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Strategies & Market Trends : Bankruptcy Predictor Model
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To: Razorbak who wrote (86)3/19/1999 5:58:00 PM
From: Paul Berliner  Read Replies (2) of 477
 
Before assessing TWA's possible lapse back into bankruptcy, there are several positive items that must be looked at:
Despite the quarterly losses, the Company has had significant positive cash flow the last several quarters, meaning that it has been able to meet its obligations. This is similar to the broadcasting companies that constantly have net losses but positive cash flow.
The Company can sell of a plane or two in its vast fleet if it needed cash in an emergency.
The Company is the 6th largest carrier in the world. Why isn't it priced like AMR or UAL? By servicing the entire world and not just the U.S. and 'popular' destinations, it sacrifices the benefits of its higher-margin domestic routes with results from several low-margin, international routes. Thus, it will never be as profitable. Also, the Company has fallen prey several times to terrorism, and many people still have in the back of their minds the feeling that the crash over long island may have been a bomb because the proof of fire was never well-supported. Any institution would rather gain exposure to the airline sector through a non-terrorism prone airline like AMR or LUV rather than TWA, which flies to all the favorite terrorist areas.
The Company does not have a lot of debt currently due, and its sitting on over $300M in cash anyway.
They are running these commercials where they brag of a recent large order placed with Boeing for new planes - they must have money coming in form somewhere in order to put deposits on them.
I am not recommending TWA, but I doubt that they'll return to chapter 11 anytime soon.

Paul

I would've never have guessed that the thread would be this busy!
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