Financing, Leasing & Acquisitions in 2030
Synopsis
The aviation industry has been one of the few industries that has consistently grown in investments, profit and demand over the years, despite economic lulls, wars on terror and airline bankruptcies.
This is a remarkable phenomenon.
Within the industry, there has been a tide of change since its advent in the 1970s to present day. There has been a distinct increase in the number of airlines and passengers, routes and destinations, regional airports and aviation hubs. There has also been a distinct increase in a third entity between the operator(airline) and the aircraft manufacturer – lessors. Lessors are entities that purchase the aircraft on behalf of an operator and lease it to them with a small interest rate tacked on to their lease rate which typically depends on location, financial standing of company and the value of the asset being leased to them. The increase in the pattern of leasing indicates that lesser and lesser number of operators want to own the asset outright. This allows a variety of advantages such as better financials and depending on lease terms, significant reduction in maintenance costs for the operator allowing greater profitability. In an industry where barriers to entry are high and is strife with competition, a measure allowing greater profitability is often looked upon fondly.
If every airline and every operator looking to lease every aircraft, has the leasing industry reached unsustainable levels? In my personal experience in dealing with clients in Asia-Pacific, Africa and the Middle-East, clients are all too keen on leasing as it frees cash to be redeployed in other areas of their business, ultimately, Cash Is King.
Biographies
Anantha Krishna's bio
Financing, Leasing & Acquisitions in 2030
The aviation industry has been one of the few industries that has consistently grown in investments, profit and demand over the years, despite economic lulls, wars on terror and airline bankruptcies.
This is a remarkable phenomenon.
Within the industry, there has been a tide of change since its advent in the 1970s to present day. There has been a distinct increase in the number of airlines and passengers, routes and destinations, regional airports and aviation hubs. There has also been a distinct increase in a third entity between the operator(airline) and the aircraft manufacturer – lessors. Lessors are entities that purchase the aircraft on behalf of an operator and lease it to them with a small interest rate tacked on to their lease rate which typically depends on location, financial standing of company and the value of the asset being leased to them. The increase in the pattern of leasing indicates that lesser and lesser number of operators want to own the asset outright. This allows a variety of advantages such as better financials and depending on lease terms, significant reduction in maintenance costs for the operator allowing greater profitability. In an industry where barriers to entry are high and is strife with competition, a measure allowing greater profitability is often looked upon fondly.
If every airline and every operator looking to lease every aircraft, has the leasing industry reached unsustainable levels? In my personal experience in dealing with clients in Asia-Pacific, Africa and the Middle-East, clients are all too keen on leasing as it frees cash to be redeployed in other areas of their business, ultimately, Cash Is King.
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View the agenda Session 3 - Finance & Leasing