Aircraft leasing and its value during Covid-19

Article by Declan Kelly, Chair, Aircraft Leasing Ireland in Plane Talking (December 2020)

The pandemic of the past year has caused what many in the aviation industry knew would happen eventually - the end of the cycle.  Few however predicted the scale of the external shock and as many airlines and aviation companies face into the traditionally tougher winter months, some will find this the most challenging period yet. The past number of years has seen aircraft leasing become more mainstream, coinciding with the significant upsurge in passenger demand for leisure travel and a growth in personal disposable income. Especially for LCCs and start ups, leasing an aircraft allows the airline to manage cash flow, while growing its fleet and also giving flag carriers access to the newest, most fuel-efficient aircraft on the market. So much so that almost half of the world's commercial fleet is now leased.

Ten months into the worst crisis to affect the sector, several commentators are asking what impact this will have o leasing. The reality is that while many leasing companies have seen a significant drop in revenue as a result of rental deferrals and restructurings, many have also been part of the solution. While some airlines have received government support, many have not and airlines like Easyjet, IAG, Wizz and others have looked to lessors as a way to provide them with much needed access to liquidity through the completion of a series of sales and leaseback deals.

It is not all doom and gloom; the airline industry will recover - history dictates that fact. In my thirty years in aviation, I have seen many crises - SARS, the horrific events that occurred in the US on September 2001, the Gulf War, the Global Financial Crisis - all of these events saw air travel emerge different but stronger. We will see many airlines also emerge stronger from this period. They will be the airlines that have restructured and engineered new ways of thinking, taking advantage of how the situation has impacted their competitors. 

To read the article in full, please see here.