Monday, May 24, 2010

Aircraft Financing at Glance

Aircraft financing refers to financing for the purchase and operation of aircraft. Complex aircraft finance (such as those schemes employed by airlines) shares many characteristics with maritime finance, and to a lesser extent with project finance.


How airlines finance aircraft?
Aircraft are expensive. A Boeing 737-700, the type Southwest or Ryanair uses, is priced in 2008 USD in the range of $58.5 - $69.5 million (although very few airlines actually pay this much). Airlines also typically have low margins so very few airlines can afford to pay cash for all their fleet.
Airlines typically use one, or a combination, of the following techniques to pay for their fleet:
1. Cash 
2. Operating leasing and sale/leasebacks 
3. Bank loans/finance leases 
4. Export credit guaranteed loans 
5. Tax leases 
6. Manufacturer support 
7. EETCs 
8. Islamic finance

source: wikipedia

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