Boeingluvr From , joined Dec 1969, posts, RR: Posted (6 years 2 months 1 week 2 days 19 hours ago) and read 3776 times:
Now we've all gone to Airbus or Boeing websites and looked at the cost of aircraft ( if we didn't already know). I was debating with someone else in the industry as I am and we were discussing the cost of aircraft over a mortgaged period? How longs are these periods? 10 years, 15 years, 20 years?? I worked out an approx figure on a 737 costing 65 million dollars, and came up with an extremly rough estimate of about 317000 dollars per month over a 15 year period. Is this anywhere close to right?
Also what about other cost incurred such as insurance on aircraft? What does it cost to insure say a 737?? Just something I hadn't thought too much about previously. Are leases better for airlines as they incur lower cost per month??
Any details.... I'm looking for educated facts if possible!
EIDAA From Ireland, joined Oct 2006, 825 posts, RR: 16 Reply 1, posted (6 years 2 months 1 week 2 days 19 hours ago) and read 3756 times:
A rough rule of thumb for for lease rental is in the region of 1% of the value of the aircraft per month. Obviously when the market is weak, you will not get that, but when the market is strong, you will often see rentals in excess of 1%.
Another factor would be the credit you are leasing to and also the term.
Also, $65m is quite high - an average cost these days would probably be about 70% of that.
For a new 737-800, let's say for arguments sake with a purchase price of $45m, in todays market you will probably see some rentals in the low 400s per month. Pretty good when you assume an economic life of 20-25 years for the asset.
I can't give you any input on insurance unfortunately.
EIDAA From Ireland, joined Oct 2006, 825 posts, RR: 16 Reply 3, posted (6 years 2 months 1 week 2 days 13 hours ago) and read 3471 times:
Quoting Boeingluvr (Reply 2): Umm according to Boeing... your prices are a bit off. You can't tell me that the discounts for even a large order are 30 million a plane.
The number of $45m is quite accurate. My 70% of list price figure above was quite high actually. I know of customers getting discounts in the region of 40%, so I should have said purchase prices of 60% of list price.
Quoting Boeingluvr (Reply 2): Can you be more specific... Like you're talkin four hundred thousands per month?
I'm afraid I can't get into specifics for obvious reasons, but again, the 1% figure is a good rule of thumb. It is not usually achievable on brand new aircraft, but lease rentals on these will typically be anywhere from 0.8 to 1% of purchase price. This would relate to $350-400k per month on an A320 or an -800.
CXfirst From Norway, joined Jan 2007, 2855 posts, RR: 1 Reply 4, posted (6 years 2 months 1 week 2 days 12 hours ago) and read 3461 times:
Quoting EIDAA (Reply 3): My 70% of list price figure above was quite high actually. I know of customers getting discounts in the region of 40%, so I should have said purchase prices of 60% of list price.
But, a private person would not get such a discount, only airlines that buy multiple aircraft and are likely candidates to buy more planes from the producer later get good discounts.
Rbgso From United States of America, joined Jun 2006, 580 posts, RR: 0 Reply 6, posted (6 years 2 months 1 week 2 days 6 hours ago) and read 3256 times:
I don't think there is an easy answer to this. I'm sure the prices paid are all over the map. A large carrier that has ordered hundreds of frames in the past and is a loyal A or B customer will get substantial (30-40%) discounts. A launch customer gets a great deal. Air Scrotum who buys 2 frames may pay close to list. A private buyer or BBJ customer may in fact pay list plus.
Then comes delivery dates. If the customer can be flexible, I'm sure they get a better deal. If they need the maker to squeeze them in, well that will raise the price. And we haven't even covered trade-ins, if applicable.
Tdscanuck From Canada, joined Jan 2006, 12709 posts, RR: 81 Reply 7, posted (6 years 2 months 1 week 2 days 1 hour ago) and read 3118 times:
Quoting Boeingluvr (Reply 5): Which brings me back to my origional statement questions? HOW MUCH???
It's not that simple. Beyond just the purchase price discount, which can vary all over the map as previously discussed, an airplane isn't something you just purchase and are done with. You've got support, maintenance, ground support, training, spares, financing, etc. Any one of these are potential items for negotiation during a sale. As a result, it's entirely possible to have two airlines pay the same purchase price for their aircraft, but one to spend 10-20% less money than the other at the end of the day.
Pnwtraveler From Canada, joined Jun 2007, 2151 posts, RR: 12 Reply 11, posted (6 years 2 months 1 week 1 day 23 hours ago) and read 2950 times:
Yes AC has gotten into the business of leasing these days. They are subleasing both some owned and some leased aircraft at a much better rate than they anticipated. They have leased 319s to Mexicana and others and are leasing out the A340's. So AC got such a good rate that they can now lease them out at a nice profit.
Boeingluvr From , joined Dec 1969, posts, RR: Reply 12, posted (6 years 2 months 1 week 1 day 21 hours ago) and read 2879 times:
Anyone have examples from certain airlines or experience? If you seem to know a lot about how the prices vary, you must have examples to give from experience or airlines. I'm not looking for exact numbers. But someone must have an approximate figure or example from previous experience.
EIDAA From Ireland, joined Oct 2006, 825 posts, RR: 16 Reply 13, posted (6 years 2 months 1 week 1 day 17 hours ago) and read 2809 times:
Quoting Boeingluvr (Reply 12): Anyone have examples from certain airlines or experience? If you seem to know a lot about how the prices vary, you must have examples to give from experience or airlines. I'm not looking for exact numbers. But someone must have an approximate figure or example from previous experience.
Well I work with one of the larger leasing companies and the guide numbers above are based on my experience with several Sale & Leaseback transactions and current market lease rentals. Due to confidentiality with the airlines, manufacturers and internally, I cannot give specifics.
Also, as some of the others have rightly pointed out above, the initial up-front cost is not the only cost an airline has to worry about. Even the up-front cost is not a lump some but rather consists of PDPs which result in a portion of the purchase price being paid over a defined term prior to the delivery date, on which the balance is paid. I can't give any input on the costs Tdscanuck listed, so perhaps others can help you out there.
Just coming back to list/purchase prices, CXfirst and Rbgso are correct in that the discounts will vary depending on the customer, size of order, aircraft type, delivery schedule, etc etc. Most of the deals I have seen have involved either start-up airlines (10-20) or larger airlines putting in orders for 30-40 aircraft. I have not dealt personally with BBJs or "ones and twosies".
Finally, it is also worth considering that the choice of suppliers for BFE/SFBFE can change your up-front cost. Customers need to negotiate individually with the suppliers... Honeywell, Rockwell Collins, Thales, Driessen, Webber, B/E Aerospace, Recaro.... and so on.
It is a very complicated process, but hopefully this thread can shed some light on it and give you some of the answers you need.