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Insight

How aircraft lessors are weathering the storm

Flexibility in the ascendant aircraft leasing sector

Aircraft leasing companies are the backbone of modern commercial aviation. Lessors now account for an estimated 60 percent of new passenger jet deliveries, up from approximately 45 percent on the eve of the pandemic and just 10 percent in the mid-1980s.

86%

of leasing companies agreed deferred aircraft lease rentals with customers during the COVID-19 crisis

Thanks in part to their ability to access cheaper financing than airlines, the ascendency of aircraft leasing companies has accelerated during the COVID-19 crisis. Nonetheless, the sector has experienced consolidations during the pandemic, including the US$31.1 billion acquisition by Ireland-based AerCap of General Electric's aircraft leasing arm, GECAS.

Lessors have demonstrated flexibility throughout the pandemic: 86 percent agreed deferred aircraft lease rentals with their airline customers during the COVID-19 crisis, with a little over half of respondents expecting these deferrals of lease rentals or power by the hour (PBH) to be a short-term measure.

Repossession is a last resort. Reduced demand during the pandemic (particularly for wide-body aircraft) has encouraged lessors to work with troubled airlines rather than taking aircraft back. A third of lessors in our survey say they repossessed less than 5 percent (or none) of their fleet during the COVID-19 pandemic. But 29 percent say they had to take back more than a tenth of their fleet.

Despite suppressed demand during the pandemic, lessors have been able to re-market aircraft. This requires patience and deep pockets: For most lessors in this study (57 percent), it took three to six months to re-market aircraft, while nearly a quarter (24 percent) say it took six to12 months. Only one in five found a new taker within three months of return or repossession.

67 percent of lessors have repossessed 5 percent or more of their fleets during the COVID-19 pandemic.

 

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