Aircraft Finance - Commercial Aircraft

Commercial Aircraft

Aircraft are expensive. A Boeing 737-700, the type Southwest or Ryanair uses, is priced in 2008 USD in the range of $58.5 - $69.5 million (although very few airlines actually pay this much). Airlines also typically have low margins so very few airlines can afford to pay cash for all their fleet.

Commercial aircraft, such as those operated by airlines, use more sophisticated leases and debt financing schemes. The three most common schemes for financing commercial aircraft are secured lending, operating leasing and finance leasing. However, there are other ways to pay for the aircraft:

1. Cash
2. Operating leasing and sale/leasebacks
3. Bank loans/finance leases
4. Export credit guaranteed loans
5. Tax leases
6. Manufacturer support
7. EETCs

These schemes are primarily distinguished by tax and accounting considerations, particularly tax-deductible depreciation, interest and operating costs which can reduce tax liability for the operator, lessor and financier.