Greater China-Based Aircraft Lessors Are Flooding Into The Global Top50 Ranking According To Cirium

• The number of Greater China-based aircraft lessors in the global top 50 has jumped by more than 40% since the end of 2019
• Greater China-based lessors now make up more than a quarter of the world’s top 50 league table – rivalling the number of lessors based in Ireland and overtaking the total number of US-based lessors
• Operating leasing may achieve a 50% fleet market share in the 2023-2024 timeframe

Hong Kong, September 3, 2020: Despite being at the epicentre of the COVID-19 outbreak which triggered the airline industry's worst-ever crisis, the number of Greater China-based aircraft lessors in the global top 50 jumped by more than 40% by the end of the second quarter of 2020 compared with Q4 2019. This is according to the latest Portfolio Tracker from the global travel and data analytics expert Cirium, which closely monitors the activity of the world’s lessor fleet.

The shift, from 9 in Q4 2019 to 13 in Q2 2020, means that Greater China-based lessors now make up more than a quarter of the top 50 – rivalling the number of Ireland-based lessors (13) in the ranking, and surpassing the number of US-based lessors (12). However, in terms of portfolio value and fleet size, Greater China-based lessors account for just 19% and 15% of the global top 50 totals respectively. Ireland-based lessors have the largest total portfolio value (35%) while US-based lessors have the largest total fleet size (36%) in the global top 50 league table.

“Some lessors, like Singapore-based BOC Aviation and Ireland-based Standard Chartered Aviation Finance, have used their parents' financial backing to support customers and bolster their fleets by adding aircraft via large sale-and-leaseback deals. As a result, they have advanced their positions on the leader board,” Rob Morris, Global Head of Consultancy, Ascend by Cirium.

“In order to cope with the strains on cash flows from struggling airlines unable to pay rent, many lessors have been building their liquidity and deferring orders. The top five global lessors alone have deferred over 75 aircraft orders and cancelled nearly 200 since the health crisis began,” Morris added.

The Portfolio Tracker, which is published quarterly on Cirium Dashboard, monitored 213 lessors based in 32 countries in Q2 2020. Interestingly, although the criteria were updated slightly in 2020 to include aircraft on finance lease, the position of the top five lessors in the Portfolio Tracker’s league table remained unchanged since Q4 2019.

Even as lessors expand their fleets, nearly all companies have seen a downward shift in values. A surplus of equipment and evaporating demand are driving aircraft values lower. Lessors will have to reckon with this trend when trading – which was limited during the first six months of 2020 – eventually returns. Impairments will not be avoided and adding aircraft alone will not do the job of buoying the value of their individual portfolios.

“As airlines seek to generate liquidity in the near term, they are offering aircraft for sale-and-leaseback. There have already been almost 100 such used aircraft sale-and-leasebacks in 2020, with airlines active in this market including China Airlines and Cathay Pacific in Asia, Delta Air Lines, United Airlines, Southwest Airlines and JetBlue in North America, and EasyJet in Europe,” said Rahul Oberai, Managing Director, Asia Pacific, Cirium.

Although the majority of the assets acquired are single-aisle aircraft, there have also been some twin-aisles. It is more difficult to quantify the impact of used sale-and-leasebacks on the increase of leasing market share, but it is likely that it will drive a further increase beyond just the new aircraft purchase-and-leasebacks.

“It is increasingly possible that operating leasing may achieve a 50% fleet market share in the 2023-2024 timeframe, as lessors provide finance and liquidity to airlines through purchase-and-leasebacks of both new and used aircraft,” said Oberai.

A video congratulating the Greater China lessors who made it into top 50 in 2019 is available on Cirium official WeChat account.

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