Issue 41 4th Quarter 2013

The latest commentary and analysis from Ascend Advisory

Up, up and away

In this issue Continued backlog growth its still a matter of supply and demand Helicopter Values going online Mexico: rise of the Golden Eagle Where have all the leases gone?

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Welcome to V1ewPoint 41
Introduction
Les Weal, Head of Valuations and Appraisals, introduces Ascends latest V1ewPoint
les.weal@ascendworldwide.com

San Francisco, the location for the Ascend 2020 Finance Forum on 2-3 December, witnessed in September one of the great sporting comebacks as the US Americas Cup team retained the trophy from the brink of defeat. Commercial aviation has in 2013 also embarked on a comeback which, although does not quite match the Oracle Team USA performance, has been gathering momentum. The cargo market continues to be the laggard that tempers the optimism, although the holiday season may offer some respite for the sector. As discussed in this issue of V1ewPoint, the traffic lights for commercial aviation are turning green with the values for many types enjoying a holiday from depreciation. Lease rates are also improving despite the upward movement in interest rates. The jet backlog stands at an all-time high by whatever metric this is analysed (11,665 aircraft valued at $800 billion and 55% of the current fleet) and the recently announced rate hike by Boeing for the 737 line is symptomatic of the optimism and extraordinary demand for new aircraft. In September, two new types took to the skies as the Bombardier CSeries and Boeing 787-9 made their maiden flights. In our view, the latter is likely to be the best seller and residual value performer in its family. For the CSeries, the hope is that the first flight will give a much needed fillip to the programme. Chris Seymour examines the improved leasing market for used equipment, which had been bearing the brunt of weak demand. It is notable that Europe has seen a significant uptick in demand and is a region where age restrictions of aircraft are not prevalent. The Mexican market is also seeing strong growth and George Dimitroffs article looks at future financing requirements. This edition of V1ewPoint also looks at the helicopter market, a sector that has caught the attention of traditional aircraft financiers and lessors. The offshore oil support sector is of particular interest and is arguably a segment that can diversify risk, as high oil prices encourage exploration and development and boost values of aircraft that serve the sector. We also discuss other factors that historically have led to outstanding value retention for helicopters. Watch out for helicopter values that will soon go live on Ascend Online V1 Values. We look forward to seeing some of you in San Francisco for the Ascend 2020 Finance Forum and associated drinks reception hosted by Vx Capital Partners. Flowers in the hair are optional! As this will be the last edition for 2013, we take this opportunity to give everyone our best wishes for the holiday season and 2014. We just need the cargo sector to catch a fair wind for the comeback to be complete.

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Continued backlog growth its still a matter of supply and demand

Rob Morris, Head of Advisory, looks at our scorecard measuring the supply-demand balance
rob.morris@ascendworldwide.com

There continues to be considerable industry chatter about Airbus and Boeing increasing production rates, as backlogs grow ever larger and airlines and operating lessors continue to seek new aircraft to replenish their eets and accommodate continued capacity growth. Boeings decision to raise its 737 rate by ve aircraft per month by 2017 is the latest increase to be announced. Much of the chatter revolves around the justification, or potential lack thereof, for these increased rates. It also revolves around sentiment, rather than informed analysis. Analysis can be the only basis for an informed understanding of the macro supply and demand dynamic. In this context, Ascend has developed a number of indicators, which can help to inform this equilibrium, and perhaps help us to understand if the ever-increasing supply of new commercial aircraft is justified by demand. We discussed these issues in a previous V1ewPoint article in May 2012 (Issue 35). At that time, we concluded that there were marginally more negative indicators than positive, leading us to a conclusion that the commercial aircraft market balance sat slightly at a surplus of supply over demand. Eighteen months later, it is time to review those indicators and see if the balance has shifted at all.

