As the owner of the biggest aircraft portfolio in the world, it is no surprise that AerCap sells more used aircraft each year than any other company.
According to CEO Aengus Kelly, this gives it the best insight into trading patterns. He notes that airlines recently displaced other lessors as the main buyers of its aircraft. This, he says, is due to new aircraft delivery delays and a growing recognition by airlines that they need cover for their new-generation narrowbody fleets, which use engines that are averaging less time on wing than the CFM56s and IAE V2500s they are designed to replace.
According to Arena Aviation Capital, many airlines are choosing to buy mid-life or older aircraft rather than extend leases, which has limited trading activity for aircraft investors like itself.
Commenting on a “subdued” first half of the year for trading, in which Arena closed “just two aircraft acquisitions,” the firm’s chief commercial officer, Erik Dahmen, says, “Airlines have reportedly been buying a lot of older aircraft from lessors, rather than extending leases, which further limits the potential supply of deal flow.”
Dahmen also notes that the increasing cost of capital has limited investors’ ability to acquire aircraft.
Higher interest rates have also affected aftermarket investors in are areas such as engine trading and equipment purchases. Speaking to Aviation Week, GT Engine Services Managing Director Greg Macleod said: “Asset finance is not economical now, with interest rates where they are, so we have changed policy and now self-finance even the largest purchases.”
To find out more about how economic pressures such as higher inflation and interest rates are affecting the aftermarket, see the upcoming October issue of Inside MRO.
