Aircraft Leasing Outlook: Global Economic Uncertainties Introduce New Headwinds as Industry Climbs Back to Cruising Altitude
This commentary reviews the outlook for aircraft leasing in 2023.Key highlights include:
• DBRS Morningstar's outlook for aircraft lessors is Stable. For 2023, DBRS Morningstar sees industry fundamentals remaining supportive of sound aircraft lessor performance and ratings.
• Airline credit improved notably in 2022, and we see this trend continuing in 2023, although at a more gradual pace with airlines facing a number of challenges. Downside risks remain from elevated fuel costs, higher wages, increasing interest rates and other inflationary costs as well as a strong U.S. dollar.
• We expect that the lessors will remain disciplined on leverage, despite the necessary debt funding to be raised in 2023.
“Airlines continue to restore, and in some cases expand, their networks to address the growth in leisure travel and steady recovery in passenger volumes. As a result, airlines have boosted demand for aircraft, which is a positive for aircraft lessors. The increasing propensity of airlines to lease aircraft is also supporting this demand.” said David Laterza, Senior Vice President, Head of U.S. Non-Bank Financial, Global FIG.
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