Aircraft Hire Purchase Agreement

Thus, the rental costs of the aircraft increased by 1.47 times compared to the initial cost (173.34 / 118 1.47), which is entirely justified by the inclusion in the rent payments of interest payments on the use of bank credits and income (margin) of the lessor. The multi-leg lease in appearance looks like a real estate mortgage because it does not sell physical movement of the property to the owner. This type of lease allows the company to obtain a substantial amount of cash from the sale of real estate, while continuing to use it after entering into a lease agreement, i.e. to increase the capital and obtain assets. Operating rental. As part of a business lease, the tenant simply uses the property they rent (usually for a relatively short period of up to seven years). In addition to expanding aircraft financing opportunities, cross-border leases (abroad) offer considerable tax advantages. If a long-term lease is included in the airline`s balance sheet accounts, an operational lease is not included in these accounts, which is important for an airline with sufficient debt. The acquisition of an aircraft is a fairly expensive process and it is far from always possible to buy a credit if necessary.

The exit from this situation can only be leasing. In recent years, leasing companies have also offered new types of services, such as. B access to the contract portfolio and producer delivery plan, which underestimates the capacity of producers. Currently, leasing company orders account for about 20% of total new aircraft production, and this proportion is expected to increase significantly over the next 10 years. Leasing as a financial service can be compared to a lease or credit to purchase aircraft that are the main means of providing the service. It all depends on the contractual terms that can include the rental of the aircraft, followed by a withdrawal, and without it. But it is worth mentioning – if necessary to carry out the buyback process in the future, leasing costs increase sharply. The lease term of the aircraft is 4 years and the annual amortization is $25 million. The acquisition of aircraft at its own expense does not apply to accelerated depreciation, thus amortization is carried out for 10 years and amounts to $10 million.

21. Calculating the reduction in income tax due to the application of accelerated depreciation. Leasing operations for aircraft purchases have complex systems that cover a large number of leasing companies, but the simplest can be presented as follows (Fig.


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