How Aircraft Leasing Works & Why Airlines Do It

We are used to assuming that if an airline paints an aircraft using its livery and operates it, it must also own it. The topic of aircraft leasing does not get the attention it deserves, given its vitality and prevalence to the airline industry. The incredible financial burden of obtaining brand new aircraft is so significant that virtually all airlines decide to lease at least some of their aircraft. Let’s dive into the functionality of aircraft leasing.
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#Aviation #Flight #Avgeek

[@PlaneSpottingBerlin]

Also availability plays a role. If you buy an A320neo now you will get it in 2-7 years (I guess). Leasing companies have placed huge orders at once and will likely be able to deliver the plane to you quicker right out of the factory :D

[@RM-el3gw]

I believe many airlines have already arranged a future lease with the lessor at the moment the order for new aircraft is placed

[@yoavhofstein3658]

you forgot one of the main reason: if an airliner has broken down, or have a maintenance issue, or has crashed, or is in huge maintenance work, airlines get an aircraft for the very short term, until the problem is sold, so they won't lose demand and don't have to repay passengers, using companies such as "CFS jets".

[@sukhoi3572]

They can just wet-lease one for the short term though even if they did own the problematic ac.

[@stevenbridgland3727]

I think you are forgetting return conditions in the op lease...

[@eltondelgado4289]

Can you make a video on how Alliances such as star alliance oneworld work and what benefits can passengers take from it. Why airlines use it..... @simpleflying

[@michaeldunham3385]

Essentially an airline can sell you a ticket for a service they don't actually offer themselves and then carry customers from other airlines who don't actually operate on the routes they operate. Another advantage if your aircraft goes tech you have a chance of being transferred to a partner airline which is something you do get with likes of Ryanair or EasyJet

[@SimpleFlyingNews]

Elton Delgado thanks for the suggestion, I’ll pass it on. - TB

[@misahorna]

Thank You for make it clear to me. I always wondered why airlines do it! Keep it up!

[@whitemailprivilege2830]

Miloš Jovanović Lots of people are doing it. I did it last night.

[@yaarn303]

@@whitemailprivilege2830 huh

[@bhavyavelani4279]

Want to learn about it 😉 thanks simple flying for this amazing video

[@kclefthanded427]

Thanks for explaining the difference between wet lease, dry lease and dramp lease

[@RuiPlaneSpotter]

I really liked the video, thanks!

[@stradivarioushardhiantz5179]

Thank you for this Educational content.....loooved it😎🛫 We need more this kind of content.🛫🛫🛫

[@nalinnarayan3994]

Always wanted to buy Cessna 172

[@MaazTech]

How much is its annual lease payment?

[@nalinnarayan3994]

MaazTech old Cessna go for $50000 to even $100000

[@user-yg2up4lg3r]

MaazTech it varies on the person

[@kkishor2]

Hi! big fan of aeroplanes and the technology behind it nice video keep it up!👌💛

[@Sallaykargbo3480]

Thank you for sharing

[@hschetana]

This helped me to understand the concept of leasing with good example. Thank you. Am interested in understanding this process and leasing finance companies

[@baryonyx2574]

Very interesting video, keep up the good work

[@zachrome91]

4:07 It’s almost impossible to ‘reduce’ indebtedness through a lease with the current financial reporting standards (IFRS 16 Leases). The present value of all future payments under the lease are now classified as lease liabilities, next to normal bank loans. So in your first example of Qatar leasing a fleet of 10 B-787s, the present value of payments of $78 million a year for 20 years would sit on Qatar’s balance sheet, reducing the headroom available to borrow. Otherwise, a great video and excellent explanation of the airplane leasing market. I was aware about wet and dry leases, but damp (!) leases are new to me! 😁

[@akvinodin]

Really very informative video, very tough time ahead for worldwide aviation industry

[@buhariabdullahi8847]

Simply Excellent!

[@BlackGold2012]

Very informative..bravo 😊

[@indranilchakrabarty4196]

SUPERB VLOG!!!

[@Ayden2008]

This is actually interesting, I did not know airlines could get leased aircraft

[@moriver3857]

Leasebacks are also popular in corporate aviation , in the U$S 30 million and above aircraft's, like Global Express, G450/550/650 line, Falcon 900, 7X, etc. In most cases, it makes perfect economical sense. Good show.

[@indranilchakrabarty4196]

EXCELLENT VLOG!! Well researched. Do dry lease planes get the livery of the operating airline

[@SimpleFlyingNews]

Yes - TB

[@axelmarrufo3504]

Damn thank you for the info

[@jeevessagoo]

Didn't Thomas Cook Airlines wet lease from Smartlynx And Avion Express which played a factor in their collapse?

