Operating leasing companies are reporting new approaches from airlines regarding deferment of aircraft rents for the coming months.
One leasing representative says it recently encountered "aggressive" requirements regarding its portfolio with two different airlines: one a low-cost carrier and one a tier-one national carrier.
One airline is asking for co-operation from the leasing community on several fronts: for aircraft leased until 2025, the airline is asking for deferral of rents for a six-month period starting on 1 July with a view to repaying the leases at no cost from 1 January 2021. It is also asking for a refund of the security deposit on each aircraft.
For aircraft on lease through 2025, the airline has requested lease extension discussions about marking to market current commercial terms, to take effect immediately, and about a provision to further review lease rental payments based on prevailing market conditions on the date that coincides with the current lease expiry date.
“It is getting really aggressive. The significant surprise comes from the darlings of the industry, which had been making lots of money over the last few years. It seems that money has disappeared, evaporated or is just being held at the shareholder level for now and hopefully for not too much longer,” says a lessor’s representative.
Another airline has asked its lessors to agree to significantly reduced aircraft rents until 2023.
In a letter to lessors, the carrier has proposed a new deferred payment schedule regarding its widebody fleet, asking to pay 20% of the current base rent for the next six months to 1 January 2021.
The carrier is then offering to pay 40% of its widebody rent between 1 January and 30 June 2021. This will increase to 60% between 1 July 2021 and 31 March 2022. Between 1 April 2022 and 31 December 2022, it wants to pay 80% of the current base rent.
The sum principal of all deferred amounts of base rent under the aircraft lease agreement will be repaid in full starting in January 2024 up until the scheduled expiration of the lease. Where leases expire prior to January 2024, the sum principal of all deferred amounts will be paid as a bullet at the end of the scheduled lease.
Another airline has approached a leasing company asking to convert some lease rates into a cost-per-flight-hour contract for a period of 12 months.
One leasing source says some airlines are asking for between six- and 12-month deferrals, as well as amending some contracts. One example includes a six-month deferral through 31 December with no interest payment on a small number of narrowbody aircraft. The airline also want security deposit to be refunded as well as a renegotiation of the lease rentals as part of the proposal.
Another lessor says: “If you are willing to work on the relationship with the airline, you can work and negotiate a solution. What worries me more is that some airlines are saying ‘we are not going to pay you’.”
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