Originally Posted by
Scoop
Carl,
I agree that as the price of oil goes down the DC-9's become more viable - good for all of us. I disagree with your credit argument for the following reasons:
*DAL recently secured another $1 Billion line of credit.
*Boeing is going to have to self finance its sales if the credit markets dry up.
*NW is chock full of unrestricted cash as you guys have been telling us for the last 6 months.
I wholeheartedly agree with the "place your bets" mentality - who knows what next year will look like?
Scoop
Here's the problem Scoop. The credit markets HAVE dried up. Whether they begin to flow again is anybody's guess - as you have correctly stated. Boeing does not finance aircraft purchases with its own internal cash reserves. Boeing accesses the commercial paper and longer term credit markets to do so, then charges customers a higher interest rate so they can make a little on the arbitrage. Same with GE, same with GMAC, etc. If there's extremely tight access to the paper and credit markets, Boeing can't finance anything unless they're willing to put at risk their own cash reserves.
Carl