Why do airlines lease?
04-29-2006 | 07:24 PM
#1
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Why do airlines lease?
Somewhat off topic, but I am curious. I heard that a majority of the airlines lease all of their aircrafts. Why do they do this? Doesnt it make sense to pay into something you can keep and invest into?
04-29-2006 | 08:10 PM
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Gets Weekends Off
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From: DD->DH->RU/XE soon to be EV
Originally Posted by TravisUK
Somewhat off topic, but I am curious. I heard that a majority of the airlines lease all of their aircrafts. Why do they do this? Doesnt it make sense to pay into something you can keep and invest into?
Are you implying that an airplane is an investment? Pretty good joke if that's the case.
04-29-2006 | 08:43 PM
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From: 767A (Ret)
Own vs. lease
Originally Posted by TravisUK
Somewhat off topic, but I am curious. I heard that a majority of the airlines lease all of their aircrafts. Why do they do this? Doesnt it make sense to pay into something you can keep and invest into?
One reason involves taxes. If you're making little or no money, you have no use for the depreciation and amortization tax writeoffs that come with airplane ownership, but a big financial institution with lots of income could use those writeoffs. You can sell airplanes you own and lease them back, or the financial institution can buy new ones, often at a volume discount, and lease them to you.
04-30-2006 | 05:08 AM
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Okay..With the airlines going down hill I just assumed that it wouldnt really be feasible for them to lease because they are paying more than the worth of the aircraft. But anymore I guess they are just lucky to be around from year to year.
04-30-2006 | 07:27 AM
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From: Executive Transport Driver
Part also has to do with the upfront costs of acquiring an aircraft. It is often cheaper in the short term to lease aircraft, allowing a carrier to bring more aircraft to the fleet.
04-30-2006 | 09:00 AM
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From: Engines Turn or People Swim
One benefit is the flexibility to trade up to more technologically advanced aircraft, if your lease is structured that way.
In today's environment, the big reason is probably that you can get airplanes on property with little capital outlay.
In today's environment, the big reason is probably that you can get airplanes on property with little capital outlay.
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