IATA figures show continued worldwide air travel growth
5th April 2023
Last week we informed you here that AIG was in negotiations with a European buyer for ILFC, now we can elaborate further: Reliable sources indicate that AerCap is close to purchasing the ILFC portfolio in a complex deal that breaks out some of the older aircraft to other lessors, and negotiations are at this time underway for that breakout of aircraft with Orix Aviation among others competing.
This is logical. AerCap is listed and thus cannot just take-on everything from the ILFC book, even though much of the ILFC book has been balanced, written-down and sorted out over the past few years from the mess that was left behind after Udvar-Hazy’s departure. The ironic side of this deal is of course Aeroturbine, which ILFC has been building-up, will end up back with AerCap which sold it off originally. Many heads will be spinning at Aeroturbine right now wondering what the future holds for them. Of course if for some reason AerCap did not want Aeroturbine then there are a few companies that one can think of offhand that will jump at the chance of getting their hands the company, which presents AerCap with some good options to throw at shareholders in the short term as it tries to sell the deal to them.
If the deal goes through, and it is very close we are told, then AerCap will become the dominant force in aviation. One thing to watch out for though is if the AerCap book combined with the ILFC book will balance in terms of aircraft types on order given that ILFC is looking very Airbus heavy on a forward-looking basis, which should be of concern to AerCap shareholders.
So in a year that has seen the sale and leaseback market become ultra-competitive and so many other deals in the market that everyone is running to catch-up, we can also argue that there has been a great deal of consolidation with JSA and MULAC and now potentially AerCap and ILFC – Given the number of aircraft held from these four it is a large chunk of the market.
The bottom line for investors – The aircraft leasing market is looking stronger right now than it ever has done and it is still ripe for investment as the current market players are under real strain to keep pace with demand. 2014 will see ICBC pull back and this will, along with recent consolidation, give rates achieved a real boost. As global airline profit forecasts move up to a projected $12.9 billion for 2013 and a record $19.7 billion for 2014 and passengers look set to top the 3bn mark for the first time we can all rest easy this holiday season knowing that there should be more work than can be processed again 2014.