May 16, 2017, © Leeham Co.: Air Lease Corp., one of the world’s leading lessors, sees
a “quite a bit” of interest from its customers in the prospective Boeing Middle of the Market aircraft, says its CEO, John Plueger.
Speaking at the Airfinance Journal conference in New York today, Plueger acknowledged with some push from moderator Mark Streeter of JP Morgan that pricing needs to be in today’s dollars in the $70m-$75m range.
By Bjorn Fehrm
May 11, 2017, ©. Leeham Co: We are attending the ISTAT (the International Society of Transport Aircraft Trading) conference in Hong Kong this week. The conference was opened by the Chief Executive for the Hong Kong region of China, Mr. C. Y. Leung. He gave an interesting perspective of the future of Hong Kong in the aviation finance market.
Hong Kong is the number four finance center in the world. But the present tax rules prohibits aircraft leasing companies to establish Hong Kong as their hub for China and Asia.
The companies cannot deduct the costs of the aircraft ownership from their lease revenue, for non-Hong Kong operators. This will now change. Read more
This is the second of two Parts looking at the wide-body market
April 25, 2017, © Leeham Co.: When lessors face re-leasing wide-body airplanes as lease terms expire, they face a far narrower market than for single-aisle airplanes.
While there may be a thousand operators which can be targets for Airbus A320s and Boeing 737s, there may be only a hundred operators interested in the most popular wide-body aircraft. When you get to the Very Large Aircraft sector, the potential market declines to the figurative, and perhaps literal, handful.
April 24, 2017, © Leeham Co.: AVi8 Air Capital is a new lessor with a different business model.
Instead of the standard operating lease model, Avi8’s mission is to buy groups of airplanes from other lessors and later sell them. AVi8 intends to be a clearing house for other lessors.
The company, which pronounces its name with the long “A” (as in aviator), was formed last year and expects to conclude its first transaction this year.
“The difference between AVi8 and other leasing companies is as follows,” says Sisson. “When I was running AWAS, I was told by a number of investment banks that you get economies of scale by getting between $12bn and $18bn in assets. You can be bigger than that, but when you get between $12bn and $18bn, you capture real economies of scale – you’re buying enough new aircraft from OEMs, financing aircraft in bulk in capital markets/bank syndicates/Export Credit agencies, and leasing enough aircraft to airlines globally.”
This, among other things, was important to the rating agencies, Sisson said.
April 17, 2017, © Leeham Co.: A shift is underway among Asian airlines that could have ramifications for the airframe and engine manufacturers and, by extension, their suppliers.
It doesn’t appear, however, that aerospace analysts in the US and Europe realize this shift. At least none has written about it that we’ve seen among the research notes we receive.
March 16, 2017, © Leeham Co.: China’s evolving commercial aerospace and aviation industry has high-profile companies such as AVIC and COMAC, and its expanding supplier based, combined with joint ventures with Western companies is well known.
Less well known is the growth in the aircraft leasing business. Increasingly, Chinese lessors are showing up on the order lists of the Big Four aircraft manufacturers. Still, there remains a bit of a mystery about the lessors and dynamics within China.
LNC spoke with the newly appointed CEO of CDB Leasing during the ISTAT conference last week in San Diego.
Peter Chang has been in the Western leasing business for decades, employed in key positions with Aviation Capital Group, ILFC and Aircastle—usually with responsibility for China.
He was named CEO of CDB in December, a move that was announced during the January Dublin conferences of Airlines Economics and Airfinance Journal. More key personnel announcements were made during ISTAT.
In an exclusive interview, LNC asked Chang about the origins of CDB, other Chinese lessors, the current policy of restricting flow of Chinese cash outside the country, the Boeing 737-10 and the Bombardier CSeries.
Here is this interview.
March 13, 2017, © Leeham Co.: The soft launch of the Boeing 737-10 and the prospective Boeing “797” Middle of the Market aircraft easily were the headline news items to come out of the annual ISTAT conference in San Diego last week.
The “797,” as the MOM-sector aircraft was unofficially dubbed, brought enthusiastic reaction.
The MAX 10, not so much.
March 9, 2017, © Leeham Co.: Proceeding with a New Mid-range Airplane (NMA) is “an important step for Boeing,” says the CEO of one of the world’s preeminent leasing companies. On the other hand, Airbus probably is covered in the Middle of the Market sector.
John Plueger, CEO of Air Lease Corp, agrees with Airbus claims that it has the MOM sector covered.
“From Airbus’ perspective, I think that’s true,” he said in an interview with LNC during the ISTAT annual general meeting in San Diego this week. “I don’t think they feel they have a gap. They’re quite happy with the A321neo. The success of that airplane speaks for itself. They’ve got the A330neo. It would be very easy for them to just do a lighter weight version of the A330neo and whack $7m to $10m off the price of that airplane to compete.
“The question is whether operators will need the range of the neo in that equation,” he said.
“I also think…they are looking at modifying the wing for the A321 possibly even a new wing, which could increase the performance capability of that airplane significantly. For the Airbus product line, I would agree, I don’t think there is a need.”
March 7, 2017, © Leeham Co.: If Boeing builds the 737-10, which appears increasingly likely, will customers come?
This is always the multi-billion-dollar question for any aircraft and engine manufacturer.
For Boeing, launching the 737-10 is a low-risk, and in the eyes of many, futile effort to stem the bleeding of market share between the MAX 9 and its rival, the Airbus A321neo.
Depending on who’s counting and how the numbers are calculated, the A321 sales outpace the MAX 9 by a factor of four or five to one. LNC calculated last year that the ratio is more likely 3:1, identical to the market share split between the predecessor airplanes, the 737-900ER and the A321ceo.
March 6, 2017, © Leeham Co.: Boeing rolls out its 737-9 MAX tomorrow.
Last week, I received a call from one of the network/cable news organizations asking, What’s special about this airplane?
The answer is: Nothing.