United focuses on paying down non-aircraft debt

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United Airlines’ focus is to pay down debt that has “nothing to do with investing in our business”, says chief financial officer John Rainey.

Speaking at the JP Morgan Aviation, Transportation & Industrials conference in New York today, he says that about $4 billion of its overall $19 billion in debt could be described as operating cash or other types of debt that is not associated with aircraft deliveries or improving operational or revenue performance.

Chicago-based United plans to pay down about 40% of that $4 billion by March 2015, Compton continues.

“We have the opportunity to significantly reduce this in the coming months,” he says.

United will repay the $800 million outstanding on its 6.75% senior secured notes due 2015, which it can prepay from this September, says Rainey. The airline will also look convert some of its other debt, he adds.

The carrier had $10.9 billion in long-term debt and capital lease obligations at the end of December 2013. This was down 2.7% compared to December 2012.

United anticipates $2.9 billion to $3.1 billion in capital expenditures, which are mostly related to the 52 aircraft deliveries it has scheduled, in 2014.

The airline will take delivery of 35 aircraft for its mainline fleet – down from previous estimates of 36 aircraft – and 17 for its regional fleet during the year, according to Rainey’s presentation.

Rainey’s delivery numbers do not include the 24 Embraer 175s that Utah-based regional carrier SkyWest Airlines will take delivery of on behalf of United in 2014.