Ernest S. Arvai

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    • Wed May 14th 10:05 AM
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      Plane Lessors Are Headed to the Desert
      Like any other business, aircraft leasing depends on the quality of decisions made, including which aircraft to buy, which airlines to lease to, and the anticipated residual values.

      The poor results in the United States, while a significant sector of the market, does not mean that international airlines will perform as poorly as those here. Growth in emerging countries, namely China and India has been spectacular, and will continue as these economies mature and air travel replaces rail for the majority of the populations.

      One must pick and choose carefully - the right aircraft that are likely to remain green, not being late adopters of technologies facing near-term replacement, and which aircraft to remove from your portfolio on a timely basis while residuals are strong.

      Historically, the airlines have been a cyclical business, and while record high fuel prices are depressing earnings, global growth in the industry will continue. That growth will need aircraft, and people to finance them.

      Will some aircraft lessors get into trouble, and find that some aircraft hit the desert? Perhaps for older fleets, but the demand for the newest and most fuel efficient aircraft is such that they can quickly be re-leased internationally.

      It is easy to be caught up in the woes of the US airline industry, most of which lacks the financial wherewithal for long-term viability, and ignore the underlying demand and global growth.

      Ernest S. Arvai
      CEO
      The Arvai Group, Inc.
      View article »