Air Lease Corp founder and CEO Steven Udvar-Hazy predicted that airlines will increasingly rely on leasing companies as LCCs expand and banks demand higher margins to finance aircraft (Bloomberg, 12-Oct-2010). He predicted that by 2010, almost 45% of aircraft will be on operating leases, up from 34% in 2010. Less than 1% of airline fleets came from leasing companies in the 1970s. He added that B737s and A320s are more often on operating leases than under ownership of airlines, with more than 1,500 of the approximately 3,000 B737NGs on operating lease, with more than 2,000 of the 4,200 A319s, 320s and A321s on operating leases. In the wide-body market, 48% of B777s and A330s are on operating lease.
Air Lease Corp predicts 45% of aircraft to be on operating lease by 2020
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CAPA global airline financial outlook
Operating margin to reach new high in 2016, but this may signal a subsequent downturn. CAPA’s global airline operating margin model indicates that the industry was more profitable in 2015 than it has been for almost five decades. Moreover, the model predicts that world airline operating margins will rise further above previous historic peak levels in 2016. These new levels of profitability are mainly thanks to the low oil price environment, coupled with strong demand growth in spite of global economic growth rates that are far from exceptional.
Much of the industry is also benefiting from a period of relative capacity discipline. New revenue sources may also be helping, although their role in airline profitability is still emerging.
The macroeconomic and geopolitical backdrops provide the main risks to this forecast. Beyond that, the biggest challenge for the industry will then be to try to sustain margin levels, rather than to allow a peak to be followed by a rapid downturn, as has always happened in the past. But downturns can play a positive role in industry development, possibly even stimulating consolidation.
Global airline financial outlook
Operating margin to reach new high in 2016, but this may signal a subsequent downturn