Which airlines have most financial staying power?

The recent plunge in oil prices has brought airlines some relief, but they're still facing serious financial pressure from near-record jet-fuel prices and a weak economy. A new surge in oil prices would worsen their losses and force them to spend their cash faster or sell assets to raise money to stay in operation.

USA TODAY airline reporter Dan Reed produced this analysis of the 10 largest U.S. airlines' financial conditions as of June 30, drawing on interviews with industry analysts and the airlines' financial reports. Revenue is for the 12-month period ended June 30, 2008. Debt figures, also as of June 30, are adjusted to include off-balance-sheet leases on aircraft.

Gauging an airline's survival

Unrestricted cash and short-term investments as a percentage of an airline's revenue from the preceding 12 months is a common tool used by financial analysts. They use it to evaluate a carrier's liquidity and to determine how close an airline is to running out of cash. Calyon Securities analyst Ray Neidl considers a ratio of 10% or less to be the danger zone and ratios in the low and mid-teens worrisome. Neidl provided the ratios illustrated below, based on financial data as of June 30.

Strongest

28. 5%: Southwest

The industry's discount leader is No. 7 by revenue, but it's No. 1 in profitability.

Financials

Revenue for latest 12 months: $10.5 billionDebt: $3.2 billionUnrestricted cash and short-term investments: $3 billionUnrestricted cash as a percentage of revenue for latest 12 months: 28.5%

Strengths

Strongest balance sheet in the industry, with lots of cash and ready access to capital marketsSterling brand image; highly rated for customer service despite its no-frills approachBest hedged against high fuel prices through 2012

Weaknesses

Cost pressures rising as growth slowsHigh fuel prices are pushing fares higher, threatening to send price-sensitive travelers — Southwest's core customers — to their cars.

Potential cash sources

Banks and others will gladly lend to only U.S. carrier with an "A" credit ratingEquity in its fleet of 540 Boeing 737s that could be posted as collateral on loans.Likely survivors

AMR

The world's largest airline company, with broad global reach, AMR is the parent of American Airlines and American Eagle.

Financials

Revenue for latest 12 months: $23.5 billionDebt: $14.8 billionUnrestricted cash and short-term investments: $5.1 billionUnrestricted cash as a percentage of revenue for latest 12 months: 21.6%

Strengths

Most cash in the industryIn U.S., strong hubs at Dallas/Fort Worth, Chicago and Miami, strong positions in New York and Los Angeles markets; leading carrier between U.S. and Latin America, one of largest between U.S. and London's Heathrow Airport

Weaknesses

Middle-of-the-pack costs would be much lower but for high labor and fuel costsPoor and deteriorating labor relations, especially with pilotsMostly old, fuel-inefficient fleet of 960 mainline and regional planes inflates costs; will take years to replace.

Potential cash sources

Airplanes: Many could be sold and leased back to raise cashOther assets: World's biggest aircraft maintenance operation; American Eagle regional airline; the AAdvantage frequent-flier program

Alaska

The USA's eighth-largest airline by revenue is a long-running success story in the West, where bigger carriers largely have been content to leave it alone.

Financials

Revenue for last 12 months: $3.6 billionDebt: $2.8 billionUnrestricted cash and short-term investments: $990 millionUnrestricted cash as a percentage of revenue for last 12 months: 27.4%

Strengths

Strong cash positionLowest costs among the seven conventional network airlinesStrong market position in the Pacific Northwest and West Coast niche market

Weaknesses

Limited assets that can be used to raise cash

Limited geographic market reach

Potential cash sources

Horizon Air regional airline subsidiary

Continental

The fourth-largest U.S. carrier by revenue, Continental is seeking government approval for a new marketing alliance with United Airlines.

Financials

Revenue from latest 12 months: $15 billion

Debt: $2.8 billion

Unrestricted cash and short-term investments: $3.4 billion

Unrestricted cash as a percentage of revenue for latest 12 months: 23.2%

Strengths

Strong cash position for its size

Houston hub serves booming energy market; Newark hub serves huge New York market and is a major access point to Europe

One of the youngest fleets among the big carriers

Weaknesses

Little equity in planes, limiting ability to raise cash through sale/lease-back deals

Minimal presence in major foreign destinations such as London, Paris, Tokyo

Potential cash sources

Airport gates and facilities, and international route rights could be sold or collateralized for cash

Delta

The USA's third-largest airline by revenue emerged from Chapter 11 bankruptcy reorganization last year and is waiting for government approval to merge with Northwest Airlines.

Financials

Revenue for latest 12 months: $20.2 billion

Debt: $10.9 billion

Unrestricted cash and short-term investments: $3.2 billion

Unrestricted cash as a percentage of revenue for latest 12 months:16.1%

Strengths

Operating costs lowered via Chapter 11 bankruptcy in 2005-2007, though still among the highest

Refocused route network to increase international service and reduce domestic flying

Powerful Atlanta hub is complemented by East Coast shuttle, Salt Lake hub and most U.S.-Europe service of any airline.

