Kroll Bond Rating Agency (KBRA) anticipates sustained elevated competition within the aircraft leasing market in the near-term with more portfolio trades and new market entrants. In addition, further industry consolidation among small to mid-tier companies determined to capture market share and increase economies of scale is likely. With relative stability expected in regards to the performance of airlines given continued growing demand for air travel, reinforced by emerging economies and increased global connectivity, overall, lessors’ performance is projected to endure.
KBRA notes that risks remain in some pockets, as in the wide-body aircraft liquidity which could lead to impairments for some—particularly for lessors exposed to such large and expensive assets. Importantly, KBRA believes that a shift and rebalancing of the competitive landscape among the lessors is almost certain due to the emergence of keen interest from less traditional investors demonstrated by significant capital outlays for aircraft leasing platforms. To that end, while the sector as a whole remains well supported by fundamentals of global passenger travel, lessors with less ability to compete in the emerging landscape may not fare as well and new risk dynamics in the sector could surface.
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