In It for the Long Haul - Widebody Aircraft Market Continues to Recover Benefiting Lessors

This commentary reviews the outlook for the widebody aircraft market and its impact on aircraft lessors.

Key highlights include:

-- International travel passenger volumes were 93.1% of September 2019 levels in September 2023, according to data from IATA, with several regions exceeding pre-pandemic levels.

-- The strong demand from airlines for widebody aircraft to meet growing passenger volumes combined with a tight supply of new and used widebody aircraft has been a key driver of improving values and strengthening lease rates.

-- DBRS Morningstar expects that lingering supply chain issues and resulting production delays will continue well into 2025 likely resulting in Airbus and Boeing not being able to meet delivery dates exacerbating shortages of new widebody aircraft vis a vis demand.

-- We see the current trends benefiting widebody aircraft values and lease rates continuing in 2024 thereby supporting a favorable environment for aircraft lessors.

“Airlines' inability to purchase widebody aircraft due to reduced OEM availability from OEMs, reduced used inventory, and high financing costs hasve also resulted in aircraft lessors getting traction writing new leases and extending maturing leases across the global airline lessee base with higher lease rates.” said David Laterza, Senior Vice President – Head of U.S. NBFI, Global FIG and Mark Hirshorn, Senior Vice President U.S. ABS.