Leasing companies bought more aircraft than sick airlines for the first time

© Reuters File Photo: Air Lease Corporation CEO Steven Udvar-Haji (L) rings the New York Stock Exchange bell with Ray Conner (R), CEO of Boeing Commercial Aircraft, at the 2012 Farnborough Airshow in southern England. Reuters / Luke McGregor / File Photo

By Connor Humphries

LONDON (Reuters) – Aircraft leasing companies are buying more of the world’s passenger planes than aircraft for the first time since a global epidemic hit, senior industry executives said on Monday.

Another sign that most airlines are facing a financial crisis as a result of this historic change after decades of growing growth relies on leasing giants capable of accessing finance cheaper than carriers.

Airbus buys planes from manufacturers like SE (OTC 🙂 and Boeing (NYSE 🙂 co and leases them to airlines, accounting for about 40-45% of air supply before the epidemic, industry pioneer Steven Udvar said.

Udvar-Hajji, executive chairman of Lizar Air Lease (NYSE 🙂 Corporation, told an airline economics conference in London that “leased content delivery has reached almost 0%.”

Udvar-Haji, who said he remembered the sector paying for only 1% of deliveries when he helped lead the industry in the early 1970s, said it was difficult to say whether the numbers could be higher.

“It’s in a range right now, which is probably a good balance for the industry,” he told Reuters. “I never thought it would reach 50% or even 40%.”

As the industry recovers, airlines can regain their own financing capacity, he added.

A senior executive at the larger rival Aircap agreed that the leasing sector is now responsible for most of the financing of new passenger jet supplies, financing somewhere between 50-60%.

“Going to Kovid, we were always saying ‘will we ever get 50%?’ And we’ve gone through that, ”Peter Anderson, Aircap’s chief commercial officer, told Reuters he thought the new level was sustainable.

Udvar-Hajji said 0% of the numbers include sales-on-leaseback, finance lease and operating lease.

He said Airbus and Boeing’s manufacturing duality is comfortable with the shift in power from airlines to leasing companies.

“It’s much better for Airbus to have a financially capable buyer,” he said. “The leasing industry has the capital to attend to delivery and actually take delivery.”

Some less than 4% of payers are paying less than 2% for some of the largest airlines in the United States and Europe, Udvar-Hajji said at the conference, the first major rally in the lease sector since the epidemic hit.

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