Option (aircraft Purchasing)
An option, when purchasing aircraft, allows an airline to purchase additional aircraft in the future at an agreed price and date.
When placing orders for new aircraft, airlines commonly obtain options from the aircraft manufacturer. These options allow the airline to delay the purchase of additional aircraft until market conditions become clearer and the purchase can be justified. It also reserves the airline a place in the manufacturing queue, for a guaranteed delivery slot. When the airline finally exercises its options, it can place its order without having to join the end of the queue which otherwise may delay the delivery of the aircraft for years. If future conditions do not justify expansion of the airline's fleet, the airline is not obliged to purchase the aircraft.
Depending on economic conditions, manufacturers often sell aircraft purchasing options below either the real or Aircraft Bluebook value of the aircraft.
Read more about Option (aircraft Purchasing): Rolling Options
Famous quotes containing the word option:
“Our passional nature not only lawfully may, but must, decide an option between propositions, whenever it is a genuine option that cannot by its nature be decided on intellectual grounds; for to say, under such circumstances, “Do not decide, but leave the question open,” is itself a passional decision—just like deciding yes or no—and is attended with the same risk of losing the truth.”
—William James (1842–1910)