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BOC Aviation Concludes PLB Deal with Virgin Blue
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#2
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Good news for Virgin I guess. Some more cash in the bank and less debt on the books.
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#3
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could you explain how it works Cheers |
#4
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Normally airlines will sell and leaseback for a couple of reasons
- Cash flow (Which isn;t DJ's issue as they have positive cash flow) - To meet capital requirements for new aircraft or investments (poss the 77's) - To realise the current value of the aircraft/ this is done especially when the market price of said aircraft may decline significantly in the near future. It is usually bansk that do these deals and they structure them in such a way that they get numerous tax breaks etc as well. Both Air NZ and Singapore Airlines have done similar deals in the last 6 months. |
#5
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Marty,
Purchase and Lease Back (PLB) or Sale and Lease Back is a quite common practice across many industries. The most simple method of describing the process is: 1) Customer identifies need to free up capital tied up in owned assets for other interests 2) Customer approaches a financial/leasing institution with a view to selling the said asset to the organisation 3) The Customer then leases the asset back for a weekly/monthly/annual cost 4) Negotiation on sale price and lease cost occurs 5) Customer is paid for the asset and is free to utilise the capital raised as required 6) Finance institution enters into a lease agreement with the Customer over a prescribed period on the asset. End result, Customer has freed up capital to utlise elsewhere within the business and has an asset on lease at an agreed lease rate over a pre negotiated term. Generally, the option to "hand back" the asset should it become surplus is also negotiated into the arrangement. Obviously, these transactions are quite complex and I don't suggest that the above may be accurate in this specific instance however it gives you a general overview of how a sale and leaseback would work. Nor should my post be construed or interpreted to question the financial viability of the organisation in question. I would ask any posts that do suggest this be removed by the mods. I hope my post has given some insight into the PLB agreement mentioned above. Well there you go, two answers to the one question! Cheers Michael :-)
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Whatever happened to Ti Dak? |
#6
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No worries, thanks both Craig and Michael sounds like a good move by VB I can breathe maybe a lil easier for awhile
Last edited by Marty H; 2nd March 2009 at 09:39 PM. |
#7
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No probs Marty, sure times are tough, but DJ is even tougher (oh, that's someone elses slogan at the moment isn't it? Whoops!) and will ride out the current economic situation.
PS: I don't think you needed to quote me in your reply! People got it the first time
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Whatever happened to Ti Dak? |
#8
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Their was brief mention in the current issue of AA about QF doing a similar deal with one of the domestic A332's -EBJ or EBK can't remember which.
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#9
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Being someone who worked at BOC head office in Beijing before (not BOC Aviation) and is likely to be working for another BOC subsidiary very soon, it's good to see the old SALC continues its expansion with greater supports from the banking group. In fact, since BOC bought SALC in 2006, a lot of the deals done by BOC Aviation were fully or partially financed by BOC and its overseas branches. Regards. |
#10
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I think that must be the one arranged by Macquarie Capital (under agreement between Macquarie AirFinance and Qantas)... [Someone please correct me if I am wrong on this]
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