How Aircraft Leasing Has Changed The Airline Industry

[Palumboism]

The ten biggest leasing companies own over five thousand aircraft.  

Number of aircraft owned by company:

GECAS                                  1,271
AERCAP                                  1,121
AVOLON                                   572
SMBC AVIATION CAPITAL           437
NORDIC AVIATION CAPITAL   404
BBAM                                   404
DAE CAPITAL                           334
BOC AVIATION                           299
AIR LEASE CORPORATION           278
AVIATION CAPITAL GROUP           274

Source: Airfinance Journal
https://www.airfinancejournal.com/Magazine


 

It's not public knowledge how many of each airlines airplanes are leased, but if you look at the leasing companies web sites, practically every airline is a customer.  Airline leasing is particularly popular with the budget airlines like Spirit, Frontier, and Easyjet.

Overwhelmingly, the most popular airplanes by the leasing companies are A320 and 737 and they buy these two aircraft in huge orders of over one hundred at a time which gives them large discounts with Boeing and Airbus.  

Many banks are getting into the aircraft leasing business particularly the Chinese and Japanese banks because they realize that very little knowledge about aircraft is needed, you just need a large amount of money to invest.  It's not hard for a Japanese bank to buy 100 A320 and 737's and find airlines willing to lease them, particularly in Asia, Latin America, and Europe.

Ireland is headquarters for nine of the ten largest leasing companies.  I believe this is mainly because their accounting rules allow aircraft to be depreciated over only eight years.  In reality aircraft can safely fly for 30 years in fact Delta doesn't retire their aircraft until they reach 30 years old.

 

[Palumboism]

Today, over 13,300 commercial jet aircraft, valued at approximately $331 billion, are owned by operating lessors and leased on this basis to the global airlines, representing more than 49% of the fleet by value.  Operating leases, although more dominant for narrow-body jets at 51 % leased (by volume), have also penetrated the regional jet (41%) and wide-body segments (38%).

While there are more than 70 aircraft lessors with more than 25 aircraft in their portfolio, the 10 largest lessors, as measured by value of their current fleet, have aircraft portfolios valued at nearly $150 billion, equal to nearly 50% of the total leased aircraft fleet, while the top 20 leasing companies own nearly 85% of the leased fleet.

https://www.icf.com/blog/aviation/why-are-airlines-leasing-more-aircraft

[Palumboism]

I'm recently retired , but my wife is a banking exec  in "leasing and capitol" .
Lots of major  industries "lease" now instead of own.
Many big road construction projects are done with leased heavy equipment.

It's complicated but the cooperate world may be at the point where it's better to rent then own for your bottom line.

Does she have any insight as to why leasing is favorable for companies?  Is it an accounting trick to get liabilities of the balance sheet?

[Humble Narcissist]

THAT and paying less corporate tax when you own less valuable equipment.
Plus, the maintenance , storage and upkeep is a big expense UNLESS you're constantly on the job.

It it flies, floats or fucks it is better to lease than buy.  This proves it.

[tres_taco_combo]

my old neighbor used to be into aircraft finance - the EETC was his fav topic.

it was interesting how they package up the aircraft and sell them to investors through EETC

[Hypertrophy]

Does she have any insight as to why leasing is favorable for companies?  Is it an accounting trick to get liabilities of the balance sheet?

Leasing costs are expensed immediately. Purchased capital goods are depreciated so you have a tax liability the year you buy it.

[Palumboism]

Leasing has lowered the entry for startups a startup carrier can realistically aim fro a fleet of over 20 new A320 or 737.  In the past they would drag on with a few Fokker aircraft for years before being able to buy a new airplane.  See Spirit, Frontier, Allegiant...

Some leasing companies specialize in leasing new airplanes, while others specialize in midlife and older airplanes.

[Mr Anabolic]

So?  

Flying sucks, FAA sucks and the TSA sucks.  Flying is pure torture.

What is your vested interest in posting this stuff here?

[Palumboism]

So?  

Flying sucks, FAA sucks and the TSA sucks.  Flying is pure torture.

What is your vested interest in posting this stuff here?

I like the freedom of Getbig and I'm interested in airplanes.

Tapeworm made fun of my posts saying something to the affect of another innovation in the airline industry.

What you don't understand is there actually have been some MAJOR changes occurring.

For the American airline industry we saw eight large airlines merge into four enormous airlines.  Which I actually believe is probably better for the flying public.

[Tapeworm]

I've made fun of him for years.  No effect.

In truth, I often repeat bullet points from his posts to people in real life.  I enjoy giving them the impression that I have the inside track on the airline industry.

[Mr Anabolic]

I like the freedom of Getbig and I'm interested in airplanes.

Tapeworm made fun of my posts saying something to the affect of another innovation in the airline industry.

What you don't understand is there actually have been some MAJOR changes occurring.

For the American airline industry we saw eight large airlines merge into four enormous airlines.  Which I actually believe is probably better for the flying public.

Merging airlines is NOT a good thing.  Less competition causes monopolies and prices always increase.  FLight service has been eroding for years now.  Flight attendants are miserable, ugly old women... they used to be pleasant, young and attractive.
 
I've flown 100's of times, domestic and international, mostly for business.  The main things the average flying public cares about are:  

1. Cost
2. Getting there hassle free without delays  
3. Getting there safely

Everything else is incidental because service has been dumbed-down so much.  Even sitting in F is nothing like what it used to be.  All you have is a few more inches of room. 

[Tapeworm]

Come on.  Gimmie something I can use.

[Palumboism]

I've made fun of him for years.  No effect.

In truth, I often repeat bullet points from his posts to people in real life.  I enjoy giving them the impression that I have the inside track on the airline industry.

I still remember the thread where you gave me the picture of the Good Will Hunting bar guy. Woods drastically underestimates ....  AND I do enjoy plagiarizing other peoples work.  I've even done so in this thread.