Originally Posted by
Excargodog
Let’s see, $10 BILLION at 5.75% interest is $575 million in annual debt service. Interest expense last year was a $1.277 BILLION dollar item and that only reflected about half of the annual cost of the major borrowing done in June. So with a full year’s expensing of that borrowing (with an effective 12% coupon) plus this borrowing AA is looking at an ANNUAL interest expense of roughly $2 BILLION.
To put this in perspective, net income for the two years preCOVID averaged about $1.55 Billion a year. That’s twice the interest expense prior to COVID.
That is a lot of interest.
https://americanairlines.gcs-web.com...e28c18f351_103
But had we not spend a ton of money on stock buybacks at their 4 year high or money on other shenanigans we would have been way more profitable. There was too much discretionary spending on things that brought us zero value but would help the perception of our stock. Between '14-'19 we spent 12.4 billion on buybacks alone. We also spent an ungodly amount of cash upgrading the narrow and widebody fleet while DAL and UAL did basically nothing except interiors.