Operating lessors expect leasing to grow in popularity among airline customers once more aircraft are required to be financed under the 2011 Aircraft Sector Understanding (ASU) regulation impacting US Export Import Bank (Ex-im) financings.
The leasing business could also benefit if Boeing is unsuccessful in persuading US lawmakers in Congress to find a compromise to extend the lending authorisation of Ex-Im by 31 May.
Ex-Im is on track to exceed its 2011 lending mark of $11.5 billion in 2012.
According to Bob Morin, vice president, transportation at Ex-Im Bank "possibly only two or three transactions covering less than 10 aircraft" will be financed under the new ASU this year as "Boeing's order book was so full".
The transition rules under the 2011 ASU for commercial aircraft provides that an aircraft that was ordered by 31 December, 2010 and delivers by 31 December, 2012 is eligible to be financed under the terms of the 2007 ASU, including the one-time, up-front exposure fees required under the 2007 ASU that range from 4.00% to 7.50%.
These financings are subject to a special commitment fee being paid of 20 basis points per annum on the non-disbursed, non-cancelled amount of the commitment accruing as of 31 January 2011.
Air Lease Corporation anticipates an uptick in operating leasing as the new ASU should level the playing field between commercial and export credit agency pricing.
"The new ASU will bring the level of financing closer to commercial rates and operating lessors will be the largest beneficiaries of that move," says Steven F Udvar-Házy, ALC's chairman and chief executive officer.
He adds: "When the export credit agencies financed airlines due to geographic location, I felt there were distortions in the market."
Another lessor agrees. "Once new the new ASU takes effect in the market, airlines will see operating leasing as one of their best options financially. Add in Basel III and leasing looks even better."
The lessor adds: "I also think the new ASU will help the values and lease rates of older aircraft as more airlines will consider five-to-ten-year old aircraft again, instead of the new equipment."