Ryanair 737-8AS V 737-8MD

STEVE35

With Ryanair accepting their latest new orders of 737's in the next week or so. What's the difference between their existing B737-8AS and the latest B737-8MD.

b757

http://www.sec.gov/Archives/edgar/data/1038683/000119312513312061/d559127dex43.htm

If I understand correctly, the purchase was through a Luxembourg leasing company on behalf of Ryanair.

Michael O'Leary is Director / Managing Director of said company also.

-MD is the customer code for the new company.

basill

They used to do a variety of sale and leaseback transactions utilising companies located in low tax countries. It's no doubt all in their annual accounts for those keen. From what I remember reading about them years ago it went something like this......

FR would buy the aircraft from Boeing. The aircraft would then be immediately sold to a company located in a far flung hot Caribbean low tax climate. The aircraft are then leased back to FR. The tricky bit is that under Irish tax law you can accelerate the depreciation of the aircraft over say 3 years for example. To keep it simple if they brought an aircraft for say 30m then that would be 10m a year as a tax deductible depreciation charge with the asset fully written off in the books after the 3 years. When they were buying lots and lots of aircraft a year their effective tax charge was single digits. When they stop buying aircraft then they would be "running out" of depreciation to offset the profits and hence would be effectively paying more in tax than in prior years.

Simon Gruber Says

Will their new ones have the redesigned winglet type as below?

L1011

No, standard winglets only.

highlydebased

I can't wait to see if the interior will be any different to the current offering....

AfterDusk

basill wrote: »

FR would buy the aircraft from Boeing. The aircraft would then be immediately sold to a company located in a far flung hot Caribbean low tax climate. The aircraft are then leased back to FR.

Source??


Back to OP, 'AS' and 'MD' are the Boeing Customer Codes.

fr336

First newbie is being delivered to DUB tomorrow morning!

ShanE90

fr336 wrote: »

First newbie is being delivered to DUB tomorrow morning!

Hopefully some of the spotters will get a few pics, I presume she'll be on FR24?

fr336

ShanE90 wrote: »

Hopefully some of the spotters will get a few pics, I presume she'll be on FR24?

Here's some already mate

https://twitter.com/BoeingAirplanes/status/509402656822292480/photo/1

pic.twitter.com/ixR6jH3C6h

https://twitter.com/KnicelyKIRO7/status/509414276638191616/photo/1

And yes will be on fr24 for most of it I'd say.

fr336

Oops try this

fr336

Crumbs868

basill wrote: »

They used to do a variety of sale and leaseback transactions utilising companies located in low tax countries. It's no doubt all in their annual accounts for those keen. From what I remember reading about them years ago it went something like this......

FR would buy the aircraft from Boeing. The aircraft would then be immediately sold to a company located in a far flung hot Caribbean low tax climate. The aircraft are then leased back to FR. The tricky bit is that under Irish tax law you can accelerate the depreciation of the aircraft over say 3 years for example. To keep it simple if they brought an aircraft for say 30m then that would be 10m a year as a tax deductible depreciation charge with the asset fully written off in the books after the 3 years. When they were buying lots and lots of aircraft a year their effective tax charge was single digits. When they stop buying aircraft then they would be "running out" of depreciation to offset the profits and hence would be effectively paying more in tax than in prior years.

Are you sure you are not missing an important piece of the puzzle there? Expanding on your example where they write off(tax purposes) an aircraft to 0 after 3 years, however being Ryanair they sell it on in year 3 before a major check for €20m, won't that trigger a clawback of €20m in capital allowances?

Tenger

Not sure what the accoutancy trick is in relation to 'clawback'. However airines have been doing this for years, FR just seem to have finetuned it nicely based on their rumoured ~E30M unit price on the B737's post 9/11.

At one point in the late 00's Boeing were actually offering big discounts to some smaller airlines to stop them buying the 2nd hand Ryanair B737's that they were offloading after 3-4 years. Such sales were nibbling away at Boeing's order book.


I know that EI did similar a few years ago sold 3-4 of their aircraft to a leasing company, (cash injection at current price) then leased the same aircraft back without taking the hit on the future depreciation losses.

Crumbs868

Tenger wrote: »

Not sure what the accoutancy trick is in relation to 'clawback'. However airines have been doing this for years, FR just seem to have finetuned it nicely based on their rumoured ~E30M unit price on the B737's post 9/11.

At one point in the late 00's Boeing were actually offering big discounts to some smaller airlines to stop them buying the 2nd hand Ryanair B737's that they were offloading after 3-4 years. Such sales were nibbling away at Boeing's order book.


I know that EI did similar a few years ago sold 3-4 of their aircraft to a leasing company, (cash injection at current price) then leased the same aircraft back without taking the hit on the future depreciation losses.

I believe that Ryanairs accountancy trick was buy plane for $25m, sell to the lessor for the market value of $30m, who then leases back to Ryanair, therefore profit of $5m for Ryanair.

Its nothing to do with accelerated capital allowances in Ryanairs case, as it only benefits airplane owners (such as lessors) who hold onto aircraft for a long period as clawback would not affect them.

Delta Kilo

There are a whole myriad of tax treaties and tax incentives that help an airline/leasing company to lower ownership costs. You really have to be an expert in international taxation to have a good understanding of it all. Im afraid I dont know much about this side, but taking tax out of it, its very popular for airlines to do sale and leaseback transactions with leasing companies.

Airline will place a large order with manufacturer and prior to taking delivery of the ordered aircraft, they will offer the new aircraft for sale to the market of leasing companies who will bid on the aircraft with a purchase price, rental, lease term and conditions. The airline will select the deal that suits them best after rounds of negotiations with the leasing companies. Airlines can also do this with their current fleet, so may often offer an aircraft that is a couple of years old for sale to a leasing company.

I guess the main reason is cashflow as it unlocks the millions the airline spent on the new assets.