
Week Ended 9/24/04 $600,000,000
Week Ended 10/1/04 $550,000,000
Week Ended 10/8/04 $575,000,000
Week Ended 10/15/04 $585,000,000

It appears to me that, based on the 3rd quarter cash "burn" thru Sept 10, that the problem will come with the last 2 weeks when the unrestricted cash balance has to start increasing. The final figure is $165 million less than the unrestricted cash on hand and 35 days after Sept 10.

While that equals an average cash "burn" of approximately $4.7 million per day, well above the "burn" between July 1 and Sept 10, one has to wonder what effect being in BK will have on revenue. And remember that during BK1 we averaged nearly $0.5 million a day on "professional fees".

Anyway, food for thought.....

Jim

 

[jimntx]

The burn rate should increase substantially as suppliers start to demand cash on delivery for supplies. I imagine some companies, like the catering kitchens, have already started.

Any supplier that doesn't demand cash up front is not playing with a full deck since it is public knowledge that US Airways has no DIP financing. I wonder how far the ATSB and related creditors will allow UAIR to burn into the "covenanted" cash on hand before they decide to pull the plug? There was an article in this morning's NY Times on this subject.

New Scrutiny for Airline Bailout Plan

 

[sfb]

72 days elapsed, $250 million gone...almost $3.5 million a day.

...

It appears to me that, based on the 3rd quarter cash "burn" thru Sept 10, that the problem will come with the last 2 weeks when the unrestricted cash balance has to start increasing. The final figure is $165 million less than the unrestricted cash on hand and 35 days after Sept 10.

While that equals an average cash "burn" of approximately $4.7 million per day, well above the "burn" between July 1 and Sept 10, one has to wonder what effect being in BK will have on revenue. And remember that during BK1 we averaged nearly $0.5 million a day on "professional fees".

I'm wondering about those targets as well and the company's ability to meet them. One big question mark in my mind is how bookings are holding up now and through mid-November. If the company burned through $250 million of unrestricted cash during what are generally two good months for traffic (July and August), that doesn't bode well. Granted, seasonally weak forward bookings for September and October may have had an effect, but I don't believe the company can rely on Thanksgiving and Christmas travel to bolster its cash given the very public speculation about a potential liquidation.

I'm not sure what sort of ability the company has to avoid/delay loan and lease payments while in Chapter 11, so that may help the cash position. It's also possible that the company's deteriorating financial position forced some of its unrestricted cash to be converted to restricted cash -- for example, additional collateral as per the Amex agreement. So the cash burn may not have quite been as bad as it appears to have been.

It's hard to say without going through all the numbers and seeing some sort of detailed itemization of cash flows for July through September.

 

[28yrsnojob]

I have talked to some vendors already ,they are either stopping the work
or demanding cash payments up front for future service.

 

[smallstFSA]

There is a little station on the east coast that will not have ice tomorrow for its originators. Guess what they want? Cash on delivery.

Info only current as of 1400.