Supply and Demand Indicator Scorecard

Metric Lease rates and values Ratio of new aircraft deliveries for replacement Aircraft retirements Stored aircraft inventories Used aircraft availability Passenger load factor Airline passenger yields New aircraft orders Order cancellations Order deferrals New aircraft finance Indicator

Our first indicator is lease rates and values. The weakness we saw back in 2012 has now turned, with the market lease rates for Airbus and Boeing single-aisles increasing, albeit marginally at this time. Market Values of newer variants are following the same trend, so that is our first green indicator on the scorecard.

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A slightly more subtle indicator is the ratio of new aircraft deliveries for replacement. In 2012, we saw a temporary tick upwards amid a generally decreasing trend since 2008. This was when virtually all new deliveries were for replacement, indicating that there was no growth impetus for new aircraft demand. In 2013, there is a return to the downward trend and indeed present indications show that the share of deliveries for replacement will be close to the historical low another green indicator on our balance scorecard. Aircraft retirements potentially tell a different story. Since 2008, an average of 560 commercial jet aircraft have been permanently retired from service each year, significantly higher than the volumes seen prior to the 2008 economic crisis. In 2013, almost 500 aircraft have been retired already. Therefore, in volume terms, this year appears to be no different. More than 75% of these aircraft were already in storage at the turn of the year and so they do not affect the growth/replacement indicator noted above. However, almost 60% of these aircraft were less than 25 years of age at retirement and nearly 10% were less than 15-years old. The trend towards earlier retirement appears to be continuing. The consequent impact of a continued high volume of new deliveries driving these earlier retirements is a negative point a red light on our scorecard. Stored aircraft inventories are, increasingly, a less clear indicator. However, the total inventory of commercial jets in storage has reduced by around 200 units since the start of 2013. The overall figure represents around 11% of the global operating fleet, down from 15% in 2001 or 14% at the end of 2008. There are still around 500 relatively young, under 15-year-old aircraft idle. However, this inventory is stable and probably representative of many aircraft going through the cycle of lease returns and thus, are only temporarily parked. So overall, the stored aircraft indicator is another green on our scorecard. These days, we prefer to use aircraft availability listings rather than stored inventories as a measure of used aircraft availability, which is what we are truly trying to gauge for our supply and demand balance. Monthly listings from Airfax, which indicated a slight uptick in availability in 2012, are now firmly on a downward trajectory for both singleaisle and twin-aisle types. While some types show a worrying trend, the macro picture is another green light. Turning to the airlines, the purest supply and demand indicator is load factor the balance between traffic and capacity. On the passenger front, traffic (demand) at a global level continues to grow ahead of capacity (supply). Therefore, the passenger load factor continues to increase. IATA numbers for the first three quarters of the year show 5% growth in RPKs against an increase of 4.3% in capacity and an 80.1% load factor. On face value, that should be a green for our scorecard. However, in two key global regions Asia-Pacific and the Middle East IATAs reports for April through July indicated that capacity is leading traffic, which is a potentially worrying trend. Though this was reversed in both regions in August and in Asia for September, we continue to watch the trend closely and for this reason, we will place this indicator at amber on watch for now. Of course, the picture for freight markets is far worse and if that alone were the metric; this would be a solid red. However, from our macro metal perspective, freight represents only a small part of the market. Therefore, unless your focus is on freighter aircraft, the indicator is amber. Airline yields also warrant an amber sign. Since their strong recovery in 2010, passenger yields have been on a downward trajectory, with IATA predicting no change in yield during 2013 and a marginal decline in 2014, on a global level. This is somewhat consistent with the load factor metric, since once capacity starts to lead traffic, airlines tend to use yield reductions to stimulate traffic at the expense of price. Therefore, this is another amber, which is bordering on red, for now.

