Farnborough 2012 Wrap: Aircraft lessors to the fore
It may have been Boeing's turn to shine at this year's major European air show, at Farnborough, handsomely out-selling Airbus with orders and commitments for 396 aircraft versus Airbus' 115 new sales and commitments, but it was the prominence of aircraft lessors in the order-making that was the real talking point.
Aircraft lessors were prominent during the 2012 Farnborough International Airshow, accounting for approximately 46% of the commitments and pledges disclosed from 09-Jul-2012 to 12-Jul-2012 covering 627 aircraft. Removing the 150 aircraft order announced during the event by United Airlines in Chicago on 12-Jul-2012, lessors represented nearly 61% of the business agreements tabled at the show. Leasing company customers Air Lease Corporation, GECAS, ALAFCO and Avolon announced orders and commitments at the show for 220 737 family airplanes.
- Aircraft lessors accounted for a significant portion of commitments and pledges at the 2012 Farnborough International Airshow, representing nearly 61% of the business agreements.
- The rise of lessors in importance is a result of airlines facing difficulty in securing credit and banks preferring to finance deals with lessors.
- The share of the world's commercial aircraft fleet financed through operating leases has grown from 25% to 35% since 2000.
- Boeing estimates that the percentage of the global commercial aircraft fleet on operating lease grew from less than 1% to 36% between 1970 and 2000.
- The article highlights specific orders made by Hebei Airlines, airBaltic, Cathay Pacific, and SkyWest at the Air Show.
- A full wrap-up of all the announcements made at the 2012 Farnborough Airshow is available for download.
The results reflect salient growth of the aircraft leasing business during the last decade as airlines saw their ability to secure credit dwindle and banks preferred to forge financing deals with lessors with increasing portfolio diversification that lowered their risk profile.
A direct result of the rise of lessors in importance is the share of the world's commercial aircraft fleet financed through operating leases has grown from 25% to 35% since 2000, according to rating agency Fitch. "Aircraft lessors have filled important financing gaps that grew as debt capital markets tightened and airline credit quality weakened," the company recently concluded. Boeing estimates that between 1970 and 2000 the percentage of the global commercial aircraft fleet on operating lease grew from less than 1% to 36%.
In this 50-page report, we review the growing importance of the leasing segment, and examine some of the strategically significant orders at this year's Air Show, including:
- Hebei Airlines' order for five Embraer E190s;
- airBaltic's move to acquire CSeries aircraft;
- Cathay Pacific's A350-1000 order; and
- SkyWest's pledge to buy 100 Mitsubishi jets.
There is also a full wrap of all the announcements - day by day - at the conclusion of this report. Click here to download CAPA's Farnborough 2012 wrap