Originally Posted by
JediCheese
No one wanted those airplanes (why would you agree to finance old airplanes at the previous value when there's no market for them). I think Delta and SWA aren't junk. United is junk but they can still access the market.
Airlines can hedge most of their costs, so I doubt large inflation would be an insurmountable problem. Even such things as pilot pay get locked in for years in the future via the CBA and inflation has no bearing on that. The real issue is if there's shocks to the system instead of a nice steady climb in inflation.
Back on topic, the US government (the group that can tax) is much more likely to use inflation than taxes to pay off their debts.
One cannot hedge interest expense on future debt refinancing. Not when your credit rating is already junk - and yeah, Delta and SWA ARE junk. Anything not A-rated is junk.
https://www.fitchratings.com/research/corporate-finance/fitch-takes-rating-actions-on-north-american-airlines-10-04-2020
so back on topic, with serious inflation most of the heavily indebted carriers will be forced to go into bankruptcy.