Lessor Azorra’s focus on the small narrowbody jet sector has recently been boosted through buying a portfolio of 49 Embraer E-Jets from Dubai Aerospace Enterprise (DAE), which had acquired them as part of its recent takeover of Nordic Aviation Capital (NAC), but which did not fit into its plans, as DAE had a particular interest in NAC’s fleet of ATR turboprops.
One of the attractions to Azorra of small narrowbody jets is that the aircraft are counter-cyclical, with low trip costs, said President Ron Baur. “So, in a downturn, and you see this historically after 9/11, the financial crash and COVID, airlines ramp down their network and wanted an aircraft that was cheapest to run between two points.
“In an airline, it’s too easy to cut an out-station and hard to build it back up. Airlines, because of that, are very motivated to maintain their schedule even in a downturn. For example, during COVID an airline would fly once a day [on a route] rather than four times. The aircraft that’s ideal to do that is a small narrowbody jet. The Airbus A220 and the [Embraer] E2 are both clean-sheet design aircraft, so they have a very low trip cost and a very competitive cost per seat.”
Baur points out that small narrowbodies have done well in North America and Europe. “I think Asia will be the next real opportunity. [LCC] Scoot is looking for smaller, more efficient aircraft, Qantas has taken the A220. ANA has just bought E2s and there are a couple of other deals in the works.”
Azorra has in recent months arranged to have a five-year-old ex-EgyptAir A220-300 parted out by Delta Material Services, to take advantage of the continuing shortage of spares. Essentially, the aircraft was worth more in component terms than as a functioning aircraft, and parting it out allowed Azorra to monetize it faster.
According to Baur, it “could make sense” to disassemble another two of the batch of 12 A220s that the lessor acquired from EgyptAir, but “you don’t want to saturate the market.”
Azorra expects that more consolidation in the leasing industry is likely, as it continues to expand both organically and through acquisition of portfolios of aircraft from fellow leasing companies.
Baur points to previously well-known names in the leasing community that have vanished in recent years such as AWAS and Gecas, commenting, “I think scale is really important being a lessor.”
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