With UA restructuring by borrowing $659 million to refinance debt; the US airlines have now completed a round of debt refinancing.
So far we have seen all the US majors (with the exception of WN whose balance sheet is quite healthy thank you). This doesn’t mean that the effort is over. Far from it.
US, UA, CO, DL, AA have all managed to engage in some financial re-engineering over the past 4 months. This is good because it means going into the “bad” winter season - the carriers have bolstered their cash positions and will now emerge next year reasonably healthy. It also shows that the credit markets are indeed loosening up. So the US airlines are now a reasonable bet for the coming months. I think we will see a period of stock declines until the first shoots of spring start to pick up. However – I think we will see only good news on lift numbers. Yield of course will remain depressed.
With the US carriers now with a cleaner financial bill of health – what about the other airlines. BA is in need of some financial help. Irish carrier Aer Lingus is still a basket case. JAL we know is sick. The other airline to watch is Scandinavian. They are struggling. Camping outside Star partner LH is not necessarily the right answer but seems to be the only conventional outcome. Among the other airlines – we see that Malaysian is “accelerating” its restructuring program. There are several other airlines that are in similar situations.
One thing is for certain – the airlines will emerge in 2010 much leaner. Anyone who doesn’t will find themselves somewhat challenged in fighting the competition.