Ascend

Top 20 airlines by deal activity in the last 12 months

2012-05-15T11:16:21Z

Top 20 lessors by deal activity in the last 12 months

2012-05-15T09:35:13Z

Top 20 banks by deal activity in the last 12 months

2012-05-15T09:11:31Z

Russian Aircraft Crash in Oil-Rich Region Kills at Least 31

2012-04-03T14:45:13Z

Bloomberg

Monday April 02, 2012

2012: Current uncertainty in global aviation finance is unprecedented, Ascend survey finds

2012-03-27T08:51:52Z

$83 billion needed for global plane deliveries this year

London, New York, Hong Kong, Tokyo, 26th March 2012 – A vast majority of airlines and lessors is being forced to secure new, alternative sources of finance to stay in business.

The global aviation sector needs US$83 billion to cover 1,500 scheduled deliveries of jet and turbo prop planes this year – but accessing those funds is becoming increasingly difficult.

Ascend’s global survey of over 600 aviation finance professionals highlights the problems, particularly in Western aviation markets. It found that 73 per cent of aviation professionals are seeking financing outside their current relationships with banks and established lenders.

Prior to 2008, this level of difficulty in aircraft financing was unthinkable, says Ascend’s Head of Consultancy in Asia, Paul Sheridan, adding, “To enable deliveries to continue, ever more creative financing options are being forced on the industry.”

Seventy-two percent of the airlines polled said they would be financing their deliveries, both this year and next, with debt – highlighting the importance of access to finance.

The survey found a serious lack of confidence among financiers looking to borrow in US dollars, with 43 per cent of respondents saying they were not very, or not at all confident in its availability. This again is a level of uncertainty previously unseen. “Before 2008, this question would not even have been asked, such was the level of confidence in US dollar availability,” Sheridan says.

On the subject of government guarantees, the majority of survey respondents believed that borrowers will choose to go to the commercial bank market for finance over using export credit agency (ECA) supported finance.

Sheridan finds this level of uncertainty and negativity high and probably unnecessary. “ECA financing will account for 35 per cent of global aircraft deliveries this year,” he says. “That amounts to somewhere between US$25 billion and US$28 billion in guarantees. A normal level, indicating a healthy, buoyant market, would be about US$10 billion less than that, accounting for around 20 per cent of deliveries.”

In seeking creative financing alternatives, respondents said they would turn to Asian financial institutions and capital markets; other capital markets; hedge funds; private debt facilities; and regional and local banks. In fact 50 per cent of respondents said they would seek finance on the capital markets – again indicating a huge shift in lending patterns.

Sheridan explains, “This high percentage shows that airlines and leasing companies are preparing for big changes to their sources of finance. Before 2008, they were well served by European banks and only leasing companies and US airlines tapped the capital markets with any regularity. Now, all airlines and leasing companies should be thinking about it.”

The survey underlines a growing financing pattern in which European lessors and airlines, battered by Eurozone difficulties, are seeking finance from Asian banks and capital markets.

“Asian lenders have always made finance available to local airlines and manufacturers,” Sheridan explains. “What’s new here are the relationships being forged between Asia and Europe. Increasingly we are providing consultancy services to support this process.”

ENDS

Please click here http://www.ascendworldwide.com/download/Ascend_AviationFinanceConfidence_2012.pptx for graphs showing:

1/ Financing new aircraft (airlines and lessors)
The majority are looking outside of their current banks and established aircraft lenders for finance

2/ Confidence in US dollar finance availability

3/ Impact of aircraft sector understanding on perceptions of ECA backed financing (airlines, banks and lessors)

4/ Activity of respondents’ organisations

Airbus Attacks Boeing Cargo Dominance by Converting Jet: Freight

2012-03-15T14:40:55Z

Bloomberg

Thursday March 08, 2012

Not all Gulf airlines will increase ticket prices

2012-03-15T14:33:22Z

Gulfnews.com

Thursday March 01,2012

Airbus to inspect all A380 superjumbos for wing cracks

2012-02-17T15:50:20Z

BBC News

Wednesday February 08, 2012

Emirates raising Dh1.9b for new jets

2012-02-17T15:31:41Z

Gulfnews.com

Wednesday February 08, 2012

AVIATION 2020 WEBCAST: IS THE MARKET STILL TREADING WATER?

2012-02-14T14:56:32Z

Date: Thursday 01 March 2012

Time: 15:00 GMT / 11:00 EST

Duration: 60 mins

Register Now

2011 was the strongest year for firm orders since 2007 with a 75% increase vs. 2010. Airlines are positioning to renew or grow their fleet. Will the cost and availability of debt financing cast a shadow over new deliveries?

With the true rate of asset depreciation being in the spotlight once again and the European Emissions Trading Scheme receiving a mixed response from airlines - will 2012 be 'plane' sailing?

