November 09, 2012
Credit: Image: Airbus
Lease rates are stabilizing for used Airbus A320 aircraft and are steady or rising for Airbus A330s and Boeing 737-800s, several aircraft leasing companies say.
In conference calls Nov. 6-8 on their respective companies’ third-quarter earnings, executives with Amsterdam-based AerCap, Stamford, Conn.-based Aircastle, Los Angeles-based Air Lease and Dublin-based Fly Leasing voiced the same general opinion about A319 and A320 lease rates, with slight variations on whether the recovery in those rates already has started.
Fly Leasing, for example, says lease rates remain soft for A320-family aircraft, but adds that is starting to see them firm up. This revival is due, in part, to airlines’ recognition that A320-family lease rate have dropped so low that they provide a “compelling economic opportunity” to replace older-generation aircraft. Airlines also that have focused on acquiring new aircraft see that some of the current-generation mid-life aircraft “represent good relative value for growing capacity,” says Steve Zissis, CEO for BBAM Aircraft Leasing and Management, which manages and services Fly Leasing’s fleet.
AerCap says its A320 lease rates bottomed out about five months ago and that A319 rates stabilized in the past month or two.
Air Lease also says it has observed stabilization in A319 and A320 rates. “We have always predicted as the order pipeline gets delivered, the supply demand balance will stabilize over time,” Air Lease COO John Plueger says. “We actually think we are seeing some first evidence of that.”
While lease rates for A319s and A320s have been a concern for lessors, some other aircraft types have not.
Fly Leasing says it never saw deterioration in lease rates for Boeing narrowbodies, and they are now starting to improve. Also, AerCap, Air Lease and Fly Leasing variously describe lease rates for Boeing 737-800 aircraft as strong or “resilient,” although Aircastle says it has seen a bit of a drop.
“I think in many, many surveys, the airline leasing community and the financial community has voted the 737-800 is one of the strongest assets,” Air Lease Chairman and CEO Steven Udvar-Hazy says.