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ANA Will Pay Cash For 10 787  
User currently offlineUSADreamliner From , joined Dec 1969, posts, RR:
Posted (7 years 3 weeks 3 days 19 hours ago) and read 9947 times:

ANA will pay cash for at least 20% of its order for 50 787s, or at least ¥140 billion ($1.3 billion), from the proceeds realized from its hotel sales. It also will sell bonds and use loans backed by Japan Bank for International Cooperation. "We're not going back to the days of more than ¥1 trillion in debt," Kanazawa told Bloomberg

http://www.atwonline.com/news/other.html?issueDate=11%2F29%2F2007

35 replies: All unread, showing first 25:
 
User currently offlineBmacleod From Canada, joined Aug 2001, 2379 posts, RR: 0
Reply 1, posted (7 years 3 weeks 3 days 18 hours ago) and read 9929 times:

Just how common is paying cash for new aircraft purchases? Has any U.S. or Canadian carrier gone through this method?


The engine is the heart of an airplane, but the pilot is its soul.
User currently offlineUSADreamliner From , joined Dec 1969, posts, RR:
Reply 2, posted (7 years 3 weeks 3 days 16 hours ago) and read 9515 times:

$1.3 billion, wow, that's alot of cash.

User currently offlineKC135TopBoom From United States of America, joined Jan 2005, 12181 posts, RR: 51
Reply 3, posted (7 years 3 weeks 3 days 16 hours ago) and read 9397 times:



Quoting USADreamliner (Reply 2):
$1.3 billion, wow, that's alot of cash.

That is a check Boeing is going to love taking to the bank.  Silly


User currently offlineOznznut From United States of America, joined Dec 2003, 153 posts, RR: 0
Reply 4, posted (7 years 3 weeks 3 days 16 hours ago) and read 9345 times:

I remember reading that "back in the day" when Braniff went to Seattle to take delivery of their first 707s, that the captain took a check with him for the full amount! Can't confirm if this is/was true, or just local legend.
Dave


User currently offlineOldeuropean From Germany, joined May 2005, 2091 posts, RR: 4
Reply 5, posted (7 years 3 weeks 3 days 16 hours ago) and read 9280 times:

What should Boeing do with more than a billion $ in cash???
ANA has to deliver some suitcases with bucks.

This sounds a bit ridiculous to me.  Yeah sure

Axel



Wer nichts weiss muss alles glauben
User currently offline777STL From United States of America, joined Dec 2004, 3768 posts, RR: 3
Reply 6, posted (7 years 3 weeks 3 days 15 hours ago) and read 9250 times:



Quoting Oldeuropean (Reply 5):
What should Boeing do with more than a billion $ in cash???
ANA has to deliver some suitcases with bucks.

This sounds a bit ridiculous to me. Yeah sure

Axel

No it's not really, you just don't understand the true definition of cash. "Cash" in this context is any financial instrument used to pay for the aircraft up front rather than having to resort to financing. So in reality, "cash" will most likely end up being a physical check. But it's the same difference, it's just another way of saying they're going to pay for those 10 aircraft upfront.



PHX based
User currently offlineJj From Algeria, joined Jun 2001, 1227 posts, RR: 2
Reply 7, posted (7 years 3 weeks 3 days 15 hours ago) and read 9214 times:

Exactly. It's not that they're gonna have the money in suitcases (or LD3's for that matter!), but rather that the money is available straight out. Probably a bank transfer, or a check. That's a lot of money to have available straight out though...

User currently offlineJfidler From United States of America, joined Aug 2000, 370 posts, RR: 0
Reply 8, posted (7 years 3 weeks 3 days 15 hours ago) and read 9151 times:

I wonder why they are not financing it? There is a benefit to leverage (gearing) as long as it doesn't get too much out of control. Aircraft are quite ideal for leverage, as they have a well-developed secondary market (easy to liquidate) and hold their value well.

Also, I suspect they will pay by wire transfer, not check, given the sums involved.


User currently offlineAvek00 From United States of America, joined Oct 2004, 4417 posts, RR: 19
Reply 9, posted (7 years 3 weeks 3 days 14 hours ago) and read 8972 times:



Quoting Jfidler (Reply 8):
I wonder why they are not financing it?

Cost of borrowing, for starters. Currency flux issues probably also come into play.

In addition, if ANA got as sweetheart a deal for the 787 as widely believed, the airline could make a small fortune should it decide to resell/lease out some of those aircraft to other operators.



Live life to the fullest.
User currently offlineCentrair From Japan, joined Jan 2005, 3599 posts, RR: 20
Reply 10, posted (7 years 3 weeks 3 days 13 hours ago) and read 8584 times:

I am not as shocked about this. Japan is still a cash society. In general people in Japan don't like debt. (politicians exception) I bought my new Macbook with cash. Bought both of my cars (Rav 4 and a Daihatsu Latte) with cash. It is a little shocking to do this at first but you get used to carrying that kind of cash around when you make big purchase.

