Bank Of America Aircraft Repossession - The aviation sector has endured two tough years amid border closures and quarantines. Despite continued volatility and uncertainty, our survey found that senior executives are cautiously optimistic about global aviation's financial position in 2022.
The past two years have been a period of intense turmoil for the aviation sector, with several bankruptcies, bailouts and reduced revenue due to the coronavirus pandemic. Its impact on airline revenue is challenging. In fact, the gap between projected and actual receipts suggests that airlines have lost nearly $1 trillion in passenger revenue as a result of the pandemic.
Bank Of America Aircraft Repossession
It will take time to rebuild the balance sheet and restore passenger confidence. Uncertainties lie ahead and (as the rapid spread of COVID-19 mutations reminds us) there is no room for complacency.
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First, airlines and contractors now have access to a wider range of financing opportunities than ever before. Innovative finance is the order of the day: In addition to traditional sources such as banks, capital markets and export credit agencies, the aviation sector is increasingly using financing from alternative capital providers, including private equity and hedge funds. High net worth individuals and family offices are now part of the mix alongside new capital market products such as green bonds.
Second – and closely related to the evolving financial environment – is the growing awareness of environmental, social and governance (ESG) considerations in aviation. Airlines and contractors—and the investors who support them—are taking the first steps toward decarbonizing aviation with initiatives that include everything from the development of sustainable aviation fuel (SAF) to the first short-range electric aircraft.
Ambiguities are ahead and there is no room for complacency.
This is important, because the future of aviation is as much a battle for hearts and minds as it is for technology. Covid-19 has turned many of us into telecommuters, but the rise of "staycations" is reminding travelers of the good times they had closer to home. Attracting travelers - especially business travelers - is not easy. Against this backdrop, travelers of all types are increasingly aware of the environmental impact of their travel. In this context, even small steps to increase airlines' green credentials can make a difference.
Introduction To Aviation Finance
The aviation sector that has emerged from this pandemic will likely look very different from the one that entered it two years ago.
But it's an area that's more flexible, leaner, a little greener, and—most importantly—likely better suited for the future.
In the fourth quarter of 2021, White & Case, in partnership with MergerMarket, surveyed 100 senior executives at entities that have invested or invested in the aviation industry in the past three years. The purpose of this survey is to analyze sentiments towards aviation finance. Companies surveyed include airlines, operating lessors, banks, export credit agencies, private equity and other alternative capital providers. Job titles include CEO, CFO, Director level, and Chief Investment Officer.
Despite concerns about Covid-19 and the global economy, aviation sector officials expect investment to maintain or increase in 2022.
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Our survey shows that most respondents expect funding to increase in 2022 and from a wide variety of sources.
Respondents see Covid-related disruptions, economic contraction and geopolitical instability as key challenges for the aviation sector in the coming year. But growth is expected, especially in Asia Pacific and Australia
Aircraft leasing companies are the backbone of modern commercial aviation. Lessors now account for about 60 percent of new passenger jet deliveries, up from roughly 45 percent on the eve of the pandemic and just 10 percent in the mid-1980s.
Thanks in part to their ability to access lower-cost financing than airlines, the rise of aircraft leasing companies has accelerated during the COVID-19 crisis. Nevertheless, the sector has experienced consolidation during the pandemic, including Ireland-based AerCap's $31.1 billion purchase of GE's aircraft leasing arm GECAS.
Commercial Aircraft Repossession
Lessors have shown resilience throughout the pandemic: 86 percent have agreed to lease aircraft with their airline customers during the COVID-19 crisis, with more than half of respondents expecting to lease this or short-term lease (PBH ) have Measure duration
Refunds are a last resort. Reduced demand during the pandemic (especially for wide-body aircraft) has encouraged contractors to work with troubled airlines rather than recall aircraft. A third of the lessees in our survey say they have repossessed less than 5 percent (or none) of their fleet during the COVID-19 pandemic. But 29 percent say they have had to retire more than a tenth of their fleet.
Despite reduced demand during the pandemic, lessors have been able to bring aircraft back into the market. It requires patience and deep pockets: For most lessors in the study (57 percent), remarketing an aircraft takes three to six months, while nearly a quarter (24 percent) say it takes six to twelve months. Only one in five people find or recover within three months of returning.
View Full Image: Have you agreed with your airline customers to defer aircraft leases during the COVID-19 crisis, and do you anticipate deferring lease or hourly electricity as a short-term or long-term feature? (PDF)
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View full image: What percentage of the fleet did you have to redeploy during the COVID-19 pandemic? (PDF)
This publication is provided for your convenience and does not constitute legal advice. This publication is protected by copyright. While the airline industry as a whole is flying these days, many pilots say they are not fooled by increased profits. Several airlines, including Southwest and Delta, are working with union negotiators to draft new pilots' contracts.
To supplement their income, some of those pilots have done a bit of freelance work—and when you have a specialized skill set like theirs, a return to aviation is a natural fit.
President Sage-Popovich Popovich is one of the kings of airline reimbursement. Since 1979, he and his company have restored 1,756 fixed and rotary aircraft (with 18 main stocks, 42 engines and various ground service equipment). But as the market has evolved over the past 36 years, they've expanded their business to include numerous other services, including consulting and fleet management. He says he expects to make between $10 million and $12 million this year.
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Once a customer decides to proceed with a refund, Popovich and the staff work quickly. In addition to a full-time staff of 42, they have 65 full-time contractors (with a focus on management). And they have a database of about 7,000 pilots they can call on to fly the plane—covering a wide range of planes from Cessnas to 777s.
Most pilots work for major airlines. And while it might seem a little strange to think that the person flying you from New York to San Francisco is doubling as a tank guy, Popovich says airlines usually don't have a problem with it.
"Most major airlines don't have a no-fly zone that other airlines don't," he says. "We work closely with the airlines—so if we're stuck for a pilot, I can call them and say, I need a 777 pilot."
The first step when the company receives the green light for the deposit: create a deposit book - a set of all the necessary legal documents, including a power of attorney for the client, a default affidavit, a certified copy of the note and mortgage. Then there is the issue of locating aircraft.
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On good days, the customer maintains a relationship with the owner by default, has copies of annual inspections and other reports, and generally knows where the aircraft is flying. When that's not the case, Popovich says he says the word airport employees know they're spying on.
"We have a wide network of people that we've built up over the years," he says. "We can send an instant message to 30,000 people and say, 'This is the plane we're looking for,' and surprisingly people will call us [and accept the fare finder]."
Self-repossessions occur in “self-help” areas—areas of the country and world where repossession professionals do not need the sheriff's office or marshal to be involved in the repossession process. Sage-Popovich representatives fly in the company's aircraft — usually a Challenger 601-3A-ER or Hawker 700A — and land alongside the plane, then quickly disembark and board it. Depending on the situation, they will tow it or fly it - after first notifying the police and airport authorities that the plane is diverting.
Although refunds are a fun part of his job, Popovich says he advises clients to try to avoid them these days. Since 2008, when the three major automakers in Washington, D.C. When it came down to it, money was demanded and managers criticized themselves for using private rather than commercial aircraft. As the public outcry grew, they were forced to make some changes—changes that other major companies imitated.
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