Meanwhile, back at the ranch, you can forget the idea that the jet-fuel market is going anywhere any time soon...

[Jan van Eck + 7,558]

How would you like to be the leasing company expecting to receive continuing lease payments on these machines, just sitting there parked in the sun, no customers, no hope of any customers, no cash, and no end in sight?   You can forget about selling jet-fuel, there are some 4,700 biggie aircraft parked out on the runway... Check it out....

Edited April 15, 2020 by Jan van Eck

[Jan van Eck + 7,558]

Conversation:

Leasing company agent:   "we are going to repossess that airplane!"

Airline:   "Go right ahead!   What are you going to do with it?"

Lessor:    "We will sell it to someone else!"

Airline?     "What, are you nuts?  Who?  Nobody has any money.  Nobody has any passengers.  Nobody can even meet payroll, forget about paying you guys.  Your airplane is going to sit. "

So, what is that leasing company guy going to do?  Bring an aircrew in there to go fly that plane out to some desert parking place, and pay money to them to go sit on it?  If an airplane is not flown in 90 days then the FAA considers it "mothballed" and there is this huge cost to re-inspect and certify it as airworthy.   More expenses looming.  This is a huge mess, folks.  Huge. 

[Eyes Wide Open + 3,555]

Let's add GM&Ford. I anticipate back to work nationally within two weeks

As to those airliners short funding comes to mind. It is what it is...Are you aware of the leasing co?  

 

[Jan van Eck + 7,558]

2 hours ago, Eyes Wide Open said:

As to those airliners short funding comes to mind. It is what it is...Are you aware of the leasing co? 

As to the pictured specific machines, no.  However, what has happened is that in the last years  (ever since 2008) the air carriers have been selling their fleets to lesing companies and then leasing them back.  Lots of airlines are in effect "paper airlines," all they really own is the name, everything else is leased.  What they are doing is transferring the future risks onto others.  Sure, they pay a premium, but that is small relative to the risk of holding a very large and very expensive asset.

In the current situation, I suspect nobody is paying anybody.  The missed payments will get tacked onto the end of thelease and the lease extended.  Given the dramatic route and service shrinkages, there is not going to be demand for these machines for years.  Don't be surprised that Boeing gets into seriouos trouble, on top of their MAXX-10 problems  (which I also do not see resolved any time soon, for entirely different reasons). 

Edited April 15, 2020 by Jan van Eck

[Eyes Wide Open + 3,555]

You have over simplified this situation yet in the end the manufacturing will take a big hit. Contracts have been written and they will be broken....at the same time those contracts were underwritten. Who has to pay or what portion one has to pay will be a matter of many bankruptcies and all of its ramifications. 

Those planes are assests/money and there will be one hell of a food fight...it's called survival.

 

Edited April 15, 2020 by Eyes Wide Open

[nsdp + 449]

It has been several years since I looked at one of those leasing contracts.  But after AIG essentially collapsed, underwriters have reworked their "Horse Manure " (force majure) clauses to leave the underwritten party naked in a case like pandemic.

Edited April 15, 2020 by nsdp
tremens hit the send button

[Dan Warnick + 6,100]

2 hours ago, Jan van Eck said:

Conversation:

Leasing company agent:   "we are going to repossess that airplane!"

Airline:   "Go right ahead!   What are you going to do with it?"

Lessor:    "We will sell it to someone else!"

Airline?     "What, are you nuts?  Who?  Nobody has any money.  Nobody has any passengers.  Nobody can even meet payroll, forget about paying you guys.  Your airplane is going to sit. "

So, what is that leasing company guy going to do?  Bring an aircrew in there to go fly that plane out to some desert parking place, and pay money to them to go sit on it?  If an airplane is not flown in 90 days then the FAA considers it "mothballed" and there is this huge cost to re-inspect and certify it as airworthy.   More expenses looming.  This is a huge mess, folks.  Huge. 

We now have long term and ongoing preservation maintenance, Jan.  The aircraft and engines are first preserved for long term parking and then preservation maintenance (minimal yet critical) is carried out to maintain airworthiness.  When it is time to fly once again, the aircraft and engines are depreserved and away you go.

