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How Little Does American Airlines Pay For 737s?
Wells Fargo has this item about what American Airlines actually paid for the Boeing 737-800, as opposed to the list price: more than a 50% discount from $84.4m. Note that AerCap (AER) appears to have paid $40m per aircraft in a purchase-leaseback. One assumes American didn’t resell the aircraft for the price paid from Boeing but marked them up at least a little bit. We’ve heard AA’s cost was in the range of $35m but this is unconfirmed. (leehamnews.wordpress.com) Mehr...Sort type: [Top] [Newest]
Right, and I am going to believe ANYTHING Wells Fargo says. Can someone link to a report on mortgage ethics from Bank Of America next?
Another thought here, could be they are in a leasing arrangement where they are only amortizing 50% of the list price. At the end of the lease the leasing company still owns the airplane and can either sell it or lease it back out.
Now I understand why the seats are so big and the fares so low...LMAO
Well played sir - HAHAHA
Most, if not all states exempt commercial aircraft from sales taxes. That is one reason why there are so many part 135 operations around. Flying a non-commercial airplane to a state where there is no sales tax is common, same as taking a boat offshore to do the paperwork. Even if AA paid sales tax it would be calculated on the actual purchase price not the list price, the same way sales tax is computed when you or I buy a car.
I hope nobody here thinks Avis pays list price for a fleet purchase of cars.
I hope nobody here thinks Avis pays list price for a fleet purchase of cars.
Apologies up front for the long post... I didn't mean to write this much when I started... @_@
But does anyone truly believe that any ultra high-profile, multi-million dollar airline like AA is 'sneaking' past the IRS and evading taxes illegally? Or that they are exploiting loopholes that the government has missed? The IRS can dig into any one of our pockets and look for loose change, and they can do it with a frightening level of impunity. I don't believe for a second that our government isn't intimately aware of what he airlines are up to.
That having been said, it probably IS completely accurate that AA (and all of the other airlines) are getting huge discounts from manufacturers and huge tax breaks from the government. The reasons why?
1) Capitalism. Aircraft manufacturers need to move their product... if they don't, they tend to go out of business. Makes sense, no? ^_^ So it really does not surprise me that an aircraft builder is willing to cut huge lease deals with airlines to get their products out in the marketplace. We don't know what their real margins are anyway and I'm sure there is more to it than what I have said... but even my grossly simplified view of it makes sense to me.
2) Infrastructure. Our country MUST transport vast numbers of people and goods in order for our economy to operate. It has always been this way. This is why railroads were built to span the country as it grew, it's why the interstate system was built, and it's why airlines have become what they are. It is also why states get HUGE financial incentives to update/maintain their roads/highways/freeways. Well, if the government uses federal tax dollars to maintain the road infrastructure, why is it surprising that they also give huge tax breaks to airlines and other carrier services? Imagine if they DID tax the crap out of the airlines? Who would end up paying for those increased cost burdens? WE would! And if air travel became too expensive for us to use it (it almost is anyway!), then what would happen to that industry? It would implode! Have we forgotten how bad it was after 9-11 when the skies were closed for only a few days? What a mess that was! ...No, it is completely logical to think that our government is all about giving the airlines a pass when it comes to sales tax on aircraft purchases. And whether or not it's fair is irrelevant... we all still benefit from it.
Again, sorry about the long post/soapbox thing. ;)
But does anyone truly believe that any ultra high-profile, multi-million dollar airline like AA is 'sneaking' past the IRS and evading taxes illegally? Or that they are exploiting loopholes that the government has missed? The IRS can dig into any one of our pockets and look for loose change, and they can do it with a frightening level of impunity. I don't believe for a second that our government isn't intimately aware of what he airlines are up to.
That having been said, it probably IS completely accurate that AA (and all of the other airlines) are getting huge discounts from manufacturers and huge tax breaks from the government. The reasons why?
1) Capitalism. Aircraft manufacturers need to move their product... if they don't, they tend to go out of business. Makes sense, no? ^_^ So it really does not surprise me that an aircraft builder is willing to cut huge lease deals with airlines to get their products out in the marketplace. We don't know what their real margins are anyway and I'm sure there is more to it than what I have said... but even my grossly simplified view of it makes sense to me.
2) Infrastructure. Our country MUST transport vast numbers of people and goods in order for our economy to operate. It has always been this way. This is why railroads were built to span the country as it grew, it's why the interstate system was built, and it's why airlines have become what they are. It is also why states get HUGE financial incentives to update/maintain their roads/highways/freeways. Well, if the government uses federal tax dollars to maintain the road infrastructure, why is it surprising that they also give huge tax breaks to airlines and other carrier services? Imagine if they DID tax the crap out of the airlines? Who would end up paying for those increased cost burdens? WE would! And if air travel became too expensive for us to use it (it almost is anyway!), then what would happen to that industry? It would implode! Have we forgotten how bad it was after 9-11 when the skies were closed for only a few days? What a mess that was! ...No, it is completely logical to think that our government is all about giving the airlines a pass when it comes to sales tax on aircraft purchases. And whether or not it's fair is irrelevant... we all still benefit from it.
Again, sorry about the long post/soapbox thing. ;)