In lean times airlines can operate for extended periods of time while making losses because?

Question

revenues will cover a large part of their costs. Why don’t loss making airlines shut down immediately?

Answer 1

Many costs are fixed (don't change with revenue level) and some are non-cash costs, such as depreciation. Tax benefits with operating at a loss can also be carried over to profit times in some cases. So as long as the revenue covers variable costs, and it is expected that revenue will exceed all costs in the future, operating at a loss is acceptable.

Answer 2

No lender would want to reposess hundreds of aging airliners with next to zero market value.
The best they can do is extend credit and hope for the best.

Even if you do stop operating, costs, such as amortization of debt, leases, gate rental, etc continue to accrue even if you generate zero revenue.
If you continue to operate , even at a loss and can pay 50% of these costs, creditors feel this is better than being paid 0%.

Answer 3

As long as operating cost are less than revenues they are better off continuing to operate.