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Posted by Jeff Strickland on September 27, 2005, 8:39 am
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The airlines have assets that can be sold off to repay the debt should they
default, and continuing operations that generate income to help prevent
defaulting. You have nothing that can be sold to repay the debt, and the
bank doesn't want the stuff you bought with the loan, and lack the
continuing operations that provide income. That's the difference.
If I was the investor community, and an airline came to me and wanted money,
I'd look at the assets it already holds, look at its operations to see if
there was a net increase in profits, and make a loan decision based on what
I see. If YOU came to me, I would look at the same sorts of things, but you
have no assets yet, and no income, and a low credit score which represents a
high risk of failure -- or at least a risk of default because there have
been reports of poor performance in the past. It's all about risk and terms.
Low risk equates to easy terms, high risk carries more difficult terms.
>I would like to know how a company in the U.S. can
> get protection through Chapter 11 - and continue to
> operate - but people with less than great credit find it
> difficult to get a mortgage
>
> I am actually looking for a commercial loan - but it
> seems that although my business plan is feasible - I
> can't get the funding because I don't have perfect credit.
>
> Yet two airlines can operate in the red
>
>
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