R, LUV has got the best debt ratings:
4. Financing (possibly via government) is made available to
get at least the long-term viable airlines thru the current
crisis (including any possible liability issues for AMR and
UAL, the world's largest airlines).
Figure 1. Debt Ratings
(as of 6/30/01) Moody's S&P
Southwest Airlines A3 A
Alaska Air Group Ba2 BB+
Northwest Airlines Ba2 BB
Delta Air Lines (1) Baa3 BBB-
US Airways Group Caa1 B
UAL Corp (2) Ba2 BB+
AMR Corp Baa3 BBB-
Continental Airlines Ba2 BB
America West Caa1 B+
and the best liquidity situation in terms of days
burn rate, so I agree it's tough to see them going out
of business: LUV has 142 days of cash, followed by Alaska
Air, at 103 days.
CAL has only 39 days of cash on hand,
hence the underperformance of CAL, yesterday and today.
Figure 2. Liquidity Analysis (in millions)
ST Amount Gross Daily Coverage
Airline Cash Invest. Revolver Outstdg Liquidity Burn (days)
Southwest Airlines 968 0 475 0 1,443 9 142
Alaska Air Group 36 335 150 0 521 4 103
Northwest Airlines 1,296 0 1,125 (13) 2,408 22 96
Delta Air Lines 2,548 5 1,250 (800) 3,003 31 85
US Airways Group 517 733 440 0 1,690 20 72
UAL Corp 2,265 482 133 0 2,880 40 63
AMR Corp 1,487 265 1,000 0 2,752 39 53
Continental Airlines 1,008 0 0 0 1,008 19 39
America West 146 28 115 (90) 199 5 31
TOTAL 10,271 1,848 4,688 (903) 15,904 189 71
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I think you have to view the airline stocks in a manner
similar to the telco stocks... those with too much debt may
not be safe at any price...not for the common stock holders.
J |