Join Eddy Pieniazek, Director & Global Head of Consultancy, Les Weal, Head of Valuations and Appraisals, Paul Sheridan, Head of Consultancy Asia, Chris Seymour, Head of Market Analysis and Rob Morris, Senior Analyst for a special interactive discussion about where we are in the aviation cycle and the outlook for 2012.

LOOKING INTO THE CRYSTAL BALL FOR 2012
Where's the cash coming from? Will there be enough money in 2012, and if not where will it come from? Which aircraft are on order and what will be delivered this year? Eddy Pieniazek and Chris Seymour discuss.

LATEST INSIGHT FROM THE ASCEND REVIEW BOARD
Les Weal takes a detailed look at the latest aircraft values and lease rate trends and reviews key market developments during 2011.

EMISSIONS - NOT ALL 'PLANE' SAILING
Aviation joins the European Emissions Trading Scheme (ETS) this year. The market is already experiencing resistance from China and European countries are enforcing the scheme – how will this affect the market? Rob Morris provides insight into what to expect.

ACROSS TO ASIA PACIFIC
The aviation market is looking more and more to Asia to take the aircraft deliveries, make the orders and now to finance the world's fleet. It's a tall order and not without its risks. Paul Sheridan will provide an update on aviation in the Asia Pacific region.

Put your questions to our panel of experts during our interactive Q&A session immediately following the presentations.

Register today for your complimentary place, click here

The Steady Rise of Airlines With No Passengers

2012-01-26T09:50:57Z

The Economist

Saturday January 21, 2012

ORIX Aviation agrees on lease extensions with US Airways

2012-01-24T12:50:02Z

US Airways has secured lease extensions on three of the aircraft it is leasing from ORIX Aviation, this news service has learnt.

The aircraft concerned are two Boeing 767-200ERs (MSNs 24765 and 24764) and one 737-400 (MSN 24552). Both 767s were built in 1990, with leases previously scheduled to expire later this year. The lease for the 1989 vintage 737 had been due to expire next year.

US Airways is also leasing three 757-200 aircraft from ORIX, with leases set to expire in 2014, according to Ascend data. The airline currently operates a total of 340 aircraft.

By Fay Sanders

Should we be Worried about Kingfisher Airlines?

2012-01-24T09:42:56Z

News services have been alive in the past few days and weeks with concerns over the future of Kingfisher Airlines, culminating with reports that the Indian Directorate General of Civil Aviation (DGCA) has issued an audit of the airline indicating that it should be wound up. Although this seems unlikely in the immediate future, reports continue to surface of concerns over the airline’s financial health and it does seem likely that some element of fleet downsizing will be necessary over the next few months to support the airline’s survival.

According to the Ascend Online Fleets database Kingfisher currently operates a fleet of three Airbus A319, 21 A320, eight A321 and five A330 aircraft alongside a regional fleet of two ATR42s and 23 ATR72s. In addition the airline holds firm orders for 68 A320s, 15 A330s, five A350s and five A380s. There was also an order for 38 ATR72s but ATR reported earlier this week that it has removed those commitments from its orderbook, describing the airline as an “unreliable customer”. So should we be concerned that a failure of the airline might create an immediate capacity surplus at a time of general market uncertainty for the global airline industry?

Looking first at the operating fleet, all 37 aircraft are owned by a diverse group of operating lessors including AerCap, Air Lease Corporation, AWAS, Aviation Capital Group, BBAM, BOC Aviation, DAE Capital, ILFC, Pembroke Group, RBS Aviation Capital and Volito Aviation Services. The single-aisle exposure is greatest at ILFC with six A320s and one A321, and AWAS with one A320 and four A321s but no single lessor currently carries significant exposure in the event of a sudden airline failure. A quick check of current aircraft availability advertised in the Airfax monthly newsletter shows there are presently 23 A319s, 23 A320s and seven A321s offered for near term sale or lease. Although the addition of the entire Kingfisher single-aisle fleet to this inventory would be an unwelcome event, the numbers do not appear significant enough to make an impact on the market by themselves. The position is similar with the A330-200s with three aircraft currently leased from DAE Capital and two from Pembroke Group. A330-200 availability is currently very limited with only one aircraft offered for lease in June this year, so the industry should have no problem with absorbing this additional capacity if it were to arrive on the market.

The backlog may appear more of a problem for Airbus, but the database indicates that only three of the A320s are scheduled for delivery in 2012 and with no serial number allocations yet evident, production is possibly not scheduled as yet. So Airbus should have no issue with reallocating these slots, particularly in view of their current backlog which today still includes another 1,560 A320 aircraft (excluding NEO variants) of which 341 are scheduled to be delivered in the remainder of 2012. The remainder of the A320 backlog is scheduled from 2013 through to 2018, so while the loss of these 67 orders would not be welcome, the impact will not be immediate and Airbus will have plenty of time to mitigate the loss of the order. Likewise, the first A330 delivery is not scheduled until 2014,the first A380 in 2017 and the first A350 in 2019, but there would be plenty of opportunity to mitigate these order losses.

