United Continental liquidity falls in Q3

Washington DC
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United Continental Holdings liquidity and debt fell during the third quarter, as the airline continued to pay down debt.

The Chicago-based Star Alliance carrier had $5.1 billion in cash and cash equivalents on 30 September, which was down 16.4% from the end of June. It had nearly $7 billion in cash at the end of the third quarter of 2011.

Long-term debt and capital lease obligations was $10.4 billion at the end of the quarter, which was down 5.5% from the end of the second quarter. It had $11.8 billion in debt a year earlier.

United made $487 million in debt and capital lease payments during the quarter, says John Rainey, chief financial officer of United, during an earnings call on 25 October. These included paying off the airline's most expensive pieces of debt, which totalled $281 million and carried interest rates greater than 12%.

The airline launched $843.9 million in pass through certificates for 21 new Boeing aircraft during the quarter. The issue is split between a $711.6 million senior class A with a 4% coupon and 2026 maturity, and a $132.3 million subordinate class B with a 5.5% coupon and a 2022 maturity. The debt closed in October.

"While we are focused on reducing our net debt balance, financing aircraft through capital markets remains a prudent and cost effective use of debt," says Rainey.