The president and CEO of one of the world's largest and fastest-growing global lessors talks to CAPA. AWAS' Ray Sisson reveals his thoughts on aviation finance, how more public lessors will affect the industry and the wait for Boeing's re-engining announcement.
What sparked your interest in aviation and how did that lead you to your career?
As a child, our family moved around the world every few years, and some of my fondest memories are of aircraft, and flying to new, exotic locations. From then on I developed an interest in aircraft and the industry, which I have been fortunate to work in for almost 20 years.
With 158 narrowbodies currently being leased to carriers, and more than 100 on order, will AWAS’ strategy ever shift to a focus on the leasing of larger aircraft?
Actually AWAS derives about 50% of our revenues from widebodies today, and we are actively looking to grow our widebody share with the right assets. We believe we have a balanced portfolio, which includes widebody passenger and dedicated freighter aircraft.
2009/10 saw the increased participation of export credit agencies (ECAs) in financing aircraft. What is your take on the current state of the aircraft financing market and the players in it?
The aircraft financing landscape is rapidly evolving with the new ASU and Basel III requirements. ECAs will reduce their lending and raise their fees, and there is significant potential for the emergence of financing players from the Middle East and Asia to help fill that gap.
Do you think ECAs have the opportunity to further facilitate the evolution of the Cape Town Treaty?
Absolutely. Given their leverage with attractively priced credit for airlines and lessors, ECAs can help evolve Cape Town just as they helped drive its initial adoption.
Do you think the new Aviation Sector Understanding’s (ASU) higher prices and more restrictive terms will expand demand for commercial aircraft finance? What affect will this have on lessors?
The new ASU will make Operating Leases even more attractive to the market. It does, however, create issues for lessors that are heavily dependent upon ECA financing; given AWAS’ strong capitalisation it is far less of an issue for us.
AWAS has no current discussions at either the board or investor level with regards to specific plans for a sale or IPO. Nevertheless, Terra Firma has always been upfront stating that they will at some point look to exit their investment in AWAS, and that an IPO could be an attractive route for divestment. That said, Terra Firma and CPPIB are incredibly supportive investors in AWAS. They have continued to add significant capital to allow us to achieve our growth plans.
How will more public lessors affect the industry?
A broader base of strong, public lessors would help give our highly specialised industry the level of analyst coverage we need and deserve. And that would be beneficial for lessors, investors and airlines alike.
The European market seems to be strong for AWAS. Do you see a shift away from this market in the near future?
While the European market is experiencing a slow-growth period just now, it continues to be a good market for us. AWAS enjoys significant airline support throughout Europe, and we have forged strong, long-term business relationships across the region.
Which aircraft do you think is most likely to replace the A340-300?
Any slack from the A340-300 has already been taken-up by the A330s, and B777s. The coming introductions of the B787 and A350 will even further supplant the A340’s role.
What are your thoughts on re-engining?
We are all awaiting Boeing’s decision on the future of the B737. If Boeing does decide to re-engine the B737, then the A320neo can have a reasonably long run. But if they decide to introduce a game-changing, new B737 then you can bet that Airbus will reconsider their strategy.
Is AWAS following the reported trend of asking for longer lease-terms?
This is very dependent upon the asset type and where the aircraft is in its lifecycle.