The 10 biggest things that have happened to the commercial airfinance market

As I am in a reflective mood this are my first thoughts – please let me know if you disagree.

The Cape Town Convention
Although criticised by some for not leading to real changes but Cape Town is an amazing achievement that no other industry has matched. The Aviation Working Group is an amazing coalition of different groups and the key participants who have driven this have done a wonderful job.

Swissair
A blue chip, flag carrier that failed. Swissair was an airline that every bank wanted in their portfolio until 2001. Its hunter strategy should serve as a warning to other airlines. Somehow more of a shock than US airline bankruptcies.

Boeing Capital and the 787
It is easy to criticise Boeing’s launch of the 787 – particularly the numerous delays – but Boeing Capital deserves huge credit for realising the importance of financiers. From the start Boeing Capital Corporation actively went out and pitched the new aircraft to financiers. This may seem obvious now but it a new strategy at the time (particularly since Airbus had stronger links with European lenders).  Now all commercial aircraft manufacturers – and some engine makers like CFM – spend a lot of time communicating with financiers.

Listed leasing companies
With AIG buying ILFC,  the failed GPA float and the short life of AerFi (which successfully floated but was then acquired by what is now AerCap) this model had not really been tested.  Genesis, AerCap, Babcock & Brown Air and Aircastle changed this. Aircastle and AerCap are the winners but all four deals were very significant and will be repeated no doubt by Air Lease and Avolon.

GPA
Without doubt the greatest story in airfinance. An amazingly successful, innovative company for many years that eventually failed. The failed IPO and work out led to the creation of Gecas and other leading lessors including Pembroke, RBS Aviation Capital, Avolon, and others. The turnaround that led to AerFi was also fantastically managed by Patrick Blaney and his team.

Ireland
As well as GPA the Irish government has supported aircraft finance amazingly. It is also home to the leading European Airfinance conference.

Chinese leasing companies
China will be to aircraft finance in the next 10 years what Japan was in the 1990s.

Export credit
Everyone likes to criticise export credit agencies in good markets. But they saved manufacturers in 1998, 2002 and 2009. Some very dedicated people who work hard.

Low costs
Just 10 years ago European airlines and IATA would often explain why low-costs could not work in Europe. Then they argued the same for Asia and Latin America. Low-cost airlines won.

Securitization
Now a dirty word but EETCs and operating lease securitizations have made a big difference. Like many I have left commercial aircraft finance before European EETCs became common.