Weaknesses

U.S. route system still heavily dependent on smaller markets, where revenue often doesn't cover operating costs

Exposure to lower-fare competition from AirTran in Atlanta

Merger with Northwest would create a short-term cash drain before benefits appear.

Potential cash sources

Airplanes: Substantial value in wide-body fleet for sale/lease-back deals

Other assets: Maintenance division, Comair regional carrier subsidiary and equity stakes in other regional carriers, and SkyMiles frequent-flier program

Northwest

The fifth-largest U.S. airline by revenue, it's counting on a merger with Delta to form the world's largest carrier, topping American.

Financials

Revenue for latest 12 months: $13.2 billion

Debt: $9.9 billion

Unrestricted cash and short-term investments: $3.2 billion

Unrestricted cash as a percentage of revenue for latest 12 months: 24.5%

Strengths

A premier U.S.-Asia route system

No. 2 in unit revenue thanks to international network popular with business travelers and strong hubs in Detroit and Minneapolis-St. Paul that face relatively little competition from low-fare carriers

Large fleet of high-capacity wide-body jets

Weaknesses

Highest unit costs among big airlines despite bankruptcy reorganization in 2005-2007

History of difficult labor-management relations; integration with Delta could be contentious

Long-standing reputation for below-average customer service, despite evidence of recent improvement.

Potential cash sources

International route rights

Equity in wide-body fleet

Regional airline and vacation package subsidiaries

STRUGGLING

-AirTran

The No. 10 U.S. carrier by revenue has the second-lowest operating costs in the industry, but reduced growth and debt are problems.

Financials

Revenue for latest 12 months: $2.5 billion

Debt: $2.8 billion

Unrestricted cash and short-term investments: $485 million

Unrestricted cash as a percentage of revenue for latest 12 months: 19.5%

Strengths

Established low-fare niche carrier in large Atlanta market

Young, fuel-efficient fleet

Largest operator of Boeing 717s, which few carriers fly, giving Boeing a vested interest in keeping AirTran afloat.

Weaknesses

High debt load

Exposed to potential increase in competitive pressure from Delta at Atlanta hub

Slowed growth threatens to push operating costs higher

Limited ability to expand without running into fierce competition from rivals

Potential cash sources

Boeing

JetBlue

A onetime Wall Street darling, the No. 9 carrier by revenue, has turned into an underperforming stock due to losses, reduced growth and operational difficulties.

Financials

Revenue for the latest 12 months: $3.2 billion

Debt: $4 billion

Unrestricted cash and short-term investments: $924 million

Unrestricted cash as a percentage of revenue for the latest 12 months: 29.1%

Strengths

Leading discount carrier in the huge New York City market

Lowest operating costs among the 10 largest U.S. carriers

Weaknesses

High debt, with many delayed orders for new aircraft still on its books

Rising costs as a result of slowed growth, air traffic congestion and delays in the New York market

Small market presence outside New York

Potential cash sources

Delivery positions for popular new Airbus and Embraer jets could be sold; LiveTV subsidiary is already on the auction blockLufthansa could increase its 19% stake

UAL

United Airlines' parent, the USA's second-biggest airline company by revenue, emerged from bankruptcy reorganization in 2006.

Financials

Revenue for latest 12 months: $20.6 billionDebt: $11.1 billionUnrestricted cash and short-term investments: $2.9 billionUnrestricted cash as a percentage of revenue for latest 12 months 14.1%

Strengths

Best global service network, with big hubs in Chicago and Denver and a strong position at London Heathrow; a premier network between U.S. and Asia

Recently extended credit card partnership and banking relationships with Chase Bank to raise $600 million in cash and improve liquidity by nearly $600 million more

Weaknesses

Less cash on hand as of June 30 than Delta, Continental and Northwest, all smaller airlines

Aging fleet

Increasingly contentious labor-management relations; pilots union calling for CEO Glenn Tilton's resignation

Potential cash sources

Airport gates and landing rights, and international route rights, can be sold or used as collateral

Company claims more than $1.billion in unencumbered aircraft and other assets

US Airways

The USA's No. 6 carrier by revenue, it is the most exposed to low-cost carrier competition.

Financials

Revenue for latest 12 months: $11.9 billionDebt: $8.3 billionUnrestricted cash and short-term investments: $2 billionUnrestricted cash as a percentage of revenue for latest 12 months: 17.4%

Strengths

Updated, fuel-efficient fleet

Recent climb from worst to first in on-time performance; also big improvements in other customer-service categories

Strong presence in heavily traveled Eastern USA

Weaknesses

Highly exposed to competition from low-cost carriers, especially Southwest at US Airways' Phoenix and Philadelphia hubsSecond-weakest balance sheet among top 10 U.S. carriersFeuding between employees of the old America West and the old US Airways has delayed some of the benefits of 2005 merger and created tense internal relationsSmall international market presence leaves US Airways more exposed to volatile, less-profitable domestic market

Potential cash sources

Could sell some assets, such as takeoff and landing rights or renegotiate loans

Sources: Calyon Securities, the airlines, USA TODAY research