On Tuesday, May 29, 2012 4:18:44 PM UTC-4, noel.wade wrote:

new" for awhile... But their comments really made me see this in a
new light: We've been considering the L-13 a $10k - $20k airplane,
and the idea of dumping $10k - $15k into it for a fix seems "wrong"
because its such a huge percentage of the airplane's value. BUT,
there's another way to look at it. Instead of considering the "street
value" of the L-13, try considering the cost of the L-13 repair in
contrast with the next-better alternative; which is either a Grob-103
or something like a TST-14 "Bonus" or SZD "Perkoz":
G-103 = Roughly $35k+ (also likely to be high-time and parts are ??)

You point out financing instruments in your post, rightfully so.

This view on the Blanik repair, however, is described as a cash-flow rather than equity issue. If we set aside liquidity, the picture is this.

When the AD came out those Blaniks lost their value in an instant. No further action will change that. The two options you point out amount to this:

1) Invest, say, $12k to obtain $15k in equity, or
2) Spend $35k on a Twin Astir and get $35k in equity.

At 3.5% (some of our members have offered to use their home equity line of credit for this), we're looking at $420 vs. $1225 p.a. in capital cost, and substantially higher cost in hull insurance. A medium-sized club will have to carefully consider if that makes sense. NB, whether you have to go to a bank or use existing capital, the capital cost will be the same apart from the spread in interest rates.

I've been pushing club members to look at these things in capital cost and various forms of equity rather than just indulging in cash-basis accounting.. Among the things that it can convincingly show is that a club should not afford to keep gliders around that don't fly as much, or operate a higher-value but less-useful towplane.