As the leasing sector recovers from the recent global economic turmoil, the signs are good that the industry will enjoy improving fortunes in 2011.
That’s the picture that emerges from interviews with leading leasing and banking executives in the Airline Business Interactive special on aircraft financing.
The global financial crisis tipped the leasing market into turmoil, and by 2009 there were just a handful of players, says Robert Martin, chief executive of Singapore based lessor BOC Aviation.
FINANCE SPECIAL |
|---|
Check out our interactive finance special for the inside track for 2011 from airlines, lessors and bankers |
But as the world economy has rebounded there has been a strong and rapid recovery among the lessors. “We’ve gone from bidding situations of two to three players, to 30 or more in the market place,” says Martin.
The impact that the financial turmoil has had on some traditional sources of capital has resulted in the leasing sector undergoing a structural change. Problems at the parent level prevented some lessors from acquiring more aircraft and expanding. “That opened up some nice opportunities for new players that could find new equity sources, usually with quite experienced managers from established leasing companies,” says Bert van Leeuwen, who is managing director of aviation research at DVB Bank.
While some existing players were casualties, there are new entrants equipped with capital that has been switched from other industries to fund the aviation market.
“These people still have cash, so have huge amounts of funds and are looking for places to put those funds,” Natixis Transport Finance chief executive Christian McCormick tells Airline Business Interactive. “And the industry they seem to have chosen is aircraft financing.”
“Various strategies [were employed by the new entrants] to build up their portfolios, some preferred to go after sale and leaseback opportunities, and a limited number were brave enough to order new aircraft,” adds DVB’s van Leeuwen.
The new arrivals, like Steven Udvar-Hazy’s Air Lease, have driven the lessors’ expanding presence in the purchasing cycle, and this will affect the way the airlines acquire new aircraft, says Vueling boss Alex Cruz. “The debate of buy versus lease is going to become more and more relevant,” says the Spanish low cost airline’s chief executive. “We’ll see how it evolves. It will all depend on price.”
Source: Airline Business
