Aviation Leasing And Finance

• Briefly revise financial mathematics on aircraft leasing financing
• Learn about the leasing vs. buying decision
• Work through the advantages and disadvantages of lease vs buy
• Learn about maintenance reserve accounts
• Understand risk profiles
• Understand the concept of leveraged leasing
• Gain an understanding of evaluating options in aircraft finance lease

CONTENT:

 Brief Revision of Financial Mathematics in commercial aircraft financing

• Principles of time the value of money
• Opportunity cost
• NPV & IRR - what exactly do they mean?
• Use of residual values
• Impact of tax on financial calculations

The Lease vs Buy Decision for Aircraft Finance

• Cash flow reasons
• Tax issues influencing the decision
• The certainty of cost vs risk
• Weak vs strong balance sheets
• Next-best alternative investments
• Strategic reasons to lease or buy

The Lease vs Buy Analysis for Aircraft Finance

• How to work out the cost of finance
• Calculating cash flows, including residual values
• Tax–deductibility of payments
• Capital allowances for taxation
• Applying financial maths to calculate and analyse the cash flows

Maintenance Reserve Accounts (MRAs) in Aircraft Finance

• Principle underlying concept of MRAs in aircraft finance guide
• Cash flow impact of MRAs
• Timing of payments
• Using corkscrews in Excel to calculate and track MRAs

Evaluation of Aircraft Finance Proposals in international aircraft financing

• Sensitivity analysis
• Set up and tools that make the analysis easier
• Cash available for debt service ("CFADS") and free cash flow ("FCF")
• Covenants and ratios used by banks:
  • Debt service coverage reserve ratio (“DSCR”)
  • Interest cover ratio ("ICR")
  • Lease payment cover ratio
  • Debt to EBITDA

• Exposure vs value calculations

Leveraged Leasing in Aircraft Finance

• Use of debt and 3^rdparty participation
• Effective transfer of capital allowances to 3^rdparties

Risk Analysis in Aircraft Finance

• Identifying critical risks
• Using probabilities to assess risk
• Quantifying risk
• Calculating weighted average risk values
• Example of a risk model
• Statistical techniques – e.g. Monte Carlo analysis

Wrap-Up

• Overall review
• Key points to re-iterate
• Final questions and issues to discuss

TRAINING METHODOLOGY:

The training methodology combines lectures, discussions, group exercises and illustrations. Participants will gain both theoretical and practical knowledge of the topics. The emphasis is on the practical application of the topics and as a result participant will go back to the workplace with both the ability and the confidence to apply the techniques learned to their duties.