The Fundamentals of Aircraft Leasing – key industry insights from leasing greats Steven Udvar-Hazy and Robert Martin

While airlines and airports are at the forefront of daily aviation operations, we can often forget about the lessors, without whom many of today’s carriers would not have any aircraft to operate. Whether traditional leasing vehicles, financiers, aircraft owners, whatever form they take, they are the ones that are taking more risk and have more to lose if an airline collapses.  After all how many airlines can acquire an initial fleet of aircraft with a huge cash sum?

Two leaders of the aircraft leasing business, Air Lease Corporation’s executive chairman of the board, Steven Udvar-Hazy, and BOC Aviation’s managing director and chief executive officer, Robert Martin, joined CAPA – Centre for Aviation’s recent Low Cost Long Haul Global Summit in Seville to give their perspectives on the outlook for the fast growing sector.

In what was an absorbing session and a great insight into the sector that encompassed a range of subjects from what they look for in an airline business model, what decisions they need to take before investing in new aircraft programmes, how they assess risk, and the vital step of achieving critical mass.

When asked what they look for in an airline business model, Mr Udvar-Hazy explained, “there are literally dozens of different factors that we consider when making these decisions”, including the credit structure, management talent and capital structure of the business, as well as the competitive landscape, network, long term strategy and break-even point.

For Mr Martin, there are four main factors.  “First of all the business model of the airline: do we think it works?  Secondly, and very importantly, do they have a management team that we think can execute the business strategy? The third thing is cashflow and fourthly the competition – can they whether the competitive response?” he explained.

You can view the highlights of the session, which also covered ‘What are the key ingredients for a Lessor?’, and, ‘Why do airlines succeed – or fail?’ by following this link ‘The Fundamentals of Aircraft Leasing, with Steven Udvar-Hazy and Robert Martin‘ to a more detailed story on the main CAPA site.