Good debts and bad debts alike shifted company fates last month

One of the most notable events of late September was the acquisition of AirTran by SouthWest Airlines. Looking closely at SouthWest’s debt outlook, you can see at least one reason why commentary in the Wall Street Journal calls the acquisition risky. A combined 28% of SouthWest’s total long-term debts will mature in 2011 and 2012 according to FactSet.*

Yet as SouthWest adds AirTran to its assets, it may be poised to move into a stronger position. Using FactSet, we can look closer at the story of SouthWest’s financial health. While their long-term debt is significant, their assets are also relatively healthy, and have still been well above liabilities throughout this year and last. Contrast this with the picture of now-bankrupt BlockBuster, whose total liabilities exceeded its assets for three consecutive quarters.

Both companies exist as examples of the too-slowly recovering economy: One forced to make a bold move to hope to survive, and another forced into bankruptcy by a failing business model. SouthWest and Blockbuster are both reminders that there are still enough risks to go around, even after the recession.

* Data from Mergent and Telekurs via FactSet