DreamsUnited
Topic Author
Posts: 239
Joined: Sat Jun 24, 2006 2:44 pm

Aircraft Leasing Question

Fri May 08, 2009 10:22 pm

I have been wondering, do all airlines lease their aircraft? how does the lease work and what do they pay? How are aircraft bought and sold with these leases and is it the airline that decides to lease longer or sell the aircraft? What companies actually own the airplanes? What types of planes are leased, like bigger planes or all planes?
Aside from airplanes, what else is leased? Like equipment like engines? I heard from another forum that some airlines lease their break pads.

I know that there are a lot of questions here so thank you very much for your insight, I have been curious about this for a while.

-Josh

[Edited 2009-05-08 15:24:14]
Do not abort a takeoff because a cockpit window pops open!
 
jetplaner
Posts: 125
Joined: Fri Mar 21, 2008 3:13 am

RE: Aircraft Leasing Question

Fri May 08, 2009 11:31 pm



Quoting DreamsUnited (Thread starter):
What companies actually own the airplanes?

ILFC, International Lease Finance Corporation (among others) lease out aircraft that it owns. If you notice aircraft manufacturers (mainly Airbus and Boeing) order books, ILFC and other leasing companies, order new planes to lease to airlines. I think that ILFC ordered some A380s.

-Jetplaner
 
DreamsUnited
Topic Author
Posts: 239
Joined: Sat Jun 24, 2006 2:44 pm

RE: Aircraft Leasing Question

Sat May 09, 2009 12:13 am

Thank you Jetplaner, I looked up Airbus's order book for orders and deliveries and saw many leasing companies, one of which the ILFC and in parenthesis had an airline name, I assume the company they are going to lease the aircraft to. I also assume that when it states just the airline name, that airline is going to buy (100%) of the aircraft, without leasing it from another company?
Do not abort a takeoff because a cockpit window pops open!
 
Viscount724
Posts: 19287
Joined: Thu Oct 12, 2006 7:32 pm

RE: Aircraft Leasing Question

Sat May 09, 2009 1:22 am



Quoting DreamsUnited (Reply 2):
I looked up Airbus's order book for orders and deliveries and saw many leasing companies, one of which the ILFC and in parenthesis had an airline name, I assume the company they are going to lease the aircraft to. I also assume that when it states just the airline name, that airline is going to buy (100%) of the aircraft, without leasing it from another company?

That's basically correct, but the subject is very complex and there are several types of leasing arrangements. Wikipedia has a brief summary of the different types of aircraft financing including leases.
http://en.wikipedia.org/wiki/Aircraft_finance

ILFC has been the largest customer of both Boeing and Airbus for quite a while. Other large aircraft leasing companies include GECAS (GE Commercial Aviation Services) and AWAS based in Ireland (originally known as Ansett Worldwide Aviation Services). There are quite a few others but those are the 3 largest. Their websites usually have some general information that may help answer some of your questions. They also include a list of their customers.
http://www.ilfc.com/
http://www.gecas.com/
http://www.awas.com/

GE also leases engines (not just their own).
http://www.geengineleasing.com/
 
tdscanuck
Posts: 8572
Joined: Wed Jan 11, 2006 7:25 am

RE: Aircraft Leasing Question

Sat May 09, 2009 4:21 am



Quoting DreamsUnited (Thread starter):
I have been wondering, do all airlines lease their aircraft?

No, but it's becoming more common all the time.

Quoting DreamsUnited (Thread starter):
how does the lease work and what do they pay?

The leasing company buys the aircraft, then leases it to an airline for an agreed price per time period (e.g. monthly). There are "dry" leases (airplane only), "wet" leases (airplane + crew) and various other combinations. In every case, the airline is basically renting the airplane from the leasing company...it's just a fixed term rental, hence a lease.

Quoting DreamsUnited (Thread starter):
How are aircraft bought and sold with these leases and is it the airline that decides to lease longer or sell the aircraft?

The leasing company owns the airplane, so they decide what to do with it, subject to the limits of their leasing agreement with whatever airline currently has the aircraft.

Quoting DreamsUnited (Thread starter):
What companies actually own the airplanes?

It varies...many companies own some but not all of their fleet.

Quoting DreamsUnited (Thread starter):
What types of planes are leased, like bigger planes or all planes?

All of them, although I believe it's more common as you get larger because one of the major reasons to lease is to avoid the giant capital outlay to purchase the thing in the first place.

