ECA new pricing to benefit operating lessors

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Higher pricing under the new Aircraft Sector Understanding (ASU), which comes into effect in 2013, will push airlines towards commercial debt financing or and operating leases, says Kostya Zolotusky, Boeing Capital managing director capital markets, leasing.

"ASU rules will mean significantly higher pricing for the guarantees and airlines will have to come up with more equity," says Zolotusky.

"Both of these factors are likely to turn a lot of people away from the export credit agencies and towards commercial sources of financing or the operating leasing market," he adds.

He believes aircraft leasing will continue to be a "very strong market", growing at a faster rate than seen in the past decade.

"Airlines will rent rather than buy aircraft and so we see the number of aircraft in the global fleet that are on operating leases going towards 50% this decade."

Zolotusky is bullish about the capital markets supporting the lessors and their aircraft deliveries going forward.

"Last year there were some concerns raised in the industry whether the lessors had sufficient leverage to finance aircraftas their leverage originated from European banks," he says. "But 2012 turned to be a good year where lessors were able to balance their leverage between the banks and the capital markets."

Zolotusky says lessors tapped the capital markets "in a big way" and raised a tremendous amount of liquidity. "We believe that trend will continue."

"This year alone lessors tapped the capital markets for well over $9.5 billion and we are likely to finish the year with over $10 billion in liquidity raised from the capital markets."

Airline cash contributions into aircraft financings have been at "high levels" during the past few years, he says.

"We are continuing on a five-year run now of a very fine level of cash, or equity contribution, towards delivery financing," he says. "This is a trend we noted a number of years ago because historically airlines contributed 15-18% of equity to the deals and now the trend is now in the 25-30% range."

"This is a reflection of global airlines deleveraging and it is a good story making airlines less volatile, and that is one of the reason why we have seen a lower rate of bankruptcies in the market," he says.