The commercial aircraft leasing market appears headed for considerable turmoil in 2021 as lessors prepare for the return of more than 1,000 aircraft without clear options for onward placement, according to aviation consultancy IBA. In a recent webinar, IBA outlined how before the start of the pandemic operators planned to return about 1,300 aircraft, including 200 widebodies, to their lessors in 2021. IBA said it believes that, while those operators would likely have extended the majority of those leases, that option now appears extremely unlikely.
IBA forecasts that, due to the drop in demand caused by the Covid-19 pandemic, the vast majority of those aircraft will not draw follow-on leases secured at the point of return. With airline failures and increasing numbers of airlines looking to terminate longer leases earlier due to restructuring, the number of aircraft returning to lessors without onward placement will only increase, said IBA.
As a result of the uncertainty, the model established in recent years of seamless redeliveries between lessees will likely break, and IBA expects a higher level of disputes between airlines and lessors around lease returns and redeliveries.
IBA also forecasts that the fall in aircraft leasing activity will drive a corresponding fall in engine shop visits. Prior to Covid-19, IBA forecasts called for those visits to rise from 3,200 in 2019 to 4,500 by 2023. It now projects only 1,000 shop visits this year, and it will take until 2026 to reach the originally forecast 2019 levels. As a result, IBA expects MROs to introduce more flexibility into their shop visit programs.
“The buoyancy in the commercial aircraft leasing market of the last few years is being brought to an abrupt end by Covid, and we foresee a significant impact not only on lessors but across the supply ecosystem—particularly in the MRO sector,” said IBA president Phil Seymour.
IBA also addressed the unique circumstances of the Boeing 737 Max’s coming return to service. Not only has the extended storage period for the aircraft created a set of technical issues that will need addressing, but aircraft manufactured during the grounding period have swelled the number of grounded airplanes to more than 750.
“It’s crucial for Boeing that it handles the Max’s return to service efficiently and without incident,” said Seymor. “Given the large number of aircraft involved, we forecast this process will take up to two years.”