How do airlines typically fund the direct purchase of aircraft?

Airlines typically fund the direct purchase of aircraft through a combination of financing methods that include capital raised from investors, bank loans, and the sale of equipment. This approach helps airlines manage the substantial costs associated with acquiring new aircraft, which can run into hundreds of millions of dollars.

Using capital allows airlines to leverage equity raised from public or private sources, providing the necessary funds to make these significant investments. Bank loans are also a common financing method, as lenders often provide loans specifically for aircraft purchases due to the asset's value and the revenue it can generate. Furthermore, airlines may sell older aircraft or other assets to contribute to the financing of new purchases, creating a cycle of investment and revenue generation.

This multifaceted approach to funding reflects the capital-intensive nature of the airline industry and helps companies maintain financial stability while expanding their fleets.