Aircraft Financing

[Hope777]

http://www.pr-inside.com/us-airways-inc-announces-340-million-r2424151.htm

 

[nycbusdriver]

http://www.pr-inside.com/us-airways-inc-announces-340-million-r2424151.htm

Regarding your subtitle:

It doesn't look like we own those aircraft anyway. It says the money will be used to REfinance those Airbuses. It may be a good deal if the new interest rate is better. And it will leave leftover funds for "general" purposes, like management bonuses!

 

[FWAAA]

The debt secured by the airplanes is maturing and must be paid off. So US has two choices:

1. Use over $300 million of its current cash to repay the debt; or

2. Borrow over $300 million to pay off the debt, thus preserving over $300 million of its current cash.

Nothing out of the ordinary here - airlines do this all the time.

 

[700UW]

And they are not sellling anything, EETC's are used to raise money by securing it by using certificates backed by OWNED aircraft.

 

[freedom]

The debt secured by the airplanes is maturing and must be paid off. So US has two choices:

1. Use over $300 million of its current cash to repay the debt; or

2. Borrow over $300 million to pay off the debt, thus preserving over $300 million of its current cash.

Nothing out of the ordinary here - airlines do this all the time.

it's always better to let someone else pay for our aircraft , if we get into finicial trouble later down the line , having lots of A/C debt is a great bargining chip ....

 

[UPNAWAY]

^ exactly, if you owe someone a million dollars they own you, if you owe them 100 million you own them! 😀

 

[28L_or_10R?]

it's always better to let someone else pay for our aircraft , if we get into finicial trouble later down the line , having lots of A/C debt is a great bargining chip ....

Oh yeah! Lots of debt is always a great thing! :blink: :wacko:

This is from the guy who suggested we all max out our credit cards...

 

[700UW]

it's always better to let someone else pay for our aircraft , if we get into finicial trouble later down the line , having lots of A/C debt is a great bargining chip ....

Wrong, they are not paying for your aircraft. US takes a loan out on a plane as they own it, they have to pay the lender for the money, they sell EETCs and use the money as operating capital, so US actually is paying twice on one airplane.

You and UP and no idea about what you posted.

 

[SparrowHawk]

^ exactly, if you owe someone a million dollars they own you, if you owe them 100 million you own them! 😀

There is a lot of truth to that statement. The fact that the old US was so far up to its eyeballs in debt actually allowed it to live long enough for the merger to take place. However lenders will only throw good money after bad but so many times before they pull the plug.

I'd like to see US clean up the balance sheet and have less debt as it gives you a different type of security and leverage. When you're leveraged to the gills and something goes amiss like say fuel costs you've got precious little room to move. With borrowing power and assets to leverage you're in a little bit better position, though not good enough for US to take cash and pay down debt. Kinda of a catch 22 if you ask me.

 

[nycbusdriver]

There is a lot of truth to that statement. The fact that the old US was so far up to its eyeballs in debt actually allowed it to live long enough for the merger to take place. However lenders will only throw good money after bad but so many times before they pull the plug.

I'd like to see US clean up the balance sheet and have less debt as it gives you a different type of security and leverage. When you're leveraged to the gills and something goes amiss like say fuel costs you've got precious little room to move. With borrowing power and assets to leverage you're in a little bit better position, though not good enough for US to take cash and pay down debt. Kinda of a catch 22 if you ask me.

Unless they've changed the rules, corporate raiders were notorious for using a company's own money and assets to buy it. The healthier the balance sheet, the easier the takeover. When there's nothing to mortgage and the bank accounts are near empty, the company is immune to raiders.