ACRONYM: Bankruptcy Fun with EBITDAR
The airline industry has its share of acronyms (EGPWS, METARS, IFR...I could go on) but the financial world is not to be outdone. Today's acronym is EBITDAR which stands for "Earnings Before Interest, Taxes, Depreciation, Amortization and Rent". Why is this important to the airline world? Weeeelllll, EBITDAR is used as a key performance measure during bankruptcy and the airline world has more than its share of bankruptcy. The important thing is that EBITDAR strips out all of the financial hocus pocus (especially depreciation and amortization) that can cloud what you really need...a good measure of revenue to cash flow. Still awake? Great...then click on Read More!
Last Friday, Delta's hired financial gun, Timothy Coleman, senior managing director at The Blackstone Group, took the stand and talked about, amongst other things the airlines EBITDAR margin (once again from the AP):
"The airline's EBITDAR margin, which estimates the amount of operating cash flow generated by each dollar of sales, fell from 23.3 percent in 1999 to 3.2 percent in 2004, Coleman said.
"The biggest event is the margin has collapsed. When you are at a low percentage you are not a viable entity," said Coleman.
Next year the airline expects to see revenues of $16.08 billion, and the pilots' wage cuts would help the airline achieve an EBITDAR margin of 11.4 percent, Coleman said.
Well, duh! Everybody knows that.
And finally lets not forget that EBITDAR is the more refined but not as popular brother of EBITDA and EBIT...stepbrother to EBITDAX...wahoo! I'm dizzy.
Last Friday, Delta's hired financial gun, Timothy Coleman, senior managing director at The Blackstone Group, took the stand and talked about, amongst other things the airlines EBITDAR margin (once again from the AP):
"The airline's EBITDAR margin, which estimates the amount of operating cash flow generated by each dollar of sales, fell from 23.3 percent in 1999 to 3.2 percent in 2004, Coleman said.
"The biggest event is the margin has collapsed. When you are at a low percentage you are not a viable entity," said Coleman.
Next year the airline expects to see revenues of $16.08 billion, and the pilots' wage cuts would help the airline achieve an EBITDAR margin of 11.4 percent, Coleman said.
Well, duh! Everybody knows that.
And finally lets not forget that EBITDAR is the more refined but not as popular brother of EBITDA and EBIT...stepbrother to EBITDAX...wahoo! I'm dizzy.
Labels: Airline, bankruptcy, earnings
posted by The ACK at
12:16
