Originally Posted by WisJudge

Mach, with all due respect, your post is a non sequitur.

Allocating resources to a capital investment or leaving them liquid is as varied as companies are. Knowing all the reasons for doing one over the other is simply unknowable from the outside looking in. One thing is certain, Mesa is not going to invest in anything without assessing the field, having the blessings of their investors and clients, and spending where they think it benefits them the most, both short and long term.

Aircraft are depreciating assets. Their value, as an asset, dwindles via depreciation on the books over a fixed period of time by a set government schedule. May a company sell an aircraft for greater than the scheduled value, of course, and often do, but aircraft lose value with time and use, period. The analogy of aircraft being like houses is not correct. A better analogy is looking at an aircraft like a semi tractor. They begin to lose value immediately upon purchase and for a period of time as miles accumulate. There is a bottom to their capital worth, but their functional worth (ability to generate revenue) continues well beyond their capital value. Airplanes for the purpose of a 121 or 135 operation are simply not there to "lock up" capital. Your premise that Mesa has purchased aircraft to somehow sideline cash makes no sense. One never invests in depreciating assets in a flight to safety. Bonds, real estate, paper, yes. New cars and new airplanes, no.

There is simply nothing untouchable in Chapter 11 (not to be confused with personal Chapter 7 BK's). Everything is on the table during a reorganization; all assets, all cash, everything. The purpose of Chapter 11 is to allow an entity to shed debt and emerge as a stronger and tax paying entity. And nothing is touchable without a court order in a BK. But Mesa is not even tracking towards another BK, so I'm not sure of the point you are trying to make about capital expenditures and BK's.

The value of a lease arrangement is to get something without strong credit, get something for a limited amount of time, or more importantly, for the immediate tax deduction. One leases to gain the full expense at the time of the expenditure; pay $100 and you get to claim $100 as an expense, hence no tax liability. Lease arrangements can be incredibly beneficial for increased cash flow and for high margin businesses. For low margin business structures there are usually plenty of deductions and less need for a lease arrangement. With a purchase we are back to the fixed depreciation schedule and only interest is immediately deductible. Simply put companies that are structuring for long term stability and growth eat the early tax payment in trade for a long-term performing asset. I'm unsure of the point you are trying to make that buying aircraft that will profitably generate revenue is somehow a net negative for Mesa, and us as pilots.

Lastly, you connect pay to pilots directly with the financial health and longevity of a company. Are you saying Mesa needs to have exceedingly high expenses on the labor side to be more competitive in selling it's service? In my experience companies with higher labor costs are always less competitive when compared to like alternatives. Can you share some examples of companies in the transportation industry adhering to your higher expense = more profitable business model? Republic perhaps?