Originally Posted by
JediCheese
Easier to use inflation. Hard to point fingers with taxes, much easier for the politicians to blame banks for inflation. Not to mention the rich don't mind inflation because they hold assets which keep their real world value vs taxation which tends to be politically expedient to raise on the rich.
Except the last bonds that AA sold they had to pay 12% for the loan of the money. ForUnited it was 11%
and their financial situation is more precarious now. Except for Alaska, I think all the majors are junk-rated now. And they don’t have the money to pay off their junk rated bonds, instead they must refinance them by selling new bonds collateralized by older airplanes in the face if their own declining credit ratings. That’s bad enough - akin to refinancing credit card debt by repeatedly charging it on a new credit card at higher and higher rates.
Add inflation to that, and the yields will skyrocket. How can ANY company make enough profit to pay off $40 billion (which certainly at least AA will reach before this is over) while paying 15-20% interest on that debt?
Inflating your way out of debt might work for the government which after all prints money, but it will put every major airline (and most regionals) in bankruptcy if it happens.