Executives from the world’s biggest aircraft leasing companies speaking at an industry gathering in Dublin said their sector is holding steady even as geopolitical frictions and market volatility mount. They pointed to a preserved tariff-free status for most aircraft, the ability to move aircraft across borders and a substantial backlog of jets from Boeing and Airbus as structural supports for rental income and asset values.
Leasing groups now collectively control about half of the global fleet and, with large order books, many of them are set to receive a large share of new jet production through the next decade. That concentration of new deliveries and ongoing industrial constraints, executives argue, are keeping available supply tight and providing what some described as guardrails around the cycle.
Tom Baker, chief executive of Aviation Capital Group (ACG), described the industry as "shockingly stable" despite wider global volatility. "There have been many, many things over the past year that we thought were going to lead to softer demand and the industry continues to grind through it," he said, adding that the lack of available aircraft has limited downside in the market.
SMBC Aviation CEO Peter Barrett acknowledged a higher level of risk but stressed the sector’s track record of absorbing shocks. "Is there more risk? It feels like it and certainly if not more, then different," he told Reuters. "(But) the industry has been good at managing geopolitical risk."
Executives also reflected on the industry’s history of being caught out by sudden crises, including the Asian financial crisis, the fallout after 9/11, COVID-19 and disruptions tied to Russia’s failure to return aircraft following its invasion of Ukraine. Those episodes have influenced how lessors manage capital and risk across the long investment horizons typical for jets.
Firoz Tarapore, CEO of Dubai Aerospace Enterprise (DAE), cautioned that recent actions by a major economy may produce effects that are not merely transient. "It’ll just take time to see if any of these knee-jerk reactions (by the U.S. administration) end up becoming chronic," he said at the Airline Economics conference in Dublin. "The disruption that’s caused by the greatest economy in the world is still something that you just can’t say it’s a sneeze and it will go away."
Consolidation across the lessor sector is advancing, driven by the rising costs of entry, the need for scale in order books and strong credit ratings. Several executives warned that smaller players without a clear niche or backing from large financial sponsors may struggle to compete.
Andy Cronin, CEO of Avolon, said barriers to entry are increasing: "That journey is much more difficult today unless you’ve got a sovereign wealth fund or a large bank behind you." Cronin noted that Avolon, SMBC and AerCap are located within walking distance of each other in Dublin and together manage roughly 15% of the global fleet. "Consolidation still has a way to go," he added.
Last year’s industry movements included SMBC Aviation’s acquisition of U.S. rival Air Lease Corp. More recently, Reuters sources said Air Lease chairman Steven Udvar-Hazy, one of the sector’s founders, was considering a potential new venture; Hazy declined to comment.
The sale of Macquarie AirFinance has drawn several bidders into its final stages, with DAE, AviLease and Qatar’s Lesha Bank among those reported to be contending. Macquarie declined to comment and none of the potential buyers offered immediate remarks.
As markets strengthen, owners of lessors face an opportunity to divest at premium valuations. Baker at ACG said firms that cannot commit capital, return capital or grow will eventually see sponsors move on. "If you can’t commit capital, you can’t return capital, you can’t grow, then it’s only a matter of time before your sponsors say, thanks so much, it’s been a great experiment, it’s time to move on," he said.
One question that surfaced in the event’s peripheral commentary was whether AER represents a buying opportunity. A related valuation tool referenced in industry conversation claims to use a mix of 17 established industry valuation models to assess fair value across aviation-related stocks, including AER, as part of a broader investor screening effort.
Summary
Major lessors say the industry is unusually robust owing to preserved tariff-free aircraft mobility, limited available supply and control over a large share of future deliveries. While executives acknowledge rising and shifting risks, they highlighted the sector’s experience managing geopolitical shocks and the pressure on smaller firms to consolidate or specialize.
Key points
- Lessors control a significant portion of the global fleet and a large share of new aircraft deliveries, supporting lease rates and resale values - sectors impacted include aviation, aircraft manufacturing and aviation finance.
- Tariff-free movement for most aircraft and persistent industrial constraints are keeping available supply tight, which continues to underpin pricing dynamics for leases and sales.
- Consolidation is accelerating, with larger lessors expanding scale while smaller firms face pressures to find a niche or secure stronger financial backing.
Risks / Uncertainties
- Policy shifts by major economies - particularly actions described as "knee-jerk reactions" by the U.S. administration - could create persistent disruption rather than short-lived effects, affecting aircraft flows and cross-border operations; aviation and related financial markets could be impacted.
- Geopolitical disruptions remain a threat, as past episodes such as Russia’s retention of aircraft after its invasion of Ukraine have already shown; this affects lessors, airlines and secondary markets for used aircraft.
- Smaller lessors face heightened survival risk amid rising barriers to entry, which could accelerate consolidation and influence market competition, funding conditions and credit dynamics in aviation finance.