A BUYER’S GUIDE TO
BUSINESS AVIATION
AIRCRAFT FINANCING
Leasing & Lending Solutions for Private Aircraft
Traditional loan ...
One of the most important things to consider when
contemplating leasing or purchasing an aircraft is
the expected level of...
The three basic financing options available
in the market to would-be aircraft owners
are outright ownership, aircraft loa...
LEASING OPPORTUNITIES
The three different kinds of leases are
known as operating leases, financing
or capital leases, and ...
RETURN ON INVESTMENT (ROI)
Companies that require a return on investment for all cash
dollars spent are generally looking ...
+1 (844) 436-8200
INFO@GLOBALJETCAPITAL.COM
GET IN TOUCH
WWW.GLOBALJETCAPITAL.COM
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A buyer's guide to Business Aviation Aircraft Financing

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The value of a professional aircraft broker on your side is unquestionable, as these individuals can use their expertise and knowledge to help you choose the best aircraft for your specific mission, identify financing alternatives and determine the optimal aircraft management approach.

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A buyer's guide to Business Aviation Aircraft Financing

  1. 1. A BUYER’S GUIDE TO BUSINESS AVIATION AIRCRAFT FINANCING Leasing & Lending Solutions for Private Aircraft Traditional loan financing and leasing represent two different ways that a business or private citizen can acquire a jet to be used for personal transportation, and avoid flying on commercial airlines. There are advantages and disadvantages to all strategies for aircraft acquisition, and these frequently have significant economic components, so any individual considering some kind of aircraft purchase or lease would be well-advised to understand the issues related to both.
  2. 2. One of the most important things to consider when contemplating leasing or purchasing an aircraft is the expected level of usage during a given year. If usage is expected to be below the threshold of between 250 and 350 hours per year, ownership probably is not the most advantageous option, and leasing might be more economically beneficial. Purchasing an aircraft can be very advantageous, if after all payments have been made, the aircraft is then sold for profit, especially since the owner will have enjoyed the use of the jet during that period. Considerable tax advantages accrue to the owner as well, since it is an asset that can be depreciated at a set rate every tax year. Some of the disadvantages of ownership are that significant capital is tied up in the aircraft as equity and resale values can fluctuate widely depending on prevailing economic conditions. Leasing an aircraft has some distinct advantages, since it generally involves a low initial payment, and at the end of the lease period the lessee can simply walk away from the agreement, or continue it at his discretion. Having the option to either return, upgrade or renew your aircraft lease at the end of the agreement allows you to void the changing costs of maintenance, upkeep and technological advances as your private jet depreciates in value over time and replacement parts become harder to find or discontinued altogether. 01 LEASING VS. PURCHASING
  3. 3. The three basic financing options available in the market to would-be aircraft owners are outright ownership, aircraft loans, and operating leases. Outright ownership can be an ideal scenario for a company if it has the cash to purchase an aircraft via a one-time cash payment which immediately transfers ownership to the company, and gives it full rights for usage or leasing to other parties. An aircraft loan involves borrowing money from banks or other lenders in order to make an aircraft purchase, and typically includes a loan agreement, promissory note, and a security agreement. Together these three components outline the terms of the loan, the interest rates, a promise to repay the borrowed amount with interest, and a grant to the lender of a security interest in the aircraft. 02 OWNERSHIP FINANCING OPTIONS “ “ OUTRIGHT OWNERSHIP CAN BE AN IDEAL SCENARIO FOR A COMPANY.
  4. 4. LEASING OPPORTUNITIES The three different kinds of leases are known as operating leases, financing or capital leases, and synthetic leases. The most popular leasing arrangement is the operating lease, in which the lessee acquires possession of the aircraft for the leasing period, while the lessor remains its actual owner. The financing lease includes an option for the lessee to own the aircraft outright at the end of the leasing period, assuming all payments are made promptly and in full, so in this scenario the financing lease basically becomes a purchase installment agreement. The synthetic agreement incorporates elements of both these leasing types, in that it is fundamentally an operating lease, but is structured in such a way as to be considered an expense on the income statement, rather than a liability on the balance sheet. 03 ““THE MOST POPULAR IS THE OPERATING LEASE.
  5. 5. RETURN ON INVESTMENT (ROI) Companies that require a return on investment for all cash dollars spent are generally looking to have money coming in as a return for any cash investment, and this can even include the purchase of an aircraft. One way to set up this kind of financial scenario is to hire out the aircraft for use by third parties when it is not in use servicing the primary owner(s). Aircraft management companies exist which offer this service, since it is a common scenario among owners looking to recoup costs during otherwise idle time for an aircraft. With active management, an aircraft might be offered to other users during most of its idle time, thus generating considerable cash income for owners, and helping to defray a portion of the cost of operation and monthly payments. 04
  6. 6. +1 (844) 436-8200 INFO@GLOBALJETCAPITAL.COM GET IN TOUCH WWW.GLOBALJETCAPITAL.COM

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