Aviation Finance

Developments

IBA's Phil Seymour predicts a contraction in outstanding aircraft leases in 2021 for first time in over a decade, as investor opportunities are evaluated for the $21 billion aviation ABS paper market
3rd April 2020: IBA in a Seminar, in conjunction with aviation finance advisory firm Split Rock provided an in depth assessment of the aviation ABS market as of April 3rd. It can be seen here. In it IBA President Phil Seymour predicts a contraction of aircraft leases this year - which will make it the first year in over a decade where the number of outstanding aircraft leases will contract.


In the latest edition of Aviation Finance (April 2nd 2020)
The scale and shape of the crisis begins to emerge - and its not an encouraging picture. Liquidity issues are to the fore, but lessors and certain airlines are slated to emerge strongest, while the aviation complex must look to a relative downgrade for a time in capital markets. Cowen managing director and senior research analyst Helane Becker predicts that it will take perhaps 18 to 24 months for traffic to start to recover and much longer for any kind of return to normalcy in an interview with Aviation Finance. Becker said: ‘I disagree with the notion that there will be pent up demand and that when people don’t have to self-isolate any more they will immediately get onto planes'.

 

Perspectives

Anton Tams, of GECAS, on lessors' electronic maintenance records






Trevor Ricards, GECAS on ABS
DVB's Kieran O'Keefe on the lease rate factor (LRF)
IBA's Dr Stuart Hatcher on lease rates
Virginia Fox on GECAS' risk model
Milestone's Greg Conlon on the rotorcraft business model
Peter Chang on relationships between OEMs and lessors

Analysis

IATA calls for governments to provide aid as severity of cash crisis grows
IATA now believes that its ‘worst case scenario’ warning, issued earlier this month, that passenger revenues worldwide will fall $113 billion in 2020, will be exceeded. It says that before COVID-19 much of the industry was fragile, with only around 30 airlines achieving economic profit improvements and a long tail of weaker airlines. Now it is calling on governments worldwide to provide financial aid to the industry. In the April 2nd issue of Aviation Finance: 'This is apocalypse now’ warns IATA’s DG ("Concerned that half of the world’s airlines could run out of cash long before the recovery comes, IATA’s director general Alexandre de Juniac has urged governments across the world to act quickly. ‘My message to governments that are considering doing something is to hurry-up. Every day matters').


Aviation Finance.aero: Markets view - 'airline casualties, market value and lease rate corrections'
March 26th 2020: As the scale of Covid-19 becomes apparent, IATA increased its estimate of the cost for airlines from last week's $113 bn to $250 bn, this in addition to an assessment that one third of the commercial fleet will be in storage by the weekend, cuts in flights, and downgrades of credit ratings of lessors. IBA in an assessment of the industry issued this afternoon say: "for 2020 we expect airline casualties, especially amongst those that have been limping along over recent years. We will also witness subsequent market value and lease rate corrections depending on the level of supply and demand of both equipment and liquidity". Their full assessment is at: iba.aero/insight.


In the March 19th edition of Aviation Finance
The scale of the crisis is only beginning to sink in. Two weeks ago IATA estimated COVID-19 would cost the world’s airlines some $113 million in revenue. Now it will only say that ‘things are clearly worse than this.’ .

 

Aircraft Leasing & Lessors

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Aircraft & Airlines

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People Moves: IBA Group appoints Ian Beaumont as Chief Executive Officer of IBA Group
11th March 2020: IBA Group has appointed Ian Beaumont as Chief Executive Officer, effective today. Phil Seymour, IBA’s former CEO will continue to serve as Company President. In a statement IBA said: "For the past five years the business has been successfully led by Phil Seymour and has seen a period of rapid growth with both its core professional and advisory services, as well as the powerful data platform, IBA.iQ.


In the March 5th edition: Steven Udvar-Hazy speaks of ALC’s willingness to help airlines by purchasing aircraft, either for cash
Special focus on the evolving financing and financial consequences in the Covid-19 crisis in the aviation complex, including the effect on lessors, airlines and the aviation finance sector generally. "As we write, a number of the blue chip stocks in the aviation complex tracked in Aviationfinance.aero's Listed Aviation Stocks page are today (March 5th) showing declines of circa 25% off all time highs recorded in the second half of February (e,g, Aercap and Delta airlines). Financial strength is going to be key in the survival and recovery."


In the February 20th 2020 issue of Aviation Finance
A number of articles reflect on the importance of pricing risk appropriately and the implications for investors when this is a mismatch. This concern comes at a time when the industry is still in a robust position overall. But the potential impact of Covid-19 on airlines and their ability to meet lease commitments, coming on top of the still unresolved MAX crisis, underscores the potential vulnerability of the sector.

 

Analysis

People Moves: GECAS appoints former GE and Milestone exec Jonty Nel as new Commercial lead, based out of Dubai
26th February 2020: Jonty Nel has been appointed as GECAS' EVP Commercial – International, with the responsibility for executing strategies across several regions including EMEA. He will take up the role from April 2020. Based in GECAS' Dubai office, he will have also have responsibility for GECAS’ Cargo business and Airline & Fleet Strategy team.

People moves: CDB Aviation appoints head of Asia Pacific
11th February 2020: Sign Kadouh has been promoted to the new role of head of Asia Pacific from his previous position of Head of Commercial, Asia Pacific. In addition to continuing to lead the Asia Pacific commercial team and driving commercial and strategic activity within the region, including Greater China, South Asia, Southeast Asia, North Asia, Australasia, and the Pacific Islands, Kadouh also will be the operational leader for Asia Pacific, managing the day-to-day activities of the company’s Hong Kong office.


In Aviation Finance (February 6th 2020)
In the February 6th issue: the launch of three new securitisations and announcements of a number of substantial unsecured banking facilities for lessors indicates a continued appreciation of aircraft leasing's strong fundamentals; The multifaceted response to climate change has seen IATA creating a dedicated exchange on which airlines can trade carbon credits, the establishment of a new working group by the AWG and the use of big data based technologies to optimise fuel efficiency.


In Aviation Finance January 23rd 2020 issue
In the January 23rd issue: Competitive carriers' backlash against UK Government move to subsidise Flybe; Aircraft Leasing Interview: New CDB Aviation CEO; Investment Banking - Credit Suisse's SCALE new aviation investor platform; ‘Appraiser of the Year’ IBA on the trading, values and lease rates outlook; GATS; Financing developments; Report: aviation’s ‘black star’ on emissions is undeserved, says Udvar-Hazy; Lessors’ unsecured assets reach all time high at $95bn.

CDB Aviation records 'strong business activity' and transactions involving 89 aircraft in 2019
20th January 2020: CDB Aviation, a wholly owned Irish subsidiary of China Development Bank Financial Leasing Co., Limited, reported today that the year 2019 marked 'another period of strong business activity and growth', in which it executed transactions involving 89 aircraft. “This past year’s continued growth in our operations is evidence of our unwavering commitment to execution and progressing our highly competitive position in the world’s key markets,” said newly appointed Chief Executive Officer Patrick Hannigan.


Avolon publishes its annual 'fearless forecasts', with, top of the list, 'MAX will safely return to revenue service in 2020'
Dublin, 19 January 2020: Avolon, the international aircraft leasing company, issued its 2020 outlook paper titled ‘Navigating Through Turbulence’. The paper, written by Avolon’s Jim Morrison and Steve Mason, reviews aviation industry trends in 2019 and offers its 'fearless forecasts' for 2020, previously authored by Avolon's Dick Forsberg. The Max may be coming back in 2020, but, see also IBA's analysis, published last week, on the serious implications it will have for values and fares in 2020.