REX to transition to ATRs, start domestic jet ops

[MickG0105]

There seems to be a perception in some quarters that power-by-the-hour leases are some sort of financial panacea for low utilisation. They're not. PBH is typically a 'tuned' arrangement pitched around forecast utilisation with a cap-and-collar for anticipated variations. They blend the relatively high fixed lease component that covers the return-on-capital to the leasing company with a much smaller utilisation-based pro-rated component for (usually engine) maintenance.

Not using the aircraft doesn't obviate the requirement to make the bulk of the lease payments. However, not utilising the aircraft does have a major impact on the airlines' ability to fund the lease costs from cash flow.

There's a reason why there are a couple of orders of magnitude fewer leasing companies than airlines and at least an order of magnitude fewer leasing companies going bust when compared to airlines. They are much better at making money under any and all circumstances.