Overview
Our client, a leading manufacturer of premium aircraft interiors, is expanding its operations to meet the increasing demand from airlines for luxurious and innovative cabin designs. This client has decided to lease equipment valued at $2,200,000 to facilitate this expansion.
Background
Our client has operated for over 15 years and has developed an excellent reputation in the aviation industry. With airlines increasingly focusing on enhancing passenger experience, there has been a surge in demand for custom-designed cabin interiors that offer comfort and luxury.
Decision to Lease Equipment
After careful consideration, XYZ Aircraft Interiors leased the necessary equipment instead of purchasing it outright. Several factors contributed to this decision:
- Conservation of Capital: Leasing allows capital preservation for other strategic initiatives, such as research and development or marketing efforts.
- Predictable Cash Flow: Leasing offers predictable monthly payments over the lease term, making it easier for XYZ Aircraft Interiors to budget and manage cash flow. This stability is precious in industries with fluctuating demand and economic uncertainties.
- Access to Latest Technology: Leasing enables XYZ Aircraft Interiors to access state-of-the-art equipment without the burden of ownership, and by leasing, the company can upgrade its equipment to the latest technological advancements, ensuring it remains at the forefront of innovation in aircraft interior design.
- Tax Benefits: Lease payments may be tax-deductible as a business expense, providing potential tax benefits to XYZ Aircraft Interiors. This can result in additional cost savings over the lease term.
Benefits of an Equipment Lease
The decision to lease equipment offers several advantages to XYZ Aircraft Interiors:
- Scalability: Leasing provides flexibility, allowing XYZ Aircraft Interiors to scale its operations according to demand without being tied down by ownership constraints.
- Risk Mitigation: Leasing transfers the risk of equipment obsolescence and depreciation to the lessor, reducing XYZ Aircraft Interiors’ exposure to technological changes and market fluctuations and allowing the company to focus on its core competencies without worrying about the long-term value of its equipment assets.
- Competitive Advantage: By leasing the latest equipment, XYZ Aircraft Interiors can differentiate itself from competitors and offer superior products to its customers.
Why Equipment Leases Inc.
EQL is a direct lender with a significant war chest of capital to invest in projects like this. They have an impressive management team, and although it’s a highly competitive industry, they have managed to operate profitably for many years. Our underwriting team got them the entire $2.2M, representing 100% of the equipment cost, including shipping and installation.
