Valuing aircraft leasing contracts with real options approach

Abstract

Research goal: to analyze Russian airline companies’ leasing contracts under depreciation of ruble and give recommendations, using real options valuation. Research objectives 1) Conduct the analysis of literature on the topic of real options valuation 2) Identify embedded options in a typical aircraft leasing contract 3) Value leasing contracts with embedded real option components 4) Study Aeroflot and Transaero performance under current condition of exchange rate volatility 5) Give recommendations for Aeroflot fleet rearrangement under current market conditions We calculated the value of embedded options for different aircraft types on the basis of 20 leasing contracts sample, and implemented the achieved results for rearrangements of Aeroflot’s fleet.