Re:Don't Lower Your Expectations
by otterley on Sunday July 09, 2017 @12:07AM
(#14728315)
Investors are much more likely to lend you lots of money when the debt is secured. Airplanes are pretty good securities against default; they don't depreciate quickly. If you default on your payments, the airplanes will be repossessed and the creditors will get most of their money back.
Seat-back monitors, on the other hand, are nearly worthless after installation. They're tied to the planes they're in; the technology obsoletes quickly; and they can't easily be resold. So the risk to the creditor in percentage terms is much greater.
So, indeed, in absolute terms, there's more at stake for the creditors (10M vs 2.5B), but if I were a creditor, I know what I'd feel safer betting on.
Seat-back monitors, on the other hand, are nearly worthless after installation. They're tied to the planes they're in; the technology obsoletes quickly; and they can't easily be resold. So the risk to the creditor in percentage terms is much greater.
So, indeed, in absolute terms, there's more at stake for the creditors (10M vs 2.5B), but if I were a creditor, I know what I'd feel safer betting on.