Driving Down the Weight of Inventory on Balance Sheets with New Lease and Repair Management Programs / by Nigel Christie
When I started my commercial aviation career 38 years ago, I could never have imagined a global crisis impacting the airline industry in the way that the COVID-19 pandemic has. Now, more than ever, GA Telesis knows it must shift focus on partnering with its airline, OEM, and MRO partners.
As we start to see small shoots of recovery, there is no doubt that all airlines’ financial impact will be deep and long. Unfortunately, this impact will trickle down through to the entire supply chain. This is where the GA Telesis Ecosystem™, and in particular, our pioneering inventory leasing and repair management programs, will help our customers navigate through this cash crunch.
The significant financial constraint of having millions of dollars tied up in inventory weighs heavily on airlines, but more importantly, their balance sheets. Since 2011, GA Telesis inventory leasing programs have freed Airlines, OEMs, and MRO’s from having their cash tied up in inventory. Through GA Telesis‘ proprietary inventory leasing programs, the Company can create access to the much-needed parts through both sale and leaseback structures and initial provisioning. This is most important with the newer generation aircraft where the investment into Main Base Kits (MBKs) can run into the tens of millions of dollars across a fleet. Leasing inventory has numerous benefits:
- Free up millions tied up in inventory
- Conserves operating capital
- Potential tax benefits
- Preserves credit availability
- Improves cash flow forecasting and budgeting
- Eliminates residual risk
- Makes fleet retirement seamless
- Provides flexibility through extensions
- Accordion feature – size can grow with airlines’ fleet expansion
With the development of our proprietary inventory leasing programs, we have also created an optional repair management product to support these leases and provide a one-stop-shop for repair, and notably, warranty administration. With over 50 years of repair data, we can combine this with many added value propositions, including technical and engineering assistance, BER avoidance program, workscope review, and replace versus repair.
There are those that may still prefer the cost per flight hour model for components, and this still has a place in certain operational situations. Nevertheless, we believe that GA Telesis inventory leasing and repair management will go a long way towards allowing our customers to focus cash and resources on other important areas. Frankly, inventory is the last thing that should be weighing down airline balance sheets.
I hope that we will never see such a devastating impact like this in our sector again, but we know that to move forward and ultimately come out stronger, partnering with GA Telesis will allow our airline, OEM, and MRO partners to do just that.
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