Aircraft Leasing

While the aircraft proprietor or leasing company keeps the right to the aircraft, he assigns the ownership of the aircraft to the leasing company. Importantly, due to the wide variety of available leasing option types, not all aircraft leasing contracts will comply with the above definitions. The FAA also regulates aircraft leasing relationships in the Federal Aviation Regulations (FARs).

FAA categorizes aircraft leasing as either a " dye" or " a wet " leasing. Within the scope of a carry lease  the aircraft operator only provides the aircraft and no crews. When at least one member of the crews is provided for in the leasing agreement, this becomes a bet leasing as per the definitions in the VRS. Letting a aircraft out of a bet is an exemption from the straightforward interpretation of a leasing relationship because it is not a transfer of ownership of the aircraft.

Leaseholders retain operative oversight of the aircraft under a Wet Leasing arrangement. In the absence of a particular exception, such as a timeshare arrangement or other option found under FAR 91.501, a bet leasing transaction will require an FAA certificate of operation. This is an introductory guide to the many leasing possibilities for corporate aircraft. Policies and deliberations for joint leasing and joint servicing contracts with corporate aircraft.

Aircraft leasing regulations of the German Air Transport Association (FAA). Aircraft leasing without crews: General agreement on the FAA's interpretations of the law. Survey of the different possibilities of leasing financings. Learn about leasing and funding opportunities for corporate aircraft.

A top selection of industries: Comparative analysis of aircraft leasing firms

I have talked about several aircraft leasing businesses in the past and I remain optimistic about the long run. Over the last 12-month period, inventories in the aircraft leasing sector have largely been moving laterally. The Air Lease (NYSE:AL) increased by 10%, Air Leasing (NYSE:FLY) by 1.1% and Aircastle (NYSE:AYR) by 6.3%.

With a return of 15.3%, AerCap Holdings (NYSE:AER) performed relatively well over the same time frame. As I see this lateral move as a good way to collect top class name in the sector, this paper offers a benchmark on the best stock to invest in. The aircraft leasing sector should be optimistic about the long run for several good reason.

The outlook for the aviation sector remains optimistic with passenger numbers growing steadily. More and more aircraft operators are leasing aircraft as direct sales. As a result, there has been strong momentum in terms of aircraft leasing company sales. Market Research reports that the aircraft leasing sector is predicted to expand from 2018 to 2023 with a 4.75% increase in CER.

Despite increasing aviation costs, IATA anticipates that the aviation sector will stay viable in 2018. Although margins are declining in relation, leasing requirements will stay strong as the number of passengers continues to rise. New aircraft have already been rented for Air Lease for delivery in 2018 and 2019.

That is an indicator of market demands. In the following chart, a comparison of aircraft leasing inventories is presented. Each company's indebtedness and loan ratios form the most important foundation for the analyses. This focus on borrowed capital and the associated ratios is due to the fact that aircraft leasing firms are dependent on the lever for economic upturn.

Furthermore, the investments, the leasing period and the leasing rates (years) also give a prospect of economic development and liquidity availability. The Air Leasing segment has the youngest aircraft in the sector with a sound residual maturity. With AerCap Holdings having a higher leasing period, the company's leasing period remains appealing, and with a significant pipelined supply of new aircraft, the weight based ageing of the fleets will also decrease.

Every company in the leasing sector is heavily indebted. Aircraft leasing airlines are expanding through leveraging, as already stated. Most importantly, even with high levels of debt, all businesses have high levels of interest cover for underlying EBIT. Here, too, the best cover is given for Air Lease and AerCap Holdings, and these enterprises also have a higher visible rate of in-crease.

Both Air Lease and AerCap Holdings have significant obligations in connection with the delivery of new aircraft. Nevertheless, both businesses have at their disposal significant liquid assets and a solid operative income stream. Whilst I anticipate that the indebtedness of all businesses will rise in the years to come, I do not see the funding of new aircraft supplies as a problem. This is also in view of the fact that Air Lease and AerCap Holdings have an asset class rated (which facilitates leverage).

Aircastle and fly leasing have also been working on the development of a state-of-the-art aircraft hire business and the loan ratios are sound for these businesses as well. Relatively speaking, however, Air Lease and AerCap are appealing. Over the last 12-month period, aircraft leasing inventories have not generated a solid return, but these two businesses have surpassed the competition.

Aircraft leasing has a constant view of economic expansion in the years ahead as aviation activity continues to grow globally and airlines choose to lease aircraft rather than buy directly. Enterprises such as Aer Lease and AerCap Holdings are well placed to take advantage of this expansion and deliver sustainable new aircraft over the next 3-5 years.

As I see it, the present level of these shares is a good occasion to consider a new buy. I/we have no position in these shares and no plan to open any position within the next 72hrs. There is no relation to a corporation whose shares are referred to in this paper.