Private Jet Sale-Leaseback: Unlock Equity, Retain Use

Convert your owned aircraft into immediate capital while maintaining operational control.

For discerning owners of private aircraft, the sale-leaseback transaction presents a sophisticated mechanism for optimising capital structure. It allows an aircraft owner to monetise their equity, converting a significant, illiquid asset into free cash, whilst crucially retaining full operational use and control of the aircraft.

How it works

At its core, a sale-leaseback involves two concurrent agreements: the sale of an aircraft to a financial institution (the lessor) and a long-term lease agreement for that same aircraft back to the original owner (the lessee). The process begins with an independent valuation of the aircraft. Based on this valuation, the lessor purchases the aircraft, paying the sale price to the original owner. Simultaneously, a lease agreement is executed, typically an operating lease, which defines the monthly rental payments, maintenance reserves, and end-of-term options. This structure immediately injects capital into the owner's balance sheet, improving liquidity without relinquishing the operational utility of the asset.

Typical terms in 2026

In the current market, sale-leaseback terms for private jets reflect a balance between asset liquidity and credit risk. Expect robust due diligence on both the aircraft's condition and the lessee's financial standing. Key metrics and ranges are as follows:

| Metric | Range (Approx.) |

| :------------------ | :----------------------------------------------- |

| Tenor | 5-10 years (typically 7 years for new aircraft) |

| LTV | 60-80% of current market value |

| Lease Rate Factor | 0.8-1.2% per month (of asset value) |

| Residual Value | 40-55% (at end of term for operating leases) |

| Interest Rate Equiv. | 8.5-12.0% (effective annual rate) |

Maintenance reserve requirements are standard, often based on hourly rates for airframe, engines, and APU, held by the lessor and drawn down for scheduled maintenance. Depreciation schedules for tax purposes will shift to the lessor, with the lessee expensing lease payments.

Who it suits

This structure is particularly well-suited for high-net-worth individuals, family offices, or corporations seeking to:

• Enhance Liquidity: Free up substantial capital tied up in the aircraft for reinvestment into core business operations, other ventures, or portfolio diversification.
• Optimise Balance Sheet: Convert an on-balance-sheet asset and associated debt into an off-balance-sheet operating expense (for operating leases), potentially improving financial ratios.
• Access Favourable Tax Treatment: Lease payments may be fully tax-deductible as an operating expense, depending on jurisdiction and specific accounting standards.
• Mitigate Asset Risk: Transfer the long-term residual value risk and some depreciation risk to the lessor.
• Fund New Acquisitions: Use the proceeds to finance the purchase of a newer or different aircraft without additional external debt.

Pitfalls to avoid

While advantageous, a sale-leaseback demands careful consideration. Ensure the aircraft's market value is accurately assessed, avoiding scenarios where the sale price undervalues your asset. Scrutinise the lease terms, particularly escalation clauses, maintenance reserve calculations, and end-of-lease return conditions. A 'fair market value' purchase option at the end of the term may introduce uncertainty. Furthermore, tax implications can be complex; engage specialist tax counsel to understand jurisdiction-specific consequences, particularly regarding VAT and capital gains.

How Mega Aviation helps

Mega Aviation acts as a specialist intermediary, streamlining the sale-leaseback process. We introduce our clients to a meticulously vetted global network of institutional lessors and specialist aviation finance providers, ensuring competitive terms tailored to your specific aircraft and financial objectives. Our expertise lies in identifying the optimal financial partner and structuring the transaction. Please note, Mega Aviation does not act as a regulated financial adviser; we facilitate connections and transactions between clients and licensed financial institutions.