Originally Posted by
PoppaJo
Might be a silver lining on the horizon. Oil Price absolutely dropping like a rock!
Crazy stuff! $20 oil not far off!
Bit of a non-sequitur.
The primary reason it’s falling is the Russians and Saudis can’t figure out how much they have to cut production by when airlines (and everyone else) stops burning the stuff.
VA has a future but it can’t forever keep paying its debt obligations by borrowing new debt like a dysfunctional family paying one credit card off with another. This has resulted in VA bonds being 8.5% at a time of record low interest rates. I’d imagine the next bond rate is higher still. (The joys of a country where the banks would rather lend to prop up the housing market than to assist businesses). The billion dollars sitting in the bank earning nothing is all borrowed, costing VA approximately 85,000,000 a year for the necessity of an airline having a cash reserve as required by a high cash flow volatile business.
Sooner of later VA will have to improve its debt to equity ratio. Until then it’s reliant on the bond markets and hoping the current panic won’t result in the credit market doing anything stupid.