The aircraft leasing industry faces a stable outlook for 2025, with strong travel demand and aircraft supply constraints expected to support solid financial performance, according to a new Morningstar DBRS report.
Global air travel demand remains robust, driven by leisure travel and improving corporate bookings.
“We expect continuing solid growth dynamics in global aviation along with supply and demand imbalances for commercial aircraft to underpin sound lessor financial and operating performance,” said David Laterza, Associate Managing Director at Morningstar DBRS.
Aircraft lessors issued $19.7 billion in senior unsecured debt year-to-date, marking a 38 per cent increase from 2023.
Production delays at major manufacturers continue to limit new aircraft availability, driving strong demand for existing aircraft.
The report noted that lessors’ average fleet age increased to 6.5 years, up from 5.3 years in 2019, due to delivery constraints.
Balance sheet leverage improved to 3.2x in the first nine months of 2024, reaching the lowest level in a decade.
Several risks remain, including potential economic slowdowns affecting travel demand and geopolitical tensions in Ukraine and the Middle East.
Large lessors have reduced exposure to potentially volatile markets, with AerCap decreasing its Chinese airline portfolio to 15.7 per cent from 20.5 per cent in 2018.
The reopening of asset-backed securities markets in late 2024 is expected to provide additional funding options for lessors in 2025.
Airlines’ profitability is forecast to reach $30.5 billion in 2024, up from $23.3 billion in 2023, though regional performance varies significantly.