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Sticking with the airline theme, new aircraft orders are a clear indicator of demand. In 2013, commercial jet order volumes are already at a record level in terms of net orders (2,528, breaking the previous record in 2011). To some extent, this is inevitable given the inexorable growth of the fleet with time and this is normalised by considering the backlog of the fleet as a ratio of the in-service fleet. However, this percentage is at an all-time high (55%) although the time period over which the backlog extends now falls well into the 2020s, Ascend Online Fleets database shows. This 11,665 strong backlog is valued at $800 billion in 2013 dollar terms, assuming Ascends Full-Life Base Values. This is a clear indicator that demand for new commercial aircraft remains robust, so that is another green on our scorecard. There are other order-related metrics, which we have considered previously, including order cancellations and order deferrals. While there continues to be small elements of both (e.g. just 163 cancellations to date in 2013) as OEMs and their customers adjust their delivery streams these are not at present significant and thus, this leads to another green. Financing appetite for new aircraft is our final indicator. At present, there appears to be no shortage of funds and all new aircraft are being financed. The amount of export credit support required to fulfil new deliveries appears to be reducing slightly. While this reduction may be more related to the increased cost of such finance under new ASU rules, it is a positive indicator that the markets are viewing demand for new aircraft as robust. A final green light. Summing all of this up, our somewhat simplistic scorecard features eight greens among eleven indicators, alongside a couple of ambers and one red. Comparing this with where we were in May 2012, the balance appears to have moved significantly towards demand firming up and this is reflected in the value trend, which was mentioned as our first indicator. Of course, this does not mean that we fully endorse the potential moves by manufacturers to increase production rates, since these indicators can turn very quickly, as seen historically in 1991, 2001 and 2008. However, it does suggest for now that we are continuing on an upward trajectory. As my dear friend Buzz Lightyear said: to infinity and beyond.

Helicopter values are going online!

Chris Wills, Client Delivery Manager for Valuations, looks at what factors influence helicopter values
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The Ascend V1 Online Values system has been providing values for commercial and business aircraft for over a decade, but is about to enter a new phase with the addition of civil helicopters. Ascend has been valuing helicopters for many years and the helicopter fleet is available on Ascend Online Fleets. Hence, the next logical step is to provide our values online. The first types will be added to the system in the near future. With a fleet of over 20,000 turbine helicopters (together with over 10,000 piston-powered ones) in use worldwide with civil and governmental operators, this class of aircraft has become an integral part of many aspects of everyday life. Moreover, their flexibility makes them some of the most marketable aircraft types. Good value retention is also a feature of helicopters and an important factor given the recent growth of the operating lease sector.

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Helicopter values are influenced by many factors, which can be industry, sector and type-specific. The following sections give a brief overview of some of the important ones.

Value Inuences Economic Useful Lives

Considering civil helicopters as an asset class, a key factor in the strong residual value retention is their long useful lives (typically 30 years) more akin to engines or business jets than commercial airliners. As they are unpressurised aircraft, there is no ultimate fatigue life and in terms of its dynamic components installed, these are substantially renewed (overhauled or replaced if necessary) through the life of the helicopter. Helicopters can also be easily upgraded with newer avionics, systems etc. The age profile in 10-year bands highlights that around 35% of the current civil helicopter fleet are already over 30-years old and 13% almost 2,700 helicopters are above 40-years old.

ross orders et orders

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CIVIL TURBINE HELICOPTER CURRENT FLEET - SURVIVOR CURVE

Percentage remaining of original deliveries 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 Age of aircraft (years)

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SOURCE: Ascend Online Fleets

Gross orders Gross orders Gross orders

Longevity can also be measured by constructing a survivor curve comparing the remaining aircraft today with those delivered. As seen in the first chart, almost 60% of the aircraft delivered 40 years ago are still in existence. 4 5 6 7 8 9 43 44 45 46 47 4849 4 4 4 53 54 55 56 57 58 59 5 5 5 63 64 65 66 67 68 69 6 6 6 73

Value inuences supply and demand

Values are intrinsically linked to the supply and demand of an aircraft type and its competitors. Historically, helicopter manufacturers have closely matched supply with demand, particularly at the larger end of the market, even undersupplying in some cases. Production slots for the heavy, mainly oil support types have long been constrained, which has helped maintain strong residual values.

