Aircraft Leasing versus Aircraft Ownership in a Global Pandemic

Aircraft Leasing versus Aircraft Ownership in a Global Pandemic

Airlines have the option to either lease or to purchase an aircraft for their flight operations – both of which have their own pros and cons. Purchasing of an aircraft costs significantly more and could also negatively affect an organisation’s liquidity by increasing the financial agility and cash retention ability. However, in times like this, with a pandemic ongoing, ownership of an aircraft would reduce the costs as compared to a lease as the airline does not need to pay for the lease monthly. These aircraft can also be used to help liquidate where necessary as well.

However, in opposition to the ownership of an aircraft, leasing might prove to be more cost-savvy. For example, a brand-new Boeing 787-8 costs about USD$240 million, however, leasing of one cost about USD$1 million a month. This means that at the purchase price of an aircraft, an airline would be able to effectively utilise an aircraft for 240 months; the equivalent to 20 years! Leasing also offers a certain degree of flexibility and allows airlines who are in financial trouble preserve cash for their survival.

When an aircraft is leased to an airline to when they are returned to the lessor, certain tasks have to be done before handing it over. These tasks include both physical inspections on the aircraft, detailed screening of the records, and reviews on life-limited parts. These leasing works usually requires a highly experienced person to ensure smooth transitions between the lessor and lessee. Here at ALG, we provide experts in this field that is guaranteed to fit your requirements through our service, ALG Consulting. Click here to find out more about ALG Consulting!