usair_begins_with_u
Veteran
- May 9, 2004
- 623
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The new airline will have about $6 billion in net debt, or about 90 percent of its total capitalization, America West Chief Executive Doug Parker said on Friday.
Lets think about that for a moment. Everyone is familliar with credit scoring right? The riskier you are as a borrower, the higher your debt payment. I doubt the combined entity is paying AAA interest on the debt.. I'd guess their avg rate is close to 10%. Thats $600 million in interest payments, without touching principal. How is that stable? This merger is nothing short of a huge financial gamble... I understand why U wanted this to happen, but not so sure about HP? I wonder if this was something they were forced into by GE Capital?? Any insiders care to share?
90% is pretty freaking leveraged...
Under terms of the deal, America West shareholders will get a 45 percent stake in the company, the new investors will have a combined 41 percent and US Airways will have 14 percent.
14% of the new company... Damn. A rose by any other name would be called "liquidation". But hey, they kept name right?
Lets think about that for a moment. Everyone is familliar with credit scoring right? The riskier you are as a borrower, the higher your debt payment. I doubt the combined entity is paying AAA interest on the debt.. I'd guess their avg rate is close to 10%. Thats $600 million in interest payments, without touching principal. How is that stable? This merger is nothing short of a huge financial gamble... I understand why U wanted this to happen, but not so sure about HP? I wonder if this was something they were forced into by GE Capital?? Any insiders care to share?
90% is pretty freaking leveraged...
Under terms of the deal, America West shareholders will get a 45 percent stake in the company, the new investors will have a combined 41 percent and US Airways will have 14 percent.
14% of the new company... Damn. A rose by any other name would be called "liquidation". But hey, they kept name right?
