lightsaber wrote:BrianDromey wrote:lightsaber wrote:The A380s will join the 744 at the quad senior center.
The A380 is something of a microcosim for the larger industry. On one had airlines cannot/will not pay the leasing costs of their current fleet. On the other hand there is little benefit to repossessing the aircraft, there is no onward market right now. Better for the leasing companies to leave them with the current operators who will have to store and maintain them. Airlines might not be willing to do this, of course. Particularly for fleets like the A380, 747, even 777s. The A350 and 787 seem to be the future WB's, I think the 77X might be a bit too large for now. The return of the MAX will put similar pressure on the narrow-body market, which has been very tight on supply up to now.
It is a game of chicken with widebody leases. In particular the largest widebodies. I agree 777s will be returned.
Due to age, the 787 2nd hand market will be tested. There are a number becoming available of the 788s: https://leehamnews.com/2020/07/10/hotr/
The 789/A359 are the safe bets for leasing companies. The 787-10 and A35K, not so much (not liquid markets).
SEPilot wrote:The main idea of leasing is that the lessee pays only for the value of the capital equipment that he actually consumes, instead of the entire cost up front. This requires a reasonably predictable residual value at the end of the lease.
MIflyer12 wrote:SEPilot wrote:The main idea of leasing is that the lessee pays only for the value of the capital equipment that he actually consumes, instead of the entire cost up front. This requires a reasonably predictable residual value at the end of the lease.
That's true, but financing an expensive asset over much of its useful life also requires stable rates of inflation and capital costs. It's why we don't see 30-year fixed rate home mortgages in less stable countries. (Make your own list; I don't need the hate mail.)
There's plenty of money available to borrow by the strong: Alphabet Inc (GOOGL.O) borrowed $10 billion in the investment-grade corporate debt market on Monday, the Google parent’s largest ever bond issue, which it secured at its lowest-ever cost of financing.
Of the $10 billion on offer, the $1 billion five-year tranche was issued at a coupon of 0.45%, the lowest coupon seen on a U.S. corporate bond at that maturity, according to Refinitiv data, which goes back to 1980.
Have another read: 0.45%
https://www.reuters.com/article/us-alph ... SKCN24Z2PC
But, no, if you're concerned whether 12-yr residual values are going to be 50% or 20%, or if dozens of the ~270 IATA carriers are going into bankruptcy restructuring (allowing them to terminate leases, or to return planes to satisfy loans), blowing big holes in the 2nd hand aircraft market(s), maybe you should find another sector in which to invest.
brilondon wrote:When you're in business, you're willing to accept risk. This is what it's about. If you can't handle that risk then you will never be successful.
frmrCapCadet wrote:brilondon wrote:When you're in business, you're willing to accept risk. This is what it's about. If you can't handle that risk then you will never be successful.
A lot of onetime people who accepted risk died in abject poverty. Its not just about accepting risk. It is about managing it.
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