[@jasonfrancis8711]

good vid

[@leodavinxi3402]

Can you make a video about simple flying.

[@saud892]

3:40 Saudi Airlines also made a sale and lease-back deal on its Boeing 747-8F

[@chrismckellar9350]

I thought a 'dry' lease is where the airline leases the aircraft only and is responsible for maintenance and crewing and a 'damp' lease where the airline leases the aircraft including maintenance and is responsible for crewing

[@jeffayoe7468]

anyone know why the 787 at 1:12 has forward leaning mlg?

[@RASHEEDKHAN-hj4ze]

Should airline operator pay dry lease money even if its grounded during covid or not flying period?

[@Droidman1231]

Lol the irony of a jumbo jet advertising the preservation of a Coral reef

[@norwegiangangsta]

Not a Jumbo.

[@Droidman1231]

@@norwegiangangsta The A380 is a Jumbo Jet. In fact it's the largest commercial airplane ever created (in terms of passenger capacity). I've even seen it refered to as a superjumbo before.

[@gavinparmar5397]

Another reason is if an airline needs a small number of aircraft, say 15 Boeing 737MAX8 jets, it won't a large discount like the buyer of 100 or 200 aircraft. By leasing from Avalon or GECAS, the lease company will get the large volume discount and the small quantity buyer will get a lower unit price than if they were to buy the aircraft on their own. Secondly, if the small quantity buyer intends to upsize their fleet to a MAX9 at a later date, say within ten years, the leasing company will often allow them to do in their contract. Owning these aircraft outright, often makes trading up to a larger size of aircraft much more expensive and sometimes cost prohibitive for the small scale buyer.

[@dj__projects]

There's a part of me that will rather go Vistaprint on buying some planes only because my ideal Airline requires a certain seat configuration and the planes would be cheaper.

[@mattfaruolo2450]

Is there a way to determine if an aircraft is leased or owned based on its registration / tail number?

[@SimpleFlyingNews]

Matt Faruolo there are a number of site that list this information. I’d check out Planespotters.net - TB

[@yanben7952]

At 2023, with very risky conditions in aviation industry, no place for airlines companies to buy new aircrafts, the most "safest" way today is to operate by ACMI model, only if you are gaint airlines you can allow your self to buy aircraft. I think 40% of the market today operates by ACMI model

[@paulwilfridhunt]

Aircraft leasing companies presumably have mortgages on the planes that they are leasing to airlines in a similar way to real estate. In real estate a tenant signs a lease to a property that’s owned by a landlord which invariably is mortgaged to somewhere around 50% of its value. What percentage of cash is required for the leasing company to purchase the aircraft from the aircraft manufacturer? Can anyone point me in the right direction? Thanks!

[@ShamrockGoldCircle]

Shame there is no great detail on the activities of the leasing companies. Also, no mention of finance leases?

[@gendaminoru3195]

Don't forget that some airplanes are designed to be almost disposable and not really good long term assets; A320 life limits were a mere 56,000 hours for example. Owning one is not such a brilliant idea

[@mq46312]

You forgot to ask "Will you be leasing or purchasing a commercial airliner?". My answer would have been yes. I am tossing up between leasing or purchasing outright an A350.

[@gamer-tj7do]

Future travel leasing and 2nd hand market.ATR72

[@pilotsam004]

More wizz air pls

[@SimpleFlyingNews]

Pilot Sam 004 I’ll pass this on to our content team. - TB

[@pilotsam004]

@@SimpleFlyingNews Thx

[@dannymurphy1779]

Can you thrash them for a couple of years and not do any servicing like some people do with lease cars I wonder???

[@hermanwan3392]

Danny Murphy I am not very certain, but from my knowledge, the aviation authority has the right to ground the aircraft and call it un-airworthy if the operator doesn’t keep up with required maintenance.

[@rednightfire2655]

I want one plane all to myself :D

[@vickyderitzi10]

How about a playmobil plane?

[@rednightfire2655]

@@vickyderitzi10 You son of a gun...I'm in

[@vickyderitzi10]

@@rednightfire2655 Ok

[@rednightfire2655]

@@77l96 Are you one? You hired

[@ernestmachpro3341]

Hi. I love your accent.

[@paulwilfridhunt]

Because of this global pandemic there presumably will be a lot of aircraft returned to the leasing companies. Do you think that some of those aircraft will never fly again?And if so which ones do you think they will be.?

[@AtulBhatia]

So, essentially like a home loan

[@shahrulrahim]

Aviation ❤️

[@abubakarabbagana5163]

Do Emirates also lease?

