How Little Does American Airlines Pay For 737s?

50% discount? I want to buy my next car from Boeing.

Now I understand why the seats are so big and the fares so low...LMAO

Open this article and at the bottom of the piece click on the 30 minute interview with Bob Crandall, former CEO of AA, and Peter Greenberg, Travel Editor at CBS, with Charlie Rose. A great discussion of airline issues. A lot of "food for thought" in the interview.

Bottom line is that the Aircraft are all LEASES! The Major Airlines do not own the fleet of aircraft. Look at the Registration Certificates located in the cockpit of the aircraft. You will see the Major Bank or Leasing Corp listed as the owner.

Apologies up front for the long post... I didn't mean to write this much when I started... @_@

But does anyone truly believe that any ultra high-profile, multi-million dollar airline like AA is 'sneaking' past the IRS and evading taxes illegally? Or that they are exploiting loopholes that the government has missed? The IRS can dig into any one of our pockets and look for loose change, and they can do it with a frightening level of impunity. I don't believe for a second that our government isn't intimately aware of what he airlines are up to.

That having been said, it probably IS completely accurate that AA (and all of the other airlines) are getting huge discounts from manufacturers and huge tax breaks from the government. The reasons why?

1) Capitalism. Aircraft manufacturers need to move their product... if they don't, they tend to go out of business. Makes sense, no? ^_^ So it really does not surprise me that an aircraft builder is willing to cut huge lease deals with airlines to get their products out in the marketplace. We don't know what their real margins are anyway and I'm sure there is more to it than what I have said... but even my grossly simplified view of it makes sense to me.

2) Infrastructure. Our country MUST transport vast numbers of people and goods in order for our economy to operate. It has always been this way. This is why railroads were built to span the country as it grew, it's why the interstate system was built, and it's why airlines have become what they are. It is also why states get HUGE financial incentives to update/maintain their roads/highways/freeways. Well, if the government uses federal tax dollars to maintain the road infrastructure, why is it surprising that they also give huge tax breaks to airlines and other carrier services? Imagine if they DID tax the crap out of the airlines? Who would end up paying for those increased cost burdens? WE would! And if air travel became too expensive for us to use it (it almost is anyway!), then what would happen to that industry? It would implode! Have we forgotten how bad it was after 9-11 when the skies were closed for only a few days? What a mess that was! ...No, it is completely logical to think that our government is all about giving the airlines a pass when it comes to sales tax on aircraft purchases. And whether or not it's fair is irrelevant... we all still benefit from it.

Again, sorry about the long post/soapbox thing. ;)

Right, and I am going to believe ANYTHING Wells Fargo says. Can someone link to a report on mortgage ethics from Bank Of America next?

Fleet sales at Boeing ? Makes one wonder, how many you have to buy, to get a discount ... and how can a bankrupt carrier afford to "buy" or get financing on anything ?? Maybe AA was already in the back pocket of US Airways.

JetBlue got their planes for FREE for the first 3 years, then began making payments.

Most, if not all states exempt commercial aircraft from sales taxes. That is one reason why there are so many part 135 operations around. Flying a non-commercial airplane to a state where there is no sales tax is common, same as taking a boat offshore to do the paperwork. Even if AA paid sales tax it would be calculated on the actual purchase price not the list price, the same way sales tax is computed when you or I buy a car.
I hope nobody here thinks Avis pays list price for a fleet purchase of cars.

Another thought here, could be they are in a leasing arrangement where they are only amortizing 50% of the list price. At the end of the lease the leasing company still owns the airplane and can either sell it or lease it back out.

Plus, a little trick that the airlines use....
Lawyers from the airline and Boeing get on the aircraft about to be purchased, fly out off the coast of Washington over international waters, circle, sign the papers, and return to BFI. Why? To avoid paying sales tax!

This is confidential commercial information..not in public domain.

any body with a half a brain knows they don't pay sales tax. If they did then our taxes would not be going up but way down. Just think what sales tax would be on 150 planes at 40mil a piece.