RE: New airline, and Apple Vaccations has already nicked a 757 from thomas cook!

[updated:LAST EDITED ON 08-12-02 AT 00:46 AM (GMT)]To further confuse the wet/dry lease issue, there are also operating/finance leases which is a more standard (outside the airline business) term for wet/dry. The one where the lessee provides their own crew/maintainance etc. may count as a finance lease, whereas the one where the lessor provide the crew/maintainance etc. are counted as operating leases. Sorry, but I can’t remember which way round the wet/dry is (trust airlines to invent their own peculiar terminology!)

You will find that airlines include finance leased aircraft on their balance sheets, but not those on operating leases. This is due to a UK accounting standard, “reporting the substance of transactions”.

On a finance lease, the lessee enjoys the benefits of ownership of the aircraft and also bears the costs of ownership. In this regard, it is akin to the airline buying the aircraft from the lessor by means of a loan which is secured on the aircraft. That’s why finance leased aircraft are on the books of the airlines operating them and NOT the lessor’s books. Globally, accounting standards are converging and they are centring around the UK standards (yippee!) so expect to see this apply to all airlines (even US carriers) within 5 years.

Ref:
Lessor = legal owner
Lessee = operator