US Airways CFO stresses carrier’s favourable liquidity position

Washington DC
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While cash balances at US Airways remain below its legacy industry peers, the carrier's management stresses the company has fewer cash obligations than other US network airlines.

US Airways had a cash position of $2.45 billion at the end of the first quarter, said CFO Derek Kerr at the carrier's recent annual media day.

Kerr emphasises that during next couple of years US Airways is the least leveraged among US carriers, and does not have a significant loan payment due until 2014.

For 2011 total fixed obligations at US Airways as a percentage of last twelve months revenue are 6%, says Kerr. For American that total is 17%, 12% at Delta and 11% for United-Continental.

In 2012 the figure increases to 7% at US Airways, falls to 15% at American, rises to 14% at Delta and drops to 10% at United.

Kerr believes the reason US Airways' cash balances are lower compared to its legacy counterparts is those carriers need to bolster their cash reserves to pay down significant financial obligations.

Fuel prices remain US Airways' number one concern, says Kerr. The carrier's working plan in December of 2010 assumed a $700 million rise in its fuel bill, but now with rising prices those estimates have doubled to $1.4 billion.

US Airways has not had a hedging programme since late 2008, but stresses it had the lowest cost of fuel per gallon among US carriers last year at $2.24. President Scott Kirby states that while fuel costs have risen roughly $30 per barrel in 2011, "no one is writing this is a crisis" and that's a "remarkable testament" to the recent industry restructuring through consolidation, capacity cuts and a drive to increase ancillary revenues.

But shortly after Kirby made those remarks American CEO Gerard Arpey described the situation as a crisis during a speech on 8 April with Dallas area business journalists. Arpey's remarks were captured by the Dallas Business Journal.