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PwC: Aviation Finance Report
January 8, 2013
By Rob Starr, Content Manager, Big4.com
The complex and lucrative world of aviation financing has been unravelled in a new report out by PwC . Aviation Financing – Fasten your seatbelts, says the market could be facing one of the most radical transformations in recent history.
PwC interviewed a mix of the world’s leading banks, lessors, airlines, export credit agencies for the report. It also found that airlines in developing countries are buying more brand new aircraft where historically older aircraft would have gone, which could see more of them ultimately retiring in ‘jet cemeteries’.
PwC financial services partner, Shamshad Ali, said:
“There are a number of headwinds in the aircraft finance market which may make these orders more difficult to finance – and more expensive. With the cloud of economic uncertainty still hovering around Europe, we are seeing banks there retreating from the market and interest from Asian investors is increasing. We are already seeing banks from China and Japan snapping up aviation assets and we think this trend will only accelerate.”
As backlogs of aircraft orders reach unprecedented levels, the survey shows lessors and airlines will be battling for the most competitive finance rates in one of the most turbulent economic climates in recent times. As of July 2012 (see notes) the aircraft order books of Airbus and Boeing had risen to 8,500, and while financing costs on jets are likely to rise, the jury’s out on how this will impact the different parts of the value chain, which includes aircraft manufacturers, airlines and lessors.