▶ Transitionperiod Fears surfacedduringandinthewakeof themost recent crisis regardingthepotentialdecline in financingofnewaircraftdeliveries. The sectordidnot encounter anyparticulardifficulties. Since then, the crucial crutchfor the sectorhasbeenthegrowingrole ofpublic-sector exportguaranteesprovidedby the UnitedStates,Germany, theUnitedKingdomand France.BCCestimates thatbank lendingbackedby thesepublic-sectorguarantees accountedfor approximately30%of the financingsources for this sector in2012. That comparedwitharound20%prior tothe crisis, therebydemonstratingtheneedtooffset the (very)partialwithdrawalof somebanking institutions fromthe aviationmarket. This year,bank financing(without apublic-sectorguarantee) accountedfor21%of the total. The impactof the crisis wasnotonly tostrengthenthe importanceofpublic- sector supportmechanismsbut alsotopushbuyers to turntoother financingsources, inparticular financial markets (bonds),whichinall likelihoodsawtheir share increase from5%to10%of total financingin 2012.Althoughthe situationhas certainly stabilized, it remains fraughtwithdangers for air carriers, since the recent revisionofOECDpublic-sector export guaranteesmechanismwouldmake itmuchmore costly.
Access tofinancingfor aircraft purchases, still a crucialparameter for
▶ Leasingcompanies, ina “win,win,win” cycle in 2012 Adearthof financingappears tohavebeenavoided andthisnewenvironment for financingnewaircraft that is still in“crisismode”hasnot affectedthe vitality ofdeliveries andorders.Aside fromthe emergenceof newbanks (Japanese,Chinese), sector financinghas benefitedfromthe increasedroleof leasing companies,whichare expectedtoownhalfof the global fleetby2020. This trendfits inwithconverging interests : •aircraftmanufacturers, needtosellmore aircraft in order tofinance costoverruns inherent inthenew programs aswell as theirgoalofdryingupthemarket witha renewedlineof aircraft tokeepemerging competitors atbay ; •thecarriers,meanwhile,needaircraft to accompany theirgrowthandbuildupamodernized andmore fuel-efficient fleet ; •leasingcompanies are lookingfor stable assets to make thebestuseof liquidity contributedby investors,whoare attractedby the resiliencyof the asset thatwas “commercial aircraft”duringthe2008- 09crisis.
A “win, win, win” cycle in aviation financing Aircraft manufacturers Need to sell
Finance new programs Stifle emerging competition
▶ Someuncertainties in2013 This convergenceof interests that contributedtothe aviationsector’sdynamicgrowthisnot exempt from potentialpitfalls that couldbreak thewin-win-win cycle asof2013: •aircraftmanufacturersmay experience industrial difficulties inrampinguptheproduction; •somecarriersmaybe subject tofinancial uncertainty that causes themtoreconsider their commitmentsordownsize their capacity,which wouldpushmore aircraftontothemarket ; •leasingcompaniesmaybedestabilizedby unfavorable conditions (leasingratesunderpressure becauseof a temporary supply anddemand imbalanceor the acceleratedimpairmentof their portfolioinlightof the impendingmarket launchof newaircraft). Someuncertainties therefore remainin the2013outlook.▣BG
Carriers
Need for aircraft Market growth
Need for more fuel-efficient aircraft (+ search for flexibility for their fleet)
Leasing companies
Abundant financing through investors attracted by the resiliency of this asset
Reduced involvement of some banks Search for solid assets