4 ms·

Well, expected revenue looks a bit difference when you're leveraged to the hilt and have interest payments scheduled. My understanding is that very few airline

• WalterBright 7y ago
  Even if they own the planes outright, the interest cost of the airplanes remains the same (because the money tied up in the airplane could be otherwise put to use earning interest). For example, conventional wisdom is that owning your own home outright is a Good Thing. But if mortgage interest rates are low, taking out a mortgage and investing in something that pays more than that interest rate is a Better Thing.
  • cesarb 7y ago
    > But if mortgage interest rates are low, taking out a mortgage and investing in something that pays more than that interest rate is a Better Thing. Yes, but there's extra risk that way. That strategy depends on either the investment returning enough every month to pay the mortgage for that month, or another funding source (like a salary) being available every month to do so. If for some reason neither are available on a given month, you risk losing your home.
• bronco21016 7y ago
  It varies. Some airlines are printing money like it’s their job and have very savvy purchasing teams. Large piles of cash spent on second hand aircraft can really help soften the blow when times get tough. Although in the current market some are even spending cash on NEW airframes which is really kind of crazy. But speaking globally, I would say you’re likely right. The majority of airlines are very heavily leveraged and as soon as the economy softens we’ll see at least a few casualties again.