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Aircraft lessors net earnings could rise to $10bn peak in 2027, says Bloomberg Intelligence

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Aircraft lessors net earnings could rise to $10bn peak in 2027, says Bloomberg Intelligence

Aircraft lessors could see net earnings rise to a peak of $10bn in 2027, according to a Bloomberg Intelligence report. The growth is expected to be largely driven by lifted trading gains via higher lease rates and asset values.

“The cycle could be extended if manufacturers' production targets are delayed further,” the report added. 

The $10bn net profit in 2027 is expected to be up 67% from 2024, along with pretax margins of 19%, up five percentage points from 2024. The report estimates around half of the global fleet to be owned by lessors in 2028, making up around 16,200 aircraft.  

“Lessors with larger orderbooks could outperform in the long term as smaller rivals get squeezed by funding costs and market relevance,” the report said. “M&A may be the only path for midsize lessors to gain the scale to improve fleet risk management and access lower-cost funds.” 

The year was already kicked off with the news that Dubai Aerospace Enterprise (DAE) would be acquiring 100% of Nordic Aviation Capital (NAC) with the deal expected to close in the first half of this year. 

This trend of consolidation may continue with smaller, private equity-owned platforms potentially being “offloaded to capitalise on the cycle”. 

In addition, lessors' cost of debt may have peaked in 2024 and then stabilise, according to Bloomberg Intelligence, with interest rates expected to level off below 3.5% could “boost profits further”. 

Aircraft supply constraints are expected to continue throughout at least 2026, with major OEMs failing to keep up with demand, as well as engine and parts supply shortages limiting MRO capacity of the existing global fleet. These latter shortages could persist until around 2028. 

Both the supply chain shortage and interest rates, the report surmised, will play key roles in determining lessors' profitability improvements, which are expected to increase 19% per year from 2024 through 2027.