![]() ![]() Political instability in Turkey and Thailand, both big markets for aircraft, were cited as risks by two aviation industry chiefs in Dublin, speaking on condition of anonymity. The rise of a new middle class has been driving much projected aviation growth.Ī flight from emerging market assets accelerated on Friday, sending the Turkish lira to a new low and setting global shares on course for their worst week this year. The Dublin gathering took place in the shadow of the World Economic Forum in Davos where bosses warned the “gold rush” of upstart economies was over. The most worrying spot on the horizon is emerging markets, which have dominated aviation’s growth in the past five years. They are exposed to risks that airlines will not be able to pay for jets they have ordered, but say they are confident others will step in and funding will remain readily available. ![]() "Any CFO should be looking at refinancing everything they've got right now," said Ron Wainshal, chief executive of Aircastle AYR.N, whose key shareholders include the Ontario Teachers' Pension Plan, a major Canadian pension fund.Ĭheap money has in turn indirectly boosted the manufacturers who are now sitting on record order backlogs. “There’s a lot of money chasing a few assets,” said Tom Tuggle, executive managing director at CMC Capital Markets.īut despite concerns that rates could rise as central banks ease off printing money to stimulate the economy, delegates said it has rarely been a better time to be an airline treasurer - traditionally a nerve-racking job. The resulting competition across the aviation industry means yields aren’t as high as they were and that is pushing investors to look at new areas to fund, such as older aircraft. We are using less export credit but replacing a lot of that capacity with capital from multiple markets,” said Kostya Zolotusky, a managing director at Boeing Capital. “We are in a very healthy market but these are changing markets. and European export credit agencies, which have raised their fees. And an ample supply of competitive financing means fewer airlines are resorting to guarantees from U.S. Leasing firms, which own or manage 40 percent of the fleet, remain active. “Our clients have a much wider variety of options than there used to be.” “The choice of where to go to refinance or finance used to be more guided by what was open, but now everything is open,” said Eric Eugene, head of transportation finance at BNP Paribas. More investors are also placing funds privately with airlines to avoid dilution when such public offerings are over-subscribed. In a landmark transaction, Air Canada ACb.TO last year issued an EETC backed by five Boeing jets. airlines, are increasingly opening up to foreign airlines because of a recent treaty to protect lenders. “We’ve seen the pensions, endowments looking to make up lost investment time, and more hedge fund investors looking for stable spread over time but not necessarily a super-sized return to make it work,” said Daniel Hartnett, partner at law firm Kaye Scholer.Ĭapital markets such as that in Enhanced Equipment Trust Certificates (EETC), a secured corporate bond structure typically used by U.S. airlines back on a more stable footing and oil prices relatively calm, aviation is luring interest from longer-term investors such as insurers and pension funds, who hope to boost weak returns dictated by low interest rates. airline Allegiant Travel ALGT.O, said at the Airline Economics conference. Everything is very robust right now," Jude Bricker, treasurer of low-cost U.S. ![]() "I don't think there's a sector of the financing space that isn't open for business. Just a few years ago, tougher capital regulations triggered fears that airlines would be unable to find the funds needed to pay for record numbers of aircraft being ordered from Airbus AIR.PA and Boeing BA.N, as European banks scaled back.īut Asian banks helped fill the void and financiers in Ireland, the world’s leading hub for aviation finance, said new money was pouring into the promising sector in their wake. REUTERS/Michael Fialaĭespite new concerns over emerging markets that mounted on Friday, an annual gathering in Dublin this week attracted record numbers of lawyers, bankers and lessors who keep the $100 billion a year jetliner industry aloft with funding. An Allegiant Air MD-83 passenger jet takes off from the Monterey airport in Monterey, California, February 26, 2012. ![]()
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