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Oil prices are going to continue to force carriers out of business. Something needs to be done about these fuel prices.
F9 is extremely short on cash. F9 hasn't been able to line up any DIP (debtor in possession) financing; that's not a good sign.Originally Posted by iahflyr
In the airline industry, cash = time. Frontier actually has a decent amount of cash if I remember correctly. I believe they have about $200 million in cash. Even though they are losing $40 million a quarter, I don't see their demise as imminent. I think there is a much better chance of a few others carriers going out of business first (Mesa, VA, etc...)Oil prices are going to continue to force carriers out of business. Something needs to be done about these fuel prices.
F9 had $170M, according to their end of Dec filing. They haven't filed a 10Q for Jan-Mar 08 yet, so it's difficult to determine their current cash position. It's unlikely that F9 will be able to emerge from bankruptcy unless they find additional cash and soon.
Due to negative cash flow trends, First Data told F9 that they would be increasing the holdback percentage on tickets sold to 50%. First Data also wanted to increase collateral from $54.5M to $130M. First Data was obviously getting rather concerned over F9's survival, since their air traffic liability at the end of Dec was $174.7M.
In one of their bankruptcy filings, F9's SVP of Finance (Edward Christie) said that F9 had $18.1M left on letters of credit.
I don't know how long F9 will be able to hold off First Data's attempt to increase holdback, but if F9's credit card processor agreement expires anytime soon, they'll likely be toast instantly.
F9's sold 2 A318s and 2 A319s, allowing them to free up ~$35M in equity (I don't have the exact numbers at my fingertips right now). Having watched this with other airlines, I'll go out on a limb and say those aircraft probably had the most equity of any aircraft in F9's fleet. Any additional aircraft sales will not net as much money.
With F9 filing for bankruptcy, they'll have to pay everything on a cash basis; there'll be no more 60 days same as cash. That's a huge squeeze on cash flow.
It seems like Southwest has been adding DEN flights ever since F9 declared bankruptcy. With Southwest rapidly expanding in DEN, they are putting the screws to F9. I have no doubt that LUV's goal is to put F9 out of business.
Here are a couple of LUV's latest press releases:
http://phx.corporate-ir.net/phoenix....359&highlight=
http://phx.corporate-ir.net/phoenix....426&highlight=