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19/12/2019

IBA's Lease Rate Analysis - A330-300. December 2019

The widebody leasing market is less fluid than that for narrowbodies and is heavily controlled by sale leasebacks for new deliveries. The market started its recovery from a post 9/11 slump in 2003 and this resurgence was affected by the global financial crisis only slightly. Since 2015, however, excess capacity has exerted immense pressure on rates in the market. Bankruptcies, fleet management decisions and lease ends, particularly young lease ends, have each played a part.

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Bankruptcies

The failures of Skymark, TransAsia, WOW Air, Jet Airways and XL all resulted in additional units flooding the market. With caution being exercised over the future of Hong Kong Airlines and SAA, a further 24 units would be an unwelcome addition to the market's excess capacity should these airlines also fail.

 

Lease Returns

Since 2015, Singapore Airlines' lease returns have supplied a steady stream of young aircraft requiring placement to the market. These units have been joined by more from China Eastern, Cathay and TAP whilst Etihad have stored their six returned aircraft and Thai Airways, despite gradually retiring their units over 20 years old, have increased excess market capacity by 10.

 

Operators and Lessors

THY, Air Canada, Brussels Airlines, Thai AirAsia X and iFly are amongst those fortunate operators who have taken advantage of the low rates and long leases available for high capability, young aircraft. Against a backdrop of airline failures, depressed lease rates and repossessions, trading for lessors is, conversely, challenging. A glimmer of hope in such a bleak re-lease environment could be to move older aircraft to freight conversions since, as new 787s, A330neos and A350s become available, there will be scant opportunity for passenger aircraft lease rates to experience a resurgence.

 

A copy of our full analysis with commentary is available to download here.

 

If you have any further questions, comments or feedback please contact: Stuart Hatcher

 

When it comes to fleet data, aircraft valuations and market trend analysis, our up-to-date, comprehensive and accurate data platform InsightIQ is essential for future transaction due diligence and risk evaluation.

 

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