While aircraft lessors are agreeing to a number of rental deferral requests to help airline customers struggling through the coronavirus crisis, leasing executives stress there is no one size-fits-all approach being sought by airlines.
Speaking today during the Leasing Leaders on Aviation Crisis webinar, organised by FlightGlobal in association with IBA Group, BOC Aviation chief executive Robert Martin notes rapid funding action - including measures from governments - means some airlines have been more interested in, for example, sale- and lease-back activity.
”Clearly a lot of our customers were immediately hit and have asked for help, but it’s not one-size-fits-all,” he says. ”Some airlines didn’t need liquidity because they already have access to liquidity in other ways. So actually they were more interested in doing purchase- and lease-back business, and we have done $5 billion of that since Covid started.
”As we have addressed these issues, it’s clear to us you can tell the experienced airlines who have been through something like this before,” he says, for example crediting the speed with which North American carriers acted to improve their liquidity and that Chinese carriers tapped their domestic bond market.
”We have been handling two things on the customer side. One is new business through purchase- and lease-backs. The other is handling their incoming requests. Those that definitely need deferrals, we help them with deferrals, and those that don’t, we’ve maybe done other things,” he says.
Another lessor leader panelist on the webinar, chief executive of Dubai Aerospace Enterprise Firoz Tarapore, concurs that there is no single response.
In publishing its first quarter results today the lessor says that as of the end of April, it had granted rent deferral requests from 25 customers with an aggregate rent totaling 5% of annual revenue. It is also evaluating rent deferral request from 33 customers, the aaggregate rent deferral for which totals 10% of annual revenue.
”The fundamental reality is our customers have seen their revenue go to near zero,” says Tarapore. ”In that case some of them will need legitimate help and our approach has been that if you come to us for relief we will evaluate that on a case-by-case basis, we will discuss why it makes sense for us and how we can help you.
”It’s been a deliberative and corroborative approach to make sure we carefully balance the needs of our clients and our own needs to make sure we are here for our other customers tomorrow.”
Separately today another aircraft lessor, Avolon, in reporting its first quarter results said it has received requests for payment relief from more than 80% of its current owned and managed customer base.
The lessor says it is in active dialogue with customers and had agreed a number of rent deferral arrangements for an average of three months and expects ”some form of short term rental deferral arrangement” to be agreed with a majority of its customers.
The Leasing Leaders on Aviation Crisis will be available to listen on demand at flightglobal.com/webinars