Which airlines have the 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%: SouthwestThe industry's discount leader is No. 7 by revenue, but it's No. 1 in profitability.FinancialsRevenue 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%StrengthsStrongest 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 2012WeaknessesCost 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 sourcesBanks 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

21.6%: AMRThe world's largest airline company, with broad global reach, AMR is the parent of American Airlines and American Eagle.FinancialsRevenue 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%StrengthsMost 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 WeaknessesMiddle-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 sourcesAirplanes: 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

27.4%: AlaskaThe 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.FinancialsRevenue 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%StrengthsStrong cash positionLowest costs among the seven conventional network airlinesStrong market position in the Pacific Northwest and West Coast niche marketWeaknessesLimited assets that can be used to raise cashLimited geographic market reachPotential cash sourcesHorizon Air regional airline subsidiary

23.2%: ContinentalThe fourth-largest U.S. carrier by revenue, Continental is seeking government approval for a new marketing alliance with United Airlines.FinancialsRevenue from latest 12 months: $15 billionDebt: $2.8 billionUnrestricted cash and short-term investments: $3.4 billionUnrestricted cash as a percentage of revenue for latest 12 months: 23.2%StrengthsStrong cash position for its sizeHouston hub serves booming energy market; Newark hub serves huge New York market and is a major access point to EuropeOne of the youngest fleets among the big carriersWeaknessesLittle equity in planes, limiting ability to raise cash through sale/lease-back deals Minimal presence in major foreign destinations such as London, Paris, TokyoPotential cash sourcesAirport gates and facilities, and international route rights could be sold or collateralized for cash

16.1%: DeltaThe 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.FinancialsRevenue for latest 12 months: $20.2 billionDebt: $10.9 billionUnrestricted cash and short-term investments: $3.2 billionUnrestricted cash as a percentage of revenue for latest 12 months:16.1%StrengthsOperating costs lowered via Chapter 11 bankruptcy in 2005-2007, though still among the highestRefocused route network to increase international service and reduce domestic flyingPowerful Atlanta hub is complemented by East Coast shuttle, Salt Lake hub and most U.S.-Europe service of any airline.WeaknessesU.S. route system still heavily dependent on smaller markets, where revenue often doesn't cover operating costsExposure to lower-fare competition from AirTran in AtlantaMerger with Northwest would create a short-term cash drain before benefits appear.Potential cash sourcesAirplanes: Substantial value in wide-body fleet for sale/lease-back dealsOther assets: Maintenance division, Comair regional carrier subsidiary and equity stakes in other regional carriers, and SkyMiles frequent-flier program

24.5%: NorthwestThe fifth-largest U.S. airline by revenue, it's counting on a merger with Delta to form the world's largest carrier, topping American.FinancialsRevenue for latest 12 months: $13.2 billionDebt: $9.9 billionUnrestricted cash and short-term investments: $3.2 billionUnrestricted cash as a percentage of revenue for latest 12 months: 24.5%StrengthsA 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 carriersLarge fleet of high-capacity wide-body jetsWeaknessesHighest unit costs among big airlines despite bankruptcy reorganization in 2005-2007History of difficult labor-management relations; integration with Delta could be contentiousLong-standing reputation for below-average customer service, despite evidence of recent improvement.Potential cash sourcesInternational route rightsEquity in wide-body fleetRegional airline and vacation package subsidiaries

•STRUGGLING

19.5%: AirTranThe No. 10 U.S. carrier by revenue has the second-lowest operating costs in the industry, but reduced growth and debt are problems.FinancialsRevenue for latest 12 months: $2.5 billionDebt: $2.8 billionUnrestricted cash and short-term investments: $485 millionUnrestricted cash as a percentage of revenue for latest 12 months: 19.5%StrengthsEstablished low-fare niche carrier in large Atlanta marketYoung, fuel-efficient fleetLargest operator of Boeing 717s, which few carriers fly, giving Boeing a vested interest in keeping AirTran afloat.WeaknessesHigh debt load Exposed to potential increase in competitive pressure from Delta at Atlanta hubSlowed growth threatens to push operating costs higherLimited ability to expand without running into fierce competition from rivalsPotential cash sourcesBoeing

29.1%: JetBlueA onetime Wall Street darling, the No. 9 carrier by revenue, has turned into an underperforming stock due to losses, reduced growth and operational difficulties.FinancialsRevenue for the latest 12 months: $3.2 billionDebt: $4 billionUnrestricted cash and short-term investments: $924 millionUnrestricted cash as a percentage of revenue for the latest 12 months: 29.1%StrengthsLeading discount carrier in the huge New York City marketLowest operating costs among the 10 largest U.S. carriersWeaknessesHigh debt, with many delayed orders for new aircraft still on its booksRising costs as a result of slowed growth, air traffic congestion and delays in the New York marketSmall market presence outside New YorkPotential cash sourcesDelivery positions for popular new Airbus and Embraer jets could be sold; LiveTV subsidiary is already on the auction blockLufthansa could increase its 19% stake

14.1%: UALUnited Airlines' parent, the USA's second-biggest airline company by revenue, emerged from bankruptcy reorganization in 2006.FinancialsRevenue 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%StrengthsBest global service network, with big hubs in Chicago and Denver and a strong position at London Heathrow; a premier network between U.S. and AsiaRecently extended credit card partnership and banking relationships with Chase Bank to raise $600 million in cash and improve liquidity by nearly $600 million moreWeaknessesLess cash on hand as of June 30 than Delta, Continental and Northwest, all smaller airlinesAging fleetIncreasingly contentious labor-management relations; pilots union calling for CEO Glenn Tilton's resignationPotential cash sourcesAirport gates and landing rights, and international route rights, can be sold or used as collateralCompany claims more than $1.billion in unencumbered aircraft and other assets

17.4%: US AirwaysThe USA's No. 6 carrier by revenue, it is the most exposed to low-cost carrier competition.FinancialsRevenue 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%StrengthsUpdated, fuel-efficient fleetRecent climb from worst to first in on-time performance; also big improvements in other customer-service categoriesStrong presence in heavily traveled Eastern USAWeaknessesHighly 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 marketPotential cash sourcesCould sell some assets, such as takeoff and landing rights or renegotiate loans

Sources: Calyon Securities, the airlines, USA TODAY research