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Operating lease survey: Keeping up with a changing market
05 August 2009
If times seemed tough in the summer of 2008,this year that pain has been magnified. Aircraft leasing is a good business, but lessors will have to be nimble and clever to find finance over the next few years.
Last
year, as fuel prices spiked, airlines and aircraft lessors were focused on
upgrading equipment with new more-efficient, cleaner aircraft. Now, as
liquidity has contracted, companies are focused on refinancing and survival.
Funding is difficult to come by,but deals are still getting done.
To add
another level of complexity, airline revenues are at risk during second half of
2009,because of recessionary pressures. Traffic numbers are down, especially in
the premium market. "Obviously, that's driving significant reductions in
capacity so you can't put aircraft in the market. This impacts lease rates, and
so values are at risk," says Thomas Hollahan, managing director, global
aviation, Citi.
Those
who have aircraft coming off lease over the next year are not only likely to
take a hit on lease rates but also they might have difficulty finding customers
to take aircraft as many airlines reduce capacity.
However,
on the whole, aircraft leasing is...
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