Times they are a changing

Off-balance sheet financing has jumped from a measly 5% of all aviation transactions in 1980 to about 25%. Views are mixed over which direction the market is heading. Some analysts see tough times ahead for lessors, arguing that, as a percentage of all transactions, the market has hit its peak. For...

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Bibliographic Details
Published in:Airfinance journal 1999-06 (218), p.46
Main Author: Collett, Naomi
Format: Article
Language:English
Subjects:
Aircraft
Airlines
Balance sheets
Business conditions
Capital markets
Economic conditions
Flexibility
International
Leasing
Lessors
Operating leases
Prices
Rentals
Securitization
Trends
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Summary:Off-balance sheet financing has jumped from a measly 5% of all aviation transactions in 1980 to about 25%. Views are mixed over which direction the market is heading. Some analysts see tough times ahead for lessors, arguing that, as a percentage of all transactions, the market has hit its peak. For those airlines with strong balance sheets, operating leases may be attractive as a means of acquiring fleet and capacity flexibility, but is essentially a stop-gap instrument. As a result, operating leasing has failed to account for more than a tiny percentage of total aircraft financing with, for example, both British Airways' and Lufthansa's total fleet financed by operating leases languishing at below 4%. On the other hand, some analysts are confident that, so long as the industry remains cyclical, operating leasing will remain popular. Increased popularity of off-balance sheet financing has triggered a concurrent rise in the number of securitizations.
ISSN:0143-2257