|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.