Global Commercial Aircraft Leasing Growth Opportunities

Global Commercial Aircraft Leasing Growth Opportunities

New Product Development to Drive the Future Growth Potential of Aircraft Leasing

RELEASE DATE
14-Dec-2021
REGION
Global
Research Code: PC9E-01-00-00-00
SKU: AE01534-GL-MT_26083
$2,450.00
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SKU
AE01534-GL-MT_26083
$2,450.00
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Description

Lessors are struggling to maintain liquidity amidst the weak economic scenario in aviation. Airline-owned leasing firms are selling off their leasing arms to consolidate and streamline their core air travel operations. The critical situation has led to some M&A scenarios in the aircraft leasing industry.

Lessors and airlines are dependent on various institutions such as banks, capital markets, debts, and asset-backed security (ABS). In the pre-pandemic scenario, banks were key financial providers to the aviation industry and were extending credits with less scrutiny. However, the situation changed post-pandemic, banks are now taking a much more conservative approach. The COVID-19 pandemic has brought the banks to a very cautious state concerning the aviation industry. This has shifted the focus of banks to largely state-owned carriers with sufficient support and access to funds. Highly rated leasing firms, with a diverse portfolio and financing options and efficient risk and asset management will be in a better position to leverage the post-pandemic aviation market. In 2020, capital markets increased their contribution to the aviation industry.

As of mid-2021, there were nearly 90 new airlines in various stages of investments and negotiations to begin operations. These new start-ups are focusing on low-cost business models that will be the recovery engines of the industry and is a key focus area for lessors. Declining leasing rates, potentially reduced debts and other fixed costs for new carriers, a significant increase in parked aircraft, and early retirements leading to wider availability of aircraft are key parameters driving these investments.

There is potential for consolidation in the aircraft lessor market (even pre-pandemic). Several new entrants are seen in the aircraft lessor market from Asia during the last decade. Difficulty in risk management, a fragmented airline market, and a huge difference in the performance of stronger and other carriers are some of the key factors that will drive M&A activity in this sector. AerCap, the leading global aircraft lessor, has been acquiring some firms in recent years, becoming a significant portfolio consisting of aircraft, engines, and helicopters. The firm now collectively has more than 300 global customers and is also the biggest client of Airbus amd Boeing. The most notable acquisition in the aircraft leasing industry is the acquisition of General Electric Capital Aviation Services (GECAS) by AerCap in 2021 for nearly $30 billion. The aircraft lessor market is still fragmented, and the top market leaders contribute to less than one-half of the aircraft market, which is significantly less compared to other industries. Post the acquisition of GECAS, AerCap will have 2,098 aircraft in its portfolio. AerCap’s fleet share for leasing will constitute almost 36% of the total fleet owned by all lessors globally. While AerCap has consolidated its position as the market leader, significant competition is expected among the other major lessors.

North America and Europe are the highest performing regions in the aircraft leasing market, having the best legal environment and regulations for market participants. The overall impact of the COVID-19 pandemic was low in these regions as there were minimal changes in aircraft repossession and rent collection rates. Europe is a key pioneer in aircraft leasing with several leading lessors based in Ireland, which has extensive support infrastructure along with a strong talent pool.

Author: Nripendra Bahadur Singh

Table of Contents

Why is it Increasingly Difficult to Grow?

The Strategic Imperative 8™

The Top 3 Strategic Imperatives Impact on the Global Commercial Aircraft Leasing Market

Growth Opportunities Fuel the Growth Pipeline Engine™

Aircraft Leasing Value Chain

Sale Leaseback Model

Aircraft Leasing Types

Growth Drivers for Global Commercial Aircraft Leasing

Growth Restraints for Global Commercial Aircraft Leasing

Distribution of Funding Sources in the Commercial Aircraft Leasing Market

Number of Lessors in the Global Commercial Aircraft Leasing Market

Challenges in Aircraft Redelivery

Number of Aircraft Leases Ending Between 2018 and 2022—By Aircraft Type

Aircraft Late Redeliveries—Reasons and Importance

Leading Aircraft Operating Lessors in 2020—By Fleet Size

Leading Aircraft Operating Lessors in 2020—By Fleet Value

Amount of Funding Necessary in the Global Aircraft Finance Industry from 2016 to 2023

