Originally Posted by
superangrypenguin
So @Ben,
Could you (or even other FTers if you are investment savvy) please elaborate on something. Before I ask, please note I am not an economist and not an investment guy at all, but I guess I'd like to ask this noob question.
If aircraft rent is not taken into account, let's say the airline nets prior to aircraft rent $10 million. Let's say I rent more aircraft than I need, (so say 70 instead of 30), and I rent all of these planes. Isn't removing a/c rent something that doesn't show how healthy the company is? I mean, if I did not remove the rent from 70 airplanes and 30 airplanes, one might be in the black, one might be in the red as one has 40 airplanes not being used (considering the airline only needs 30).
Please note, I understand that it's not only AC that does this, but i'm curious, in general, how one would account for overcapacity in this regard. (assuming they have parked the other 40 planes and are just paying rent).
*PS No flame please, i'm no aviation $ guru here!
Our assumption is we will continue to grow and fill the added capacity
If you look at the Investors Day presentation, you will see our forecasted fleet until 2018. While we didn't publish specific forecasted capacity numbers, analysts make their forecasts and assumptions based on hard stats such as this fleet, our aircraft utilisation, etc. In addition to the 'hard factors,' the goal of Investors Day was to hopefully sell them on our business plan and our vision.
Also this is where the concept of swing capacity comes into play. When the next cyclic downturn inevitably hits, we have a fleet of paid off and/or cheap aircraft we can park to reduce capacity (e.g. 767s), without having to park our most expensive assets (e.g. 777s). We've never been in such a position before, and we believe this is a major benefit.