ABSTRACT
One of the most significant aspects of airline finance concerns the acquisition of aircraft. In 2014, 1,490 new commercial jet aircraft were delivered and Boeing (2015) predicts that 38,050 new aircraft, valued at US$5,200 billion (at list prices), will be required by 2033. The costs associated with acquiring aircraft pose a considerable challenge for airlines. The 2015 list price for a new Boeing 737 MAX 8, for example, was US$110 million (Boeing 2015), while the equivalent list price for a wide-body Airbus A380-800 was US$428 million (Airbus 2015). Although bulk purchase discounts mean airlines rarely pay the full manufacturers’ list price, carriers still need to source large amounts of capital to finance the acquisition of these assets. Some second-hand aircraft can retain a relatively high value, and airlines will need to source sufficient finance to cover their acquisition.
