Question about loan...

[schlaf]

Why cant you use the aircraft you are gonna buy as a security for a loan?

Today you must own a aircraft since before to use it as a security...

[swiftus27]

That's a questions for Sami only.  While I agree that it should be allowed to be used for collateral, I fear that by making this change you will only further help the "F5ers"

[schlaf]

What is "F5ers"?

[GEnx]

People with too much time on their hands who continuously refresh the used market to get the best aircraft.

[Bolier Dweller]

not only what qulnoky said but also in the real world you have to own the plane first. As in have the title to it before you can use it as a security. Since you are just buying the plane from the dealer you do no own they do which means they have the title. You have to wait till you get, which in this case would be in two weeks when the plane is delivered. What you are talking about is what caused the stock market to crash in 1929.

[Jona L.]

People with too much time on their hands who continuously refresh the used market to get the best aircraft.

Not only the best, but ALL [I know some of those guys... too bad I don't have enough time for such neat stuff ]

[swiftus27]

not only what qulnoky said but also in the real world you have to own the plane first. As in have the title to it before you can use it as a security. Since you are just buying the plane from the dealer you do no own they do which means they have the title. You have to wait till you get, which in this case would be in two weeks when the plane is delivered. What you are talking about is what caused the stock market to crash in 1929.

Are you insane? 

This has nothing to do with speculation or buying on margin at all.  The stock market crashed because people borrowed against their shares to buy more shares.  So when there was a 'Margin Call' the stocks that backed those loans also were being sold.  This lead to the values of other people's stock portfolios to also be negative as well thus triggering more margin calls.   

Have you ever gone into a car dealer and gotten a loan for the car you are about to purchase?  I have done it many times. Heck, I am a business banker.  I get loans for equipment that hasn't been delivered.

[Bolier Dweller]

so what's the difference between borrowing against your shares to buy more and borrowing  against a plane that hasn't been delivered to buy another one? would this create a issue because your buying the plane and then your using it to buy another one so if you have the cash to buy the first one and then use it to buy the next one on credit then you use the second one to do the same thing. Wouldn't you create a severe finical strain on the company? I mean i know dan dates does this and is very good at doing and the business model works very well for him. But in the real world i don't see how it is possible?

[swiftus27]

I'd ask you to please read up about borrowing on Margin and speculation first. The value of your collateral changes constantly.  At the end of EVERY business day, your total 'value' (collateral shares + shares bought on margin) must be greater than $0.  If you are less than $0, a Margin Call is triggered.  That means the person must either pay the difference in cash or his shares will be liquidated.  Well, if person X has his shares liquidated, that means all of those sales will reduce the value of shares held by person Y.... so his value is less than zero causing this whole cycle again and then Z and then AA through ZZZZ have the same problem.  This is why personal fortunes were lost almost instantly.   

Airplane's values are much more stable.  An airline won't be allowed to borrow 100% of a plane's value either.  They almost always have equity in the aircraft.