Positive outlook tempered by fuel costs and social unrest: FLY

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

After several sluggish quarters, lessors are finally enjoying solid demand across aircraft types matched by strong lease rates; however, rising fuel prices and political instability are causes for concern, according to FLY Leasing.

"We are seeing strong demand for virtually all aircraft types. While demand in the earlier stages of recovery focused almost exclusively on the Boeing 737-800 product, we are now seeing a similar uptick in demand on not only the Airbus narrowbody aircraft, but also for the more common widebody aircraft," says Steve Zissis, director of the board of FLY Leasing during a first quarter earnings call today.

He believes lease rates on in-production aircraft have "rebounded sharply" from the period of time following the global financial crisis.

"Even after adjusting for the interest rate environment today compared with 2006 and 2007, when the industry was last firing on all cylinders, net margins for aircraft lessors are comparable and, in some cases, even better."

However, Zissis notes this positive outlook is "somewhat tempered" by rising fuel prices and social unrest in the Middle Ease and North Africa.

He adds: "While rising fuel prices do put financial pressure on airlines, it is more of a concern for the industry given the impact high fuel prices can have on consumer demand more broadly in the economy."