rj777
Posts: 1549
Joined: Sat Dec 02, 2000 1:47 am

When Do Airlines Pay For Their Planes?

Sun Jun 22, 2003 12:28 am

Do airlines pay for new planes when they sign the contract or when they take delivery?
Just wondering.
 
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clickhappy
Posts: 9042
Joined: Thu Sep 13, 2001 12:10 pm

RE: When Do Airlines Pay For Their Planes?

Sun Jun 22, 2003 12:42 am

I believe it is something like 1/3 on firm order, 1/3 on painting, and 1/3 on delivery.
 
MxCtrlr
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RE: When Do Airlines Pay For Their Planes?

Sun Jun 22, 2003 1:06 am

The technical answer is they pay a small amount at contract (usually $100,000 to $500,000, depending on the aircraft type), then there are structured payments of 25% of the purchase price, in stages, over an 18-month period with the remainder due at delivery. (At least this is how Boeing does it)....

MxCtrlr  Smile/happy/getting dizzy
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venuscat2
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RE: When Do Airlines Pay For Their Planes?

Sun Jun 22, 2003 1:13 am

Isn't it really the leasing companies that pay the manufacturer, and then the airline pays the leasing company over a period of time?
 
aloges
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RE: When Do Airlines Pay For Their Planes?

Sun Jun 22, 2003 1:28 am

Why let a leasing company pay your aircraft when you don't lease them?
Don't cry because it's over, smile because it happened.
 
luisca
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RE: When Do Airlines Pay For Their Planes?

Sun Jun 22, 2003 1:51 am

But i think that can also be negotiated before sining, a la Jetblue (havent payed a buck yet a think) but i think airbus gives more options on that than boeing
If it ain't Boeing (or Embraer ;-)) I ain't Going!
 
JAL
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RE: When Do Airlines Pay For Their Planes?

Sun Jun 22, 2003 2:51 am

I think airlines pay a deposit to the manufacturers upon an order and pay the balance upon delivery.
Work Hard But Play Harder
 
venuscat2
Posts: 461
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RE: When Do Airlines Pay For Their Planes?

Sun Jun 22, 2003 3:06 am

Why let a leasing company pay your aircraft when you don't lease them?

Well, whenever I look up the N number of a newer aircraft that I have flown on, the name of a bank comes up. So, if the airline owns the plane, then why does the bank come up?
 
bigmo747
Posts: 301
Joined: Mon Dec 25, 2000 3:33 pm

RE: When Do Airlines Pay For Their Planes?

Sun Jun 22, 2003 4:06 am

Maybe it's like buying a house--like a mortgage!! Technically it's my house--but the bank can foreclose/reposess due to non-payment.

If i'm not mistaken didn't Varig-Brazilian airlines have that problem a few months ago with a 777 aircraft in Paris and again in florida??

just my thought on this interesting topic  Smile
 
flyingbronco05
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RE: When Do Airlines Pay For Their Planes?

Sun Jun 22, 2003 4:11 am

Some airlines don't even pay for them. The manufacturer gives them to the airline.

*cough* airbus *cough*
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Heavierthanair
Posts: 834
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RE: Why Do People Complain About R.J.s

Sun Jun 22, 2003 4:45 am

G'day

Looks like some people can defer the downpayment and still get their planes. I guess this is what competition is all about.  Wink/being sarcastic


Dow Jones Business News
China Air To Accept Plane Delivery, Delay Payment
Thursday June 19, 4:41 am ET

TAIPEI -(Dow Jones)- China Airlines Ltd. will still have to accept the delivery of 18 passenger jets it ordered last year from Boeing Co. (NYSE:BA - News) and Airbus , but it will be able to defer the advance payment originally scheduled for the second half of 2003, which is likely to help the airline's bottom line this year.

ADVERTISEMENT
The news helped boost China Airlines' shares 2.1% to NT$14.95, its highest close since Feb. 7.

"The planes will be delivered as scheduled, and by postponing the payment (for six months) we can cut interest costs as well," Roger Han, spokesman for Taiwan's largest commercial carrier, told Dow Jones Newswires on Thursday.

The lower interest costs could help China Airlines' earnings this year, which have been hurt by higher oil prices in the run-up to the war in Iraq and fewer travelers due to the outbreak of SARS.

"This is a definitely good news for China Airlines from the standpoint of cost control," said D.C. Wang, an analyst at Yuanta Core Pacific Capital Management.

China Airlines began talks with the two airplane makers to delay the delivery, scheduled to start next year, after the SARS outbreak damped demand for air travel.

The airline reported May revenue slumped 40% on year to NT$4.03 billion ($1= NT$34.59) as SARS kept travelers at home.

