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Author Topic: Loans... C300's...  (Read 1667 times)

flightsimer

  • Former member
Loans... C300's...
« on: May 28, 2011, 08:08:26 PM »
ok, i have read previously about people buying aircraft to borrow out against a larger loan to then buy another aircraft to borrow out against an even bigger loan, etc, etc...

My question is, is this process worth it and how exactly does it work?

Right now i have 26mil available to me in unsecure loans with 150mil available in secure loans. How much aircraft value is needed for that 150mil? I want to order some C series aircraft, but i dont have the money to make the order size i want and there is nobody in my alliance that has any on order as far as im aware. So im looking into getting loans for them or trying to find someone else to lease them from reasonably.

Now i was thinking about loaning 21mil unsecured for a 2yr loan and purchasing one of my leased Q400's or one off the market and then borrowing against it to get the money for my C300's. However, i dont want to ruin my airline by doing this. I also dont know how much that Q400 will get me with secured loans so i dont want to do it if its not even going to be enough anyways.

any info on this?

PS if you have C300's on order and are willing to lease them out, let me know please.

Offline ukatlantic

  • Members
  • Posts: 1780
Re: Loans... C300's...
« Reply #1 on: May 29, 2011, 01:54:35 PM »
ok, i have read previously about people buying aircraft to borrow out against a larger loan to then buy another aircraft to borrow out against an even bigger loan, etc, etc...

My question is, is this process worth it and how exactly does it work?

Right now i have 26mil available to me in unsecure loans with 150mil available in secure loans. How much aircraft value is needed for that 150mil? I want to order some C series aircraft, but i dont have the money to make the order size i want and there is nobody in my alliance that has any on order as far as im aware. So im looking into getting loans for them or trying to find someone else to lease them from reasonably.

Now i was thinking about loaning 21mil unsecured for a 2yr loan and purchasing one of my leased Q400's or one off the market and then borrowing against it to get the money for my C300's. However, i dont want to ruin my airline by doing this. I also dont know how much that Q400 will get me with secured loans so i dont want to do it if its not even going to be enough anyways.

any info on this?

PS if you have C300's on order and are willing to lease them out, let me know please.

You can't just go and purchase say a $26M aircraft from your fleet and then use it to get the full $150M of secured loan finance.  The amount of secured loan you can get is directly proportional to a few factors, but the most important being how many aircraft you have available that you own to secure the loans and how much they are worth.   Generally the bank will loan you more for a longer repayment term so if you tried to get the full $150M over say 4 years the bank may reject your application, however over 10 years and it is likely to be successful.

You do need securities to back up the loan request and without them you wont get het big loan you need. I tend to find that I can get a full loan amount for just over 70% of that total backed up with aircraft secured againt it, so for $150M I normally get away with providing anywhere from $70 to $90M of aircraft assests.  However one time I had 2 loans out and went to take the 3rd offering of $180M but found that even with a 10yr repayment cycle I had to offer up $240M of aircraft against it, so it does vary depeding on existing debt etc.

flightsimer

  • Former member
Re: Loans... C300's...
« Reply #2 on: May 29, 2011, 06:27:46 PM »
I have never owned an aircraft so thats why i was asking...

I dont have any current loans so it woud be a 12mil loan for the buying of the a/c over a year and then the loan for the other a/c.

I only need 82mil of the 150 im allowed. so do you think ~25% would be enough to get the loan over a longer period?

Offline ukatlantic

  • Members
  • Posts: 1780
Re: Loans... C300's...
« Reply #3 on: May 29, 2011, 07:32:22 PM »
I have never owned an aircraft so thats why i was asking...

I dont have any current loans so it woud be a 12mil loan for the buying of the a/c over a year and then the loan for the other a/c.

I only need 82mil of the 150 im allowed. so do you think ~25% would be enough to get the loan over a longer period?

I don't think the bank will lend you $82M for $12M of securities you would need to provide (based on my experience) around $40-55M of aircraft value to secure that $82M.  However the way I have done it in the past is to buy an aircraft thats worth about $15M from my cash reserve then use that aircraft to secure a $25-40M loan to buy out another couple of aircraft and then use them as the security for the larger loan of $82M.

flightsimer

  • Former member
Re: Loans... C300's...
« Reply #4 on: May 30, 2011, 01:41:21 PM »
Well the 12mil is all i need to buy a Q400 or ATR. I have a small cash reserve...

flightsimer

  • Former member
Re: Loans... C300's...
« Reply #5 on: June 01, 2011, 02:16:19 AM »
well, i went ahead and took the risk and tried it and it paid off. i took out 15mil to buy a Q400 for 26mil. Using the plane which was valued at 24mil, i was able to get 65mil in secured loans. Length of the time didnt matter. I could have paid it back in one year if i wanted to (aka wanted to kill myself), but i ended up taking it over 10 years.

So with 65mil, i was able to get 15 aircraft. i originally wanted all 300's, but i ended up ordering 8 C100's and 7 C300's after looking at my future routes again. I almost had enough money for 16 a/c, but i didnt want to wait so i settled with 15.

 

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