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Author Topic: prepaying for aircraft  (Read 632 times)

Offline hmellouli

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prepaying for aircraft
« on: June 07, 2013, 03:58:14 AM »
is there a proper way to prepay for aircraft that will be delivered in the future?

I have a large order of aircraft, with deliveries throughout the next 5 years. I paid 20% at order, 80% on delivery. as it stands, I owe around $99M at every delivery, due to a nice large order discount. I'd like to prepay some of next year's deliveries, mostly so i could reduce my tax liability for this year. but when i go to the aircraft on order page, and I modify the specific orders to 100%, the updated figure is $130M payment. pretty much erasing my discount and any savings. Am I doing something wrong here, or is this a technical limitation?

Online JumboShrimp

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Re: prepaying for aircraft
« Reply #1 on: June 07, 2013, 06:24:28 AM »
is there a proper way to prepay for aircraft that will be delivered in the future?

I have a large order of aircraft, with deliveries throughout the next 5 years. I paid 20% at order, 80% on delivery. as it stands, I owe around $99M at every delivery, due to a nice large order discount. I'd like to prepay some of next year's deliveries, mostly so i could reduce my tax liability for this year. but when i go to the aircraft on order page, and I modify the specific orders to 100%, the updated figure is $130M payment. pretty much erasing my discount and any savings. Am I doing something wrong here, or is this a technical limitation?

That's how the system works.  You lose the discount when you change the pre-payment amount...

Offline dmoose42

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Re: prepaying for aircraft
« Reply #2 on: June 09, 2013, 02:02:13 AM »
You will just have to save up now :)

on an unrelated note (and i'm not saying that this applies to your situation), but prepaying only 20% is one thing that often leads to bankruptcies as the deliveries arrive faster than the airline can generate cash, forcing the airline either into BK, or to liquidate aircraft to accommodate the new planes.


Offline hmellouli

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Re: prepaying for aircraft
« Reply #3 on: June 09, 2013, 04:32:22 AM »
dmoose,
that's a very good point, and I'd advise airlines to take that seriously. for me, I actually did a revenue analysis, and figured out each new airplane will bring in enough incremental revenue to pay for the airplane in a few months. I have half a billion in cash reserve, ability to secure another half billion in secured loans, and several A306/Rs that I plan to sell of as my new 764s are pretty much a fleet expansion + replacement.

anyway, good advice, and I'd advice the less experienced players to look at the long term impact of their orders. make it like ur analyzing a real life purchase of airplanes!

Offline mark320

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Re: prepaying for aircraft
« Reply #4 on: June 12, 2013, 08:26:27 AM »
May I ask one of the gurus?
I normally pre order the cheapest variant of an aircraft of choice, then I change the variant accordingly when I get closer to delivery to save on interest. Am I loosing discounts too and paying the new rates 2 or 3 yrs down the line?

Thanks,

Offline Infinity

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Re: prepaying for aircraft
« Reply #5 on: June 12, 2013, 09:47:19 AM »
Yes, you are losing discounts that way.

Offline mark320

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Re: prepaying for aircraft
« Reply #6 on: June 12, 2013, 11:24:18 PM »
oops,

thx

 

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