“We believe major shifts in the financing market, including declining traditional aerospace bank capacity and more expensive export credit support, will drive more business to leasing companies as a bridge-to-financing market for airlines,” Ron Waishal, CEO of Stamford, Conn.-based Aircastle, said in November. Access to the unsecured debt market, which a company like Aircastle has, is a strategic advantage, he adds. The PwC report notes that lessors, many of which have an investment grade rating and better risk profile, can access more and relatively cheaper capital than airlines.
Evans, however, cautions that the lessors—and everyone else—should be cautious about making predictions about the impact of the regulatory changes for ECAs and banks.
For example, some observers question whether the new ASU will ever be fully implemented. The 2007 ASU was in affect for only three years before being renegotiated, and in 2011 Russia and China only participated as observers, even though both countries are developing new aircraft.
The commercial market is an even bigger question mark.
“Are the capital markets going to open back up? That is sort of the big unknown,” Evans says.
Even if traditional sources do not, some new-entrant banks and private equity firms are showing interest in aircraft financing, and even some insurance companies are considering getting back into the mix after having been burned in the 1990s, Evans says.
PwC notes that sovereign wealth funds backed by the governments of China, Singapore and United Arab Emirates have become part of the fabric this time around. It also believes that aircraft-manufacturer financing may play a bigger role in the future, non-U.S. carriers may find ways to tap into the capital market as U.S. airlines already do, and the ongoing shift of financing from the traditional aviation banks in the West to new players from the East could accelerate.