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For other, particularly smaller types, supply is strong. However, the market does not lend itself to speculative orders, as the fixed wing market can. At the smaller end of the market, interest from financial players and lessors is limited and with demand often being for individuals, supply and demand are closely matched. Although for corporate or private-use helicopters, a large fleet with a wide spread of operators can see a significant supply of used examples in a downturn, as we have witnessed recently.

Value inuences market and role

The Market Value movements of a particular helicopter type will be principally affected by (macro) global economic factors and by specific (micro) economic and market factors in the sector which the aircraft operates in. The helicopter market experienced strong growth in the mid/late 2000s, but the many roles that helicopters operate in mean that they have not been as exposed to the global economic slowdown. As an example, the higher oil prices have stimulated exploration, which has a beneficial effect on the demand for offshore oil support helicopters. The banking crisis and recession had the opposite effect on corporate-configured helicopters, leading to increased used inventory for sale, reductions in demand and lowering of values. Demand for helicopters in law enforcement, Search and Rescue (SAR) and Emergency Medical Services (EMS) roles are more influenced by geopolitical factors and government budgets.

Value inuences liquidity

As with fixed-wing aircraft, a factor that drives values for a particular type is the liquidity of the asset. Helicopters benefit from their inherent flexibility to change roles, as they can be relatively easily reconfigured by adding or removing equipment inside or attaching additional ones to the outside of the airframe. However, we expect most medium and heavy types to stay in their primary role for at least the first 15 years of their lives. Being smaller, light types are more flexible in that reconfiguration to other roles are less costly and there are also more roles in which helicopters can be used as the type gets smaller in size. In terms of fleet size, for fixed-wing aircraft, we have seen the need for a minimum critical mass (often over 500 aircraft) for a type to have a typical value profile over its life. Helicopters have typically smaller fleets with niche roles, particularly at the larger end of the market. However, we would still expect to see over 100 deliveries for a heavy type and 200+ for medium types to merit a typical value profile (this might be fewer for individual variants of a family).

Value inuences optional specication

The value of a specific serial (tail) number will be influenced by which specification options have been selected. All helicopters are built effectively to the same baseline specification. Subsequently, the helicopters are configured for the particular roles they will be used in, with the addition of avionics and cabin and exterior options. These options can add considerably to the value of a specific helicopter, by 10-40% depending on size and role. In the case of the high specification All Weather Search and Rescue (AWSAR) heavy types, the add-ons can total over $10 million.

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Value inuences maintenance

The value of a specific serial number at a particular point in time will also be affected by its maintenance status, especially as it ages. For a new aircraft, the value adjustment for Full-Life may represent only 1-2% of the total value, whereas for a 30-year-old aircraft it can be over 20% and be potentially as high as 50%. Helicopter maintenance differs to that of fixed-wing aircraft primarily due to its components. The stresses on many moving parts in helicopters mean that maintenance cycles are much shorter in terms of total flight hours. For this reason, there is an increasing trend for operators, especially the larger commercial ones, to place their helicopters on hourly maintenance support agreements. This may not just cover engines, which is prevalent in the business jet market and increasingly on widebody airliners, but also gearboxes, airframes and major components. In some cases, a Tip-to-Tail (T2T) programme effectively means that the helicopter is in Full-Life status at every juncture.

oss orders t orders

Value trends and depreciation forecasts

EUROCOPTER AS332L1 MARKET VALUES TRENDS AND FUTURE BASE VALUE FORECASTS 1986 TO 2011 YEARS OF BUILD Percentage of value since new 120% 100% 80% 60% 40% 20% 0% 1986
SOURCE: Ascend Values

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1991

1996

2001

2006

2011

2016

2021

2026

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The chart provides an example of the historical helicopter Market Value retention and the forecast Base Values, in this case for a heavy type the Eurocopter AS332L1 Super Puma which has been in operation since the mid-1980s. The forecast projections may appear conservative when compared with historical value movements, but the future values are not inflated so that would improve the projections. More importantly for the larger-size categories, a truly balanced market that meets the Base Value definition has not really existed, but this is not a guaranteed situation going forward. In addition to the historical market value trends, Ascend also applies its qualitative assumptions, which again impacts the depreciation profile in comparison with historical trends.

