Posted On: 03/07/2014 8:51:15 PM
Post# of 41414
Posted this on iHub, but I thought it would be more appropriate here for longs who appreciate relevant information:
The engines are leased on a "power by the hour" basis, which means that Baltia is charged a certain amount per flying hour. Baltia owns the airplane outright, and the engine lease is very smart for them for a few reasons:
1) As a start up, outfitting N706BL with four new engines isn't practical, as the cost of four PW JT9D engines would likely run in the millions of dollars. (For what it's worth, one engine on the helicopters I fly is half a million, so think about a 747 engine...)
2) The power by the hour concept (PBTH) allows Baltia to pay a fixed cost per flying hour, therefore making it easy for Baltia to project operating costs. It gives them advantage in forecasting their maintenance budget as well, as many PBTH programs provide for a predetermined maintenance / repair / overhaul schedule.
3) Having maintenance and part replacement programs in place allows Baltia to REDUCE the amount of "bench stock" that they have in their inventory, which means that their inventory cost remains lower and their initial inventory investment is lower as well.
The engines are leased on a "power by the hour" basis, which means that Baltia is charged a certain amount per flying hour. Baltia owns the airplane outright, and the engine lease is very smart for them for a few reasons:
1) As a start up, outfitting N706BL with four new engines isn't practical, as the cost of four PW JT9D engines would likely run in the millions of dollars. (For what it's worth, one engine on the helicopters I fly is half a million, so think about a 747 engine...)
2) The power by the hour concept (PBTH) allows Baltia to pay a fixed cost per flying hour, therefore making it easy for Baltia to project operating costs. It gives them advantage in forecasting their maintenance budget as well, as many PBTH programs provide for a predetermined maintenance / repair / overhaul schedule.
3) Having maintenance and part replacement programs in place allows Baltia to REDUCE the amount of "bench stock" that they have in their inventory, which means that their inventory cost remains lower and their initial inventory investment is lower as well.
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