Many airlines have recorded record profits in 2023 capitalising on sustained demand for air travel. However, costs are rising steadily as inflation bites. Wages are rising with airlines bearing the brunt of wage inflation as well as a scarcity of trained labour force, especially pilots. Rising interest rates are also adding to cost pressures, which will impact those airlines that have not begun to reduce the debt stack built up during the pandemic.
Aircraft leasing companies are enjoying unprecedented levels of demand with the majority of airline customers opting to extend existing leases due to the short supply of new aircraft in the market. Lessors are saving on transition costs and retaining valuable customers while extending useful lives of older aircraft. Meanwhile, lessors are also selling aircraft at historically high values.
Against this backdrop, Airline Economics and KPMG have kicked off their global “state of the market” review of the aviation industry with interviews with aviation market leaders held around the world. In 30-plus interviews, these high-flying executives unpack their experiences from the past 12 months and cast their visionary gaze into the short- and long-term horizons of the industry's future.
Ahead of the publication of the completed Aviation Global Leaders Report 2024 in tandem with the Airline Economics Growth Frontiers conference in Dublin in January 2023, Airline Economics and KPMG are releasing a series of video interviews with industry experts that were conducted between October to the end of November 2023.
In this interview, Aengus Kelly, Chief Executive Officer, AerCap speaks to Joe O’Mara, Head of Aviation Finance at KPMG Ireland, in Dublin in late November 2023.
AerCap is the largest aircraft leasing company in the world with a portfolio of 1,733 aircraft, 1,000 engines and 300 helicopters, with 380 aircraft on order, as of Q3 2023. Aengus Kelly has been at the helm since 2011 and has presided over a phenomenal growth period for the company which acquired International Lease Finance Corporation in 2014 and GECAS in 2021.
In the interview, Aengus shares his thoughts on record airline profits as well as the impact of rising cost base and capacity constraints on future growth. As GE exits the business with the sale of its final AerCap shares gained as part of the GECAS sale, Kelly shares his insights on managing the smooth exit of a major shareholder.
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This discussion is the third to be released in the 2024 series of Aviation Leaders interviews that will be published between now and January 29, 2023 when the full report will be published at the opening of the Airline Economics Growth Frontiers Dublin 2024 conference week.