Aegean Airlines: operating leases will dominate new refleeting orders for 45-60 Boeing or Airbus

Earlier this year, Aegean Airlines talked of an important longer term fleet decision to be made in 2017, or early 2018, since the majority of Aegean's leases will need to be replaced between 2019 and 2023. It issued a tender for the supply of 45-60 narrowbody jets earlier this summer.

Aegean currently operates Airbus narrowbodies, but is equally evaluating the new generation A320neo family and Boeing 737MAX. A decision is expected before the end of 2017. It will continue to use operating leases as its preferred means of funding aircraft acquisitions, and believes that lessors have ample capacity to place.

After three years of falling margins from 2014 to 2016, caused largely by falling unit revenue as a result of rapid capacity growth by Aegean and competitors in Greece, Aegean is pausing in its growth plans in 2017. So too is the leading competitor, Ryanair. This helped Aegean to drive up RASK and margin in 1H2017.

Aegean has used its Athens hub and its domestic subsidiary, Olympic Air, to help combat strong competition. The fleet decision will help to position it for the longer term.