This. It’s not how those loans are structured today but how they’ll look after the current term is up. They have an insane amount of liabilities. The FED isn’t done hiking rates yet and when they do pivot downwards history says it won’t come down quickly. And there’s rate issues globally, so restructuring loans on those planes isn’t going to be easy. I’m going to guess a lot of aircraft leasing companies will be scaling back the number of planes they’re purchasing and leasing back to airlines; so the option to sell aircraft and leaseback to ease the burden on the books may be unavailable or unattractive. This is going to hurt our airline too, we’re going to take a huge hit in our ability to sell/leaseback under favorable terms.

Hopefully that question gets asked today on the earnings call. And we’ll get to hear “look….blah, blah, blah…lowest cost…blah…greenest…blah….120 miles per seat…blah…nothing to see here🤣

An added problem for AA (and others) is that they got their original loans (or sold the bonds to buy the aircraft) back when the aircraft/equipment used as collateral was new. When/If they are forced to refinance, those assets will now be used and worth less, meaning they will generally have to up the ante as far as coupon or discount rate or add additional collateral to the refinancing to attract buyers.

That’s less of a problem with newer aircraft - especially newer NEOs/MAXs/A220s that have an advantage in fuel economy.

That’s an excellent point. Our young fleet age definitely gives F9 a better position.

They just answered the question. Jimmy (CFO) said we’re financed for the next 12 months and have capped our exposure to rising rates. What happens after that… who knows.

Any other good info?

The sign on the door does not say airline management, it says financial investment company. He would sell it to anyone with a dime.

I can’t recall anything else that notable. More time was spent addressing new pilot recruitment programs for staffing, while attrition was not addressed. They readdressed capacity increases and reducing CASM with the introduction of the 321neo. The question was asked about expected performance during an economic downturns and they drew comparisons to other low cost airline previous cycles; basically they expect our low costs to win in a recession, people buy-down when money is tighter, etc. The market seems to like us this week, we’re up almost 31% this week compared to 6-8% for most other airlines after their 3rd quarter financials posted.