What does Options mean when airlines order new a/c

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15th June 2005 | 14:30

#1 (permalink)

BMI701EGCC

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What does Options mean when airlines order new a/c

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Scott Waterworth

15th June 2005 | 17:56

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Rollingthunder

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They are provisional orders, usually at a pre-agreed price. Once exercised the now confirmed orders slot into the production line.

17th June 2005 | 08:35

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Re-Heat

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They also have an agreed delivery date in many cases - a right for which the airline will pay, therefore being very valuable to that airline such that they can sell them on to another party if they wish to do so.

If there is no agreed delivery date, then there is a further level of commitment of additional aircraft for which no delivery date is agreed and no payment has been made for that right.