let’s assume you want to buy a new 737-700 BGW…
If you had enough money to pay cash, you could buy one new plane or lease 20 new planes.
20 leased planes should give you a net profit (after the weekly lease is paid) of 20 times 250.000 dollar, or 5.000.000 dollar.
Your one newly bought plane will then give you a net profit of 250.000 dollar plus 232.000 (you don’t pay lease), or less than 500.000 dollar.
If you end the lease after one year, you get all your money back. The security deposit is fully refunded. If you sell the plane, you get over a million dollar less than what you paid because the plane is now one year older.
If you don’t have money and the bank trusts you enough, you can ask for a loan. The bank tells you they give you a cheap loan of 0,8% … which actually means they charge you 50% per year. But okay, you sign the loan and pay everything back in 50 weeks.
At the end of the first week, you pay 1/50 of the capital back, or 930.000 dollar, plus 372.000 dollar interest.
At the end of the second week, you pay another 930.000 dollar, plus 364.560 dollar interest.
At the end of the 50th week, you pay your last 930.000 dollar, plus 7440 dollar interest.
Your 46 million dollar plane will have cost you 56 million dollar, and is now worth 45 million dollar.
The picture changes when you buy planes that are written off. A 21 year old 737 will cost you three times the leasing deposit of a new 737. Maintenance costs are higher, your image gets a penalty, but the plane will pay itself back in a few months.