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Do Northwest Have A Lot Of Debt?  
User currently offlineDonder10 From Canada, joined Oct 2001, 6659 posts, RR: 22
Posted (12 years 4 months 1 week 3 days 5 hours ago) and read 1098 times:

Hi all,
can someone tell me how much debt NW have?Although their long haul fleet is generally oldish,their short haul fleet is quite young and Im not sure if they have paid for the 333s yet.
Cheers,donder

6 replies: All unread, jump to last
 
User currently offlineHlywdCatft From United States of America, joined Jan 2001, 5321 posts, RR: 7
Reply 1, posted (12 years 4 months 1 week 3 days 3 hours ago) and read 1049 times:

I don't know about Northwest finances, but from what a lot of people say on here Northwest is one of the best off.

As for aircraft, you can bet those DC-9s are paid off as most of the other planes because they own the majority of their aircraft and not lease them.

I would assume that Northwest doesn't have a lot of debt.


User currently offlineSFOintern From United States of America, joined Oct 2001, 770 posts, RR: 5
Reply 2, posted (12 years 4 months 1 week 3 days 3 hours ago) and read 1032 times:

Yes.

The important thing to look for here is Net Worth. Northwest's debt outstrips its valuable assets.

Only Northwest and US Airways currently have a negative net worth. US Airways is worth less than -$1 billion. Northwest is not far from a $0 net worth.

This takes into account stock price, owned aircraft, owned airport facilities, etc.

Northwest is what they call "highly leveraged" (massive losses from the Republic merger, early 90s), which is why they are so conservatively managed.

Amazingly, though CO has huge debt, it has invested its valuable assets so wisely that it has a respectable net worth.

Despite what people think about United, it still has the 3rd highest net worth behind AMR and DAL, respectively.


User currently offlineBobnwa From United States of America, joined Dec 2000, 6432 posts, RR: 9
Reply 3, posted (12 years 4 months 1 week 3 days 1 hour ago) and read 1015 times:

SFOintern,

The debt that Northwest has is not a result of the Republic "merger" buyout. Northwest paid cash for that transaction and incurred no debt. The debt that Northwest has is the result of the leverages buyout by "Wings Associates" in the early 90's. This leveraged buyout used the assets of Northwest to buy its shares.

At that time Northwest has the strongest balance sheet in the airline industry and was ripe for a leveraged buyout


User currently offlineTWFirst From Vatican City, joined Apr 2000, 6346 posts, RR: 52
Reply 4, posted (12 years 4 months 1 week 3 days 1 hour ago) and read 1002 times:

Bobnwa is correct.

NWA may be highly leveraged, but they don't have a problem with liquidity. Comparatively, they have a high amount of cash reserves and they also have a large amount of unencumbered assets to borrow against. In addition, they're spinning off Pinnacle airlines, which is expected to raise a significant amount of capital (I think $400 million)... whether they use that for debt reduction or expansion I don't know.



An unexamined life isn't worth living.
User currently offlineSFOintern From United States of America, joined Oct 2001, 770 posts, RR: 5
Reply 5, posted (12 years 4 months 1 week 2 days 23 hours ago) and read 976 times:

Bobnwa-- My bad, thanks for the correction.

TWFirst:

Net worth takes into account cash and unencumbered assets. Either way you have it, NWA at this point either has a negative or near 0 net worth. (Well the spinoff might help).

Liquidity is not a problem as long as you can borrow! The simple fact is NW's debt rating hinders its borrowing power.


User currently offlineTWFirst From Vatican City, joined Apr 2000, 6346 posts, RR: 52
Reply 6, posted (12 years 4 months 1 week 2 days 23 hours ago) and read 966 times:

>>Liquidity is not a problem as long as you can borrow! The simple fact is NW's debt rating hinders its borrowing power.<<


Gee, thanks professor. Gee, maybe I shouldn't have bothered with the MBA and just visited airliners.net so a teenager could explain to me that debt rating hinders borrowing power.  Insane

Northwest's debt ratings are comparable to other majors. Northwest has a variety of ratings on its various notes/bonds etc., but its ratings are similar to that of AMR's. You can go to Moodys.com to check.


And I disagree that net worth is the most important thing to look at anyway. Debt-to-equity ratio is a more valuable indicator. All airlines market caps are depressed right now relative to before 9/11, so net worth is skewed.



An unexamined life isn't worth living.
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