Airtran 2001 Annual Report Download - page 15

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t
carryforwards existing at December 31. 1998, offset
in
part
by
alternative minimum tax and the application to goodwill
of
the tax benefit related
to the realization
of
aportion
of
the Airways Corporation, Inc.
NOL
carryforwards.
Liquidity and Capital Resources
We
rely
primarily on operating cash flows to provide working capital. We presently have no lines
of
credit or stlOrt-term borrowing facilities. As
of
December
31,
2001,
our
cash and cash equivalents, including restricted cash, totaled $130.0 million compared to $103.8 million at December
31,
2(X)().
The deferral
of
$16.5 million in excise tax payments until January 2002
in
accordance with the Stabilization Act is reflected
in
our 2001 year-end
cash balance. We generally must satisfy all
of
our working capital expenditure requirements from cash provided by operating activities. from external
capital sources or from the sale
of
assets. Substantial portions
of
our assets have been pledged to secure various issues
of
our outstanding indebted-
ness.
To
the extent the pledged assets are sold, the applicable financing agreements generally require the sales proceeds to be applied to repay the
corresponding indebtedness.
To
the extent our access to capital is constrained,
we
may not
be
able to make certain capital expenditures
or
continue
to implement certain other aspects
of
our strategic plan.
As
of
December
31,
2001, our cash and cash equivalents including restricted cash increased by $26.2 million compared to December
31,
2000.
Net cash provided by operating activities was $95.4 million for 2001, a$26.0 million increase over the prior
year.
Our operating cash flow results
for 2001 reflect the receipt
of
$24.6 million from the U.S. Department of Transportation and the deferral
of
$16.5 million
in
excise tax payments until
January 2002
in
accordance with the Stabilization
Act.
Net cash used for investing activities was $31.2 million and consisted
of
purchases
of
property and equipment
and
the payment
of
aircraft purchase
deposits offset in part
by
proceeds from the disposal
of
equipment.
In
2001,
we
sold
17
B717s
(14
of
which were acquired from Boeing during 2001,
as discussed below) under our lease financing commitment with Boeing capital Services Corporation (Boeing
CapitaO.
Our lease financing commit-
ment was for the purchase and sale-leaseback
of
up
to
20
8717s.
8y
the end
of
2001 all
20
aircraft under this commitment were purchased with
corresponding sale-leaseback transactions completed. Related to the refinancing
of
certain debt obligations (see "Other Information" below), Boeing
Capital's purchase price under the lease financing commitment was increased by
$3.1
million per aircraft for the fourth ttlrough twentieth B717 deliv·
eries,
or
$52.7 million
in
the aggregate. The majority of these transactions with Boeing Capital, including the related
debt
repayments
(see
"Other Infor·
mation" below). are noncash items. Our property and equipment purchases primarily consisted
of
spare parts and equipment provisioning for the 8717
aircraft, and to alesser extent capital expenditures on leasehold improvements and computer equipment
to
support our operations growth particularly
in the three new cities
now
served.
In
2001,
we
paid $13.3 million
in
purchase deposits for future 8717 aircraft deliveries.
Net cash used for financing activities was primarily related to the refinancing
of
certain
debt
obligations associated with the 80eing Capital transactions
(see "Other Information" below).
As
of
December
31,
2001, our deliveries
of
8717s from the Boeing Company (Boeing) totaled 30 aircraft. Initially,
we
contracted with Boeing to pur-
chase
50
8717s for delivery between 1999 and 2002, with options to purchase an additional
50
8717s. During 2000, we revised our contracts with
Boeing relating to the purchase and financing
of
our
future B717 aircraft deliveries.
in
addition to recharacterizing the
50
option aircraft to provide for
25
options.
20
purchase rights and
fIVe
rolling options. The options and purchase rights. to the extent exercised. would provide for delivery
to
us
of
all
of
our
8717s
on
or before September 30, 2005. Prior to this revision.
we
had committed to purchase
50
8717s during the following years: 1999 (eight
aircraft).
2000
(eight aircraft), 2001 (16 aircraft) and 2002 (18 aircraft). Also prior to the revision, the
50
option aircraft, if exercised, would have been
available lor delivery between January 2003 and January 2005.
/J.s
of
December 31, 2001. our remaining commitments with respect to 8717 aircraft were for the acquisition
of
12
aircraft in 2002 and
11
aircraft
in 2003. Aggregate funding, net
of
previously paid purchase deposits, required for these aircraft commitments was approximately $470.2 million
at December
31,2001.
On March
21,
2002. we amended our B717 purchase contract as follows:
(i)
our commitments to acquire B717s
in
2002
increased from
12
aircraft to
20
aircraft. comprised of 13 firm and seven option aircraft;
(ii)
our
commitments to acquire 8717s
in
2003 decreased from
11
aircraft to 10 aircraft, comprised
of
nine firm and one option aircraft; and (iiij purchase deposits that were previously paid for aircraft deliveries
in
2002
will
be
applied
10
future aircraft deliveries, rather than reducing the balance
of
the total purchase price due at delivery. Although
we
expect to finance
the acquisition
of
these aircraft.
we
did not have financing in place for these aircraft as
of
December
31,
2001. We have since signed alease financing
proposal from Boeing capital for
19
(20 at Boeing Capital's option)
new
or previously owned 8717 aircraft to
be
delivered in 2002. According to this
proposal. the lease term for each
of
these aircraft commences upon delivery and will continue lor
18
to
19
years. at which time
we
can renew the lease
at fair market rental or purchase the aircraft at the greater of apredetermined amount or its fair market value.
If
completed as contemplated, this lease