29-May-2015 12:14 PM

KBRA: Oil price drop is changing airline fleet strategies

Kroll Bond Rating Agency (KBRA) released (28-May-2015) a report on the links between oil prices and airline fleet planning. The report states that although many airlines note that they are planning their business based on a higher price of oil, fleet-planning decisions indicate otherwise. As a result of the 40% year-over-year decline in oil, major airlines are increasingly delaying retirements, refurbishing aging types, and leasing mid-life aircraft, in a reversal of actions taken from 2011-2014 (although these carriers are still taking on newer, more-fuel efficient aircraft as well). However, these strategies are not without risk, as investments in vintage aircraft require a sustained period of cheaper oil in order to generate sufficient economic returns. To the extent that fuel prices remain stable at current levels, though, alternatives to new aircraft will continue to be in high demand, thereby benefitting owners and operators of these aircraft. [more - original PR]

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