With $2.5 billion in assets under management and the additional current committed capacity to lend $1 billion, Global Jet Capital has the expertise, financial strength, industry relationships, and infrastructure necessary to offer a variety to offer a variety of flexible leasing and financing solutions as the speed the market requires. We currently serve nearly all jurisdictions and have the capital and expertise to meet the needs of today’s rapidly expanding and diversifying private aircraft owners and operators.
Financial Products and Services
Offering a full range of aircraft financing solutions, products and services, Global Jet Capital provides every client with flexibility, comfort and convenience with their aircraft finance. Our jet capital management team has the industry expertise and experience needed to structure integrated solutions for all your aircraft leasing and lending needs.
The operating lease is an increasingly popular aircraft financing tool to help private aircraft users gain access to these progressively more expensive assets. In an operating lease financing structure, our clients can: enter into a sale and lease back arrangement for their pre-owned aircraft; identify an aircraft for us to purchase; or assign their purchase contracts to us for their new, on-order aircraft. In each of these scenarios, our client does not take ownership of the aircraft, but has full use of it as if they did. Instead of a large down payment, the client puts down a more modest security deposit and returns the aircraft at the end of the lease term to Global Jet Capital.
At the time of acquisition of the aircraft by Global Jet Capital, we enter into a lease arrangement with our customer (the "lessee") for an agreed upon multi-year lease term. The operating lease will typically be five years or longer and our customer will be responsible for making all lease, insurance, operational and maintenance related payments for the term of the lease. Typically, such lease obligation will be with recourse to a corporation, ultra-high net worth individual and/or a guarantor. However, in certain instances, the lease may be 'non-recourse' or 'partial recourse' with Global Jet Capital relying on the value of the ownership interest in the aircraft and any security deposit to justify its investment.
Global Jet Capital will lease the aircraft to the customer for a pre-agreed term and monthly lease rate. At closing, the customer will transfer to Global Jet Capital a refundable security deposit equal to a set number of monthly rentals. The customer is contractually required to return the aircraft to Global Jet Capital at the end of the lease term. The return of the aircraft will feature pre-agreed technical conditions that must be met by the customer. In general, these conditions are designed to return the aircraft back to Global Jet Capital in the same condition that it was in when initially delivered, less a certain amount of normal wear and tear. If the return conditions are satisfied, we then return the security deposit to the customer.
Our clients typically have the aircraft managed by a recognized third party aircraft management company during the term of the lease and the expectation is that the aircraft and major components will be covered by third party maintenance plans.
Over the term of the lease, Global Jet Capital shall periodically perform inspections on the aircraft and records, and review the aircraft management company performance to ensure that the asset is being appropriately operated and maintained.
Advantages of Operating Leases:
Allocation of Capital
Acquiring a long range private aircraft for cash, or using traditional loan financing for 70% of the aircraft cost, represents a significant allocation of capital into a depreciating asset. With an operating lease, up to 100% of the cost of the aircraft can be funded by Global Jet Capital. Clients typically only have to fund the security deposit and certain other transaction costs at closing. The operating lease allows ultra-high net worth individuals and corporations the opportunity to gain access to a long range jet without having to tie up significant amounts of capital in a non-core asset.
No Residual Value Risk
Operating leases shift the risk of aircraft ownership to Global Jet Capital and away from the customer. At the end of the operating lease, the customer simply returns the aircraft to Global Jet Capital. The value of the aircraft at the end of the lease is Global Jet Capital's risk - not the customer's. The introduction of new aircraft technology, a slump in global equity markets, or an excess supply of pre-owned aircraft can all affect the future value of an aircraft. But with the operating lease product the customer has no exposure to any of these events.
A leasing company is able to diversify residual value risk by having a portfolio of many different kinds of assets, spread across different global economies and lease maturity dates. An aircraft coming off lease in one year may have an entirely different value than the aircraft coming off lease a year later. A large financial institution can manage this risk - individuals and companies with one or a few aircraft cannot effectively do so.
