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Author Topic: Pitfalls of Leasing Out Planes  (Read 1327 times)

Offline Troxartas86

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Pitfalls of Leasing Out Planes
« on: June 13, 2012, 08:10:41 AM »
So I had a couple AN-24s built years ago to fulfill my mission of keeping Soviet production open and because there were then several airlines leasing that type. Anyway, after more than two years of leasing my planes, I knew my customer airline was derelict and just waiting to get shut down by the bank. Finally, I get the three year old planes back and one has actually never flown a single flight and the other was returned in 25% condition with A, B and C-checks expired with value cut in half.

The plane that never flew went straight into automatic C-Check before I could get it back up for sale costing me half a million bucks but has since been resold to the brokers. The other is just a chunk of scrap metal that must have been sent back to me by truck as there's no way it flew home to Moscow. I wish I could scrap it despite its age because I'm sure there are real life scrap yards that don't care how young the thing is as long as its garbage sold cheap.

Anyway, I am really wanting to get rid of this thing and I am wondering if it's worth it to do some maintenance to get the thing sold. Keep in mind it's in 25% condition, has an airworthiness warning and three expired checks. It's not yet three years old but it IS scrap metal for all intents and purposes.

Offline EsquireFlyer

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Re: Pitfalls of Leasing Out Planes
« Reply #1 on: June 13, 2012, 05:44:39 PM »
Why would the customer spend his hard earned money on "maintenance," when he can just beat up a leased airframe until he returns it?  :laugh:

J/K


Online Emaw Jones

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Re: Pitfalls of Leasing Out Planes
« Reply #2 on: June 13, 2012, 06:17:51 PM »
This is the second time I have heard of this happening.

I'm new here, so going to step out on a limb and hope that the screams of "read the manual noob!" dont distract too much.

But not doing maintenance on an aircraft I thought led to a grounded aircraft and fines?  Is there a workaround?


Thanks

Offline Jona L.

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Re: Pitfalls of Leasing Out Planes
« Reply #3 on: June 13, 2012, 09:15:27 PM »
This is the second time I have heard of this happening.

I'm new here, so going to step out on a limb and hope that the screams of "read the manual noob!" dont distract too much.

But not doing maintenance on an aircraft I thought led to a grounded aircraft and fines?  Is there a workaround?


Thanks

Happens often, and ruins the fun of leasing, there have been a couple of different ft.req.s that dealt with that topic, shouts are yet unaswered...

And no, there is no workaround, it is just randomly if you get fined or not... sometimes it takes months, sometimes it happens immediately. If it is "just" A-/B-Checks that expired, you usually get fined, and only if condition sinks dramatically there is a chance the a/c gets grounded...

cheers,

Jona L.

Offline Troxartas86

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Re: Pitfalls of Leasing Out Planes
« Reply #4 on: June 14, 2012, 02:46:28 AM »
$1,109,356 to get this piece of junk up to code. Still might be worth it if I can get it sold for over 2 million like I did with its sister. 86 days and $6million to repair it to 100% which is more than twice what I originally paid to buy it.
« Last Edit: June 14, 2012, 02:49:12 AM by Troxartas86 »

Online Emaw Jones

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Re: Pitfalls of Leasing Out Planes
« Reply #5 on: June 14, 2012, 05:52:56 AM »
Kinda defeats the purpose of going all soviet having to expense out that kinda repair.

To bad she cant become the hanger queen somewhere that your mechanics rob parts off of.

You could always donate her to the Soviet School of Avionics and Ballet in Minsk.   :D

Offline pascaly

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Re: Pitfalls of Leasing Out Planes
« Reply #6 on: June 14, 2012, 06:10:33 AM »
I had the same thing happen to me. My advice is not to repair, just accept the loss and put it on the market for as low as possible. Eventually, the brokers will buy it, but it might take some time (12+ months).  If it's for sale, it's not costing you anything.

As I'm not in a current game world, could somebody tell me, the new features of leasing selection (to whom etc), has a feature of airlines to NOT lease to been included? That would be handy (not in this case since they BK'd, but other times).

Offline knobbygb

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Re: Pitfalls of Leasing Out Planes
« Reply #7 on: June 23, 2012, 12:52:17 PM »
Quote
the new features of leasing selection (to whom etc), has a feature of airlines to NOT lease to been included?

Nope. Anyway, to make that work you'd need to do it by player name rather than airline (any airline who dies this IS going to go bust very soon) and it's just not worth building such a blacklist for most players.

I lease out a lot and just take this kind of thing in my stride.  Crap happens...

Don't be put off the leasing business.  In the last game I had 500+ aircraft leased out and it accounted for about 15% of my income and over 30% of profits, more if you take tax savings into account.

Offline EsquireFlyer

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Re: Pitfalls of Leasing Out Planes
« Reply #8 on: June 23, 2012, 03:19:04 PM »
Nope. Anyway, to make that work you'd need to do it by player name rather than airline (any airline who dies this IS going to go bust very soon) and it's just not worth building such a blacklist for most players.

Perhaps there could be an option such as to display the plane for lease only to airlines with a credit rating of "CCC" or higher or something?
Would not apply to the "sale" option since once they buy the plane the maintenance is none of your concern anymore. So, low-credit airlines would see that plane as being listed only for sale and not for lease.

Offline schro

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Re: Pitfalls of Leasing Out Planes
« Reply #9 on: June 23, 2012, 10:44:45 PM »
Perhaps there could be an option such as to display the plane for lease only to airlines with a credit rating of "CCC" or higher or something?
Would not apply to the "sale" option since once they buy the plane the maintenance is none of your concern anymore. So, low-credit airlines would see that plane as being listed only for sale and not for lease.

By definition, CCC means you have positive cash in the bank and CC means you have negative cash in the bank.  Therefore, by definition, only airlines with credit ratings of CCC or higher can lease planes.

The credit rating system doesn't really give a good forward outlook on an airline nor is it based on operational profitability.. its more of a measure of cash, company value, debt and airline age....

Offline EsquireFlyer

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Re: Pitfalls of Leasing Out Planes
« Reply #10 on: June 23, 2012, 11:40:28 PM »
The credit rating system doesn't really give a good forward outlook on an airline nor is it based on operational profitability.. its more of a measure of cash, company value, debt and airline age....

Fine, make it "B" or something then, or let the user specify the cutoff.
And cash, company value, and debt level are directly correlated to the likelihood that an airline will be able to pay for heavy maintenance checks.

Offline schro

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Re: Pitfalls of Leasing Out Planes
« Reply #11 on: June 24, 2012, 04:22:09 AM »
Fine, make it "B" or something then, or let the user specify the cutoff.
And cash, company value, and debt level are directly correlated to the likelihood that an airline will be able to pay for heavy maintenance checks.

To an extent, yes, however, its usually the CEO's choice whether to use profits to continue funding expansion (plane and slot acquisition) or to spend some time building a financial cushion. Brand new airlines are stuck at CCC for at least 6 game months, as it takes a positive company value to bust into the B ranks. The bank is rather stingy with loans until you've been going for a few years, so that's a non-issue for new airlines, leaving CV as the only valid measures of airline health, which really isn't a predictor of future ability to pay. Operational profits (i.e. net income after factoring out new leasing and other one time expenses) is really the best measure of health, but that isn't used as part of the credit rating...

 

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