Lessors Combat COVID-19, MAX Issues By Deferring Payments, Moving Aircraft

As airlines grapple with capacity shortages created by the Boeing 737 MAX grounding or a sudden over-supply because of COVID-19-related schedule reductions, lessors are supporting their mitigation plans, including matching customers in both categories and moving aircraft between them.

“We’ve got about a dozen carriers in Europe that probably feel that they will not have their summer season made because of the MAX [grounding] that are asking us for aircraft,” Air Lease Corp. President and CEO John Plueger said on a recent earnings call. 

“We already are, in fact, very close to taking delivery of two 737-800s, for example, out of China that we already have placed in Europe,” Plueger added.

For lessors with affected customers, the scenario is troubling. “Airlines have stopped flying. They have less cash coming in,” Plueger said. While the largest carriers can withstand a short period of high disruption, “there are some secondary and tertiary carriers that need cash.”

In cases where a lessor’s customers have opposite short-term needs, moving aircraft between them is feasible.

“If you’re a smaller or medium-sized airline in China or Asia and you need cash, and we’re about to write you or wire transfer a big check [for an aircraft], you can bet your bottom dollar that transaction will happen expeditiously,” Plueger said. 

Currently, 31% of in-service aircraft in Asia are leased, with China leading the pack.

This is an abbreviated version of an article by Sean Broderick that appeared in Aviation Daily. Get the full article here.