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Author Topic: lease length, and borrowing against new aircraft  (Read 741 times)

maumausi

  • Former member
lease length, and borrowing against new aircraft
« on: March 15, 2011, 05:19:32 PM »
couple of questions if I may

is there any advantage to taking out a used lease for, say, 3 years rather than 1 year? Especially since they renew automatically anyway. The only possible advantage I can think of is that the monthly lease cost stays the same for the entire 3 year period rather than going up at each renewal

also, if I buy a new plane, and it will be delivered in say 18 months which is what is happening now, can I use the plane as security for a loan before it's delivered?

Cheers, Simon

Offline [ATA] Sunbao

  • Members
  • Posts: 901
    • FmFreaks
Re: lease length, and borrowing against new aircraft
« Reply #1 on: March 15, 2011, 05:26:31 PM »
couple of questions if I may

is there any advantage to taking out a used lease for, say, 3 years rather than 1 year? Especially since they renew automatically anyway. The only possible advantage I can think of is that the monthly lease cost stays the same for the entire 3 year period rather than going up at each renewal

also, if I buy a new plane, and it will be delivered in say 18 months which is what is happening now, can I use the plane as security for a loan before it's delivered?

Cheers, Simon

You can not use a plane you don't have for security :)

minerva

  • Former member
Re: lease length, and borrowing against new aircraft
« Reply #2 on: March 15, 2011, 06:05:50 PM »
Yes, and only the advantage to the long lease length is, as you surmise, that it remains constant over the entire period of the lease.  The downside to that is if you need/want to replace a plane before the lease is finished you have to pay half the remaining lease. 

Online CVACEO

  • Members
  • Posts: 601
Re: lease length, and borrowing against new aircraft
« Reply #3 on: March 16, 2011, 03:23:31 AM »
When leasing from an AWS "leasing company" you will be better off in the long run to lease for only 1 year (or 3 years for new a/c) at a time.  Your leases will be less each time they renew, reflecting the depreciation of the aircraft.

When leasing from other players you might consider longer lease terms since the owner may suddenly decide not to let the lease renew when it comes due, in which case you will suddenly be short an aircraft.  In such case you must decide for yourself how important a particular aircraft is to your fleet and how secure you want your leasing arrangement to be.  A player/owner cannot cancel a lease except when it comes up for renewal.

 

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