The Government of the Cayman Islands is set to save over US$600,000 a year through purchasing a Boeing 737-200 aircraft. Currently leased to the national flag carrier, Cayman Airways, the aircraft will cost $5.2 million to buy.
The original lease agreement was guaranteed for $8 million to cover rental and reserve costs as well as return costs. The outright purchase of the aircraft has allowed the government to vary the guarantee not to exceed US$5.3 million. Previous reserve payments of US$600,000 paid to the lessor, Citicorp, become an immediate saving to the government.
The purchase, following months of negotiations and a US$1 million reduction in costs, was made possible by a government guarantee converting the lease to a purchase agreement. Financing was arranged through the Royal Bank of Canada.
A spokesperson for the Ministry of Education and Planning, which is responsible for Cayman Airways, said: "A major benefit of owning instead leasing is that improvements to the aircraft remain assets of the Cayman Islands Government. In the past, the national airline found itself adding significantly to the asset value of leased aircraft, only to see improvements passed on to successive lessees following the aircraft's return."
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