Leasing companies buy more planes than struggling airlines for the first time
By Conor Humphries
LONDON (Reuters) – Aircraft rental companies are buying more passenger planes globally for the first time than airlines after the pandemic hit carriers around the world, senior officials said Monday ‘industry.
The historic change, after decades of gradual growth, is due to the fact that leasing giants can access cheaper financing than carriers, another sign of the financial difficulties facing much of the airline industry. air transport, they said.
Aircraft lessors, which buy planes from manufacturers like Airbus SE and Boeing Co and lease them to airlines, accounted for around 40-45% of aircraft deliveries before the pandemic, the industry pioneer said. Steven Udvar-Hazy.
“Leased content has grown to around 60% of deliveries,” Udvar-Hazy, executive chairman of lessor Air Lease Corp, told Airline Economics in London.
Udvar-Hazy, who said he remembers the sector funding only 1% of deliveries when he helped launch the industry in the early 1970s, said it was difficult to say whether the number could increase.
“It’s in a range now that is probably a good balance for the industry,” he told Reuters. “I never thought it would reach 50% or even 40%.”
As the industry recovers, airlines may regain the ability to obtain financing on their own, he added.
A senior executive at bigger rival AerCap agreed that the rental industry was now responsible for funding the majority of deliveries of new passenger jets, funding between 50% and 60%.
“Going into COVID, we were always’ Will we ever get to 50%? “And we got over that,” AerCap chief commercial officer Peter Anderson told Reuters, adding that he believed the new level was sustainable.
Udvar-Hazy said the 60% number included sale and leasebacks, finance leases and operating leases.
He said the industry manufacturing duopoly of Airbus and Boeing was comfortable with the transfer of power from airlines to leasing companies.
“It’s much better for Airbus to have a financially capable buyer,” he said. “The leasing industry has the capital to show up for delivery and actually take delivery.”
Some lenders pay less than 2% for financing, compared to more than 4% for some of the largest airlines in the United States and Europe, Udvar-Hazy said at the conference, the credit industry’s first major gathering. lease since the start of the pandemic.
(Reporting by Conor Humphries in London; Additional reporting by Sarah Young in London; Editing by Pravin Char and Matthew Lewis)