Robert Herbst

Pair Trading the Friendly Skies

Sean,

While what you state above is technically correct. You have left out that ~$2.5 billion of UAUA's (2008) net loss was due to Goodwill & Other Intangible write downs that were written up when UAL came out of bankruptcy.

I would also suggest when looking at LT Debt in the airline industry, it should be compared as a ratio to TTM revenue and current assets.

Specific to LT Debt and Capital Leases, CAL is more negative than UAL when comparing those metrics to TTM revenue.

Note: Cash and equivalent for airlines has a large variance from quarter to quarter. As such, cash ratios should not be used to draw many conclusions beyond short-term liquidity.

Robert Herbst
AirlineFinancials.com