ReserveCA

the trailer park in Denver ran surprisingly smooth yesterday🤔🤔🤫🫣

DumboDrop

From a purely mathematical standpoint, disfunction^2 equals function. Or something.

Tranquility

HOLY ****!!! We, 'with our powers combined' (thanks CA P.), could match Delduh?!

planejoe

Hope it still does when it's blowing snow and grandma needs to walk across the ramp to the rear stairs.

ReserveCA

WHAT!
It snows in Denver?

CaseTractor

Is the benefit faster turns times or just a result of limited gate space?

I wonder if salt on the ramp during cold weather will cause problems from a corrosion prevention standpoint years down the road with 150+ people embedding rock salt into the isle and carpets every boarding...

spooldup

I will add, that most of the dysfunction comes with gate issues and space available.

I know there is more than just gates, but the amount of gates an F9 + NK merger would bring would be huge compared to what we have now.

Stayontarget

BB has touted the faster turn times as a result of dual boarding. That has yet to be true for my flights but I won’t argue the potential is there. I have heard we poached a SWA station manager to improve the process. Could be a false hope. We will also increase from 9 to 14 gates when it’s all completed. This doesn’t including the occasional international gate with a normal jet bridge. I surmise the operational costs for this facility are substantially cheaper over the long run than the previous gates but I don’t have anyway to back that hypothesis.

It might. We give away airplanes at the 8-12 year mark so it may not matter that much by that time. Can’t be too much worse than the myriad of bodily chemicals already festering in that carpet. Oh look! A peanut M&M! Mmmmm

doz4dllrs

So is this a correct hypothetical interpretation on how this affects Frontier?

Step 1: Placing the Aircraft Order

Frontier places an order with Airbus for a new airplane that costs around $50 million. Instead of paying the full amount upfront, they make a Pre-Delivery Payment (PDP), which is about 30% of the total cost, so Frontier pays $15 million.

Step 2: Financing the PDP

To cover this $15 million PDP, Frontier uses a small loan or credit facility. This loan is temporary and is meant to be repaid once the plane is delivered. This adds $15 million of temporary debt to Frontier’s balance sheet.

Step 3: Receiving the Airplane

When the plane is ready for delivery, Frontier needs to pay the remaining 70% of the plane’s price, which is $35 million. Instead of using their own cash, Frontier uses a Sale-Leaseback (SLB) arrangement.

Step 4: The Sale-Leaseback (SLB) Process

In the SLB process, Frontier sells the plane to a leasing company for the full $50 million and then immediately leases it back from them. This transaction allows Frontier to recover the $15 million PDP they initially paid, enabling them to repay the PDP loan. The leasing company covers the remaining $35 million.

Step 5: The Plane on the Ramp

After this transaction, the plane is now on Frontier’s ramp, and they pay a monthly lease fee to the leasing company rather than owning the plane outright.

Step 6: Debt Impact

The $50 million plane, through the SLB arrangement, doesn’t add long-term bond debt to Frontier. Instead, it becomes part of Frontier’s lease obligations, which is recorded as a financial liability. This is how Frontier reports the debt associated with new aircraft.

When Frontier repeats this process for multiple planes, say 82 aircraft, the total financial liability sums up to $4.09 billion (82 planes x $50 million each). This figure is shown as debt on their balance sheet, but it specifically relates to aircraft leases, not the kind of bond debt that other airlines might take on to finance operations.

So, while it appears as debt, it’s tied directly to leasing arrangements, not to traditional bonds.

ginntonic

Essentially yes. Although the SLB may or may not be for book value of the aicraft & so a net gain/loss will show in the financials. Also, the liability for the lease isn't on the purchase price. It's on the value of future lease payments over the term, which will vary depending on the interest rate.