Capital Helicopters, LLC ... the industry's best choice for leasing Robinson Helicopters!
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Tallahassee Helicopters - R44 Training

Lease vs. Buy

Undecided whether to Lease or to Purchase your Robinson Helicopter?

A lease usually is the smartest and most cost-effective solution to "owning" an aircraft. For most individuals and companies, leasing provides a host of benefits and frees them from a number of risks that make "owning" the aircraft a truly carefree experience. There is a reason why 80% of businesses prefer leasing over purchasing and financing: It is the use of the helicopter and not its ownership that produces the benefits of the helicopter.

For a more detailed comparison, consider ...

Up-Front Costs

Purchasing & Financing:
If you purchase a factory-new Robinson helicopter a non-refundable deposit in the amount of $10,000 for an R22 or $25,000 for an R44 is due at the time you place your order. When you receive the helicopter your lender requires a down payment of typically at least 20% and sales tax may add another significant amount to your upfront cost. Your total cost before you even see the helicopter will be at least $50,000 and may even exceed $150,000.

Leasing:
If you lease a helicopter, your only up-front cost will be a small security deposit. This security deposit is fully refundable while in the purchasing scenario sales tax and a significant portion of the down payment (due to depreciation) would not flow back into your pocket. Thus, leasing will not only result in significantly lower up-front cost but also in obvious overall savings.

Equity Payments

Purchasing & Financing:
When you finance your helicopter all your equity portions of your loan payments including your initial down payment are tied up in that helicopter and you are unable to benefit from this significant equity.

Leasing:
If you lease the helicopter you don't have any equity payments. You only pay for the actual usage of the helicopter.

Credit Line Impact

Purchasing & Financing:
By borrowing funds from a lender for an expensive item such as a helicopter, you are significantly reducing your line of credit and the ability to obtain any loans for other needs. Financing may even require additional collateral to secure the loan, even further reducing your remaining line of credit.

Leasing:
Leasing will provide you with the same usage of the helicopter but without any impact to your credit line. You use the helicopter as needed and pay for your usage as you go.

Balance Sheet Impact

Purchasing & Financing:
A helicopter purchase results in a significant liability on your balance sheet. For many individuals and smaller companies, this may prevent you from obtaining loans and generally lowers your financial performance indicators.

Leasing:
Operating leases are generally structured in accordance with the provisions set forth in FASB 13, i.e the lease is not required to appear on your balance sheet for financial statement reporting purposes. Your lease payments are simply treated as fully tax-deductible rental/lease expenses on your income statement. Taking a lease "off balance sheet" under accounting regulations can have both direct and indirect financial benefits. Direct benefits include lower payments than if the entire purchase price was financed with a loan. Indirect benefits stem from better financial "ratios" on the Balance Sheet and as a result, better financial performance indicators.

Tax Considerations

Purchasing & Financing:
If you own the helicopter you can depreciate this asset and deduct your loan interest expenses. However, your equity portions of your loan payments will not be tax deductible.

Leasing:
If you lease the helicopter, the entire lease payment for each and every lease payment is typically treated as an expense and as such fully tax deductible.

Market Risk

Purchasing & Financing:
If you purchase and own the helicopter the actual expenses for your flight hours can only be determined after you will have sold the helicopter. Based on the market and how quickly you will have to sell the helicopter, the sales price can vary significantly making every single flight hour in hindsight possibly $50-$100 more expensive than budgeted.

Leasing:
If you lease a helicopter all your “ownership” expenses (i.e. your lease payments) are fully known upfront. The lessor takes the entire market value risk so that if the market drops, the lessor (and not the lessee) looses.

Overhaul

Purchasing & Financing:
Robinson helicopters require complete overhauls every 2,200 hours of flight time. Such overhauls will cost you about $100,000 for an R22 and about $150,000 for an R44. Additionally, your helicopter will be out of service for about six month while being overhauled. Many expenses such as loan payments will continue while not having the helicopter available for flight.

Leasing:
If you lease a helicopter you don't have to worry about overhauls. As the leased helicopter approaches the time for an overhaul the lease automatically terminates and you simply return the helicopter to the lessor without any charges or worries to you.

Commitment

Purchasing & Financing:
To make ownership cost effective, you should operate your helicopter for many years. This is a significant long-term commitment.

Leasing:
If you lease the helicopter your commitment can be of a much shorter duration. Additionally, at the end of your lease you have many flexible options:

  • If you no longer need the helicopter simply return it to the lessor without having to find a buyer.
  • Trade-in the helicopter for another helicopter with options that better meet your changing needs.
  • Renew your lease if the helicopter is serving you well.
  • Purchase the helicopter if you determine that for some reason ownership becomes more beneficial for you.
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