Aircraft leasing companies are enjoying a period of rising asset values and lease rates driven by tight supply but equally would rather the provision of aircraft was more stable and aircraft deliveries were more certain to better serve their airline customers, which are struggling to service passenger travel demand that continues to rise.
Airlines are beginning to report earnings expectations for a record fourth quarter 2023, building on a solid year of growth and profitability. However, many are also braced for the challenge to sustain capacity levels in the wake of engine and other issues taking aircraft out of service, with production levels still slow to ramp up due to lingering supply chain issues.
Higher interest rates, inflation and heightened geopolitical tension are creating a challenging operating environment for airlines and lessors alike.
At this time of building headwinds, and for the sixth year running, 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, John Plueger, Chief Executive Officer, Air Lease Corporation speaks to Kieran O’Brien, Head of Aviation Advisory at KPMG Ireland, in Singapore in early November 2023.
Founded in 2010 by Steven Udvar-Házy and John Plueger, Air Lease Corporation (ALC) is a publicly-traded, investment grade rated aircraft lessor with a portfolio of around 900 aircraft that are owned, under management and on order.
In the interview, John Plueger shares his positive outlook for the airline industry on the back of a return of travel, including impressive demand for premium travel for legacy carriers. ALC has placed all of its 2025 widebody deliveries due to the historic high demand for lift due to the equally as historic tight supply of aircraft; and the lessor is also benefitting from a rise in aircraft values and lease rates are also increasing. However, John shares that he would prefer to have access to more aircraft to better serve his customers. He also notes that such bullish demand is tempered by the headwinds building in the sector notably that geopolitical issues are at the forefront of many boardroom discussions, stressing the need to plan for unpredictable events.
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This discussion is the second 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.