US AIRLINES HOARD CASH RICH TO CUSHION AGAINST SHOCKS

Dino D'Amore
By Dino D'Amore December 21, 2010 10:32

US AIRLINES HOARD CASH RICH TO CUSHION AGAINST SHOCKS

The six largest US airlines have built up $23.8 billion in cash to cushion against future shocks and to pay down outstanding debt. This is the highest US airlines have had cash as a percentage of assets since 1959, according to RBC Capital Markets. However, the airlines total balance sheet debt amounts to $50.2 billion.

Airlines are hoarding enough reserves to be able to continue operating through another steep downturn such as another 9/11 or a repeat of the credit crisis.

Southwest is drawing on cash reserves for its purchase of AirTrain, while Delta is working to cut its debt by 33% to $10 billion by 2012 to be in a position to explore new opportunities. Market rumours suggest a possible deal with Virgin Atlantic although no further details were revealed.

Dino D'Amore
By Dino D'Amore December 21, 2010 10:32
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