The CEOs of two leasing companies say rate volatility and new rules for export credit agency (ECA) financing are making it less appealing for lessors to order new aircraft.

“We don’t believe in ordering new aircraft for future delivery from the manufacturers. We think that this is an old model” that is inappropriate for a publicly traded company, Fly Leasing CEO Colm Barrington said in a presentation last week to the Dahlman Rose Global Transportation Conference.

“We will grow primarily through sale-and-leaseback transactions and through acquiring aircraft in the secondary market,” Barrington added. “We will not pursue new aircraft orders.”

Barrington argues that the cyclical nature of the aviation industry places pressure on lessors, who have to order aircraft years before delivery into conditions that can vary widely from the order date.

“Lessors who ordered aircraft four years ago and are taking delivery today are finding that the high prices they paid four years are not always being reflected in the lease rates they’re getting,” Barrington said.

Fly Leasing also does not like spending cash on pre-delivery payments with no immediate payback, he added.

Dublin-based Fly Leasing owns 60 aircraft and has another 49 under contract to be acquired, 40 of which are in the Boeing 737 NG and Airbus A320 families.

Barrington’s sentiment is not universal—Air Lease, for example, ordered 75 Boeing 737 MAX aircraft in July—but Aircastle CEO Ron Wainshal also expressed some reluctance about orders for new aircraft in comments delivered to the Deutsche Bank Aircraft Financing and Leasing Conference, which also was held last week.

“I don’t think it’s a good time to buy new aircraft on spec,” said Wainshal. “Placing the aircraft is more difficult and rentals are lower, and I think the financing risk has never been higher. And I don’t think there’s any impetus for the manufacturers to give anybody a good deal right now,” he added.

Aircastle’s fleet comprises 155 aircraft.

Upcoming increases in guarantee fees for ECA financing support also will have an impact, Wainshal said, noting that a company with a BB credit rating from Jan. 1 will have to provide 11-14% of the total price of the financing package instead of the 4-5% currently required.

An aircraft lessor can spread out the cost over 12 years, he added, but will pay a heavy financial price if it wants to sell the aircraft before then.

“As a leasing company, I value the ability to have portfolio flexibility, and I’m much more reluctant to step into something that becomes effectively very expensive financing if I choose to pull the trigger early,” Wainshal said.

The higher fee also detracts from the appeal of having ECA as a “lender of last resort” if attractive financing is not available when the time comes—years after the order is placed—for deliveries. “It makes me a lot less excited about financing new aircraft,” Wainshal said.