I had planned on putting together a chart like this, but CNN beat me to it. It really captures what happened this week. One thing missing here, and it's a small spin off, is the business and first class load factors from New York to global business hubs. I spoke with one analyst who said that those cabins are usually 20% Wall Street on any given flight to places like London and Tokyo. Business travel is the backbone for decent yields on international flights, the airlines could take a further hit even beyond the accessibility of aircraft if these people aren't flying.
But hey, look at the bright side, oil is only at $100 a barrel!
But hey, look at the bright side, oil is only at $100 a barrel!
CNN is full of it. To suggest that the problems at ILFC (as a result of its parental incompetence) will have the effect outlined in the chart is ludicrous. ILFC has 155 airplanes on order from Airbus and Boeing out of a backlog of about 7,500. These orders could go away and nothing would happen.
Lease rates will remain competitive; there are 107 worldwide lessors. ILFC is an elephant, to be sure. But it's not going away.
I agree with Scott. A firesale of ILFC only makes it easier for Chairman Udvar-Hazy to buy back the company. I'm also sure that Boeing would have no trouble reselling ILFC's early 787 slots, if it came to that.
Further, I'm sure Boeing would like to have that breathing room back in their delivery schedule, and reduce their penalty payment obligations.
CNN have got it wrong. global lease rates are likely to keep falling significantly as the supply demand equation improves. Under capitalised airlines are facing insolvency due to higher fuel costs and lower global gdp, in addition existing airlines are cutting capacity and retiring aircraft. OEM's will see their backlog shrink, particularly in narrow body a320 and b737 models. In response the highly leveraged lessors need to cut rates to stay competitive. they have been milking the supply tightness for too long.
CNN is obviously in the business of hyping news. After all bad news sells. Scott and John above have the assessment of the aircraft manufacturers correct. ILFC doesn't amount to a hill of beans in the total number of backlog aircraft. I could name you five leasing companies that would love to see ILFC go under so they could get their business. The leasing of aircraft is not going away and someone will fill that need.
Both manufacturers have new more fuel efficient aircraft that the carriers desperately need. The more pressing issue is the credit market and the ability of the carriers to finance the new planes they are buying.