Airline Balance Sheet Comparison

After Q1 earnings these are rough estimates for positions at the end of Q2 2020 after raising cash and debt. Assumption is that all airlines take the secured loans in the second part of the CARES Act. AA has committed and others are analyzing. Numbers may be slightly inaccurate due to the constant shuffling to liquidity for debt and assets. as well as varying cash burn rates. The cash to zero estimate is also based off of the current burn which is worst case scenario with no recovery in revenue and no cost cutting measures taken on 10/1/2020. Airlines will have unencumbered assets remaining that could potentially be used to leverage for more cash if they have a low debt to asset ratio. The higher the debt to asset ratio, the more at risk and leveraged the company is. Boeing and airline CEOs seem to be in agreement that international flying will lag domestic recovery by a year. This will obviously further complicate a recovery for AAL, UAL, and DAL as they deal with inefficient long haul fleets.


Southwest Airlines

• Total Cash-15.5B
• Total Debt-13B
• Total Unencumbered Assets-5B
• Debt to Asset Ratio-0.63
• Q2 Cash Burn-30M/Day to 35M/Day
• Cash To Zero at Current Burn-11/21

Delta Air Lines

• Total Cash-15B
• Total Debt-32B
• Total Unencumbered Assets-10B
• Debt to Asset Ratio-1.28
• Q2 Cash Burn-100M/Day slowing to 50M/Day
• Cash to Zero at Current Burn-4/21

United Airlines

• Total Cash-13B
• Total Debt-31.5B
• Total Unencumbered Assets-12.5B
• Debt to Asset Ratio-1.23
• Q2 Cash Burn-40M/Day to 45M/Day
• Cash to Zero at Current Burn-4/21

American Airlines

• Total Cash-11B
• Total Debt-46B
• Total Unencumbered Assets-5B
• Debt to Asset Ratio-2.875
• Q2 Cash Burn-70M/Day slowing to 50M/Day
• Cash to Zero at Current Burn-2/21

Alaska Airlines

• Total Cash-3.25B
• Total Debt-5.5B
• Total Unencumbered Assets-1B
• Debt to Asset Ratio-1.29
• Q2 Cash Burn-8.65M/Day slowing to 6.65M/Day
• Cash to Zero at Current Burn-10/21

Spirit Airlines

• Total Cash-1.73B
• Total Debt-3.8B
• Total Unencumbered Assets-565M
• Debt to Asset Ratio-1.66
• Q2 Cash Burn-4M/Day
• Cash to Zero at Current Burn-8/21

JetBlue Airways

• Total Cash-3.65B
• Total Debt-6B
• Total Unencumbered Assets-1.58B
• Debt to Asset Ratio-1.14
• Q2 Cash Burn-18M/Day slowing to 10M/Day
• Cash to Zero at Current Burn-7/21

 

That some good info there. Thanks!

 

Yes.. Good job. Thanks!

K

 

Of course no airline is going to go cash to zero there will be drastic things happening before then

 

Of course, but it's probably a good indicator of which airlines can hold off furloughs and concessions the longest so demand hopefully comes back before that sort of thing is necessary. It also depends on each respective C-suite's penchant for burning through cash before even more drastic measures are taken.

Take United v. Delta. United seems to want more drastic measures sooner than Delta does. Assuming these numbers listed above are correct then there stats are pretty similar. Of course their businesses in reality aren't exactly the same and they have differing threats.


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All of this will depend on demand by late Summer. If we go into Sept with limited bookings going forward, all the airlines will be furloughing once the free govt cheese has been gnawed through.

 

That very well could be the case. Maybe we cut our losses and pay down the debt we just acquired to keep our stellar balance sheet intact.


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Of course nobody will go to zero, I was just using that as a reference point. Airlines with higher debt and operating expenses will need to keep more cash to service that or they will be bankrupt. There was some pilot math here, I’m no accountant but these should be pretty accurate, if not feel free to correct. It was also a bit tricky to be precise being that so much has changed so fast. UAL and SWA have had stock sales recently, which we’re included in these numbers. It appears Spirit announced that today as well....so that could further change things. DAL has a market cap more than double UAL, and triple AAL. They may choose to dilute that to raise liquidity. The debt burden of a company like AA was barely sustainable during good times. With severely reduced revenue it makes you wonder how they plan to navigate the next few years without a bankruptcy to lower debt levels and get rid of a portion of their fleet.

 

Someone should dump all of that data into an easy to reach chart

 

Great info, but not the whole story. Personally, my airline (Southwest) has so much debt that is not on the books now, but they are obligated to pay, and would need to pay in order to keep an operable fleet. This does not take that in to account. I am speaking of new aircraft on order. Our fleet is old! I think we are going to end up a 300-400 aircraft company going forward over the next 10 years, but even at that rate of shrinking, we do have to replace the aging fleet. If for any other reason, is to improve our cost per seat per mile.