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Operating Lease

Although operating leases are a very common means to acquire aircraft in the commercial airline industry, they are a relatively new concept within business aviation. Cello Air Finance is at the forefront of this development and provides its clients with a simple and cost effective alternative to acquiring an aircraft.

Our clients appreciate our individual approach to structuring a lease to allow them to enjoy the flexibility and advantages that an operating lease can bring to their operation, namely:

  • Conservation of capital An operating lease allows an operator to enjoy all the benefits of aircraft ownership for a fraction of the initial cash outlay - thus enabling the operator to use the funds that would otherwise have been required to purchase an aircraft.
  • Removal of the risk of a fall in asset value Aircraft are deprecating assets whose values can vary considerably over time. If aircraft are purchased for cash or with finance, then the operators may find the value of the aircraft falls below the outstanding value of the finance at some stage in the future. An Operating Lease removes this uncertainty, since the operator simply pays a fixed rental during the term of the lease, and at the end of the lease the operator can extend the lease, acquire it at the then prevailing current market value or return the aircraft to Cello as the Lessor.
  • Ability to upgrade and change aircraft type At the end of the lease aircraft can be upgraded or changed under a new lease.
  • Tax and accounting advantages Often operating leases are beneficial to operators from both a tax and accounting perspective subject to the operators own specific circumstances and tax regime.
  • Equity release from a sale and leaseback Operators that already own aircraft are able to release their equity in the aircraft by a sale of the aircraft to the lessor and lease back of the aircraft to themselves – thus retaining the benefits of exclusive use of the aircraft whilst releasing cash for other purposes.
  • Removal of aircraft from a balance sheet Operating leases have often been used in numerous jurisdictions to take the aircraft off a balance sheet whilst still allowing the operator exclusive use of the aircraft.
  • Flexibility of lease terms Operating leases can be tailored to meet the individual circumstances and requirements of the lessee, and can offer flexibility in payment terms as compared with straightforward loan finance.
  • End of lease flexibility and ease of exit for the operatorAt the end of an operating lease the lessee has great flexibility to extend the lease, purchase the aircraft outright, or hand it back to the lessor.  Whichever course is chosen, the operator has the benefit an easy exit from the lease with no time consuming and costly involvement in the remarketing or sale of the aircraft.

The process:

The Lessee chooses the specific aircraft or aircraft type to be leased based upon the exact requirements of the client. Cello can assist in the technical aspects of this process if so required. Alternatively, the current owner of an aircraft selects an aircraft that it wishes to sell to Cello and lease back to itself.

Cello provides an indicative quotation based upon the length of the lease required, which typically can be anywhere between 5 and 10 years, or longer if so required.

The lessee pays Cello a commitment fee as an advance rental, which is refundable at the end of the lease.

Cello drafts all necessary documentation and the lease commences when all terms are mutually agreed. Typically, the aircraft is enrolled on an approved maintenance program and insured in line with industry standards.

The lessee enjoys all the benefits of ownership for the term of the lease, and at the end of the lease, the lessee can extend the lease, acquire the aircraft for the then prevailing current market value or return the aircraft to the lessor.

For further information on how Cello Air Finance can assist in your next acquisition, or sale and leaseback of existing aircraft please contact us at enquiries@celloairfinance.com