Financing your Aircraft

Financing your Aircraft

Information provided by: Greg Allard, GE Capital

There are basically two traditional methods to finance your aircraft: 1) lease the plane; 2) get a loan. You may also want to consider refinancing or doing a sale-leaseback on your existing aircraft. The financing alternative that works the best for you or your business depends upon your budget requirements, cash flow and tax situation.

Finding the right solution isn't always easy. Businesses are generally affected by a number of factors:

Optimal utilization of cash
Capital budget management
Balance sheet and working capital enhancement
Debt covenant management
Tax considerations
Hedge against equipment of obsolescence
Expected length of asset use
All-in-cost of financing package
Regulatory capital requirements

Financially strong businesses might be tempted to use cash to fund purchases. Self-funding, however, draws vital resources away from other critical investments.

Lease Financing
Leasing offers a business some significant benefits in managing its balance sheet and cash reserves. Since the aircraft is owned by the lessor, leased equipment, in many cases, is not included on a business's balance sheet. This improves debt-to-equity ratios and the business's overall credit position. Leasing is a financing alternative for businesses that are unable to take advantage of accelerated tax depreciation.

Sale-Leaseback of Existing Aircraft
In a sale-leaseback, a business sells some or all of its existing aircraft to a financing company and then the financing company immediately leases the equipment back to the business. A sale-leaseback provides a business with a cash infusion and helps improve the balance sheet. Businesses that use this product typically believe that equity tied up in aircraft can be better utilized elsewhere.

Loans and Refinancings
Financing aircraft or refinancing your current debt can free up cash for working capital. Financing appeals to businesses with longer equipment needs and builds equity with every payment. Loans are tailored with flexible payment terms to match a business's budgetary needs and goals.

Refinancings, in particular, help businesses uncover hidden equity in assets. Existing aircraft loans can be consolidated into one transaction with one monthly payment. Refinancing allows you to improve cash and lower financing costs. In addition, the current aircraft value may exceed the remaining debt, thus allowing the business to increase the amount it borrows.

Upgrade Financing
Sometimes the buyer or lessor of an aircraft wants to upgrade the aircraft with new interior, exterior, engine or avionics. The costs of these upgrades may be included in the total financing amount of your lease or loan depending upon the requirements of your financing source.

GE Capital Is a Lender in Aircraft Financing
With over 20 years of experience, hundreds of aircraft in our portfolio, and billions of dollars in business aviation underwriting experience, GE Capital, can help you manage your aircraft funding needs to optimize your company's financial resources.

If you'd like to discuss your financing needs with GE Capital, contact Greg Allard at:

Phone: 303-488-9027
Email: cccef.gallard@capital.ge.com

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