Aircraft Financing Solutions

Business 3

Your company has become successful, and you want the ability to show some of that success through the acquisition of a private aircraft. Owning a private aircraft is more than a status symbol. It is a practical and economical way for you and others associated with your business, including important clients, to travel, meet, and conduct business.

If you are in the process of considering the ownership of a private aircraft for your company, whether it is new or pre-owned, it is important to understand what financing options are available to you. Whether it makes sense to buy or hold an operating lease for your aircraft depends on your financial situation, and you need to compare your options to determine which makes sense for the company. Here is an exploration of buy versus lease options and how to make the best decision for acquiring your private aircraft.

Purchasing Your Private Aircraft

Purchasing a private jet for your company’s needs is as straightforward an option as there is. You simply make the purchase using cash on hand, and the aircraft becomes an immediate asset on your company’s balance sheet. However, you need to consider whether having a depreciable asset is something you want to carry on your company’s books, and if the cost of amortizing this asset is beneficial to your bottom line.

Once you buy the aircraft, you own it outright. All costs associated with maintenance and repair are expenses you carry on your company’s financials under Section 162 of the Internal Revenue Code. At the end of the depreciable life of the asset, you can expect to sell it with a deep discount from the original purchase price.

Leasing Options for Your Private Aircraft: Do They Make Sense?

If an outright purchase does not make financial sense for your company, an operating lease may be something to consider. An increasingly popular way to finance the acquisition of your private jet is to make an operating lease of your private aircraft, similar to what you would expect when leasing a car. Instead of coming up with a large down payment, as in the case of a business loan taken out to acquire the asset, a smaller security deposit is all that is needed to take ownership of the aircraft during the lease period.

Although your company technically does not own the vehicle, you have unlimited access and use of the private aircraft during the lease term. Typically, multi-year operating leases are for 5 years, but they can also be for a longer 10 year period, or otherwise customized to meet the needs of your company. A shorter lease gives you the option for upgrading as newer aircraft become available on the market, as well as letting you control costs in relationship to this expensive asset.

Consider All of Your Options Before Your Sign

Having an aircraft makes sense. It helps to increase productivity by reducing the amount of time you spend on the ground, preventing delays caused by TSA security checks, long lines, or baggage claims, while lowering the amount of time spent in transit between destinations, as opposed to being forced into connecting flights with long wait times between destinations. An analysis of the options available to you for obtaining a private aircraft will allow you to make the best decision financially for your company.

Leave a Reply

Your email address will not be published. Required fields are marked *