About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline

13 Bus. Law. 199 (1957-1958)
Developments in Commercial Aircraft Equipment Financing

handle is hein.journals/busl13 and id is 201 raw text is: January 1958

New York City
The purchase of commercial aircraft by American airlines has
always presented serious financial and legal problems. The financial
problems result from the high cost of the aircraft and the rapid
development of aircraft transportation. In order to preserve their
competitive positions and to be able to offer their customers the
fastest and most comfortable service made available by the most
modern planes, our airlines have had to undertake extensive financial
commitments. The problems become increasingly serious with the
development of the very costly jet and turbo-prop planes which are
generally expected to replace, within a relatively brief period of
time, a large part of the present fleets now used by our 13 major
air carriers.' For the last five years local service carriers have been
striving to acquire larger and more modern planes to substitute for
the Douglas DC-3, a plane which for so long was the mainstay of
commercial operation, but which today has many uneconomic operat-
ing characteristics.2
Largely because of the rapid development .of aircraft transportation
and commercial aircraft, the major and local carriers have, in general,
paid small dividends, have retained a large part of their earnings
and, until recently, most were the beneficiaries of air-mail subsidy
payments. But even the most successful carriers have not been able
to raise, through earnings or depreciation, amounts sufficient to
pay cash for new aircraft they may need.
To some extent, commercial aircraft financing has borrowed from
precedents established in the field of railroad equipment financing,3
*Member of the Section's Committee on Corporate Laws.
**Member of the Section's Committee on Developments in .Business Financing.
1. As of December 1, 1957, our 13 major air carriers were reported to have
purchase commitments approximating $1.4 billion in connection with orders for
174 four-engine jets (Boeing 707's and Douglas DC-8's) costing approximately
$5y million each, 40 four-engine jets (Convair 880's) costing approximately
$3y4 million each and 116 four-engine turbo-props (Lockheed Electra's) costing
about $2y million each.
2. As of November 1, 1957, 5 of our 13 local service carriers were reported
to have purchase commitments in excess of $25 million in connection with
orders for 50 two-engine 40 passenger turbo-prop (Fairchild F-27's) transports
costing about $y million each.
3. As to railroad equipment financing, see Adkins & Billyou, Current Develop-
ments in Railroad Equipment Financing, 12 BUSINESS LAW. 207 (1957);

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.

Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Contact us for annual subscription options:

Already a HeinOnline Subscriber?

profiles profiles most