For ANA, they will own these aircraft and have NO DEBT on these aircraft. If they have a debt in the long run, it will not be as bad and it will get paid off in short order. It is the Japanese way.



Yes...I am not a KIX fan. Let's Japanese Aviation!
User currently offlineDank From United States of America, joined Jul 2006, 915 posts, RR: 15
Reply 11, posted (7 years 3 weeks 3 days 13 hours ago) and read 8560 times:



Quoting KC135TopBoom (Reply 3):
That is a check Boeing is going to love taking to the bank.  

Unless Boeing was the one doing the financing, what exactly does this actually have to do with Boeing? Just a different source of the money that they are going to get at the same time points. The difference is to ANA and any banks that they would have secured financing from.

cheers.


User currently offlineQantas744ER From United States of America, joined Jun 2005, 1296 posts, RR: 4
Reply 12, posted (7 years 3 weeks 3 days 13 hours ago) and read 8523 times:



Quoting Centrair (Reply 11):
It is the Japanese way.

And the right way to go  Wink

Others should learn from the fine japanese way of doing business  Wink

leo



Happiness is V1 in Lagos
User currently offlineBandA From United States of America, joined Aug 2004, 341 posts, RR: 0
Reply 13, posted (7 years 3 weeks 3 days 13 hours ago) and read 8359 times:



Quoting Qantas744ER (Reply 13):


Quoting Centrair (Reply 11):
It is the Japanese way.


And the right way to go

Others should learn from the fine japanese way of doing business

leo

definitely!

Like the Boeing tour guide said the the three times I've been there - "... sorry folks Boeing doesn't take credit cards, cash only!"



"They [Terrorists] never stop thinking about new ways to harm our country and our people, and neither do we." - GWB
User currently offlineRIXrat From United States of America, joined Nov 2005, 789 posts, RR: 0
Reply 14, posted (7 years 3 weeks 3 days 13 hours ago) and read 8288 times:

No suitcases full of greenbacks. It was a cash transfer using electronic bank accounts that can see your money coming in within seconds. Most of the world uses IBAN and then a SWIFT code to get it to the bank. Unfortunately, the US still uses ABA which is much more complicated.

User currently offlineScouseflyer From United Kingdom, joined Apr 2006, 3402 posts, RR: 9
Reply 15, posted (7 years 3 weeks 3 days 13 hours ago) and read 8288 times:



Quoting Centrair (Reply 11):
Daihatsu Latte

Well done you for saving up to buy things, in the UK we;re slightly two-faced about it all: everyone talks about not being in debt and saving and then buys everything on a credit card!

Oh and Latte - amazing name for a car:D


User currently offlineLuv2cattlecall From United States of America, joined Sep 2007, 1650 posts, RR: 2
Reply 16, posted (7 years 3 weeks 3 days 10 hours ago) and read 7080 times:
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Quoting Jfidler (Reply 8):
Also, I suspect they will pay by wire transfer, not check, given the sums involved

As long as it's not a Nigerian airline...they'd have Boeing front a few million in processing fees, and you know what would happen after that!



When you have to breaststroke to your connecting flight...it's a crash!
User currently offlineKtachiya From Japan, joined Sep 2004, 1806 posts, RR: 2
Reply 17, posted (7 years 3 weeks 3 days 10 hours ago) and read 6860 times:



Quoting Centrair (Reply 11):
In general people in Japan don't like debt. (politicians exception)

This made me laugh for some reason. They like to get paid in Golf or Golf club sets I guess. Yeah, but carrying that much money on a cheque with you........ I would get a stomach ache doing that.



Flown on: DC-10-30, B747-200B, B747-300, B747-300SR, B747-400, B747-400D, B767-300, B777-200, B777-200ER, B777-300
User currently offlineEMBQA From United States of America, joined Oct 2003, 9364 posts, RR: 11
Reply 18, posted (7 years 3 weeks 3 days 10 hours ago) and read 6814 times:



Quoting Oldeuropean (Reply 5):
This sounds a bit ridiculous to me.

As said above... it's not actually 'cash' as you think. It's done as a wire transfer from the airlines bank to Boeing's bank. If you watch the PBS special on building the Boeing 777 from a few years back, when United picks up their first aircraft they do it by just this manner.


Quoting Bmacleod (Reply 1):
Just how common is paying cash for new aircraft purchases?

It's not uncommon..... but in todays world, it is somewhat rare.



"It's not the size of the dog in the fight, but the size of the fight in the dog"
User currently offlineRwSEA From Netherlands, joined Jan 2005, 3135 posts, RR: 2
Reply 19, posted (7 years 3 weeks 3 days 10 hours ago) and read 6814 times:



Quoting 777STL (Reply 6):
in reality, "cash" will most likely end up being a physical check

More like a wire transfer.


User currently offline474218 From United States of America, joined Oct 2005, 6340 posts, RR: 9
Reply 20, posted (7 years 3 weeks 3 days 9 hours ago) and read 6737 times:

Boeing always gets paid in cash when they deliver an aircraft, just like a car dealer gets paid cash when it sells a car. The buyer borrows the money from a bank, loan company, etc. The bank, loan company, etc pays Boeing or the car dealer in full and the borrower pays back the bank, loan company, etc.

