Aircraft leases, lease liability and EBITDAR
Rent by vintage, lease liability, lease-adjusted debt.
By Surojit Chakraverti, founder of L3VLUP and an investor running a long-short healthcare and technology equities strategy.
On this subject: aircraft leases, lease liability and ebitdar.Updated 22 October 2026
What it does
Half the world’s airline fleet is leased, so leases are financing, not a footnote. Each lease pays fixed rent; the lease liability is the rent still to pay, discounted at the lease rate, built vintage by vintage, and it rolls forward as opening plus new leases plus interest less rent paid. Under operating-lease accounting rent stays above EBITDA, which is why airlines are compared on EBITDAR, before rent, and on net debt including lease liabilities. A DCF of cash flow after rent must then not deduct the leases again; a valuation on EV / EBITDAR must.
Where it lives
The same schedule in each model that carries it, with the rows to open. Open a model in the browser, go to the sheet, and click the lines.
- Assumptions, rows 74–79: Narrowbody: lease rent, Widebody: lease rent, Lease discount rate, Remaining term, FY0A lease portfolio…
- Costs, row 35: Aircraft rent
- Leases, rows 6–14: Annual rent, FY0A lease portfolio, Annual rent, leases signed in the year, Rent paid, FY0A portfolio, Rent paid, FY1E leases…
- Leases, rows 17–23: FY0A portfolio, FY1E leases, FY2E leases, FY3E leases…
- Leases, rows 26–31: Opening lease liability, New leases, Interest on the lease liability, Less rent paid…
- Leases, rows 34–38: Opening right-of-use assets, New leases, Less amortisation, Closing right-of-use assets…
- Leases, rows 41–44: Net debt (debt less cash), Lease liability, Net debt including lease liabilities, Lease-adjusted net debt / EBITDAR
- Valuation, rows 33–39: EBITDAR, FY1E, Lease-adjusted enterprise value, Less net debt, FY0A, Less lease liability, FY0A…
What a reviewer looks for
- Deducting the lease liability from a DCF of cash flow that has already paid the rent.
- Comparing EBITDA between an airline that owns its fleet and one that leases it.
- A lease liability that does not roll forward from the rent paid.
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