ABSTRACT
This chapter examines the aircraft leasing market, different types of aircraft lease, and buy-vs.-lease analysis. Performing the breakeven analysis is critical for the leasing industry, because it sets the boundaries within which these transactions can be performed, while still allowing room for negotiation. Boeing Capital Corporation offers operating and capital leases to airlines, as well as working with third-party lenders, such as commercial banks and other financial institutions, to secure financing for aircraft purchases. The net present value (NPV) of buying and leasing can be examined by looking at all cash flows for each method of financing or by examining the incremental cash flows. The only part of an operating lease that affects the financial statements of the airline is the rent expense, which is recorded on the income statement for the payments the airline makes to the lessor.
