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CS Professional · IFSCA - Regulations, Listing and Compliances · Banking Services and Finance Companies in IFSC

Skyline Airways, an Indian carrier, sells an aircraft it owns to Apex Aircraft Leasing IFSC and simultaneously takes it back on a long-term operating lease. What is the main commercial purpose of this structure for the airline?

The airline's purpose is to release capital locked in the aircraft while continuing to operate it. Selling to the IFSC lessor gives sale proceeds, and the leaseback keeps the aircraft in service, though the airline must still pay rentals to the lessor.

  1. ATo release capital tied up in the aircraft while retaining its operational useCorrect
  2. BTo transfer the aircraft's operation permanently to the lessor
  3. CTo avoid any obligation to pay periodic rentals
  4. DTo convert the lessor into a bank accepting deposits

Explanation

In a sale and leaseback the owner sells the asset and leases it back, unlocking cash from the asset while continuing to fly it. The airline still pays rentals, and the lessor does not become a deposit-taking bank.

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