Share of Leased Aircraft in the Aviation Industry Globally

Discussion by Region

Growth Opportunity 1: Demand for Narrow-body Aircrafts to Address Airlines Short-hauls Focus

Growth Opportunity 1: Demand for Narrow-body Aircrafts to Address Airlines Short-hauls Focus (continued)

Growth Opportunity 2: Space for Private Lenders to Bridge the Financing Gap in Aircraft Finance

Growth Opportunity 2: Space for Private Lenders to Bridge the Financing Gap in Aircraft Finance (continued)

Growth Opportunity 3: Freighter Aircraft Leasing to Plug in the Financing Gap in Air Cargo

Growth Opportunity 3: Freighter Aircraft Leasing to Plug in the Financing Gap in Air Cargo (continued)

List of Exhibits

Legal Disclaimer

Lessors are struggling to maintain liquidity amidst the weak economic scenario in aviation. Airline-owned leasing firms are selling off their leasing arms to consolidate and streamline their core air travel operations. The critical situation has led to some M&A scenarios in the aircraft leasing industry. Lessors and airlines are dependent on various institutions such as banks, capital markets, debts, and asset-backed security (ABS). In the pre-pandemic scenario, banks were key financial providers to the aviation industry and were extending credits with less scrutiny. However, the situation changed post-pandemic, banks are now taking a much more conservative approach. The COVID-19 pandemic has brought the banks to a very cautious state concerning the aviation industry. This has shifted the focus of banks to largely state-owned carriers with sufficient support and access to funds. Highly rated leasing firms, with a diverse portfolio and financing options and efficient risk and asset management will be in a better position to leverage the post-pandemic aviation market. In 2020, capital markets increased their contribution to the aviation industry. As of mid-2021, there were nearly 90 new airlines in various stages of investments and negotiations to begin operations. These new start-ups are focusing on low-cost business models that will be the recovery engines of the industry and is a key focus area for lessors. Declining leasing rates, potentially reduced debts and other fixed costs for new carriers, a significant increase in parked aircraft, and early retirements leading to wider availability of aircraft are key parameters driving these investments. There is potential for consolidation in the aircraft lessor market (even pre-pandemic). Several new entrants are seen in the aircraft lessor market from Asia during the last decade. Difficulty in risk management, a fragmented airline market, and a huge difference in the performance of stronger and other carriers are some of the key factors that will drive M&A activity in this sector. AerCap, the leading global aircraft lessor, has been acquiring some firms in recent years, becoming a significant portfolio consisting of aircraft, engines, and helicopters. The firm now collectively has more than 300 global customers and is also the biggest client of Airbus amd Boeing. The most notable acquisition in the aircraft leasing industry is the acquisition of General Electric Capital Aviation Services (GECAS) by AerCap in 2021 for nearly $30 billion. The aircraft lessor market is still fragmented, and the top market leaders contribute to less than one-half of the aircraft market, which is significantly less compared to other industries. Post the acquisition of GECAS, AerCap will have 2,098 aircraft in its portfolio. AerCap’s fleet share for leasing will constitute almost 36% of the total fleet owned by all lessors globally. While AerCap has consolidated its position as the market leader, significant competition is expected among the other major lessors. North America and Europe are the highest performing regions in the aircraft leasing market, having the best legal environment and regulations for market participants. The overall impact of the COVID-19 pandemic was low in these regions as there were minimal changes in aircraft repossession and rent collection rates. Europe is a key pioneer in aircraft leasing with several leading lessors based in Ireland, which has extensive support infrastructure along with a strong talent pool. Author: Nripendra Bahadur Singh
More Information
No Index No
Podcast No
Author Nripendra Bahadur Singh
Industries Aerospace, Defence and Security
WIP Number PC9E-01-00-00-00
Is Prebook No
GPS Codes 9000-A1