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Helicopter Leasing Challenges & Opportunities!
Article by Aubrey Point & Gary Fitzgerald Pure operating leasing is a relatively
new, but fast growing, financial product in the helicopter world. The numerous bene- fits of operating leasing are matched by some substantial challenges that are inher- ent in the structure of the helicopter opera- tor industry. This article aims to explain these challenges and opportunities for op- erators and investors alike.
THE BENEFITS As a general rule, operating leases bring
operators several advantages over owning helicopters outright. Owning helicopters entails tying up substantial amounts of cap- ital during the operating life of the helicop-
38 August 2013
ter. Leasing helicopters requires nearly no initial capital outlay, except for a deposit that is returned at the end of the lease. Sec- ondly, the operator does not take any resid- ual-value risk on leased helicopters; the investor takes the risk and rewards of any future value fluctuations. In addition, be- cause the operating lessor orders the heli- copters, the operators are shielded from the risk of lengthy speculative orders, as heli- copters offered by operating lessors are available at shorter notice, which is often in-line with tender or operational require- ments. Thirdly, the operator benefits from a much greater flexibility of lease term that is not the case with owned machines. The investors take the risk of remarketing the
helicopter at the end of a lease term, but the operator always has the option to extend a lease. In some specific circumstances the lease may also be terminated early, for ex- ample, if the underlying service contract is not renewed as expected. From an investor perspective, helicopters
are relatively attractive machines to lease, as they are generally fairly liquid assets, both in terms of multiple operators and multiple roles. This, in theory, creates a wide potential market for placement. This liquidity is in large part created by a heli- copter’s versatility to be physically con- verted for different roles such as offshore, medical evacuation, fire fighting, etc. As a result of this liquidity, and their inherent
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