To replace or not to replace... leased aircraft that is....

[Seattlepilot]

Here is the dilemma: I can pay $2000000 / month for an aircraft that produces 500K profit and keep adding 10 of these in a single month or just wait and buy a single aircraft a month , hoping that curbed growth will let me get rid of this expense.
Sounds good to replace 2mil/month with a used aircraft that can be purchased for 11mil. But i don't see this being reflected on the finance section.
Your thoughts?

[MAXAir]

I wouldn't replace it, as long as your making money.  You'll be better off when the aircraft ages because you won't be paying maintenance on it.  The only reason to replace it would be if you aren't making a profit on the plane.  If you are paying 2000000 per month and making 500000 per day, you pay for the lease in 4 days and get 20 days of profit.  I say keep it.

[lhenning]

I would also say that you should keep it. Because as long as it´s making a decent number of money I don´t see why you should spend money on a replacement aircraft that takes months to pay back!

[Seattlepilot]

.. fair enough.. but then why most successful airlines have purchased their aircraft instead of leasing them?

thanks..

[czhang]

I think the rules in r/l are different, plus there aren't exactly 'unlimited' lease terms - that would defeat the point of them

[csturdiv]

.. fair enough.. but then why most successful airlines have purchased their aircraft instead of leasing them?

thanks..

My strategy was to buy the aircraft 2nd hand and then replace it with a new model when I could afford it.  I did this in I think W9 with the F28-200, I bought several cheap used models and replaced them with new models when I could afford the purchase.  I leased an aircraft once, but then returned it when I was able to buy the same model.  I used the F28s to get my fleet into all F28s and then used the money to expand into B737-200s.  I also purchased a couple of B727 Executive Jets, and I think those were a waste of money because of the number of seats they have.  I have them on longer routes, but I need to get them on some shorter routes.  May not be the best, but it works for me and has kept me in the black and able to compete with the airlines out of my hub and that serve the cities that I do.