Used Aircraft Struggle to Find Buyers as Banks Avoid Taking Risk
Banks are becoming increasingly reticent to finance used aircraft because their value has become harder to gauge as an unprecedented number of new jets floods the market, a managing director of DVB Bank SE (DVB) said.
“There are too few institutions willing to finance aircraft aged more than eight to ten years old,” Bertrand Grabowski said in an interview from Dublin. “Most institutions have limited resources, and as a bank, you prefer to back easy- to-understand new aircraft market rather than the difficult, and somewhat dangerous second-hand market.”
Airbus SAS and Boeing Co. (BA) are producing aircraft at record numbers, and their planned A320neo and 737 MAX jetliners are winning customers seeking to cut fuel consumption. Financing new planes will become tougher in 2012 as European banks feel the squeeze from the sovereign debt crisis, a trend the U.S. Export Import bank will help mitigate with higher guarantees to keep production at Airbus (EAD) and Boeing humming along, Grabowski said.
“On both sides of the Atlantic, the credit agencies are doing their duty,” said Grabowski, whose Frankfurt-based bank is the single-biggest financier of used aircraft. “I can imagine for 2012 that the Ex-Im bank and credit agencies in Europe would probably back 35 percent or even above that, which is historically high.”
Airbus has won hundreds of orders for its A320neo, making the aircraft the fastest-selling jet in aviation history. Airbus and Boeing won orders today from Norwegian Air Shuttle valued at 127 billion kroner ($21.5 billion) as Europe’s fourth-biggest discount carrier steps up its competition with state-backed SAS AB
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