Revelation wrote:jumpjets wrote:AA747123 wrote:Why would an airline that is struggling to survive be spending money on a brand new airplane? Makes no sense. Part of ANY government assistance should include NO NEW AIRPLANES at all until the TAXPAYERS are made whole and 100% of the government assistance is paid in full!
Didn’t Willie Walsh say something at the recent IAG earnings call that because of the way payments for new aircraft are made taking delivery of a new aircraft actually generated positive cash flow for the purchaser- and no, I didn’t understand how that works- so not to have taken delivery, rather counter intuitively would have been the wrong move for a company wanting more cash. Maybe this is only true for taking delivery of aircraft already in the course of production so as WW outlined in the call deliveries scheduled further into the future are being deferred.
BA ordered the plane many years ago and presumably at a discount. Now a financial consortium will buy it from BA and lease it back to them. Presumably they will pay market price for the airplane which presumably is more for the plane than the price BA negotiated years ago. Thus BA ends up with net positive cash from the transaction. Thereafter it has to make lease payments, but these come with tax advantages. Overall BA makes more money this way than owning the planes themselves.
I can't remember if what I'm saying is exactly what Willie Walsh said, but basically, the final payment required for the aircraft is much smaller than the overall value of the aircraft. Then, once with BA, the full value of the aircraft goes on the books.
Did WW specifically say they would do a sale and lease back arrangement with these aircraft?
If not, then it is more figures on a spreadsheet than actual cash.
Also, I can't see BA selling the aircraft for more than they paid for it. That would lead to increased leasing payments.
More a case, similar to above, where the sale value would be more than the final payment to Boeing.
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