Can someone explain?

AAG2000

Advanced
Aug 20, 2002
186
0
Two main advantages:

1. As G4G5 said, it raises badly-needed cash for American.

2. If Arkia is profitable, it allows them--as the owner of the planes--to take depreciation and reduce their net income for tax purposes. American does not need this tax benefit because it is not profitable.

If you read between the lines, you might notice that this sounds an awful lot like a loan, with the aircraft as collateral. However, there are important differences...that's where AA's excellent legal department comes in handy.
 

G4G5

Advanced
Aug 21, 2002
164
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You get the cash.[BR][BR]Airlines have been doing this for years. They pay off their aircraft during the good times and lease them during the bad. AA receives $94 million upfront. If you are loosing $1 mill per day, you just kept the doors open for another 3 months.
 

AAmech

Veteran
Aug 22, 2002
766
1
[blockquote]
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On 11/10/2002 10:08:26 AM G4G5 wrote:

You get the cash.

Airlines have been doing this for years. They pay off their aircraft during the good times and lease them during the bad. AA receives $94 million upfront. If you are loosing $1 mill per day, you just kept the doors open for another 3 months.
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[/blockquote]

If only we were losing $1 mil per day!! Life would be wonderfull!!