I’m not an accountant but isn’t most of Ryanair’s debt held off the balance sheet... held by leasing companies but Ryanair need to provide the cash to keep the plates all spinning... I’m assuming many airlines are the same? Interrupt that cash flow and it gets hugely expensive.... for example when you can’t fly ac due Crew shortages!
Correct.
Low Fare Airlines and even the established airlines hold aircraft off balance sheet. This changes ratios of debt and the like, but the money is still required to be paid.
Low Fare Airlines are not really low cost, that is code for low wage. In not owning an asset a low fare airline has less depreciation and thus more profit.
The problem for low fare airlines and indeed airlines like's Australia's Qantas subsidiary Jetstar is that accounting rules are a little opaque and that is going to change.
IFRS 16 will address the way that airlines can have an operating lease (where the aircraft is rented for a fixed term, a monthly payment made and at the end of the term handed back to the lessor) but somehow record the value of the asset, implying some ownership. Trucking and many transport companies have the same problem.
In assessing an airline it is often of use to look also at 'free' cash flow (net) to see whether the business generates enough cash to conduct operations and there are a few conventions as to how long companies ought burn cash, Oil (shale) producing companies are really interesting when looking at cash flow.