However, your mock conversation is not far off the mark.  Better to keep the lease going and let the operator do the preservation maintenance and work out parking concessions with their local authorities and governments.

[Dan Warnick + 6,100]

2 hours ago, Jan van Eck said:

How would you like to be the leasing company expecting to receive continuing lease payments on these machines, just sitting there parked in the sun, no customers, no hope of any customers, no cash, and no end in sight?   You can forget about selling jet-fuel, there are some 4,700 biggie aircraft parked out on the runway... Check it out....

A large portion of any government bailout or loan program will go to paying lessors and creditors, and then employees, in that order usually.  As you can well imagine, those funds will dry up pretty quickly so the carriers desperately need to get flying again with paying customers (business people will fly first and then slowly, very slowly, tourists will take to the skies again).  Locally though, the loss of operations means the loss of airport fees and taxes, 1,000s of airport and ramp workers, caterers, fuel depots and right on out into the community.  It is a massive hit on a city when these guys shut down.  Unprecidented almost everywhere, and devastating to the local economy.  No one knows at this point which airlines will survive.  But be prepared to be surprised at which ones fold and which ones survive.  There are also massive order backlogs at Boeing and Airbus, not to mention others, and those orders are being deferred and cancelled en masse on a weekly and daily basis already.  Boeing has shuttered, I believe the latest reports are, 4 manufacturing/assembly sites already, and they may go to a full shutdown soon.  Similar actions will have also been taken at Airbus.  Maintenance is being deferred and that means maintenance bases are also getting hit hard.  Recovery will be long and arduous.

[Eyes Wide Open + 3,555]

3 minutes ago, Dan Warnick said:

A large portion of any government bailout or loan program will go to paying lessors and creditors, and then employees, in that order usually.  As you can well imagine, those funds will dry up pretty quickly so the carriers desperately need to get flying again with paying customers (business people will fly first and then slowly, very slowly, tourists will take to the skies again).  Locally though, the loss of operations means the loss of airport fees and taxes, 1,000s of airport and ramp workers, caterers, fuel depots and right on out into the community.  It is a massive hit on a city when these guys shut down.  Unprecidented almost everywhere, and devastating to the local economy.  No one knows at this point which airlines will survive.  But be prepared to be surprised at which ones fold and which ones survive.  There are also massive order backlogs at Boeing and Airbus, not to mention others, and those orders are being deferred and cancelled en masse on a weekly and daily basis already.  Boeing has shuttered, I believe the latest reports are, 4 manufacturing/assembly sites already, and they may go to a full shutdown soon.  Similar actions will have also been taken at Airbus.  Maintenance is being deferred and that means maintenance bases are also getting hit hard.  Recovery will be long and arduous.

The ripple effect of what is going on is hard to get ones head around, But have no fear uncle Joe is back in the loop.Which brings me to only one way out....Nationalizing American industry..I cannot see our manufacturing segments suddenly agreeing to just all get along...What a time to be living in. Suddenly covid does not look so bad at all.

[Eyes Wide Open + 3,555]

1 hour ago, nsdp said:

It has been several years since I looked at one of those leasing contracts.  But after AIG essentially collapsed, underwriters have reworked their "Horse Manure " (force majure) clauses to leave the underwritten party naked in a case like pandemic.

Act Of God?.....Not this time to many to uniform. We are not yet that civilized. It is entirely possible to spin the masses with political garbage..When big money gets involved not so much.

 

Edited April 15, 2020 by Eyes Wide Open

[Ward Smith + 6,615]

6 hours ago, Jan van Eck said:

How would you like to be the leasing company expecting to receive continuing lease payments on these machines, just sitting there parked in the sun, no customers, no hope of any customers, no cash, and no end in sight?   You can forget about selling jet-fuel, there are some 4,700 biggie aircraft parked out on the runway... Check it out....

The video where that picture came from

Original YouTube video of parked jets

Edited April 15, 2020 by Ward Smith