Operational Lease vs Direct purchase

[sergio]

Hello!

I run an airline previous beginners world.
I found, that company value did not increase as planned for the following reason:

my own airplanes decreases value. sum abt 25% equal from Pre-tax income from previous finacial quater. (may be mistaken, but big sum)

Acf loss of value is not concidered as expences, thus i pay more taxes.

In view that i dont play so far - can some one educate me: is it better to have operational lease, thus this is included into expences, or loss of value from direct purchase is cheaper.

(my airline parameters: (all own) A300-600R - 6 units, 2.5 years old; 747-400 - 12 units, 3.9 years old. Pre tax income pre fin quater : 253 642 702 usd, total sales revenue, prev fin quater 460 915 549 usd. margin 46,95%. Hong Kong 18% tax. typical week: Y 13 000, C 35 000, F 2500)

wbrgds

p.s. - may be add acf value loss per year/qaurter in the "Purchas Aircraft" to compare?

[JumboShrimp]

Hello!

I run an airline previous beginners world.
I found, that company value did not increase as planned for the following reason:

my own airplanes decreases value. sum abt 25% equal from Pre-tax income from previous finacial quater. (may be mistaken, but big sum)

Acf loss of value is not concidered as expences, thus i pay more taxes.

In view that i dont play so far - can some one educate me: is it better to have operational lease, thus this is included into expences, or loss of value from direct purchase is cheaper.

(my airline parameters: (all own) A300-600R - 6 units, 2.5 years old; 747-400 - 12 units, 3.9 years old. Pre tax income pre fin quater : 253 642 702 usd, total sales revenue, prev fin quater 460 915 549 usd. margin 46,95%. Hong Kong 18% tax. typical week: Y 13 000, C 35 000, F 2500)

wbrgds

p.s. - may be add acf value loss per year/qaurter in the "Purchas Aircraft" to compare?

Check out this post on loss of value of an aircraft vs. inflation:
https://www.airwaysim.com/forum/index.php/topic,36100.msg192472.html#msg192472

Depending the year you are playing in, 300-600R and 747-400, these may be very popular or be losing popularity rapidly.  In 90s, these will be popular, in 2000s, 2010s, they will be sitting on used market, nobody will want to buy them or order new ones.  Perhaps, because of this, the market value of all of these aircraft will go down faster than inflation.

There is another instance when the value goes down quickly.  Once the aircraft gets to the age of some 18 - 20 years old, the value starts to drop rapidly.  A good strategy is not to own any of the aircraft that is this old.

But in general, if you get an aircraft on lease and keep it for 20 years on lease, you will pay almost 3x the original price of the aircraft in lease payments (plus you pay extra insurance).  If you buy the aircraft (Direct Purchase), the savings of lease payments will go into profits.

Another thing to consider is that when your airline is very profitable, investing the money into aircraft, rather than hoarding cash will lower your tax payments, since Direct Purchase is considered expense.  BTW, aircraft losing its value is not considered expense in AWS, and you do not get an "expense" for that, just lowering of the Company Value.