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Warning: no real point


Aviation leasing and Aviation lending. The names sound similar, but aviation leasing represents a very different financing play from aviation lending. 

Aviation lending means lending money with an interest in someone's airplanes as collateral.

This has become a big deal of late. It is a very different play from investment int he equity of an airline. Airlines are very dubious investments. Three events in my lifetime have made THAT very clear: the deregulation of the industry in the US under President Carter, the close-down of the whole industry as a national security matter in the wake of the 9/11 attacks, and the severe limits placed on the industry around the world for epidemiological reasons during the peak of the Covid-19 pandemic. In each case investors have taken beatings.

But beneath the booms, the busts, and the crises, that afflict the companies, there are the assets. It is very easy to move these assets from one place to another -- since that is the point of them -- but it is very difficult to hide them. Furthermore, market participants still clearly remember that even during the worst of Covid, there was a strong sense that mass commercial air flight would return, and with it the full operating value of the hardware.  The troubles of running an airline in the meantime were generally understood to be temporary, so long as one could survive by ...borrowing. Borrowing against those very planes, then, made perfect sense.

Aviation leasing?  It is the ownership of a plane not for the purpose of operating said plane and reaping the profit, but for the purpose of leasing the hardware out often for long periods.    

Some of the entities involved have acquired an impressive global portfolio of airplanes -- and they lease them to airlines as needed. 

A 2022 study by McKinsey found that the average return on capital from such leasing had been higher AND less volatile than the returns of those airlines on a regular basis over the preceding decade. 

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As I warned you, no real point.  If at some later date I have need to refer to either of these two activities, lending against or leasing aircraft, I will be able to link back to this post. 


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