Fitch Ratings warns unless more alternative sources of financing become available, some operating lessors will need to revise their business strategies to accommodate ageing fleets.
"In our view, this would likely create additional risks for some lessors related to residual values, maintenance costs and operational leverage," says the ratings agency in a research report.
Fitch does not believe there is adequate capacity in the leasing space to absorb all of the older aircraft that may hit the market before the end of the decade.
It views the aircraft leasing industry's increasing exposure to older aircraft as a longer-term risk.
If market capacity expands further and becomes sufficient to absorb the growing number of older aircraft in lessors' fleets, Fitch believes the ratings impact across the industry will be limited. However, if the secondary market remains narrow and lessors get saddled with ageing fleets, ratings will likely be pressured.
"The issue would be more pronounced for those lessors with less conservative valuation policies, and underdeveloped technical and risk management functions," says Fitch.
The rating agency notes recent interest from nontraditional players in filling the financing gaps for older aircraft that are being cycled out of operating lessors' fleets.
The ratings agency highlights AerCap's $1 billion sale of the equity tranche in the ALS securitisation to Guggenheim Partners last November.
In another recent example, Merx Aviation, a portfolio company of Apollo Investment Corporation, acquired 26 aircraft from General Electric late last year.