Asset management and Equity questions

I have a holding company with an equity of around 10 million and a solely owned enterprise with an equity of around 220 million. The enterprise owns a B737 with a book value of 56 million, bought new on a 90% loan.

So, here are the questions -

  1. If I use the asset management tool to do a simple transfer of ownership to the holding company, does that mean the holding company now has an equity of 66 million?

  2. I want the enterprise to continue to operate the aircraft as before, in other words a lease-back - but the only available option of this type on the Aircraft Transfer tab is sale and lease-back - the aircraft is actually sold to the holding company. However my holding company does not have the cash to buy the aircraft. So if I do a simple asset transfer and then lease back the aircraft to the enterprise, is that possible, and if so, what happens to the schedules?

The sole reason for me wanting to do all this is to increase the equity of the holding so that it can subscribe to IPOs.

Well, as nobody has responded I decided that action is better than words and tried it out. I did an asset transfer of the 738 from the enterprise to the holding and sure enough, the holding’s equity went up. (as well as its loan credit rating going up to $20 million) On the holding side I then put the plane back on the market with the intention of leasing it back to the enterprise.

First a couple of observations - the aircraft gets a new registration! Huh? That means it was hard to figure out which plane on the market is which.

Second - the "offer for sale or lease" options really are as clear as mud - I really had no idea what the heck I was offering. Does 10% really mean I am offering to sell the plane for 10% of its value? In any case, it turns out that the enterprise can NOT lease back the aircraft from the holding company - "This is considered cheating" flashed up in big red letters. So I decided to asset transfer the plane back to the enterprise, this having cost me the lost revenue for the cancelled flight plus replacing the interior and seating. However I did gain some other insights. Maybe more later.

Go to asset management / [size=4]aircraft transf[/size]er (You´ve obviously been there)

Then:[size=4] Pick the receiving company[/size] (You´ve done that too)

Then: [size=4]Pick the transfer method[/size]

Asset Transfer without compensation - Simple transfer. Aircraft’s book value is subtracted from and added to the equity of the respective companies.

Sale - Aircraft is sold to the receiver at book value.

Sale and lease-back - Aircraft is sold to the receiver at book value and immediately leased back. Schedules and settings are maintained.

Leasing - The aircraft is leased out to the receiving enterprise based on the current book value.

You´ve done the first, but maybe you just missed the other possibilities :slight_smile:

… and if the receiving company has no money?

  1. Asset Transfer without compensation, as you have done

  2. Leasing, just don´t do it via the aircraft market but use the asset transfer tool

ok, that works - great to know you can find all this out by trial and error. In that case, why is leasing the aircraft back over the market considered to be cheating if you can do exactly the same thing with the asset transfer tool? And what determines the leasing rate?

The reason is quite straight forward.

Think of it as ebay, you put a listing and if you are allowed to participate your own bid, you can artificially create bids and increase the price at your steam, not by other genuine bidders.

The pre-determined leasing rate through asset management is calculated with the current base price of the plane.