Originally Posted by
Excargodog
Nope. Generally you collateralize bonds with things like aircraft, which even if originally new are used aircraft when the bonds mature and have to be redeemed. And if you have to refinance them they have now depreciated in value so you either need more of them or you pay a higher coupon.
the fact is that debt is a cost - you are renting that money - and if you can gainfully employ it - like to buy aircraft you are flying at a net profit - that’s aOk. But those aircraft you park are costing you even if you nominally own them.
See I do agree with that. The bond’s money was just to keep us afloat in some people’s eyes but you can take on the theory that restructuring the fleet did cost money. Sell bonds for the luxury of remolding your entire airline. Seems even better than flying planes to pay them off.