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SAA Overpaying For Leases Of Boeing Aircraft  
User currently offlineYUL332LX From Canada, joined Feb 2004, 820 posts, RR: 1
Posted (8 years 10 months 5 days 9 hours ago) and read 3258 times:


South African Airways (SAA) is leasing at least 4 Boeing aircraft for double their market price under contracts entered into by its previous management, the company said on Wednesday.

SAA Chief Executive Khaya Ngqula said the state-owned carrier was paying USD$900,000 a month each for the Boeing 747-400s when the current market price was only about USD$450,000.

The lease contracts were entered into by previous management and would run until the end of 2006, adding to operating costs as the company struggles to return to profitability after years of heavy losses, he said.

...

http://news.airwise.com/story/view/1119479813.html


E volavo, volavo felice più in alto del sole, e ancora più su mentre il mondo pian piano spariva lontano laggiù ...
8 replies: All unread, jump to last
 
User currently onlineUnited Airline From Hong Kong, joined Jan 2001, 9115 posts, RR: 15
Reply 1, posted (8 years 10 months 5 days 6 hours ago) and read 3099 times:

Not very good. Hope they can renegotiate better deals...

Guess they will renew the lease in 2006

[Edited 2005-06-23 19:02:27]

User currently offlineGigneil From United States of America, joined Nov 2002, 16345 posts, RR: 86
Reply 2, posted (8 years 10 months 5 days 6 hours ago) and read 3085 times:

Quoting United Airline (Reply 1):
So what Boeing aircraft do they plan to lease more?

What?

N


User currently offlineAndz From South Africa, joined Feb 2004, 8416 posts, RR: 11
Reply 3, posted (8 years 10 months 5 days 5 hours ago) and read 3003 times:
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Maybe if the CEO looked at his own extravagance he might help the company in returning to profitability. Every bit of cost cutting helps....


After Monday and Tuesday even the calendar says WTF...
User currently offlineWhiteHatter From , joined Dec 1969, posts, RR:
Reply 4, posted (8 years 10 months 5 days 4 hours ago) and read 2972 times:

Not enough detail.

There is no breakdown of just what is involved, and on what basis the 'double' statement has been arrived at.

For instance a fresh D checked 744 with low hours, against one which is 15 years old or similar. There is also nothing about how the leasing has been done. Is there some kind of risk loading which was necessary at the time we are not aware of? Are engines included in the deal or leased separately? Lease guarantee insurance? Offshore corporations?

Before anyone starts pointing the finger and making any allegation of corruption or incompetence then there are so many issues which have to be looked into and the article doesn't reference anything like that.


User currently offlineUAL747-600 From United States of America, joined Sep 1999, 567 posts, RR: 0
Reply 5, posted (8 years 10 months 5 days 4 hours ago) and read 2963 times:

How is a 340-300E worth $925,000 per month and a 747-400 worth only $450,000 per month???

UAL747-600


User currently offlineSA7700 From South Africa, joined Dec 2003, 3432 posts, RR: 26
Reply 6, posted (8 years 10 months 5 days 4 hours ago) and read 2955 times:
AIRLINERS.NET CREW
HEAD MODERATOR

Well the new CEO is not off to a good start anyhow, the South African media is stepping on his gas pedal already - chartering aircraft and helicopters for himself while we as taxpayers have to foot the bill?

I don't like it, plain and simple...

Rgds

SA7700



When you are doing stuff that nobody has done before, there is no manual – Kevin McCloud (Grand Designs)
User currently offlineMidnightMike From United States of America, joined Mar 2003, 2892 posts, RR: 15
Reply 7, posted (8 years 10 months 5 days 4 hours ago) and read 2905 times:

Perhaps when SAA signed the agreement, that was the market rate, or, perhaps SAA had bad credit and had to pay a higher fee to secure a line of credit.

Just like a car, when I signed the papers for my lease car, I was happy, about a year later, the rate was about $75 less per month.....



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User currently offlinePlaneSmart From New Zealand, joined Dec 2004, 790 posts, RR: 0
Reply 8, posted (8 years 10 months 5 days 3 hours ago) and read 2859 times:

Quoting WhiteHatter (Reply 4):
For instance a fresh D checked 744 with low hours, against one which is 15 years old or similar. There is also nothing about how the leasing has been done. Is there some kind of risk loading which was necessary at the time we are not aware of? Are engines included in the deal or leased separately? Lease guarantee insurance? Offshore corporations?



Quoting MidnightMike (Reply 7):
Perhaps when SAA signed the agreement, that was the market rate, or, perhaps SAA had bad credit and had to pay a higher fee to secure a line of credit.

Exactly. You can't compare deals unless you know all the facts. Some lease deals include equipment & services that in other countries would be treated as revenue expenses and charged to P&L. Tax rules influence behaviour. What hours / cycles are included? Does the cost include local taxes?

There would also be a country risk component.

The leasor's financial position would also determine costs which have to be passed on to SAA.

Some leases have a credit / refund component at termination for under-utilisation.

SAA are giving a less than subtle message to the leasor and B. To the leasor, it's you better have a sharp pencil ready in 2006 if you want the leases extended. And to B, it's if you want SAA to remain a 744 operator, and 747ADV prospect, you better assist the leasor.


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