[@theanimators2.095]

They are mixed like 90 percent of carriers emirates has atleast more than 100 branded new fully purchased aircrafts through cash some were purchased through loans and some through other payments though it still has a well over 70 leased aircrafts mostly the a380s

[@albomaa]

When throughout the video the aircraft shown are from very known airlines but then a Vueling A320 shows... Me: it’s the largest airline in Spain by number of aircraft Oh

[@PedroEmanuelMusic]

Now do a how leasing companies pay for their hundreds of aircrafts

[@22ndCenturyBasterd]

Venture capitalists

[@PedroEmanuelMusic]

22ndCenturyBasterd Okay so, its not owned by a small group of people, its usually owned by many of them?

[@theanimators2.095]

@@PedroEmanuelMusic yep and cauz they have more credit ratings

[@vickyjang5138]

Vietnam Airlines also Dry-Lease all of A350 and Most of B787

[@fitnessmythwalakaka]

Why is the value of the lease 2.34Bill for 29 years? Wouldn’t it be 1M x 10planes x 12mth x 20 years x 0.65 = 1.56B Thanks!

[@lukasbauer586]

We all know Ryanair leases it’s rough landing bad boys

[@santiagoalvarez7536]

Actually Ryanair bought (place the order directly to Boeing) for the most of their 737's

[@TheNZDoug]

The SAPS Computer maintenance schedules enabled pension funds worldwide to purchase and lease engines only as viable business propositions. .

[@skylineXpert]

Only a handfull of airlines can fork over cash when purchasing

[@samirg7650]

Quick answer because airlines don’t have 10s of $billion lying around

[@norwegiangangsta]

Fucking mindblowing. A380 promoting for "save the reef - it's not too late!" someone is taking the piss

[@fjp3305]

What I never understood is why a airline would sell a B-767 for, let's say, $20 million and pay $200 for a B-787 to replace it. It doesn't make sense to me. And a cargo company would buy that B-767 and make money.

[@Cross-xm2fr]

Same reason you lease a car

[@rundmc5554]

I think main reason is tax or accounting related.

[@analyna9672]

So that's why Lufthansa surviving the pandemic while other big boys suffering. They own most of the aircrafts

[@josefmprable]

I keep hearing *acne,* am I the only one?

[@80sfreak14]

Nope

[@shrimpflea]

There's stuff you can buy to clear that up.

[@stevenbridgland3727]

you are hearing ACMI - Aircraft, Crew, Maintenance and Insurance

[@norfolkandchance9298]

Very annoying. Sound keeps breaking and the guy sounds he is stuttering

[@RajesH-xo9ws]

Why not call it as Renting...!

[@malaysia_airlines0828]

O

[@thomasmutunga9833]

Paying cash for ANYTHING is always the best way to do it. Leasing is basically “buying” a plane that you cannot afford with “money” that you do not have, essentially deliberately taking in debt. Leasing ALWAYs benefits the leasing company NOT the airline. It’s the most expensive way to operate an aircraft. That’s the reason why many airlines are in SO much trouble now, they are still obligated to pay there debt to the leasing company although the planes are not flying. The sad part is that we, the taxpayers, end up bailing them over and over again. Airlines need to be more responsible and pay cash for aircraft and STOP leasing, with the expectation that the government will bail them out when they screw up!!!!!!

[@thomasmutunga9833]

Joakim von Anka I do not understand your point. When people/airlines keeping leasing things/planes that they cannot afford they are bound to be in debt in perpetuity. Airlines need to stay out of debt, pay cash for everything, and have a rainy day fund. Leasing is a financially irresponsible way of running a business.

[@thomasmutunga9833]

Joakim von Anka I respect your point of view, but unfortunately you are completely wrong. Staying in debt “feels” good in the short term but is disastrous in the long term especially when there is a crisis. As warren buffet says “You only find out who is swimming naked when the tide goes out..” I am not sure which historical data made you come Up with your idea but read different books😞

[@JoaoSilva-yh4dg]

Leasing allows for lower short-term cash expenditures, which means more liquidity on hand. Your personal budget, a corporate budget, and a national budget are all very different things, and truisms for one do not apply for the others.

[@thomasmutunga9833]

João Silva a budget is a budget. You shouldn’t differentiate a personal budget vs a corporate budget. Everyone (including corporations) must live on less than they make. Many companies will not make it through this crisis because they carelessly leaded things that they couldn’t afford with “money “ they don’t have.

[@kerucutgaming2216]

@@thomasmutunga9833 leasing makes the ownership of the plane an operational cost while purchasing it means depreciated assets. This looks the same in personal finance but completely different in corporate finance. Loans also considered as an operational cost in some companies or organization.

[@hummadh]

Looks like Germans are ahead again. Good job.

[@norwegiangangsta]

That didn't age well.

[@jacquesmertens3369]

So, a leased plane is like a woman? Dry, wet or damp, and with high maintenance costs.