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Author Topic: Dangerous leasing options  (Read 1101 times)

Nlgravity

  • Former member
Dangerous leasing options
« on: December 07, 2011, 02:41:15 AM »
This is my first full game world back (I took a break until 1.3 was live).
I see I can lease a 20 yr old plane for 15 years and pay a dirt cheap lease during the first stages of the world.
Does this mean that in 5 yrs when the plane is retired I owe 50% of remaining 10 years?

Are people using the super long and unrealustic lease terms to benefit during the beginning?

minerva

  • Former member
Re: Dangerous leasing options
« Reply #1 on: December 07, 2011, 03:17:33 AM »
You'll owe 70% of the remaining lease (another 1.3 change).

Yes, some people do think they will benefit from the super long leases, but unless you make a mint in those first five years and can afford the huge penalty, it is a very dangerous leasing option.

Offline Jimbo2012

  • Members
  • Posts: 306
Re: Dangerous leasing options
« Reply #2 on: December 08, 2011, 05:15:57 PM »
@Minerva (comments from all invited):

But is there anything dangerous about a super long lease on a nearly brand new aircraft?
If it were 2yrs old, and you take a 15yr lease, losing it at 17yrs seems reasonable (ok, it will pull up the average age of your fleet so I am not suggesting an entire fleet on this basis, perhaps just 25% of it).

Offline ArcherII

  • Members
  • Posts: 1935
Re: Dangerous leasing options
« Reply #3 on: December 08, 2011, 06:20:16 PM »
On a 15 year lease you'll need to make at least one D-check on the airframe, so the amount saved by getting in a long lease can be neglected by it. Also it will be difficult to get rid of those airplanes later on when you need to.

Offline LemonButt

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  • Posts: 1895
Re: Dangerous leasing options
« Reply #4 on: December 08, 2011, 06:35:44 PM »
On a 15 year lease you'll need to make at least one D-check on the airframe, so the amount saved by getting in a long lease can be neglected by it. Also it will be difficult to get rid of those airplanes later on when you need to.

As long as you don't fly the plane, you don't have to D-check it.  It will probably be cheaper to ground the aircraft and pay the lease than continue to fly it.

Offline JumboShrimp

  • Members
  • Posts: 5992
Re: Dangerous leasing options
« Reply #5 on: December 08, 2011, 07:37:13 PM »
@Minerva (comments from all invited):

But is there anything dangerous about a super long lease on a nearly brand new aircraft?
If it were 2yrs old, and you take a 15yr lease, losing it at 17yrs seems reasonable (ok, it will pull up the average age of your fleet so I am not suggesting an entire fleet on this basis, perhaps just 25% of it).

2 things to consider:
- on a 5 year lease + 1 year lease extensions, the lease price adjust itself every year.  As the aircraft gets older, normally the market price of the aircraft goes down and lease prices go down on every extension
- but with inflation, prices of aircraft go up.  Buying identical (but still popular) aircraft later will cost you more.  Buying (or leasing) the aircraft now, you are locked to the current price.  As the price of new aircraft goes up, so does a price of identical aircraft that is 15 years old.

So you have these 2 trends opposing each other, aging of aircraft and inflation.  These rates happen to be nearly matching each other (for the length of MT games).  So there is not a lot of danger in a long term lease of a new aircraft (as long as it will remain popular 15 years from now).

The downside is that when you are drowning in money, and you want to lower your lease costs by buying out the leases, there is a huge penalty to either buying out your own lease early or terminating the lease.  Another downside is that if years from now, you want to transition to a different fleet type.  Getting rid of an aircraft that still has years left on the lease will result in a loss for your airline.

 

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