
Obtaining the right form of financing is a often the most important step in the acquisition process. Every buyer has different constraints which must be taken into consideration and objectives which must be met. On a consultancy basis, ABA can assist clients in negotiating optimum financing or lease terms. To do this requires an in-depth knowledge of cross-border structures and jurisdictions, as well as the ability to work closely with institutions involved in asset finance.
ABA is an experienced and independent advisor, whose interests are always fully aligned with those of its clients. The following list includes the basic frameworks around which most forms of asset financing are structured:
Similar to debt financing but with no initial capital outlay (i.e. 100% debt-financing). Rental payments are lower when compared to operating leases. At termination the lessee has the option of purchasing the asset for a pre-agreed price. Accounting treatment is on-balance sheet (lessee depreciates the asset, lease rentals are capitalised as debt).
Means of obtaining aircraft on a short to mid-term basis (typically 3 to 5 years), therefore ideally adapted for operators needing to develop new routes. Upfront capital in the form of advanced monthly rental payments is required. Leases can be “Dry” (aircraft only) or “Wet” (aircraft plus maintenance, insurance, and crew). Accounting treatment is off balance sheet (enhanced liquidity, better gearing, greater debt capacity).
Similar to an operating Lease in terms of structure, however the Lessee has the right to purchase the aircraft through the lease term at a reducing value. It normally requires a larger initial capital outlay, and the rentals will include an element of principal.



