USADreamliner
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ANA Will Pay Cash For 10 787

Thu Nov 29, 2007 5:03 pm

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
 
bmacleod
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RE: ANA Will Pay Cash For 10 787

Thu Nov 29, 2007 5:09 pm

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.
 
USADreamliner
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RE: ANA Will Pay Cash For 10 787

Thu Nov 29, 2007 7:15 pm

$1.3 billion, wow, that's alot of cash.
 
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kc135topboom
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RE: ANA Will Pay Cash For 10 787

Thu Nov 29, 2007 7:44 pm



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
 
oznznut
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RE: ANA Will Pay Cash For 10 787

Thu Nov 29, 2007 7:57 pm

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
 
oldeuropean
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RE: ANA Will Pay Cash For 10 787

Thu Nov 29, 2007 8:05 pm

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
 
777STL
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RE: ANA Will Pay Cash For 10 787

Thu Nov 29, 2007 8:09 pm



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
 
Jj
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RE: ANA Will Pay Cash For 10 787

Thu Nov 29, 2007 8:13 pm

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...
 
jfidler
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RE: ANA Will Pay Cash For 10 787

Thu Nov 29, 2007 8:22 pm

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.
 
avek00
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RE: ANA Will Pay Cash For 10 787

Thu Nov 29, 2007 9:25 pm



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.
 
centrair
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RE: ANA Will Pay Cash For 10 787

Thu Nov 29, 2007 10:25 pm

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!
 
dank
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RE: ANA Will Pay Cash For 10 787

Thu Nov 29, 2007 10:26 pm



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.
 
Qantas744er
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RE: ANA Will Pay Cash For 10 787

Thu Nov 29, 2007 10:29 pm



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
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BandA
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RE: ANA Will Pay Cash For 10 787

Thu Nov 29, 2007 10:40 pm



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
 
RIXrat
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RE: ANA Will Pay Cash For 10 787

Thu Nov 29, 2007 10:46 pm

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.
 
scouseflyer
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RE: ANA Will Pay Cash For 10 787

Thu Nov 29, 2007 10:46 pm



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
 
luv2cattlecall
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RE: ANA Will Pay Cash For 10 787

Fri Nov 30, 2007 1:24 am



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!
.
 
ktachiya
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RE: ANA Will Pay Cash For 10 787

Fri Nov 30, 2007 1:54 am



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
 
EMBQA
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RE: ANA Will Pay Cash For 10 787

Fri Nov 30, 2007 2:02 am



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"
 
rwsea
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RE: ANA Will Pay Cash For 10 787

Fri Nov 30, 2007 2:03 am



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

More like a wire transfer.
 
474218
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RE: ANA Will Pay Cash For 10 787

Fri Nov 30, 2007 2:12 am

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.
 
jfk787nyc
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RE: ANA Will Pay Cash For 10 787

Fri Nov 30, 2007 3:29 am

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.
 
Carpethead
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RE: ANA Will Pay Cash For 10 787

Fri Nov 30, 2007 3:34 am

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.
 
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lightsaber
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RE: ANA Will Pay Cash For 10 787

Fri Nov 30, 2007 4:29 am



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
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fridgmus
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RE: ANA Will Pay Cash For 10 787

Fri Nov 30, 2007 5:38 am



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!
 
Max Q
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RE: ANA Will Pay Cash For 10 787

Fri Nov 30, 2007 6:00 am

Northwest used to pay for all of their aircraft with cash.

Those were the days...
The best contribution to safety is a competent Pilot.
 
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mighluss
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RE: ANA Will Pay Cash For 10 787

Fri Nov 30, 2007 9:43 am



Quoting RwSEA (Reply 20):

More like a wire transfer.

A check does better in a ceremony Big grin the bigger the better!
Miquel.
 
bill142
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RE: ANA Will Pay Cash For 10 787

Fri Nov 30, 2007 10:41 am

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 cash, which would other wise be returned to shareholders in the form of special dividends or share buy-back schemes.
 
PanAm1971
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RE: ANA Will Pay Cash For 10 787

Fri Nov 30, 2007 3:41 pm

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 Seattle. We need more ceremony and drama in life. You want a reciept for that?
 
Boeingluvr
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RE: ANA Will Pay Cash For 10 787

Fri Nov 30, 2007 5:36 pm



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



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.

Axel

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 think the term cash is just being used as meaning the airline will be paying without mortgaging the planes correct? I don't know a whole lot about paying for aircraft but these would be my assumptions.
 
dank
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RE: ANA Will Pay Cash For 10 787

Fri Nov 30, 2007 8:24 pm



Quoting Boeingluvr (Reply 29):
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 think the term cash is just being used as meaning the airline will be paying without mortgaging the planes correct? I don't know a whole lot about paying for aircraft but these would be my assumptions.

 checkmark  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 same amount of money at the same times (I also don't get where anybody interpreted this statement as being one lump payment, it is going to be payed out whenever the contract stipulates each part; i.e. they have already placed deposits, and likely don't finish paying for each plane until it is delivered), just comes straight from ANA instead of a bank and ANA doesn't carry a debt for those frames.

cheers.
 
SFORunner
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RE: ANA Will Pay Cash For 10 787

Fri Nov 30, 2007 9:10 pm

Did ANA get a discount for their cash only purchase? Did Boeing throw in the floor mats and heated seats for free?
 
olle
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RE: ANA Will Pay Cash For 10 787

Fri Nov 30, 2007 9:23 pm

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 might share the risc with 3rd party borrowers ets or selling bonds with security into different deals (like house loans that we see the effect of now).

This is similar like they having shares in a bank for having influance the only difference is that they have the name "Boeing" on the entrance instead of citigroup of deutche bank.
 
flysherwood
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RE: ANA Will Pay Cash For 10 787

Sat Dec 01, 2007 12:53 am



Quoting Bill142 (Reply 27):
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 cash, which would other wise be returned to shareholders in the form of special dividends or share buy-back schemes.

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.
 
tdscanuck
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RE: ANA Will Pay Cash For 10 787

Sat Dec 01, 2007 1:55 am



Quoting SFORunner (Reply 31):
Did ANA get a discount for their cash only purchase?

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 rare).

Tom.
 
planesailing
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RE: ANA Will Pay Cash For 10 787

Sat Dec 01, 2007 3:37 pm

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 interest on the monies or keeping them to help cash flow.

The level of cash held by ANA must be in excess of $1.3 billion.

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