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Feature: More than a blip?
06 February 2012
Persistently low lease rates for factory-new aircraft give investors cause for concern.
Read more:
A320 lease rate
737-800 lease rate
Airbus
Boeing
OEM
On a hot July day in 2010, executives from Gecas and Air Lease Corporation announced orders for 60 and 51 A320-family aircraft, respectively. The orders meant that Airbus would easily surpass its 2010 target of 300 new orders, eventually notching up 574 net commercial orders that year.
The mood at the Farnborough Air Show was optimistic in what was a bumper year for airline profits. Leasing companies were confident that their new orders would deliver into a buoyant market.
While manufacturers have continued to take orders and deliver aircraft at record numbers - even as airline profits fell - lease rates have not matched investors' expectations.
This is difficult news for leasing companies, which were counting on much better lease income for in-demand narrowbody aircraft.
Lease rates, which were touching $400,000 for 737-800s and A320s in 2008, have plummeted and remain low.
"I've heard some real horror stories," says...
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