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How to find depreciation rate


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#1
ChrisInSD

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How do you find out the depreciation rate of an aircraft without actually buying it?  The only place I can find this is on the aircraft details page.  Thanks.



#2
davedave

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It's also on one of the aircraft info pages. Not the one that shows profit/loss, seat changes, etc. The other one.



#3
ChrisInSD

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Which only works for used aircraft...if you are buying new you have no idea.

 

Case in with Bombardier RJs:  CRJ-700 has a 3% depr rate.  Makes sense to buy.  CRJ-700ER bizarrely has a 9% depr rate.  Makes sense to lease.  No way to know that before I bought them, though.

 

Also, there seem to be strange things that can only be errors--CRJ-900LR has a 20% depreciation rate.  Huh?



#4
davedave

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If I remember rightly, lease costs are directly proportional to depreciation, so the balance between depreciation and leasing is always the same. It's still most cost-effective to lease planes until the cost-to-purchase hits zero. (And it's a lot of effort for very little extra money, with a proper spamline). Depreciation rates only change the time that takes to happen. 



#5
ChrisInSD

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It is not always “most cost effective” to lease planes to zero. You will pay far more in lease payments than you will incur expenses in depreciation on low depreciation AC like most CRJs and B777-300. Many other planes make sense to buy in years 7-9 even if not “zero” cost. You have to run the numbers for each type but driver is always depreciation rate.

And there is nothing “proper” about a spam line at all.

#6
conflictwithin

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Leasing is the least cost-effective if you plan on keeping an aircraft in service for 10+ years. Look at the 737-700 for example. Buying is the way to go if you plan on keeping it in service for more than 90 months or 7.5 years. I haven't looked at all the planes but over a long holding period buying is the way to go once you can afford to do it.

 

As far as depreciation if it's modeled correctly in the financials it should only have an impact on your net income and should reduce your taxable income (which is a good thing). Depreciation is a non-cash expense so I don't even consider it, all that matters is cash flow.  






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