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Author Topic: Installments  (Read 464 times)

Offline Mr.HP

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  • Posts: 2730
Installments
« on: January 17, 2014, 08:33:38 AM »
Can we have paying by installments, please?

One time payment of aircraft is just too costly, as we have a big loss in cash, and still owe tax that amount

Thanks

BD

  • Former member
Re: Installments
« Reply #1 on: January 17, 2014, 02:03:44 PM »
Can we have paying by installments, please?

One time payment of aircraft is just too costly, as we have a big loss in cash, and still owe tax that amount

Thanks
Borrowing the money to make the initial payment will effectively spread out the payments.

Is there more to the problem that should be addressed?

Offline Mr.HP

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Re: Installments
« Reply #2 on: January 17, 2014, 07:01:37 PM »
The problem is, you can only loan up to 500 M versus making fully loan for each purchased aircraft

And you still have to pay lots of tax
« Last Edit: January 17, 2014, 07:03:51 PM by Mr.HP »

BD

  • Former member
Re: Installments
« Reply #3 on: January 17, 2014, 07:09:02 PM »
The problem is, you can only loan up to 500 M versus making fully loan for each purchased aircraft
True, but the company that would extend an installment payment plan would have the same credit worthiness concerns as the bank.  Presumably, the loan limit is based on credit worthiness.

If the loan limit is capped in AWS to maintain a level of competitiveness between the large established airlines and new joiners to the game, then allowing installment payments would run counter to that, as I can tell.

I was just wondering if there was some other problem regarding gameplay I had not thought of, where this might be an imperitive.   ;D

Offline dmoose42

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Re: Installments
« Reply #4 on: January 17, 2014, 07:56:04 PM »
isn't putting 20% down basically an limited installment plan?  If you buy 40 planes and put 20% down, then you pay the remaining 80% on installment based on delivery schedule...

Offline Mr.HP

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Re: Installments
« Reply #5 on: January 18, 2014, 04:38:02 AM »
That is just a simple deposit

What I suggest is a mortgage system where you pay small amount in, say 10 years, and own the A/C after that

So if we earn 100M annually and want to purchase 3 100M A/C, it'll take like 4 years, coz we have to pay 30% to tax, and the depreciation won't kick in until each A/C is delivered. Using loan to buy 3 A/C right away is another solution, but then we are limited by the fund of like 500M

With mortgage, we can buy those 3 A/C today, and pay small amount till 10 years after that. Depreciation of all 3 immediately on the book, which will reduce taxable income, thus lower tax a bit


Offline LotusAirways

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Lease buyout
« Reply #6 on: January 22, 2014, 11:08:57 AM »
Hi HP,
You mean lease buyout? Somehow under the current system is exists, but in a format that doesn't encourage its use.

At present:
1) Lease-end buyout, one day before the end of the lease period buy the aircraft at purchased price + depreciation. There are two issues:

(a) most leases end just before D check, and the D check date is not incorporated into the pricing of the plane. The current system seems to price an aircraft with D check in 8 years time and another plane with D check next week at the same price.
(b) if the lease price was overvalued at start, that is the purchased price the system will use.
In conclusion, option 1 is not realistic, therefore seldom used.

2) Early buyout, during the lease period buy the airplane. There are three issues:

(a) and (b) mentioned above.
(c) the fact that you still pay 50% of the remaining lease.
In conclusion, option 2 is also not realistic, therefore seldom used.

Suggestion, simple:
- Correct the mechanism of pricing an airplane to include D check date. Maybe easy to say, difficult to code.
- Reduce the early buy out clause to say 25% of the remaining lease.

Suggestion, complex:
Two categories and One option (at the end of the lease) for airplane leasing.
1) simple lease contract, contract break equals 75% of the remaining lease, no complains. The lowest monthly lease value among the 2 options.
2) lease with early buyout clause, buy at any time during the lease period, pay 25% of the remaining lease no questions asked. A slighly higher monthly lease value than "simple lease".

One month before the end of the lease, a message shows up saying "lease expires in one month, do you want to
- renew lease as a simple lease?
- renew lease with early buyout clause?
- or buy with 10% discount*?"

* of a proper/realistic market value that takes into consideration D check date.    

Maybe easy to say, difficult to code.
LA
« Last Edit: January 22, 2014, 02:36:04 PM by LotusAirways »

Offline Mr.HP

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Re: Installments
« Reply #7 on: January 23, 2014, 01:23:21 AM »
I meant like car mortgage. You buy the car today with 30% down payment, and pay the remaining 70% monthly in the next 60 months or so

 

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