sigler

There was never a chance for stagnation at the big 3. They were always either going to furlough or hire. If they were overstaffed, of course they’d furlough. If their current staffing level is somewhat adequate (which seems to be the case for all 3), hiring is inevitable to compensate for all of the upcoming retirements. Stagnation (not hiring nor furloughing) for 3 or 4 years as some had suggested would cause a somewhat significant reduction in their number of pilots over the years, which is a very inefficient way of fixing an overstaffing problem.

RIPV3

If he's happy at Spirit, cool. Why not just leave it at that and keep it positive instead of trying to trash legacies so much?

watch

Also re: excargodog

inflation is amazing for debtors. Pay back debt with inflated dollars.

rickair7777

People who question the utility of home ownership usually forget that... the mortgage gets cheaper every year. Probably about half of what you started with after 30 years.

If you rent, your rent will at the very least keep up with inflation, and you'll be lucky if that's as high as it goes.

arbalist1

Yeah, but issuing corporate bonds doesn't really have the same mechanics as your home mortgage. AA is maintaining a large amount of liquidity so they can buy a lot of their own bonds back from the market at a discount before their maturity date if they want to. Everyone is acting like they have an adjustable rate mortgage and they're going to get screwed because interest rates increase.

TransWorld

Or, for that matter, buy additional planes if the market demands it. Remember, AA retired about 10% of their fleet.

Excargodog

You still have to MAKE those inflated dollars against the headwinds of that debt service.


No, it’s not an adjustable rate mortgage, it is an INTEREST ONLY mortgage. They are paying the coupon - not paying down principle. They are RENTING the money, not buying it. They are maintaining liquidity because they need the liquidity for operations and to keep their holders of debt from getting nervous and demanding even higher rates.

When the bonds mature they will STILL need to either pay back the face amount or (far more likely) refinance at the rates determined by the market at the time. And yes, if they are flush with money they will likely be able to buy back their long term bonds at a discount to the face value if inflation has sent interest rates up, but to do that they have to be flush with money, and it is difficult to be flush with money when you have bonds you are already paying 12% to finance and loans at LIBOR + 9.5%. Debt can benefit you, but only if the debt allows you to out earn the debt service.

Expecting inflation to somehow help out deeply indebted companies is probably unrealistic.

https://www.bloomberg.com/news/artic...-for-liquidity

Excargodog

Who is “trashing” legacies? Just discussing economics and seniority projections. That’s pretty standard fare fir APC.

TyWebb

Sure that may sound like good news for established debt, but what about future debt and the fact that your paycheck isn't covering the cost of living anymore.

RIPV3

Is that so...