CIT Group warns aviation leasing could hit turbulence

CIT Group has issued a briefing saying the global airline industry currently has access to an abundance of fragmented capital, but there may not be an equal abundance of market awareness to adapt to potential changes in market conditions, which it predicts could hit leasing companies and carriers hard.

While this fragmentation has served the industry well during a period of significant growth and profits; however, due to the cyclical nature of the global airline sector, this lack of market awareness is leaving companies vulnerable to the next potential downturn, argues John Morabito, group head, financial institutions group.

“As the industry reaches a peak, it’s crucial that global airlines and financial institutions strategically and methodically plan their growth and access to capital in order to protect their economics before the sector enters a slowdown,” said Morabito. “In order to better serve our clients in the face of this prospect, CIT established a joint venture with Century Tokyo Leasing (CTL) that combines CIT’s platform and asset management experience with CTL’s unique capital backing and deep regional knowledge.”

The “Global Commercial Aerospace: Financing Trends” report says lenders and some carriers are missing opportunities with midlife equipment, largely due to a lack of knowledge and expertise in financing this type of asset.