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IBA’s views and predictions on aircraft financing

As this year draws to an end we are all waiting to see what 2009 will bring to the industry. With this in mind, The International Bureau of Aviation (IBA) gives its perspective on the current state of the Aircraft Financing market and their predictions for the year ahead.

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  Many banks that traditionally support aircraft finance are not currently committing to new deals.

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  Some banks are exiting aviation altogether, whilst others have suspended their involvement.

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  In the most part, banks will support deals already underway which will take them up to the second quarter of 2009, after which time they will hold back on activities.

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  Many new deliveries from quarter three 2009 will not have financial support.

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  Reliance on manufacturer and ECA financing will become more prevalent.

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  Airlines committed to increasing yields by cutting frequency are parking or returning aircraft early in order to survive escalating costs.

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  Slower growth in traffic numbers, fuel price volatility and the lack of credit will mean many more airlines will cease operating in 2009.

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  A lack of finance for new deliveries, poor finance opportunities for secondary market transactions, and lease defaults will increase availability and affect supply and demand.

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  Aircraft values and lease rates are expected to drop substantially for many types thought to be stable only 12-18 months ago.

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  Older aircraft will be parked and/or parted out.

For more information on IBA's views on the market, or detailed predictions on value changes for the main narrow and wide-body aircraft types, please contact Owen Geach on owen.geach@ibagroup.com.

ABOUT IBA

The International Bureau of Aviation (IBA) was established in 1988 to provide independent expert business analysis to the aviation industry. IBA advises commercial and business aviation clients, aircraft/engine manufacturers and operators. Services include asset valuations, technical and engine management, consulting and commercial services, industry and sector research and analysis. Please visit www.ibagroup.com