Ishka reports on the aviation finance panel at last week’s ISTAT EMEA event held in Edinburgh. more
Air Lease Corporation’s (ALC) most recent quarterly results highlight why investors are still seeking a foothold in aircraft leasing. The Californian aircraft lessor showed a 17% rise in revenues compared to last year and an improved EBITDA margin of 93.1%. The Ishka view is that the company’s performance demonstrates that its business model is well-suited to the upswing part of the industry cycle. more
CIT is rumoured to be preparing an announcement this Friday regarding its sale.
Rival lessor Avolon, which is owned by Chinese conglomerate HNA Group, is said to have won the bidding war for the US leasing firm, according to sources on the side of the Europe ISTAT conference.more
Aircraft leasing is a capital-intensive business and aircraft lessors remain highly leveraged. However, the larger lessors can boast of enviable operating margins. Several lessors have become listed which has also helped optimise their capital structures. Ishka has compared the public financials of AerCap, Air Lease Corporation, Aircastle, Aviation Capital Group, Avation, BOC Aviation, FLY Leasing and SMBC AC to assess their performance. more
All of Air Malta's 8 aircraft are currently leased from AerCap which is a rarity. The struggling State Island national carrier is under considerable pressure to remain an entity in the market as its cost cutting measures have been insufficient. With only a few options left, the Ishka view is that only a deeply restructured Air Malta can survive under the umbrella of a bigger carrier. However, the question is whether there are airlines willing to invest in Air Malta. more
Iran, through Iran Air, is in talks with Boeing and Airbus for up to 198 new aircraft through direct orders. At least two big issues remain in place for either of the two aircraft order deals. The first is regulatory approval in the face of increasingly vocal US opposition in Congress towards the selling of aircraft to Iran and any involvement by the US Export Import Bank. The other related but secondary concern is whether banks and lessors are willing to finance aircraft deals into Iran. more
The two largest LLCs operating in the UK, Ryanair and easyJet, are both rumoured to be interested in acquiring Monarch Airlines which has recently made the transition from a charter to a low-cost carrier. However, if Monarch is not acquired then it faces the greater challenge of building a successful low-cost business model. To do so it will need to lower its CASK rates if it is to successfully compete against other LCCs in the long-run. more
Since Fastjet started operations in late 2012 it has struggled to breakeven. The Ishka view is that the airline faces an uncertain future until it implements some drastic changes to its operations and overhauls its network and fleet. In the absence of a strong restructuring program, the carrier could be staring at bankruptcy in the near future. more
Following Brexit, the GBP is down 14% against the US$, reaching a 31-year exchange rate low of 1.2798. Currency devaluation will impact traffic, but a weaker pound also means airlines may have to pay for aircraft purchases. Our analysis suggests that among the airlines operating out of the UK, Jet2 appears to be one of those vulnerable to a weaker pound. Sustained currency weakness may lead it to defer some of its planned deliveries. more
Following a challenging 2014 which saw losses of RUB 17.1 billion ($267 million), Aeroflot has managed to stem the tide in 2015 and is on track to make a profit in 2016. more
Oman Air made pre-tax losses of $209.18 million in 2015, adding to total accumulated losses of $1.7 billion, and although the airline has had some success in limiting its losses last year, its financial performance remains unsustainable. The strategy is to break even by YE2017 and prepare the ground for a possible privatisation, but on current trends the Ishka view is that needs to be done to make this happen. more
At a time when international air travel to Egypt has been on a decline as a result of the socio-political unrests and terrorism related incidents, outbound travel from the country has displayed a healthy growth trend. A continuation of this trend would lead us to take a optimistic view on the medium to long-term prospects of the smaller Egyptian airlines. more
Avianca is set to receive 149 aircraft between 2016 and 2024, but the airline is struggling to bring its costs down and tackle an unsustainable level of debt. The carrier’s gross adjusted leverage – as measured by total adjusted debt EBITDAR – is currently 7.4x. The company is in the market for a $500 million capital injection. If it fails to find this additional equity it will face a challenge in funding its fleet renewal. more
Ignoring the non-recurring revenue and cost items, SAS posted losses in both the quarters of the first half of FY 2015/16. SAS needs to improve its capacity utilization especially on intercontinental routes this summer in-order to post a profit for the full year. The carrier has improved its bottom line through concerted restructuring efforts but needs to continue with its reforms as it still faces strong competition from low-cost carriers. more
Japan-based JP Lease Products and Services has acquired four aircraft on lease from Aercap. JPLS bought A320 and an A321 on lease to Dragon Air - vintage 1998 (MSN 930) and vintage 2002 (MSN 1695) with 4-6 years remaining on the lease. The firm has also acquired two vintage 2004 A320s (MSN 2206 and MSN 2191) on lease to Aer Lingus.
CIC financed the Are Lingus aircraft while DVB Bank Singapore funded the Dragon Air aircraft. Vedder Price are the lawyers on the deal advising Aercap while K&L Gates advised JPLS. Watson Farley (WFW) advised CIC and Clifford Chance advised DVB Bank. Arena Aviation Capital arranged the deal and will service the aircraft.
We look briefly at three key areas in aviation – the assets, passenger traffic and and the new regulatory environment to understand the impact of last week's historic UK vote on aviation. more
The Polish carrier’s newly appointed CEO, Rafal Milczarski, is considering overhauling the carrier’s narrowbody fleet. Ishka sees a short-haul fleet overhaul as a step in the right direction but can LOT afford a substantial fleet expansion just three years after the carrier was on the verge of bankruptcy? more
The Australian airline appears to be on track for a sustained recovering as continues its Transformation Plan. Qantas has eight Boeing 787-9s which are scheduled to begin delivering in late 2017 through 2018. The Ishka view is that the new aircraft, which will mostly be used to replace the airline’s ageing 747-400s, will not threaten Qantas’ profitable codeshare agreement with Emirates but will allow the airline to benefit from the high rise in Chinese traffic to Australia. more
Spirit Airlines’ (Spirit) new CEO has announced a new strategy for the Ultra-Low Cost Carrier (ULCC) which will include targeting 500 new domestic routes, cutting capacity by 10% and changing the culture of ‘America’s most hated airline’ in an attempt to improve customer service. more
Alaska Airlines and Horizon Air’s parent firm, Alaska Air Group, Inc., is set to acquire Virgin America, Inc. Despite the limited commonalities, Ishka believes that this merger makes strategic sense for both the airlines, especially in a consolidating US airline market. However fleet integration, Virgin’s shareholders and the increased leverage could still challenge Alaska’s attempt at expanding its market share beyond the Pacific Northwest. more