ABSTRACT
This chapter discusses the buy versus lease decision in quantitative detail, along with the different types of leases and major aircraft leasing companies. A general classification for a lease depends on whether the asset is represented on the balance sheet or off the balance sheet. A wet lease provides an airline with an aircraft and everything that is needed to operate the aircraft, including crew, maintenance and insurance for the aircraft. Aircraft can be leased for the long-term under two different types of leases; operating leases and capital leases. In order to analyze the financial component of the buy versus lease decision, an approach comparing the net present value (NPV) of buying and leasing can be used. The buy versus lease decision is also common in everyday life as one must decide whether to lease or buy when shopping for a car. There are several companies who lease aircraft to different clients all over the world.