However, in recent weeks several regional airlines have announced a restoration of some flights that had been canceled during the height of the severe acute respiratory syndrome outbreak, and on Tuesday the World Health Organization lifted its travel warning on Taiwan due to SARS.

As a result, Han said he isn't too worried that the deliveries can't be delayed.

Now "it seems everybody has thrown their (SARS) fears into the air, so I think we also need to ensure capacity is sufficient down the road," said Han.

The Economic Daily reported this week that China Airlines plans to resume all flights suspended due to SARS in August.

In addition, the airline has joined the "Fly Taiwan Fly" campaign and cut ticket prices in order to lure back business to the island in the aftermath of SARS.

Delayed Payments Total US$300 Million

The 18 passenger jets are part of a 22-plane package China Airlines ordered in October to expand its fleet and replace some older planes.

Six are Boeing long-haul B747-400s and 12 are Airbus medium-range A330-300s. The remaining four are Boeing 747-400 Freighters, which are slated for delivery later this year.

The list price of each B747-400 is US$200 million, while that of an A330 is around US$158 million.

Another senior executive at China Airlines said the advance payments that have been delayed total roughly US$200 million to Boeing and US$100 million to Airbus.

Boeing and Airbus confirmed the timetable for the plane deliveries remain unchanged.

"Everything is on schedule...there has been no change, and Boeing acknowledges that both sides are working together to work out mutually agreeable terms," Ivy S. Takahashi, a Boeing spokeswoman in Seattle, told Dow Jones Newswires.

She wouldn't comment on the financial agreement.

An Airbus spokesman in Singapore said he "is not aware of any changes to the delivery schedule," but added he couldn't comment on the financial details.

-By Perris Lee, Dow Jones Newswires; 8862-2502-2557; perris.lee@dowjones.com


Cheers

Peter
"Two things are infinite: the universe and human stupidity; and I'm not sure about the universe." (Albert Einstein, 1879 - 1955)
 
MD-90
Posts: 7835
Joined: Mon Jan 17, 2000 12:45 pm

RE: When Do Airlines Pay For Their Planes?

Sun Jun 22, 2003 6:09 am

Airlines that buy planes outright have to finance them, you know. It sort of is like a mortgage, to Chase Manhattan, Boeing Capital, GE's financial divison, whomever. The terms are generally more akin to 10 years instead of 30.
 
MD88Captain
Posts: 1224
Joined: Wed Nov 14, 2001 9:50 am

RE: When Do Airlines Pay For Their Planes?

Sun Jun 22, 2003 8:21 am

DAL used to send a check with the Captain sent to pick up aircraft at Boeing.
No kidding. A Captain, usually a management/training department/line check airman would be sent for an acceptance flight with a multi-million dollar check to be handed over to BA when the aircraft was accepted.
 
jhooper
Posts: 5560
Joined: Thu Dec 13, 2001 8:27 pm

RE: When Do Airlines Pay For Their Planes?

Mon Jun 23, 2003 1:22 am

MD88Captain ,

You said "used to". What do they do now? EFT?
Last year 1,944 New Yorkers saw something and said something.
 
clipperno1
Posts: 641
Joined: Tue Jun 01, 1999 12:47 am

RE: When Do Airlines Pay For Their Planes?

Mon Jun 23, 2003 1:33 am

I once saw a report on TV about the delivery of a new LH 747 a few years ago. If I recall right the LH crew checked the aircraft, noted down all smaller mistakes on the plane (galley,kitchen, interior etc.) then advised LH via phone to wire the money over to Boeing. A Boeing representative checked with their accounting office and once the money was there they took off. Once airborne the ownership of the 747 was transferred from LH to a (LH-owned?) leasing company (Sell-and-Lease-Back). Maybe I recall some things wrong about it...It's been a while. Fly-K should know better.
"I really don't know one plane from the other. To me they are just marginal costs with wings."� Alfred Kahn, 1977
 
hkg82
Posts: 1301
Joined: Fri Apr 05, 2002 4:24 pm

RE: When Do Airlines Pay For Their Planes?

Mon Jun 23, 2003 1:42 am

If it’s a purchase, I think the actual transaction (or perhaps, the final transaction?) takes place as the aircraft is delivered to the airline (i.e. flown to the airline’s home airport).

I am saying this based on a 747 documentary I saw on Discovery a few months ago. They showed a Lufthansa 747-400 being prepared for takeoff on its delivery flight to FRA from Seattle as the executives from the airline & Boeing are gathered together finalizing the transaction.

Interesting stuff.

Hkg82.

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