NEW YORK–(BUSINESS WIRE)–Kroll Bond Rating Agency (KBRA) releases research discussing the pandemic’s economic impact on aircraft values and lease rates. In this update to research published in April, KBRA provides our observations over the past four months and outlines our expectations for the industry moving forward.

Some key takeaways in this report include:

  • Airlines continue to be proactive in preserving liquidity through accelerating the retirement of older aircraft as well as grounding of certain mid-life, less fuel-efficient aircraft for prolonged periods.
  • Aircraft values and lease rates could face further downward pressure as initial U.S. government pandemic-related subsidy programs expire at the end of September.
  • Aircraft lessors are expected to be challenged with remarketing numerous aircraft post-airline defaults, which may drive lease rates downward. That said, lease rates have improved on newer aircraft, as carriers demand for sale-leaseback aircraft have increased significantly as airlines try to boost their liquidity and needed cash.
  • KBRA still believes that next generation narrowbody aircraft will be the most in-demand for both airlines’ and lessors’ future operations and therefore, are best positioned to recover post-pandemic. Nonetheless, we note that, the concerted effort of OEMs to reduce production and delivery rates for newer aircraft could create some respite for the values of existing aircraft as the supply and demand dynamics adjust to the new reality of a smaller global fleet over the next few years.

Click here to view the report.

About KBRA and KBRA Europe

KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and is a certified Credit Rating Agency (CRA) with the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe is registered with ESMA as a CRA. Kroll Bond Rating Agency Europe is located at 6-8 College Green, Dublin 2, Ireland.

Contacts

Thomas Moore, Senior Analyst

+1 (646) 731-3375

tmoore@kbra.com

Marjan Riggi, Senior Managing Director

+1 (646) 731-2354

mriggi@kbra.com

Danise Chui, Managing Director

+1 (646) 731-2406

dchui@kbra.com

Boris Alishayev, Senior Director

+1 (646) 731-2484

balishayev@kbra.com

Business Development


Nish Kumar, Senior Director

+1 (646) 731-3372

nkumar@kbra.com

0 comments