Global Aircraft Leasing 2025 Outlook: Blue Skies Ahead

This commentary reviews the 2025 Outlook for Global Aircraft Leasing companies.

Key highlights include:

-- Morningstar DBRS maintains a stable outlook for aircraft lessors. Financial performance has been healthy through the lessors' most recent reporting period reflecting the positive industry dynamics. We see lessors continuing to benefit from the ongoing supply/demand imbalance for commercial aircraft, especially narrow body aircraft, through 2025.
-- With airline profitability improving across all regions, we expect airline credit performance to remain favorable for lessors. Nevertheless, certain performance risks are present, including the potential for a sudden shock to fuel costs should political tensions in the Middle East or elsewhere lead to a wider conflict.
-- Through the date of this report, the aircraft lessors we follow have issued nearly $19.7 billion in senior unsecured debt compared to $13.3 billion in all of 2023. We anticipate lessors will continue to be active issuers in 2025.

"Lessors have noteworthy financing requirements in 2025, including the financing of new aircraft deliveries as well as the refinancing of maturing debt. With asset-backed securities (ABS) markets reopening during 2024, we expect that lessors will return to the ABS markets to diversify funding, obtain lower cost financing as well as manage airline exposures," said David Laterza, Associate Managing Director, NA Financial Institution Ratings, and David Petu, CFA, Senior Vice President, US Structured Finance.