On first impressions, the potential failure of an airline of the stature of Kingfisher Airlines may cause concerns in the market and will certainly cause some issues for particular leasing companies in the short-term, yet the longer-term impact on the commercial aircraft supply side does not appear significant.

Aldus acquires three Brazilian E-jets through ECA facility

2012-01-20T15:23:44Z

Aldus Aviation has made its first investment from a $375 million export credit facility, which was underwritten by Brazilian Export Bank BNDES in September last year, according to Ciarán Redmond, chief operating officer at the Shannon, Ireland-based lessor.

The investment was used to fund the recent delivery of three new Embraer E-Jets - two E-195s and one E-190 – which are already being operated by two South American airlines, Redmond said.
Aldus, which has 19 Embraer jets in its current portfolio, is planning to use the credit facility to acquire a further 12 of the Brazilian aircraft over the next 12 to 18 months. A number of these new aircraft have already been earmarked to specific airlines, Redmond said.

By Fay Sanders

Japanese banks flourish amidst European financial uncertainty

2012-01-20T12:00:49Z

As European banks are forced to rein in their lending, Japanese banks have stepped up their activity in the aircraft finance market. The Development Bank of Japan (DBJ), a new entrant in the global aviation industry, is understood to be looking to add an additional $500 million to its original budget of $1.5 billion to cover its first three years of aviation finance lending. This news service has learnt that DBJ is planning to up its lending activity in 2012 once its budget increase has been finalised.
Tokyo Star Bank, another Japanese newcomer to global aviation financing, is currently looking at a number of deals involving operating lessors and top-tier airlines, according to Fintan Smyth, managing director of the bank’s cross-border finance division. The bank completed its first deal in March 2011 when it underwrote $30 million of ILFC's $1.52 billion loan facility led by Citibank and Credit Suisse First Boston involving the participation of fellow Japanese banks Aozora Bank and NEC Capital.
“We’re seeing a good pipeline of deals and, since pricing is going up, we can get margins that make sense for our bank; even for the top airlines,” said Smyth. “As a new bank we can therefore focus on the more conservative deals while building up our bank's expertise and relationships, whereas previously spreads may have been a bit low for us on such deals.” Similarly to DBJ, Tokyo Star Bank’s resource allocation for 2012 will be firmed up by 31 March.
Meanwhile, European funding prospects look bleaker with Basel III banking regulation looming on the horizon, bringing with it the threat of more costly lending. In some cases, banks have been forced to wind down their aviation finance activities, such as German bank HSH Nordbank which is set to close its aviation branch in London before the end of 2012. Major players in the French banking market, including Société Générale, Crédit Agricole & corporate investment bank, Natixis Transport Finance, BNP Paribas and Credit Industriel et Commercial have all had to scale back lending to the aviation industry, as they struggle to obtain dollar funding.
However, the climate of economic uncertainty in Europe is helping certain emerging aviation banks in Japan to gain momentum, suggested one Asian banker. “Emerging players often miss out on arranging primary deals through not being able to make a quick enough decision, but the current market situation is allowing new players to consider a particular deal at their own pace and to discuss primary deals directly with the airlines or lessors,” he said.
It is thought that Japanese banks will be an invaluable source of financing for the predicted $100 billion worth of new aircraft needing to be financed in 2012. Strong support from export credit agencies, combined with fresh funding from Japan, will “remove the threat of a tremendous funding gap”, according to Bertrand Grabowski, managing director and board member of Germany’s DVB Bank.
DBJ has already closed seven deals in as many months, from June through to December 2011, exceeding its original target of completing seven deals by March 2012. At an average ticket size of $30-35 million, the deals have involved both undisclosed lessors and airlines; such as the recent financing of an Airbus A330 for Thai Airways and a Boeing 777-300ER for Air New Zealand.
Although DBJ has focused on primary transactions, there has been market talk of the bank buying a certain amount of loans from European Banks. However, question marks remain as to whether the group will continue allocating resources with a view to carrying out large-scale secondary transactions, given the costly element of senior debt and the abundance of primary deals. “Nothing has been decided yet; the budget is still under discussion and the bank is reviewing all options,” said Masao Masuda, acting head of DBJ’s global aviation team, who argued the strategic rationale of buying loans from European banks selling off segments of their portfolio. “Secondary deals with banks that are staying in the market could lead to some attractive primary opportunities, as well as giving access to short-term maturity debt,” he noted, adding that there could be some interest in doing secondary deals with banks that have walked away from the market if the margins are as attractive as, or better than, primary transactions.
SMBC’s acquisition of RBS Aviation Capital earlier this week will heighten domestic Japanese interest in the aircraft asset class, several industry players argued. It has already been mooted that the newly-acquired entity would be open to acquiring Mitsubishi regional jet aircraft, prompting further local investment.
By Fay Sanders