Quoting DreamsUnited (Thread starter):
Aside from airplanes, what else is leased? Like equipment like engines? I heard from another forum that some airlines lease their break pads.

Engines can be leased. You can also get "power-by-the-hour", which is an agreed on price per hour for an engine, not a particular engine. The engine company is then responsible for making sure you have a running engine all th etime.

Entire brakes can be leased...I don't know of anybody who leases just the pads. I think you can also lease tires, but I'm not positive about that.

Tom.
 
FlyASAGuy2005
Posts: 3965
Joined: Sun Sep 23, 2007 4:55 am

RE: Aircraft Leasing Question

Sun May 10, 2009 1:41 am



Quoting Tdscanuck (Reply 4):
There are "dry" leases (airplane only),

Isn't this also true where airlines would lease their own a/c to other airlines? I know DL had UA DC-10s on lease.

Quoting Tdscanuck (Reply 4):
"wet" leases (airplane + crew) and various other combinations

You also see this with larger charter companies/airlines and smaller ones where they will lease the a/c and crew to another company. Doesn't Air Jamaica do this during the winter months with some company with 767s?

Quoting Tdscanuck (Reply 4):
Entire brakes can be leased...I don't know of anybody who leases just the pads. I think you can also lease tires, but I'm not positive about that.

I remember reading way back when; around the time Delta sold their fuel hedges (Leo Mullin and Michelle Burns times) they also began to heavily lease a/c parts to include brakes. Not sure about tires and engines but that may have been true too.
What gets measured gets done.
 
Bravo1Six
Posts: 56
Joined: Fri Dec 07, 2007 11:03 pm

RE: Aircraft Leasing Question

Thu May 14, 2009 5:28 am



Quoting DreamsUnited (Reply 2):
I also assume that when it states just the airline name, that airline is going to buy (100%) of the aircraft, without leasing it from another company?

Not necessarily. The airline may do a sale/leaseback at delivery where they sell the airplane to a leasing company and the leasing company leases it back to the airline.
 
Dalmd88
Posts: 2450
Joined: Fri Jul 28, 2000 3:19 am

RE: Aircraft Leasing Question

Thu May 14, 2009 3:22 pm



Quoting Bravo1six (Reply 6):
Not necessarily. The airline may do a sale/leaseback at delivery where they sell the airplane to a leasing company and the leasing company leases it back to the airline.

This can be a big moneymaker for an airline. Ultra big airline, XYZ orders 50 new airplanes and gets a great price form the maker. When they take delievery they sell for more to a small time lessor, Bob's Buy here Pay here Planes. Bob only does a few deals so he can't get that great price from the maker. Bob now leases the plane back to airline XYZ. The airline then doesn't have all that capital tied up in the plane.
 
FlyASAGuy2005
Posts: 3965
Joined: Sun Sep 23, 2007 4:55 am

RE: Aircraft Leasing Question

Thu May 14, 2009 11:59 pm

This question is a bit off topic but contractually speaking, how does a/c manufaturers feel about airlines selling a/c immediately upon delivery. Take DL for example and what they did with many of their 738s that should have been on property. This may be a totally different case but I always think of the whole deal with the 44 seat CRJs. One would think, it's their a/c so they can do what they want but not necessarily. I know DL/ASA/Bombardier had to come to some sort of agreement to convert the 44 seaters to 50 seaters because of the rate that they originally got the a/c for.

May be a bad example but hopeefully someone sees what i'm trying to say.
What gets measured gets done.
 
borism
Posts: 45
Joined: Tue Oct 24, 2006 3:23 am

RE: Aircraft Leasing Question

Thu May 21, 2009 9:07 pm



Quoting DALMD88 (Reply 7):
This can be a big moneymaker for an airline. Ultra big airline, XYZ orders 50 new airplanes and gets a great price form the maker. When they take delievery they sell for more to a small time lessor, Bob's Buy here Pay here Planes. Bob only does a few deals so he can't get that great price from the maker. Bob now leases the plane back to airline XYZ. The airline then doesn't have all that capital tied up in the plane.

This can also be a great money loser for an airline. Imagine really really bad economy, like right about now. Turns out Bob doesn't really have all that money (line of credit really) he promised you for your brand new aircraft. You end up with something you already paid huge amount of money for (probably credit too) which nobody including yourself wants.

Generally I consider it very bad business practice. But it has and is being done.

Also worth mentioning is that biggest aircraft lessor ILFC is subsidiary of famous insurance giant AIG.

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