In this leasing mode, the lessor only needs to invest 20% to 40% of the purchase price of the aircraft, and most of the rest is obtained by borrowing in the name of the lessor. At the same time, the lessor must use the plane as collateral to transfer the relevant rights and interests to the borrower. In this way, the lessor can own the aircraft, enjoy the same tax treatment as the fully invested aircraft, and transfer part of the tax reduction concessions to the lessee by reducing the rent, so that the lessee can obtain lower financing costs. Among them, the tax benefits enjoyed by the lessor include investment tax reduction, depreciation deduction and irrecoverable loan interest deduction.
(Figure 1: American leveraged lease transaction structure) Japan has been involved in aircraft leasing since the late 1970s. After 10 years of development, it has become an important international aircraft leasing market. 1985, a new form of aircraft leasing, Japanese leveraged leasing, appeared for the first time in Japan.
The purchase price in Japan's leveraged lease transaction consists of two parts: the loan part, which accounts for about 80% of the aircraft price, is usually a US dollar loan or international currency; Japanese investors' equity investment accounts for about 20% of the aircraft price, and this part of the investment is made in Japanese yen, mainly because the tax paid by Japanese investors in China is calculated in Japanese yen.
In Japan, there are three main parties to leveraged leasing:
1. Lessor. The lessor is a special purpose company registered in Japan, usually a wholly-owned subsidiary of a leasing company engaged in aircraft financial leasing business. The business activities of special purpose companies are limited to leasing aircraft (or leasing aircraft at the same time). It is the intermediary and contact between the two parties to the transaction, so that there is no direct substantive contact between the lessee, the lender and the investor. In order to avoid the occurrence of debt risk, the special purpose company shall not engage in other businesses.
2. investors. Investors invest at least 20% of the aircraft value in the form of equity investment, becoming the economic beneficiaries of investing in aircraft and enjoying the economic benefits of tax reduction. Japanese investors sign contracts with lessors in the form of partnerships. All investors share the full aircraft depreciation deduction and loan interest deduction in the form of partnership, so that investors can achieve the purpose of tax reduction and deferred tax payment. At the end of the lease period, regardless of whether the lessee purchases the aircraft, the remaining risks shall be borne by the lessee.
3. Lenders. The loan provided by the lender accounts for about 80% of the total price of the aircraft. The lending bank can be the Bank of Japan, a foreign branch of the Bank of Japan or a Japanese branch of a foreign bank.
Compared with the United States, the transaction structure of leveraged lease in Japan is simplified. Among them, the function of special purpose company is the same as that of owner trustee and contract trustee in American leveraged lease.
(Figure 2: transaction structure of leveraged lease in Japan) Leveraged lease in Germany came into being in 1962. Because there is no uniform law and tax standard in the leasing market in Germany, its financing structure and legal text are complicated, and the tax reform in Germany has restricted many institutional investment funds, and the corporate income tax rate higher than that in other European countries has been abolished. There are fewer and fewer institutional investors, and most of the investment funds mainly come from extremely limited individual investors who want to reduce the high income tax. Leveraged leasing structure in Germany is relatively rare in aircraft financing projects of airlines all over the world.
Generally speaking, the structure of leveraged lease in Germany can be divided into two parts: one part is the loan (100%) for purchasing aircraft funds, mainly from ECA and commercial lenders. Airlines usually borrow dollars to return dollars. This part of the loan structure is simple, the risk is low, the contract text is standardized, and its loan cost is the comprehensive interest rate of the two loans; The other part is the more complicated German tax structure. Under this structure, the lessor generally needs to obtain about 40% to 60% investment funds (expressed in marks) from the investors, plus the US dollar loan funds (60% to 40%) obtained from the bank on the condition of US dollar rent during the lease period, and pay 65,438+000% of the aircraft price to the aircraft manufacturer to buy the aircraft and lease it to a company. 1.GECAS (General Electric Capital Aviation Service): Founded in 1975, formerly known as GPA Company, headquartered in Shannon, Ireland, it is one of the largest professional leasing companies specializing in aircraft leasing in the world today. 1993, GPA was merged by General Electric Investment Company, a subsidiary of General Electric Company, and renamed GECAS.
2.ILFC (International Leasing Finance Corporation): Founded in 1973, it is the largest professional aircraft leasing company in the United States and one of the major aircraft leasing companies in the world. Now it is a wholly-owned subsidiary of American International Group (AIG) and has the highest credit rating awarded by the world's authoritative rating agencies.