Certainty of Cost
Operating leases help our customers more accurately predict the cost of private aircraft use. In both the loan and the operating lease scenario, the user will have the same direct operating costs. But at the end of the loan term, when it comes time to sell the aircraft, cost of ownership can jump if you cannot sell in a timely manner or if the net proceeds fall short of expectations. In recent months, the aircraft manufacturers have announced new models of aircraft that will compete against older aircraft with similar capabilities. The impact on the resale values for these older aircraft is uncertain but the introduction of new models has traditionally had a negative impact on residual values. An operating lease leaves the residual value risk with Global Jet Capital and provides the customer with a certainty of cost associated with the term of use for an aircraft.
An operating leases allows a user to transition between aircraft more easily. At the end of the operating lease, the user can upgrade to the latest technology aircraft, adjust the size or capabilities of the aircraft to reflect a changing mission profile, or seek to extend the lease on the existing aircraft. Transitioning an owned aircraft can involve a lengthy sale process and the prospect of owning two aircraft at the same time to facilitate the transition.
Accounting and Tax Benefits
Operating leases support off balance sheet accounting treatment. Users can access a private aircraft without burdening the balance sheet with a non-core asset. For jurisdictions that tax the purchase of an aircraft, the operating lease may allow users to minimize their tax liabilities to just tax on monthly lease payments. Consult your tax and accounting professional for guidance.
A finance lease (also known as a capital lease) provides financing for up to 100% of the cost of a private aircraft. Once the lease has been paid in full, the aircraft title will pass from Global Jet Capital to the customer. The customer (the 'borrower/lessee') will be expected to provide an initial down payment towards the acquisition cost of the aircraft (typically between 0% and 25% of the aircraft cost) with Global Jet Capital providing a finance lease to cover the remaining balance of the acquisition cost. The term of the finance lease is typically five to 12 years. The finance lease will be repaid down to a lump sum or "balloon" payment due at the final payment date. The size of the balloon will be a function of the term of the finance lease and age and estimated future value of the aircraft, among other factors.
Advantages of Finance Leases:
Benefits of Ownership
Finance leases are typically accounted for as being 'owned' for tax and accounting purposes by the customer. Benefits such as depreciation and other inducements to buy a capital good are for the customer's account. And since title will pass to customer upon final payment, the benefits and risks of the residual value of the aircraft will also accrue to the customer. Consult your tax and accounting professional for guidance.
Allocation of Capital
Up to 100% of the cost of the aircraft can be funded by Global Jet Capital under the finance lease structure. Clients typically only have to fund the security deposit, an initial down payment and certain other transaction costs at closing.
Global Jet Capital clients may have an existing relationship to source attractively priced senior debt or finance lease capital to fund the senior portion of an aircraft. In certain circumstances, Global Jet Capital may provide clients with additional "top up" loan capital to finance (in total) 80%-100% of the acquisition or refinancing value of an aircraft. The term of the junior or mezzanine debt will likely be between a five and 10-year term and may feature a lump sum or 'balloon' amount at maturity.
Advantages of Mezzanine Loans:
Allocation of Capital
The mezzanine loan, combined with a traditional senior loan, allows borrowers to obtain up to 100% financing of the cost of the aircraft from Global Jet Capital working together with a senior lender. Clients typically only have to fund an equity deposit, the security deposit and certain other transaction costs at closing.
Building a new aircraft is a multi-year process. The OEMs require that installment payments be made to cover cost of materials and manufacturing. Global Jet Capital can provide financing to help our customers pay for some or all of these installments, referred to as progress payments.
During the term of the progress payment financing, the customer will pay periodic interest charges at an agreed upon rate. All principal amounts loaned as part of the progress payment financing will generally be applied to the permanent financing of the aircraft, whether by way of an operating lease, a finance lease or otherwise.
Advantages of Progress Payment Financing:
Allocation of Capital
Progress payment financing allows those who have placed an order with an OEM to minimize the amount of their own capital that needs to be tied up in the 18-24 month period prior to delivery. Traditionally not offered by banks, the progress payment financing option from Global Jet Capital is an important capital allocation alternative for our customers.