KBRA: Lessors Will be Tested by Post Pandemic Aircraft Returns

Kroll Bond Rating Agency (KBRA) released research on the potential ramifications of the coronavirus (COVID-19) pandemic on aircraft values and lease rates. KBRA believes that aircraft values and lease rate declines will be contingent on two factors, namely, the speed of economic recovery and the path that surviving airlines take in deciding the composition of their fleets post-coronavirus.

Roughly half of the total global passenger fleet was parked as a result of severe travel restrictions. Further, KBRA expects that many aircraft may be removed from service through early retirement and/or be returned to lessors at lease end, in anticipation of significant passenger traffic reduction. Aircraft lessors will be tested as more aircraft would need to be remarketed as a result of lease expiry and airline bankruptcies, resulting in more downward pressure on lease rates.

As the coronavirus’ impact continues the shape of economic recovery is becoming increasing more difficult to predict, but KBRA believes the younger, fuel-efficient aircraft are best positioned to be key for airlines and lessors post-pandemic.

Click here to view the report.

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