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Author Topic: How can airlines be $20m + in debt and still going?  (Read 446 times)

Offline creambun

  • Members
  • Posts: 9
How can airlines be $20m + in debt and still going?
« on: August 27, 2012, 02:27:30 PM »
One airline is -500m, but not bankrupt?? tonnes of them are -15m + but appear when you search airlines and go to last page. i thought if you got to around 15m in debt the bank takes the airline and that's it?

or is that the case but it still shows them on the search page

brique

  • Former member
Re: How can airlines be $20m + in debt and still going?
« Reply #1 on: August 27, 2012, 02:41:12 PM »
be sure you are not confusing -cash with a -company value : company value can go up and down a fair bit, if you have aircraft ordered and being paid for using loans : loans are a debit on the company value, the new aircraft's value is not added to CV until it arrives : So, for big aircraft, its easy to get a big 'minus' company value figure : once the aircraft arrive, its common to secure another loan on it then order more : its a way to expand using the banks money, rather than saving up from your income.

A 'minus' cash figure is worst news, you get a few weeks to get back into the green or the bank closes you down.

Offline Sanabas

  • Members
  • Posts: 2161
Re: How can airlines be $20m + in debt and still going?
« Reply #2 on: August 27, 2012, 02:50:44 PM »
The one at -500 million is well & truly bankrupt. But it still takes time from the first BK warning to the airline actually being shut down. The others beyond -50 million are likely similar. Anyone with a pax graph headed steadily downwards and a D credit rating/negative CI will be getting closed down. But an airline that takes as much as it can in unsecured loans, and then spends almost all of that on ordering planes, can easily reach -40 million and still be relatively healthy.

Offline creambun

  • Members
  • Posts: 9
Re: How can airlines be $20m + in debt and still going?
« Reply #3 on: August 27, 2012, 03:05:01 PM »
thanks both for your replies

Offline creambun

  • Members
  • Posts: 9
Re: How can airlines be $20m + in debt and still going?
« Reply #4 on: August 27, 2012, 03:05:45 PM »
any advice for me on the C check post below this topic? :)

 

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