The year 2020 was anything but rosy for US airlines. American Airlines, Delta, United Airlines and Southwest alone burned $ 32 billion due to the corona crisis. Apparently, this has no impact on liquidity, because according to the published balance sheets the “Big Four” are literally swimming in money.

If you calculate the liquid funds reported by the four carriers mentioned, you get the proud sum of 31 billion US dollars as of December 2020, 31,5. According to CNN, that's $ 13 billion more than at the end of 2019, the strongest year in civil aviation history. In addition, the four carriers combined have unused credit lines amounting to 65 billion US dollars. A corona miracle?

Probably not, because the high liquidity is literally “on credit”, because the lion's share of the funds was raised on the capital market. As a result, at some point the due date will come and the money will have to be paid back. The airlines have sold bonds, borrowed money, mortgaged their planes, frequent flyer programs and other assets, and even sold additional stocks, which is extremely unusual for an industry in this position. The borrowing has added around $ 40 billion in long-term debt to national airlines' balance sheets.

There was also financial support and loan programs from the US government, but these do not make the herb fat in view of the high debt that was taken out, for example, on the capital market. The problem is that all carriers, with the exception of Southwest, were classified by analysts as so-called junk bonds. As a result, the interest rate is not exactly cheap due to the high risk.

The workforce was greatly reduced in October 2020

Most carriers implemented large-scale downsizing in October 2020 as the first support program expired and the Trump administration took a long time to bring a new regulation into being. That was just right for the big airlines, because they parted with many employees and were able to drastically reduce costs. Further measures have also been taken to reduce expenditure.

Nevertheless, it can be assumed that the record liquidity, which was bought at a high price, could become a boomerang at a later point in time. At the latest when the bonds and credits are due, but the income does not match, things get complicated. Many US airlines have a solution for this that has already been successfully tested many times: For example, you could restructure yourself via Chapter 11. But this can be expected in a few years at the earliest.