FLY Leasing has noticed an uptick in demand for Boeing 737 Next Generation equipment amid the Max grounding, though chief executive Colm Barrington says it is too early to tell exactly what or how long it will be.
Dublin-based FLY, which repossessed three 2014-vintage Boeing 737-800s from Jet Airways last month, has noticed solid demand for the aircraft, Barrington told investors during a first quarter earnings call on 9 May.
"The market for Boeing 737 Next Generation aircraft remains very strong, perhaps assisted by the uncertainties over the 737 Max," Barrington says.
"We do think that there is some positive impact on NGs from the from the Max situation and certainly in the case of the Jet Airways aircraft, we had no difficulty in finding new homes for them very quickly."
Of the three 737-800s FLY took back from Jet, two have been placed with another airline, Barrington confirms, noting that there was "strong demand from several lessees". The third aircraft is undergoing maintenance and expected to re-enter service in the third quarter.
Barrington says that FLY has significant cash security deposits and maintain reserves from Jet, which will be applied against delinquent rentals and will be held to restore the maintenance condition of the aircraft.
"We don't expect to be showing any significant loss from the Jet Airways situation but nor do we expect to be getting any more out of Jet Airways," Barrington tells investors.
"We expect that most of our integration and maintenance costs will be covered by these maintenance reserves and security deposits."
FLY ended the quarter with 103 aircraft and seven engines in its portfolio, after selling 10 aircraft during the quarter. The fleet has an average age of 7.2 years, with an average remaining lease term of 5.7 years.
The lessor’s total assets amounted to $4.1 billion.
Source: Cirium Dashboard