Qantas total debt...now at $8.7 billion. Definitely not $12 Billion

Was reading Plane Talking, the usually reasonable aviation blog on Crikey and hit an article that mentioned Qantas was $12 billion in debt. A bit high I thought, so I crunched the numbers from the half yearly figures.

Firstly, we have on balance sheet debt of $6.2 billion. No dramas.

Secondly, we have non-cancellable Operating Leases, (which are debt by any other name) of around $3 billion. Now the usual method of accounting for the Operating leases is to discount them to Present Value at the Cost of debt Capital. Using the Qantas costs of debt capital of 7%, it turns out the 3 billion is more like $2.5 billion.

So that leaves us a total of $8.7 billion. High, but not crazy high

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