I'm just wondering, assuming Qantas (and other airlines of course) lease rather than buy their aircraft, what the conditions are, mainly with regards to repayment, etc., when the aircraft aren't flying and the airline industry in the main is “on hold”.
Only just recently Qantas executed a Sale and Leaseback on about 7 of their dreamliners to get a $1bn cash injection into their accounts.
Given their strong balance sheet in recent years they paid cash outright for these aircraft. This has now allowed them to refinance these assets and given them a cashflow solution when it's quickly drying up.
The terms from my understanding were 10 years @ 2.75%.
Virgin from memory lease their entire fleet, so they would still be needing to make repayments on those facilities. Hence they find themselves with cap in hand to the government.
It would be up to their financier if they get a repayment holiday so to speak but we're not talking about a $1m mortgage these are $100m + deals. Most large aircraft funding is done via a multi-bank syndicate so each bank spreads the risk and doesn't take as larger position.
I believe Virgin Australia actually own around 30 Boeing 737s and 4 Boeing 777s and some other smaller planes, which might be useful if they need to restructure.
I'm just wondering, assuming Qantas (and other airlines of course) lease rather than buy their aircraft, what the conditions are, mainly with regards to repayment, etc., when the aircraft aren't flying and the airline industry in the main is “on hold”.
It's not quite as simple as leased or owned.
Aircraft can be obtained from one of the recognised leasing companies on an operating lease.
Aircraft can also be obtained or placed later on on a finance type lease. Qantas has quite a few aircraft in this category, if you look at the aviation register you will see who the owner of the aircraft is.
With the finance type leases the owner might be a bank or another finance provider, or it might be a shell company that is owned by Qantas themselves. These ones are easy to spot as the company names often have the plans rego in their name and the business address as Coward st Mascot.
Airlines now have the added problem of decreasing values for any aircraft that they own outright, and negative equity a real threat for any that are mortgaged. Surely the best case scenario for an airline right now would be to have a significant proportion of aircraft approaching end of lease in the next 6-12 months so that they could get them off their books altogether?
Only just recently Qantas executed a Sale and Leaseback on about 7 of their dreamliners to get a $1bn cash injection into their accounts.
Given their strong balance sheet in recent years they paid cash outright for these aircraft. This has now allowed them to refinance these assets and given them a cashflow solution when it's quickly drying up.
The terms from my understanding were 10 years @ 2.75%.
Virgin from memory lease their entire fleet, so they would still be needing to make repayments on those facilities. Hence they find themselves with cap in hand to the government.
It would be up to their financier if they get a repayment holiday so to speak but we're not talking about a $1m mortgage these are $100m + deals. Most large aircraft funding is done via a multi-bank syndicate so each bank spreads the risk and doesn't take as larger position.
Virgin do not lease their entire fleet...
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Qantas aircraft financing?
SimonFrost
SimonFrost
Qantas - Qantas Frequent Flyer
Member since 10 Jul 2013
Total posts 70
I'm just wondering, assuming Qantas (and other airlines of course) lease rather than buy their aircraft, what the conditions are, mainly with regards to repayment, etc., when the aircraft aren't flying and the airline industry in the main is “on hold”.
Lps988
Lps988
Member since 20 Jan 2017
Total posts 33
Only just recently Qantas executed a Sale and Leaseback on about 7 of their dreamliners to get a $1bn cash injection into their accounts.
Given their strong balance sheet in recent years they paid cash outright for these aircraft. This has now allowed them to refinance these assets and given them a cashflow solution when it's quickly drying up.
The terms from my understanding were 10 years @ 2.75%.
Virgin from memory lease their entire fleet, so they would still be needing to make repayments on those facilities. Hence they find themselves with cap in hand to the government.
It would be up to their financier if they get a repayment holiday so to speak but we're not talking about a $1m mortgage these are $100m + deals. Most large aircraft funding is done via a multi-bank syndicate so each bank spreads the risk and doesn't take as larger position.
patrickk
patrickk
Qantas
Member since 19 Apr 2012
Total posts 736
QANTAS has a healthy mix between leasing and buying outright. I think this is publicly available in their annual report or similar.
HDawson
HDawson
Member since 07 Jul 2015
Total posts 10
I believe Virgin Australia actually own around 30 Boeing 737s and 4 Boeing 777s and some other smaller planes, which might be useful if they need to restructure.
AJW
AJW
Member since 16 Nov 2011
Total posts 55
Originally Posted by SimonFrost
I'm just wondering, assuming Qantas (and other airlines of course) lease rather than buy their aircraft, what the conditions are, mainly with regards to repayment, etc., when the aircraft aren't flying and the airline industry in the main is “on hold”.
Aircraft can be obtained from one of the recognised leasing companies on an operating lease.
Aircraft can also be obtained or placed later on on a finance type lease. Qantas has quite a few aircraft in this category, if you look at the aviation register you will see who the owner of the aircraft is.
With the finance type leases the owner might be a bank or another finance provider, or it might be a shell company that is owned by Qantas themselves. These ones are easy to spot as the company names often have the plans rego in their name and the business address as Coward st Mascot.
Winstonatc
Winstonatc
Member since 24 Sep 2019
Total posts 15
Airlines now have the added problem of decreasing values for any aircraft that they own outright, and negative equity a real threat for any that are mortgaged. Surely the best case scenario for an airline right now would be to have a significant proportion of aircraft approaching end of lease in the next 6-12 months so that they could get them off their books altogether?
Dunc
Dunc
Member since 30 Sep 2011
Total posts 25
Some contracts will have a get out of Jail Free Card, some Force Majeure will be there.
Dan22
Dan22
Qantas - Qantas Frequent Flyer
Member since 07 Aug 2013
Total posts 168
Originally Posted by Lps988
Only just recently Qantas executed a Sale and Leaseback on about 7 of their dreamliners to get a $1bn cash injection into their accounts.
Given their strong balance sheet in recent years they paid cash outright for these aircraft. This has now allowed them to refinance these assets and given them a cashflow solution when it's quickly drying up.
The terms from my understanding were 10 years @ 2.75%.
Virgin from memory lease their entire fleet, so they would still be needing to make repayments on those facilities. Hence they find themselves with cap in hand to the government.
It would be up to their financier if they get a repayment holiday so to speak but we're not talking about a $1m mortgage these are $100m + deals. Most large aircraft funding is done via a multi-bank syndicate so each bank spreads the risk and doesn't take as larger position.