JP Morgan sees European bank capacity as a concern

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JP Morgan Securities highlights European bank appetite for aircraft financing as a concern in a recent research note.

“More concerning to us is the much more limited European bank market capacity for aircraft debt that we suspect going forward, especially in light of aircraft financier powerhouse West LB's announced restructuring,” the bank writes in a research note.

The bank says speculation that Chinese and Asian banks will fill the potential European void "remains mostly just that in our view.”

It further notes that the capital markets for aircraft funding “remains tenuous at best.”
However, the bank says export credit “remains readily available for most buyers of new aircraft” and expects this will help fund a “large chunk” of the backlog at the manufacturers.

The bank also upgraded 12 North American airlines due to improved liquidity, lower oil costs and the likelihood that these airlines could return to profit in 2009.