Aviation Finance

Aviation Finance - Vol 2 No.3 February 2nd 2012
Risk Management: Counterparty Risk

Lessor fallout from Spanair and Malev collapses

The fall of Spanair and concerns surrounding Hungarian airline Malev will leave some lessors exposed as 29 aircraft may become available for re-lease at a time when the market for second hand narrow bodies has weakened.

Aircraft Financing

Norwegian Air Shuttle's mega order raises interesting questions

Norwegian Air Shuttle's huge order for 222 narrow body aircraft shows that Norwegian believes this is an optimal time to strike a large aircraft order. Norwegian could have the option of either deploying these planes on its own routes or else trading them to others if demand around the world is strong. If that was to evolve as a strategy then Norwegian would be combining the activities of an airline with that of an aircraft financier, something that would prove highly innovative in the industry.

Capital Markets

Wider variety of financing options sees lessor portfolios reaching a size that suits a securitisation model

Airlines and lessors seeking finance are exploring less traditional forms of funding, said Maples' partner David Maughan in conversation with Aviation Finance. Maughan chaired a European airlines' panel discussion at the Airfinance European Air Finance Conference in Dublin on January 25th and spoke about the panel contributors' identification of a wide variety of financing opportunities, for instance that lessor portfolios have reached a size that suits a securitisation model. Contributors also focused on growing competition in the Asian market.

Aircraft Leasing

RBS deal likely to sharpen investor focus on modern generation portfolios says JP Morgan

Analysts at JP Morgan have released an assessment of the aviation leasing industry, hot on the heels of the Initiation Research Report by Morgan Stanley, referenced in the last issue of Aviation Finance. The JP Morgan report says that the RBSA-Sumitomo deal 'is a positive for the sector'.

  
Aviation Finance Vol. 2 No.3

In this issue

Innovation, as in all other industries, will be key to the success of aviation financing, and 2012 will be marked by this theme, we predict. Also, lower yields can make capital markets issuance attractive, and evidence of equity interest, such as shown in the RBS deal, examined again in this issue, can add to confidence that the 'financing gap' can be satisfactorily filled. This, further has been bolstered by the impression created by Bjorn Kjos' Norwegian Air Shuttle whose giant order placement raises the interesting question as to whether Scandanavia's second largest airline and fleet is seeking to mimic the aircraft leasing model and incorporate it into his own very successful LCC model to date, with global ambitions to link the continents later.

Capital Markets

Lower yields on outstanding issuance encouraging for lessor issuance in 2012

A rally in the unsecured debt of lessors has paved the way for increased capital market activity by leasing companies to fill the funding gap left by banks that are reticent to lend.

The Cutting Edge

Doric-like structures for Boeing 787s?

Aviation Finance looks at a proposal for the use of a Doric-like structure to provide a financing infrastructure to support the future of the Boeing 787 (ZA003). This structure could provide a leasing model that addresses issues of complexity and transparency for investors.

Lessor and Airline Financing and Developments

January sees new year begin with positive resolve

Despite uncertainties, a mood of innovation characterises transactions in all regions. ILFC expands Asian presence; Waha's activity strong, despite a dive in earnings; Qantas deals with downgrade; GECAS expands ATR business; Etihad seals engine sale; EADS and Airbus looks to US production, as AMR seeks 20 p.c. wage bill cut, in next round of its financial restoration.