The Leasing Top 50 2013
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An expanding universe of lessors
We are very proud to present the Leasing Top 50. A new supplement from the Airfinance Journal stable of publications, the Leasing Top 50 updates our existing leasing survey and presents a more detailed overview of the aircraft-leasing sector.
We would also like to take this opportunity to thank our partners, AeroTransport Data Bank (ATDB) and Avitas, for their help in offering and sourcing data on lessors’ fleets.
The leasing industry is an incredibly fast-moving one. As the magazine that covers this sector, we are constantly impressed by the influx of new lessors being created and the increasing diversity of aircraft leasing models.
Competition in this sector has never been as intense, and airlines are spoilt for choice for a range of sophisticated fleet solutions. On a recent visit to Brazil for the Latin America Airfinance conference at least eight lessors stated they were keen to close sale/leasebacks in Latin America. What was fascinating was the variety of lessors willing to arrange deals in the region. Lessors from Russia, Japan and China are actively courting the world’s airlines, and taking on many of the world’s largest lessors to do so.
Lessors have benefited from the modest uptick in passenger demand and from the continued high cost of fuel. According to the June 2013 set of figures by the International Air Transport Association, global revenue passenger kilometres showed a year-on-year growth of 6%, and passenger load factors have increased to 81.7% over the same period. Airlines are ordering more aircraft, and lessors have been the obvious beneficiaries of this. In addition, the high cost of fuel has motivated airlines to engage with new-technology aircraft. This has been good news for lessors of new kit but challenging for lessors, and asset-backed securitisations (ABSs), of older aircraft. It has also helped leasing firms that specialise in late life aircraft and part-out specialists.
As many of the newer or smaller lessors have expanded in size, many of them are ordering directly from the manufacturers. Lessors made up 39% of the 923 orders announced at the 2013 Paris Air Show in June. Airlines looking to secure the best slots for these new aircraft types will increasingly be forced to use operating leases.
One aspect of this supplement that is perhaps different to similar publications is that we have taken the time to analyze the financials of the different lessors. Looking at the top 50 aircraft leasing companies makes you realize the lower volatility of profitability of the aircraft-leasing sector compared to airlines.
This success has been mirrored by how easily lessors can raise financing. Lessors rely on access to immediate capital in order to buy and trade aircraft quickly. A lessor that has difficulty raising capital is a business disaster waiting to happen.
Happily, from a pure financing perspective, leasing firms offer a fantastic spread of risk, with a diversified asset base spread across many geographies. As we hit the last stretch of 2013, lessors have continued to use their bilateral banking relationships, as well as prepare their more sophisticated capital market solutions. On that note it is a safe bet to expect to see more asset-based securities transactions before the end of the year.
A quick word on methodology. The fleet data used in the supplement has been obtained by consulting the lessors directly. Where we have failed to secure up-to-date fleet data, we have relied on ATDB’s numbers. Using separate databases means that there are some unavoidable discrepancies, particularly between the size of fleets recorded in ATDB and by Avitas.
In addition, we should also stress that some lessors have offered their very latest fleet count, while others have used public data from within the past three months. Wherever possible we have used the latest figures.
The last thing we would like to add is a sincere thank you. Many of the leasing firms featured took the time to respond to our questions, and we appreciate their efforts. We hope you enjoy the supplement.
DICKON HARRIS,
Editor, Airfinance Journal
MICHAEL DUFF,
Managing director,The Airline Analyst.