Posts: 550
Joined: Sat May 07, 2005 5:50 am

Airlines And Their Debts

Sun May 08, 2005 5:34 am

I have read a lot of post recently concerning airline debts. i would like to know how badly debt effects an airline, and how many airlines have become bankrupt because of debts. also does anyone know who is in serious debt and how they get out of it.
thanks guys  bigthumbsup 
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Posts: 9811
Joined: Mon Apr 25, 2005 2:30 am

RE: Airlines And Their Debts

Sun May 08, 2005 5:39 am

Debt is the Achilles heal of any corporation, not just an airline. It affects just about every aspect of the business short of the physical day-to-day airport operations. Carrying a high debt load can limit the financial options an airline has, reduce or eliminate the number of financial institutions willing to loan money and complicate that airline's access to the capital markets (i.e., banks, other lending institutions, etc.). In addition, debt can have an enormous impact on an airline's balance sheet because it creates so much interest payments. AA, for example, would have reported a $14 million profit (instead of a $168 million loss) for Q1 if not for $176 million in interest payments ... and that is just for three months time!