planes on order as security assets on a loan

[greenoperative]

i need lots of new MD88's and credit limit of 90mil if i have security , is it possible to pay the 40% for a new aircraft and then use the aircraft on order as asset?
sorry i sound noob 

[Zabuti]

Hi
Nope, aircraft on order cannot be used as assets since you don't actually owe them until they are delivered.

Example :

You buy an aircraft worth 100 M.
You pay 40 M cash, but your company value lose 40M, because you just sent 40M out of the company. When the aircraft is delivered, you pay 60M, but your company value increases by 100 M because your aircraft is now in your hands and one of your balance sheet's asset.

In Real Life, you could still be able to negociate a loan, discuss with banker on whether or not you can use it as a partial guarantee to cover both parties risk. Not here.

Hope this helps