Originally Posted by
43Inches
Leasing vs purchase depends on long term strategy and availability. Lease companies use scale to buy numerous production slots and then can offer them at lease rates comparable to what you would otherwise pay if you borrowed the money and purchased a small run of units at a higher price. If you are an accountant you would know there are certain tax benefits to leasing and to outright purchase. There is also the matter of how long you imagine you will be operating such aircraft, most modern jets are best kept under 10 years old to get the most from the latest efficiency gains. A 20 year old jet probably burns 10-20% more fuel and maintenance and parts costs are again large percentages higher. If you lease, you can sign the contract for 10 years, and then re-lease new machines and keep the fleet age as efficient as possible without having to deal with acquisition and sales costs. You might want to ask Hertz and a few other rental car agencies how their old strategy of purchase and sell vehicles at low kms has gone with their electric cars... I think Hertz is now down 4 straight consecutive losses into the billions due to the junk status of used Teslas and Polestars.
Aviation is one of those places where underlying profits mean nothing. An airline is constantly renewing fleet, brand, staff and everything else. There is never a point where you are just running without some form of change happening, if you are it means things are aging and losing value, so its false numbers, at some point you have to play catch up at more than whatever cost you saved by pinching pennies.
Car leasing and aviation leasing are completely different IMO especially when China is changing the game by flooding the market.
Nissan is in big trouble and German car manufacturers likewise.
Boeing and Airbus are the only manufactures from my understanding and 1 of them has serious production problems at moment.
That is why leasing frames have gone sky high in recent times which has been great news for aviation leasing companies but not airlines as unfortunately Rex and Bonza found out to their cost
Hindsight is a great thing but there was only going to be 1 outcome once they decided to compete with Qantas on high margin domestic routes.
The beauty for Qantas going forward is that are replenishing their frames that reach 23/24 frames with new fuel efficient state of the art frames over next 5 years.
The new frames for Jetstar are giving them $7m savings over frames they replace from memory in last annual report.
That is a serious competitive advantage IMO and I backed that up by investing my own money in them.
I am repeating myself, but from my research ,Qantas strategy is to run their frames till 23/24 years-great in a low fuel environment, sure there is extra maintenance ,but they will be replaced by fully owned Qantas frames from Airbus when there time is up.
Owning will always be better than leasing IMO although argument could me made that Qantas should have leased the 12A380s rather than buying them.
Other forum members have said, my research is rubbish, no problem with that, and wish them well.
I look at OPEC,crack spreads,2025 oil production by country,1 parameter among many in my decision to continuing holding Qantas shares.
I also have subscriptions to both the Australian and Australian Financial Review to get insights on Australian airline industry and hopefully this forum will help as well.
It is great to get different view on here and thank forum members for their alternative view.
Those views just doesn’t make sense to me ,and that is why would be interested to gauge whether those particular forum members have accountancy qualification or background in financial analyst.
I know this may not be popular but it is reassuring to me that current Qantas CEO came from a finance background.
Anyway, last comment on this particular thread and Rex will survive with government support.
Their shareholders got burnt though ,and Warren Buffet said never invest in airlines.
I have made an exception to his rule based on my research ,but it is still a risk and lot of u think my research is rubbish anyway, and hopefully there is not a Covid type event around the corner.
Have a great weekend fellow forum contributors .