US Airways plans to retain cash in order to cover its anticipated $1.2 billion in integration costs from its proposed merger with American Airlines, say executives.
"We want the [cash] balance there so that there is no hiccup," says Derek Kerr, chief financial office of the Tempe, Arizona-based carrier, at a media event in Tempe on 24 April. He adds that cash for the integration will take priority over paying down debt until the process is complete, which is expected by 2015.
US Airways had $2.53 billion in cash, cash equivalents and marketable securities at the end of the first quarter. This was up 6.3% from the end of December and up 15.5% from a year earlier.
Kerr says that this is the highest "first quarter unrestricted cash balance" in the airline's history.
Long-term debt and capital leases net current maturities fell a dramatic 25% to $3.28 billion during the quarter, compared to $4.38 billion at the end of 2012. Debt was down 17.6% from the end of the first quarter 2012.
US Airways issued $183 million in notes under its 2012-1 enhanced equipment trust certificate (EETC) issue during the quarter, according to a stock exchange filing on 23 April. The debt is split between a $111 million A tranche with a 5.9% coupon, a $37 million B tranche with an 8% coupon and a $35 million C tranche with a 9.125% coupon.
The airline also closed its $819.6 million 2013-1 EETC deal on 24 April. The two-tranche issue financed and is secured by 14 Airbus A321s and four Airbus A330-200s.
Net capital expenditure was $116 million during the first quarter. This includes $48 million in net aircraft expenditures.
US Airways anticipates net capital expenditure of $397 million this year, including $227 million for aircraft and $170 million for other items, says Kerr. This is up from guidance of $334 million in January due to the 2013-1 EETC deal, he says.