Has the airline credit cycle turned?
Airfinance Journal (“AFJ”), a unit of Euromoney Institutional Investor PLC, releases data that suggests that the airline credit cycle may have passed its peak.
AFJ Financial Ratings, a subscription data service covering approximately 140 of the world’s airlines, generates numeric scores rating the financial health of each airline based on five criteria. The criteria are average fleet age, Ebitdar (Earnings before interest, tax, depreciation, amortisation and rent) margin, fixed charge cover, liquidity and leverage.
Having reviewed the latest data, AFJ observes that the number of ratings that declined in the most recent annual period exceeded the number of ratings that improved. This is a reversal of the four prior years, as shown in Figure 1.
The simple average rating declined from 3.9 to 3.8 (equivalent to B+) in Figure 2. Weighted by size of airline the average declined from 4.7 to 4.6 (equivalent to BB).
Any questions should be addressed to Michael Duff on mduff@theairlineanalyst.com or +44 7736 804460.
For information about subscribing to The Airline Analyst or AFJ Financial Ratings please refer to www.theairlineanalyst.com
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Regional Snapshot
Transactions
| Transaction Name | Stage |
|---|---|
| Neos | Operating lease | 02-25 | 3x737 Max8 | Finance mandated |
| Transavia France | Sale leaseback (RFP) | 02-25 | $56m (est.) | 1xA320neo | RFP |
| SKY Leasing | A/c sale (RFP) | 01-25 | 11xA/c | RFP |
| Air France | A/c financing (RFP) | 02-25 | €199m (est.) | 5xA220-300 | RFP |
| Ghost 2025-1 | ABS | 02-25 | $600m | 18xA/c | Finance mandated |
| Air Baltic | Sale leaseback | 02-25 | $234m (est.) | 6xA220-300 | Financial close |
| Aircraft Finance Germany | A/c purchase | 02-25 | 1xATR72-600 | Financial close |
| Avion Express | Operating lease | 02-25 | 1xA320 | Financial close |
| TrueNoord | Bond issue | 02-25 | $400m | Financial close |
| Skyways Technics | A/c purchase | 02-25 | 1xATR72-600 | Financial close |
Related Data
Regional Snapshot
Transactions
| Transaction Name | Stage |
|---|---|
| Some Air | Finance lease (RFP) | 03-23 | $1.35bn (est.) | 21xA/c | RFP |
| Some Airlines | Operating lease | 03-23 | 2x737-800 | Finance mandated |
| someJet | Bond issue | 03-23 | €850m | Financial close |
| Airsomething | Operating lease | 03-23 | 1x737-800 | Financial close |