26 May 2020 – As companies continue to face the impact of the COVID-19 pandemic on their business, our experts keep you up to date and provide practical insights on the key developments related to your sector.
AVIATION: Outlook and Opportunities
as seen by Oleksiy Burchevskyy, Head of Aviation, Kinstellar
1. Do you expect a decline or increase in the number of deals in the sector in 2020 / 2021?
Deliveries of new aircraft are down significantly, with around 600 aircraft of all major types expected to be delivered in 2020. Leasing of new aircraft has fallen significantly. Due to expected overcapacity, the leasing market is not expected to pick up earlier than summer 2021. Steady but slow growth in the sector is expected from autumn 2020 until summer 2022, when full recovery of the sector is expected.
2. Is CEE in any way distinct from the rest of the EU?
As CEE airlines are generally receiving less support from their national governments, we anticipate more airline bankruptcies in the region compared to the western part of the EU.
3. Where do you see the best opportunities on the market (type of deal, sub-sector, size)?
Aircraft portfolios are distressed assets at the moment. Newer and smaller aircraft types are still attractive investments from the long-term perspective. Airlines with a healthy pre-crisis balance sheet and an attractive collection of destinations may also be a good choice. Aviation hangars may be an attractive long-term investment as well.
4. Closing thoughts:
- The airline market is not expected to recover until summer 2022, provided that major travel restrictions are lifted in autumn 2020.
- Bigger, older aircraft (A380, B747) are being retired en masse.
- Cargo airlines/aircraft are currently thriving, but this is expected to subside as full passenger traffic resumes and cargo is again carried on passenger aircraft.
- Government support is needed and, in many cases, has already been provided (US).
- Lessors with access to US and Chinese capital are expected to have a significant advantage over others.
We would be happy to answer any questions you may have about this topic. For more information please contact Oleksiy Burchevskyy, at .