gloom wrote:Hello there,
I think the topic I specified above is wider than corona topic, and it will get washed among other topics.
So, the question is: will leasing stay in the market? To what extent? What are their mid term perspactives, and short term seem to be disastrous?
I have a feeling there are many trends there, I'll try to talk them one by one. In both ends - acquiring new, and getting back post-lease.
1. New planes. Since it seems we've had already symptoms of too many planes on the market (see 787 or 330 drops in delivery rates), it seems that the drop this year (and subsequent bancrupties that we all see ahead) will slow down orders significantly (in fact, I think "zero" mentioned from the start of the year on first months might stay for quite long). Since prices of oil also dropped down quite significantly, I see this trend to continue for next 2-3 years. I must admit I don't see any new orders from lessors to be done the next 3-4 years. There will be no market at all. This will be also undelined by all frames coming off the lease. And the costs for orders/cancellations are still ahead...
2. Frames coming off the lease. There will be plenty, both from global slow-down of economies (less people) and problems within airlines themselves (planes from bancrupcies and fleet adjustments). Will we see leasing prices down at zero? Not really, I think, but they will be as low as possible. I guess we'll see lots of deals aimed at reducing cost, rather than making a profit. I still see a market, lots of conversions coming soon for cargo, since passenger traffic will go down (and underbelly space as well).
So, I believe we see a hard times ahead for the leasors. I guess some of them will go out of business, and I see some overtaking as well (buy cheap). Will they survive? Well, I think as a market - yes, it's (and will be) cheaper to acquire a frame on leasing, especially when you start new airline, new destinations, new market segment, whatever (and market growth will come one day, may it be in two, three, or five years). Only a couple of strong players will stay, though.
I also expect this trend will kill large frames (777X anyone? will 350 become too large? some questions ahead, but let's stay on leasing for today) for leasing. 777 value will be zero soon (any 777, including Xs). Many will come to scraps as soon as they're off the leasing.
What are your visions, thoughts on the subject?
kaitak744 wrote:"777 value will be zero soon" ...... really? Do you know how economics works? Nothing has zero value. Even a 50 year old Boeing 707 can still have some value.
There is no sense in retiring aircraft early. What we may see is large aircraft (777-300ERs, A380s, 747-8s) retired when they come to their next heavy maintenance check.
Taking some of the big U.S. airlines for example:
AA - retire all 767s and 757s. Slow delivery of A321NEOs. Retire older A320s and 737-800s. Retire 777-200ERs that are up for a heavy check.
UA - retire all 757s. Retire older A320s and A319s. They just invested large sums of money refitting their 777-200ERs and 767-300ERs, so I don't think they will go anywhere.
DL - faster retirement of 757s and 767s, MD-80/90s. Retire older A320s and A319s. Retire A330-200s.
^That right there is a large capacity decrease.
fly2moon wrote:Speaking of airlines not making lease payments, are typical (dry) leasing terms and conditions allowing airlines to stop lease payments during conditions like current COVID19? For example, if government orders airspace or airports in the country closed where the airline is based, airline would have no legal means to fly the aircraft. Can airlines in affected countries use goverment imposed lockdowns to stop lease payments of grounded aircraft to leasing companies?
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