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Author Topic: Worth it to cancel a lease on a old aged aircraft?  (Read 591 times)

cidjackaries

  • Former member
Worth it to cancel a lease on a old aged aircraft?
« on: April 22, 2014, 12:00:53 AM »


 Hello all!

 I have been reading up on scrapping of old aged aircraft and still have some questions.

A majority of my aircraft are leased, the average age of them are around 17 years old. In a couple of years some of them will be hitting 20 years of age. I keep the aircraft in good condition, and their load factors are 90% or higher. I was drawn to these aircraft due to their low leasing cost. (If it helps, they are turboprop)

Can I keep flying these aircraft after 20 years if I am still making money off of them, or is better to cancel the leases and lease new ones?

Thanks!

Offline CUR$E - God of AirwaySim

  • Members
  • Posts: 4028
Re: Worth it to cancel a lease on a old aged aircraft?
« Reply #1 on: April 22, 2014, 12:04:59 AM »
You can fly them even when they are 20 years or older, however, take care because the maintenance costs of old aircraft are much higher than on newer ones.

cidjackaries

  • Former member
Re: Worth it to cancel a lease on a old aged aircraft?
« Reply #2 on: April 22, 2014, 01:39:03 AM »

Cool thank you for the information. It looks like I need to whip out the calculator and figure it out.

--Cid

Offline LotusAirways

  • Members
  • Posts: 845
Re: Worth it to cancel a lease on a old aged aircraft?
« Reply #3 on: April 28, 2014, 12:39:29 PM »
Hi Cid,
You can fly them till age 35. But maintenance costs on a 23 year old plane are around 350% higher than on a new plane (same model). I like to keep props till they reach the third D check (24 years).

LA

cidjackaries

  • Former member
Re: Worth it to cancel a lease on a old aged aircraft?
« Reply #4 on: April 29, 2014, 06:46:02 AM »

Thanks for the heads up. I got a few more years before that happens.

Kumono

  • Former member
Re: Worth it to cancel a lease on a old aged aircraft?
« Reply #5 on: April 30, 2014, 05:41:06 PM »
One way to look at this is to calculate the net present value of this project. This way you have to factor in interest rate, all sorts of gains (e.g. reduced maintenance cost) and losses (e.g. early termination penalty) of this replacement - pretty difficult.

Another way to look at this is that the market for many types (e.g A320, B767) of aircraft is not very efficient. Sometimes supply is much higher than demand since bigger players are dumping their older models (not so old 10 to 15 yr with around 5 yr to next D check) to the market. Therefore in general it maybe a good deal to lease new ones.

 

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