Boeing also has a division called Boeing Capital which provides loans for new airliners. If an airline use Boeing Capital they pay Boeing Commerical Aiurcraft Division in full when the aircraft is delivered. Its like taking the money out of your left pocket and putting it in your right pocket and it would seem similper to just give them the airplane and let them payments diredctly to the Boeing Commerical Aircraft Division. But to comply with the lending laws the money has to be transferred from on Boeing division to an other, its the only way to keep their debits and credits straight.


User currently offlineJFK787NYC From United States of America, joined Apr 2007, 812 posts, RR: 2
Reply 21, posted (7 years 3 weeks 3 days 8 hours ago) and read 6308 times:

I do not understand why everyone is causing commotion that this is a good thing for Boeing. It may not be a good thing for them at all, ANA may order another 10 787 in the very near future and sell these for at least 50-60 Million in profit each. So it lowers the cost on all the other 40 on order.

With Boeing there is no difference they get paid the day the plane leaves there facility. You people are talking like this means they can go and put this into a safety deposit box for a rain day. Cash doesn't really mean GREEN PAPER.

Boeing in 2007 made 4 Billion Net Profit, That is 4 Billion CASH without the 787, Imagine the type of money they will have after this puppy is in the air.


User currently offlineCarpethead From Japan, joined Aug 2004, 2978 posts, RR: 3
Reply 22, posted (7 years 3 weeks 3 days 8 hours ago) and read 6264 times:

NH is currently operating with enormous profit/revenue, so no big surprise.
Also NH is currently purchasing back many of its leased aircraft back when times weren't so rosy.


User currently offlineLightsaber From United States of America, joined Jan 2005, 13549 posts, RR: 100
Reply 23, posted (7 years 3 weeks 3 days 7 hours ago) and read 5944 times:
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Quoting Jj (Reply 7):
Exactly. It's not that they're gonna have the money in suitcases (or LD3's for that matter!),

Now that sounds like the plot for Ocean's 14!  hyper 

Quoting Centrair (Reply 11):
For ANA, they will own these aircraft and have NO DEBT on these aircraft.

Extreme flexibility. Depreciate the airframes at whatever schedule they see fit. But... its sad they sold of the hotel operations. Historically, airlines with hotel operations have been able to use their revenue to get through tough times... (PanAm being the extreme example.) But if the funds are invested wisely, low debt will keep them profitable.

Quoting Carpethead (Reply 23):
NH is currently operating with enormous profit/revenue, so no big surprise.

Good to hear. Now hopefully they use that money to keep buying more aircraft.  Wink But if their revenue is so good, why sell off the hotels? Note, I'm asking. I haven't pulled their quarterly report.


Lightsaber



Societies that achieve a critical mass of ideas achieve self sustaining growth; others stagnate.
User currently offlineFridgmus From United States of America, joined Oct 2006, 1442 posts, RR: 11
Reply 24, posted (7 years 3 weeks 3 days 6 hours ago) and read 5606 times:
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Quoting Centrair (Reply 11):
For ANA, they will own these aircraft and have NO DEBT on these aircraft. If they have a debt in the long run, it will not be as bad and it will get paid off in short order. It is the Japanese way.

What Centrair says sounds good to me, being an outsider. Can someone please tell me what's the big deal with ANA paying for their 787's this way?

Thanks,



The Lockheed Super Constellation, the REAL Queen of the Skies!
25 Max Q : Northwest used to pay for all of their aircraft with cash. Those were the days...
26 Post contains images Mighluss : A check does better in a ceremony the bigger the better!
27 Bill142 : The current credit crunch caused by the US sub-prime crisis is probably playing a part in this decision. Also it's a good way to get rid of excess cas
28 PanAm1971 : A wise decision. BTW-it's a bank transfer via routing number. Though I would love to see guys with suitcases handcuffed to their wrists show up in Sea
29 Boeingluvr : I don't think it matters much to Boeing. Whether you pay cash for a plane or go through mortgaging, Boeing still gets there money at once. I also thi
30 Post contains images Dank : Exactly. Hence my post above. Unless Boeing is the one that was to provide the financing, I don't see how this impacts Boeing at all. They get the sa
31 SFORunner : Did ANA get a discount for their cash only purchase? Did Boeing throw in the floor mats and heated seats for free?
32 Olle : Even if Boeing "finance" handles the cash flow they are a separate entity and they handle the risc maangement as a normal bank. This means that they m
33 Flysherwood : Not in Japan they won't. At least not the full amount, ever. They always take the long range view to a decision regarding cash.
34 Tdscanuck : Why would they get a discount? All purchases are cash only, from Boeing's point of view, unless Boeing is doing the financing themselves (which is ra
35 Planesailing : I think the importance of the topic is that an airline has $1.3 billion available in cash reserves that it can spend on aircraft instead of accuring i
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