ALC warns of neo's potential value and lease rate threat on current assets

London
Source: Flightglobal.com
This story is sourced from Flightglobal.com

Operating lessor Air Lease Corp warns of a possible drop in Airbus narrowbody values and lease rates due to the launch of the neo programme.

"The availability of A319/A320/A321 aircraft with these new engine types may have an adverse effect on residual values and future lease rates on current A319/A320/A321 aircraft," says ALC in a regulatory filing yesterday.

ALC says development of these new engine options "could decrease the desirability of the current A319/A320/A321 aircraft that are not equipped with these new engines and thereby increase the supply of this type of aircraft in the marketplace".

This increase in supply could, in turn, according to ALC "reduce both future residual values and lease rates for this type of aircraft".

ALC notes it is also possible that other manufacturers "could embark on similar programs, which could have similar effects on residual values and lease rates of the aircraft manufactured by these manufacturers".