Narrowing Airline Losses Supportive of Improving Cash Collection for Lessors; Virus Variants Remain a Risk
This commentary reviews the narrowing of airline losses in 2021 and expectations for a further recover in airline earnings in 2022.Key highlights include:
• Airline losses are expected to narrow further in 2022 following unprecedented losses over the last two years caused by the Coronavirus Disease (COVID-19) pandemic and the corresponding travel restrictions put in place by governments globally.
• Higher passenger load factors along with higher ticket prices and cost reduction initiatives enacted during the pandemic are supporting the improving airline financial performance.
• This improved performance should result in lower rent deferral requests for aircraft lessors from their airline customers and further enhance their cash collection rates.
“With airline financial performance improving in 2021, more airlines returned to paying status and lessors began to see new rent deferral requests from airlines materially abate by mid-2021. In their most recent financial reports, nearly all aircraft lessors indicated that cash collection rates were improving with most seeing collection rates between 89% and 99% in 3Q21,” said David Laterza, Senior Vice President, Head of Non-Bank FIG – Global FIG.
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