CAPA’s World Aviation Summit – show me the money: the outlook for aviation financing

The aircraft leasing industry has proved to be one of the most robust sectors of the air transport industry in recent history. Airline lessors have come out of the pandemic era with a larger role than ever in the sector, even in the face of global economic and geopolitical uncertainty.

The airline industry took on a heavy debt burden (and found a new affection for government ownership and state-supported aid packages) in order to survive the pandemic, and it found itself desperately in need of financial support.

For their part, leasing companies saw both threat and an opportunity. Lease delinquency and aircraft on ground rates spiked, and lease agreements needed to be restructured to reflect the new realities that the air travel sector was dealing with.

At the same time, lessors took on a greater share of global aircraft delivery financing. Leasing firms accounted for better than 50% of financing for OEM deliveries during the pandemic, and around 60% in 2022. Sale-and-leaseback agreements became popular as cash strapped airlines sought to reduce liabilities and improve short-term liquidity.

With the airline industry saddled with debt from the COVID-19 pandemic, the cost of financing on the increase and aircraft deliveries trending towards pre-pandemic levels, what is the outlook for commercial aircraft financing?