Mar 31, 2020
class="no_name selectionShareable">Companies that lease aircraft are hopeful that government stimulus funds can help steady struggling US airlines, as half of carriers worldwide seek rent relief on their planes.
The precipitous drop in demand for air travel caused by the coronavirus pandemic has hurt not only airlines, but also the companies that supply about 40 per cent of their planes, collecting rent from the operators. The stock price for AerCap in Dublin has decreased 65 per cent since the start of the year, while Los Angeles-based Air Lease has fallen 56 per cent.
The $2 tillion (€1.8 trillion) US stimulus bill signed into law on Friday includes no money for the leasing industry per se, nor do the rescue packages governments put forth this month for Norwegian Air Shuttle or airlines in China.
But the law earmarks $58 billion in loans and loan guarantees for US passenger airlines and cargo carriers, with half set aside to pay employees’ wages and benefits, and waives aviation excise taxes for the year. Suppliers from caterers to fuel providers to lessors will feel the trickle-down effect, said Alvin Khoo, chief financial officer at GA Telesis, a midsize Florida company that leases, repairs and sells parts from aircraft.
“Liquidity for your customer is good,” Mr Khoo said. “It’s a significant credit positive for the entire leasing community. How it works its way through the funnel I don’t know, but I’m sure every lessor is calling up the airlines and saying, ‘OK, you just got this cash. Don’t forget us.”