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The grounding of Boeing’s 737 Max fleet is a headache for carriers such as American Airlines and Norwegian Air, but it is also a reminder of the boom that the aircraft leasing industry has enjoyed in recent decades. More than a fifth of Boeing’s 2,700 orders for the Max 8 came from a $330bn aircraft leasing industry whose growth has been fuelled by more people taking to the skies, the abundance of cheap money since the financial crisis and airlines opting to lease rather than buy planes. “Sometime in the near future, over half the aeroplanes in the world are going to be owned by people who don’t operate them,” said Peter Barrett, chief executive of SMBC Aviation Capital, the world’s sixth-largest lessor with more than 400 planes.
Few believe that the Boeing crisis is big enough to trigger a downturn in the sector, where leasing companies generate profits from buying and then leasing the planes but run the risk of their airline customers failing in a cyclical industry.
However, the crisis at the aerospace company has injected urgency in to the debate over whether a slowing global economy will soon hurt an industry in which GE Capital Aviation Services, with 1,200 planes valued at $27bn; Carlyle Aviation Partners, which is owned by the US buyout firm; and New York-listed AerCap are among the biggest players.
Tye Holmes, executive director of aviation at Mitsubishi UFJ Financial Group, said there were “plenty of warning signs” including overcapacity in certain regions, softening lease rates and a few large airlines going bust. “Most people appear to be pleasantly surprised the market is keeping going,” he said.