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ChrisPochari
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Posts: 2
Joined: Wed Feb 21, 2018 1:45 am

Leased vs non leased airlines profit margin

Wed Feb 21, 2018 2:23 am

Hi guys new member here. I signed up to gather some information for a project I'm doing trying to compare the benefits of leasing vs debt or equity financed aircraft acquisition.
My main goal is to learn how leasing vs purchasing impacts impacts airline financial performance, i,e return on capital, and specifically net margins.
Thanks.
 
WPvsMW
Posts: 1158
Joined: Thu Mar 23, 2017 7:30 pm

Re: Leased vs non leased airlines profit margin

Wed Feb 21, 2018 8:17 pm

Amazon: "aircraft finance"
 
wrongwayup
Posts: 207
Joined: Thu Jan 07, 2016 6:23 pm

Re: Leased vs non leased airlines profit margin

Wed Feb 21, 2018 9:00 pm

There is some preexisting research on the issue, done by a couple people in Toulouse of all places.

https://www.researchgate.net/publicatio ... e_industry

My earlier post has apparently been removed, as I posted the link without context.

The best thing to do is model it out for yourself: model the purchase/finance/residual value cash flows and compare to a fixed set of lease cashflows over the same period. The advanced model would include tax implications and vary by jurisdiction. You can calculate ROIC and net margin implications from there if you have a set of cashflows from operation and assume the leased and owned aircraft are otherwise identical. Every airline is different. I didn't take finance at school but it's probably an upper year university project in terms of complexity in order to get it right.
 
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ChrisPochari
Topic Author
Posts: 2
Joined: Wed Feb 21, 2018 1:45 am

Re: Leased vs non leased airlines profit margin

Wed Feb 21, 2018 10:49 pm

wrongwayup wrote:
There is some preexisting research on the issue, done by a couple people in Toulouse of all places.

https://www.researchgate.net/publicatio ... e_industry

My earlier post has apparently been removed, as I posted the link without context.

The best thing to do is model it out for yourself: model the purchase/finance/residual value cash flows and compare to a fixed set of lease cashflows over the same period. The advanced model would include tax implications and vary by jurisdiction. You can calculate ROIC and net margin implications from there if you have a set of cashflows from operation and assume the leased and owned aircraft are otherwise identical. Every airline is different. I didn't take finance at school but it's probably an upper year university project in terms of complexity in order to get it right.

Perfect, exactly what I was looking for
 
leghorn
Posts: 544
Joined: Sun Jan 22, 2017 9:13 am

Re: Leased vs non leased airlines profit margin

Fri Mar 02, 2018 2:53 pm

better a leased new plane than an old one you own and if you can't only afford to lease an old plane you aren't at the races.

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