Aircraft Orders?

[Karl]

I understand the desire and the need to own aircraft.  I also understand that one can borrow a lot of money to purchase airplanes.  Everyone seems to be doing it.  Every time I sign on, it seems that there is an airline that has announced an order for a decent number of aircraft. 

As a newbie player, I am not sure, however, how an airline can reasonably expect to be able to pay for the planes when the order is completed! 

Yet, unbelievably, there are airlines in the Beginners World that have huge fleets of owned aircraft.  So, it must be possible.

I am just not sure how?!   

[Infinity]

Its quite easy, really.
Earn enough money to buy one, put a loan on it and buy another from the loan.
Not the best way, but a possibility.
The better way of course is to buy all aircraft from the normal cash flow, which, given the easiness of the beginners world scenario, should be reasonably easy for every player with a little experience and able to withstand the desire to grow too fast.

[Gant]

In Beginners World I'm simply patient.  My first 100 aircraft were all leases.  I only started buying aircraft when I had enough cash to do so.  As my cash increased, I could place larger and larger orders for new aircraft.  I don't want to have to worry about owing money to the banks and repaying loans, so I just do it the old fashioned way.

In the other worlds that are more difficult, I'm sure I'll have to change and take out loans to buy new aircraft but I'll worry about that when I get there!

[Karl]

I too have been cautious and waited to buy until I had about $75,000 in cash and 100 leased aircraft that were successfully bringing in cash.  I now have 109 aircraft - two owned with two more just ordered - paid in full at time of order.   

It seems to me that ordering new aircraft (especially wide bodies) in big numbers by borrowing is bankruptcy in progress.  At some point the cost of loan repayment is more than the airfare brings in, and an airline slowly disintegrates into bankruptcy. 

On the other hand, my hat is off to those airlines which seem to have found the magic line where borrowing against purchased aircraft does not cause disintegration. 

[alexgv1]

A good rule of thumb of when to buy aircraft is when you can afford to buy one every week (either buy out of lease or pay the delivery fee to manufacturer).

I personally never use loans when direct purchasing aircraft because in the past it has gone bad for me. Sure you see these 200-300 aircraft airlines 5 years into the game but many of them don't survive much long. I find loan payments deduct too much from the weekly profit. Therefore I would rather have the money to pay for the aircraft in the first place.

Grow patiently and steadily, outlast your competition and chase good profit margins, not market share, and you will soon find yourself in a financial position to direct purchase some aircraft. It is not actually that expensive to do so, the best thing is a large purchase discount. For example, ordering 50 A320 in DOTM will only cost $600m or so with a 40% downpayment.

It is hard to imagine these numbers when you are at the bottom, I remember I was there once, but if you learn the fundamentals behind the mechanics of the game then you ca become successful and own your fleets.

Even with a 100 aircraft airline at a marginal airport, you can have a company value over the billions if you start owning your fleet. It's possible!

[Karl]

I hate what ordering new aircraft does to the Income Statement.   

It seems to me that the prepayment of the aircraft gets deducted right away, but the value of the prepayment does not reappear on the Income Statement until the aircraft is delivered.  The invested amount seems to listed as an expense rather than an investment.   

[alexgv1]

Yeah there are threads about this, it's not good but hopefully revamping the in game financials is on the to-do list.

You take a big hit in company value, which is reflected in things like alliance score, etc.

[Zombie Slayer]

I hate what ordering new aircraft does to the Income Statement.   

It seems to me that the prepayment of the aircraft gets deducted right away, but the value of the prepayment does not reappear on the Income Statement until the aircraft is delivered.  The invested amount seems to listed as an expense rather than an investment.   

In a way, though, it is an investment because in a pinch you can convert an order from direct purchase to a lease and take money back. Also, the price of new build goes up over time so that $40 million 737-400 you ordered in 1988 for delivery in 1996 will be worth $44 million by the time it is delivered which, in the end, is a boost to your CV.

Its all in how you look at it 

Don

[Karl]

I know that new aircraft are an investment and it eventually gets credited to your income statement, but for a while, things don't look good.

[Karl]

In a way, though, it is an investment because in a pinch you can convert an order from direct purchase to a lease and take money back.

How do you lease back a purchased aircraft?

[kyearmour]

Go to the aircraft that you own and make sure you have no routes scheduled to it.
Go to the Sell aircraft button, then change the settings so that you can lease the aircraft out.

[Sanabas]

How do you lease back a purchased aircraft?

Don meant changing planes that haven't been delivered yet. Say you've put down 50 million for your 737, due to be delivered in 12 months. You're really short of cash, so you can edit that order to a lease, which only needs a deposit of 5 million. So you get 45 million back. You can only do it if the plane is 10 or more months away from delivery though.

[Infinity]

How can you HONESTLY complain about the aircraft price appearing in the income statement. This is what saves me from ever paying taxes after all  The main reason I buy aircraft is to evade taxes : - D

[Karl]

How can you HONESTLY complain about the aircraft price appearing in the income statement. This is what saves me from ever paying taxes after all  The main reason I buy aircraft is to evade taxes : - D

Ok, that's one valid point for the money temporarily disappearing, but... 

[kyearmour]

I guess it does depend how far in a game you are!

I have done some costings and it is actually cheaper to lease the aircraft for me as there are only a few game years left.

In future i will try to buy aircraft early on!