Moving from leased to owned

Started by miln0039, July 25, 2012, 08:30:55 AM

miln0039

Hi - obviously I understand the principle that an owned aircraft is a better ROI long term than leasing an aircraft (I'm not paying for a middle mans profit marign!) - but what do people think the cross over point is?

I'm at the stage where I have 11 aircraft in my fleet and about $20m in the bank. Is it worth starting to save and buying planes or continue the leasing methodology to allow expansion to continue at a quick rate?

I know there must be a cross over point, but cannot for the life of me figure out where it is!!

Belinik

I was on a similar boat, and I made my decision when I have enough to pay for my new plane, new base(another 20m) and ~10m to spare(yes a little bit overkill).

My issue with own plane at this stage is with ~6 years remaining my lease plane is going to do much better then purchase(pay less even til world end, much faster expansion), if you are pursuing company value, then you may not want to lease all the way to the end and want to consider buying a plane, as lease plane do not give you any company value except income. Having a own plane also gives you a safety net should things goes south and you need money(can take a security loan or sell it) if mistakes were made. But do note when you are trying to save up for your 50m(assuming a 737), you could of expand to a much larger fleet, with only 11 aircraft in fleet and c-check incoming I would be careful about budget and wait a little longer.

miln0039

Quote from: Belinik on July 25, 2012, 04:42:20 PM
I was on a similar boat, and I made my decision when I have enough to pay for my new plane, new base(another 20m) and ~10m to spare(yes a little bit overkill).

My issue with own plane at this stage is with ~6 years remaining my lease plane is going to do much better then purchase(pay less even til world end, much faster expansion), if you are pursuing company value, then you may not want to lease all the way to the end and want to consider buying a plane, as lease plane do not give you any company value except income. Having a own plane also gives you a safety net should things goes south and you need money(can take a security loan or sell it) if mistakes were made. But do note when you are trying to save up for your 50m(assuming a 737), you could of expand to a much larger fleet, with only 11 aircraft in fleet and c-check incoming I would be careful about budget and wait a little longer.

Bugger! I've bought one before I read this. Just to see what's what. Cost me $20m as a used 737-200Adv to fit in with the rest of the fleet. We'll see how things pan out. But I already have enough to lease again...hmmm...

Sanabas

If you're buying a plane you would have leased for 6+ years, then it's definitely a good idea. Don't forget, you can now use that plane as a loan security, letting you keep on leasing. The tough decision is slowing your expansion enough to actually save up that $20 million. Since you'd already done that, buying's a good idea.