Engine Leasing Gets Creative

Government support for airlines and forebearance by lessors have led to decreased leasing opportunities.
Credit: Aero Capital Solutions

Engine leasing activity has picked up since mid-2021 on the back of demand for green-time solutions and aircraft coming out of storage, Texas-based Aero Capital Solutions (ACS) has said.

The midlife aircraft and engine lessor signed 51 engine lease agreements in 2021, sold 17 engines and purchased three.

Speaking to Engine Yearbook (EYB) a few months ago, the founder and CEO of ACS, Jason Barany, said engine acquisition opportunities had been lower than expected at the beginning of the pandemic, partly due to government support for airlines and forebearance by lessors.

“We expect retirement rates to be below the forecasted level as airlines retain capacity during the recovery period,” he added. “The sum of these factors means that engine availability has been below expected levels overall and prices have reflected current supply against recovered or projected future demand.”

ACS was among the lessors that sought to help airlines hit by the collapse in passenger demand, Barany said, noting that green-time leases could help ease liquidity pressures.

“A helpful point in these discussions has always been that green-time leasing is less sensitive to the return conditions and end-of-lease payments found in traditional operating leases.”

During 2021 ACS also concluded 63 aircraft transactions, including 28 aircraft purchases, 20 airframe sales and 15 lease placements or extensions.

Barany told the EYB that ACS experiences significant synergies between its engine and aircraft portfolios. 

“In many cases, we are an active manager working closely with our airline partners to optimize the maintenance spend on our leased aircraft and utilize our engine portfolio to assist the airline in avoiding unnecessary maintenance," said Barany. "This is particularly important in a market where investment into maintenance is not necessarily rewarded with higher long-term asset value increases of an equal amount."

Alex Derber

Alex Derber, a UK-based aviation journalist, is editor of the Engine Yearbook and a contributor to Aviation Week and Inside MRO.