FR also have over ten aircraft parked up for the foreseeable future and over 40 737s for delivery in the next six months. I would be more concerned at the effect of having such a large number of unproductive aircraft on the balance sheet.
I can't see any bank in the western hemisphere being reckless enough in the current environment to lend money to any airline to buy lots of new aircraft that have no earning capability. FR have in the last ten days announced the closure of eight routes. Consequently the only way I see MOL affording all these new aircraft is to use FR's cash reserves. Given that FR's balance sheet is already heavily debt laden - approx 45%, the question has to asked as to how robust their position would be to withstand the next few years with their cash reserves depleted.
Bank lending money to purchase aircraft is the same one that has been lending for years. Export Import of the United States
Export-Import Bank of the United States and remember the rates they charging were always low so no change there.Given the strength of Euro v US $ then FR is only benefitting from it.
Currently FR at end of September had 39 leased aircraft so replacing with owned is pretty easy as and when leases expire.
Gearing at 45% is not heavily indebted.
Cash generated in first half year was €177m so somehow the idea that they are not generating cash is not being reflected in reporting results.
EI on the other hand is using up its cash and with an Operating loss this year plus redundancy payments which are an Exceptional Item I think you will find EI with a negative cash flow for 2008 of circa €50m.