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Mexico: rise of the Golden Eagle

George Dimitroff, VP Advisory, Americas, considers the growth being witnessed in the Mexican aviation market
george.dimitroff@ascendworldwide.com

Mexicos economy, ranked 14th in the world by GDP size, may not be the most eye catching on a global scale. However, the country has the second-largest economy in Latin America, with an estimated annual GDP of $1.17 trillion around half of the GDP generated by Brazil, the number one player in the region. Brazil has been the focus of investor attention for the past decade or so, but more recently, things are slowing down both in the economy at large and in the aviation industry. Most carriers are keeping a close eye on domestic capacity in Brazil as they try to improve load factors, yields and profitability. Meanwhile, international investors are turning their attention to Mexico, a country seen as having more growth potential. In the past decade, Mexico has seen explosive growth in aerospace manufacturing investment. Bombardier, Cessna, Goodrich, Honeywell and Safran have all recently opened new manufacturing facilities in the country. The latest addition is Eurocopter (soon to be Airbus Helicopters), which will manufacture EC725 helicopters there as well as cargo and emergency exit doors for Airbus A320 and A330 family aircraft (transferred from a previous Asian subcontractor). In the airline industry, growth opportunities have been promising, especially since Mexicanas demise took a large slice of capacity out of the market, leaving room for others to fill the void. Flightglobals Ascend Online Fleets database shows that there are currently 312 jets and turboprops, passenger and cargo aircraft, in active service in Mexico. The country has a further 241 aircraft on order. The fleet is led by Aeromexico with 58 mainline and 57 regional aircraft in its Connect unit. Recent years have seen the rise of low-cost carrier competition and the next largest fleets are now Volaris (44) and Interjet (41). Aeromexico has based its fleet around Boeing types 767s, 777s and now 787s for long-haul routes and 737NGs for short haul. However, the A320 family leads the Mexican in-service fleet as Volaris and Interjet have fleets of over 40 each. Mexico also has a vibrant regional sector; Aeromexico Connect has built up a fleet of 26 Embraer EJets and 31 ERJ145s, while Aeromar operates 16 ATRs and two Bombardier CRJs. The size of the Mexican order backlog 77% of the current in-service fleet is significant and reflective of the growth opportunities to come. The most recent order came from VivaAerobus for 52 A320 family aircraft to replace their 18 737-300s. This alone has increased the size of the Mexican backlog by 27% and takes the Airbus backlog to 145, while Aeromexico has placed orders for 60 737 Max aircraft. An interesting addition to the fleet is the Sukhoi Superjet, with the first three of 20 ordered by Interjet now in service. If we look at the fleet by dollar value, the importance of the backlog is even more significant. The current fleet is worth around $4.7 billion at Current Market Values, but the backlog is estimated at a further $12.5 billion (based on the 2013 Full-Life Base Value, not inflated). Considering how deliveries are staggered, the financing requirements for aircraft being delivered into Mexico in the next two years are expected to hover around $1 billion annually with a quieter period to follow in 2016/17.

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These then build up to be heavily concentrated (two thirds of delivery value) in the 2018-2021 window, with deliveries in 2019 and 2020 both exceeding $2.7 billion, consisting mostly of 737 Max and A320neo aircraft.

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DELIVERY VALUE OF CURRENT FIRM ORDERS BACKLOG FOR MEXICO

Estimated value of deliveries ($m) 3,000 2,700 2,400 2,100 1,800 1,500 1,200 900 600 300 0 2013 2014 2015 2016 2017 2018 2019 Delivery year 2020 2021 2022 2023

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SOURCE: Ascend Online Fleets, V1 Values and additional analysis

ross orders ross orders ross orders

The Mexican fleet growth will most likely be greater than the firm order backlog now. Given the countrys growth, we would expect its airline industry to require additional aircraft, which could be sourced from lessors or future orders. Another point attracting investors to the region is the fact that the airlines have been fairly realistic with their ordering of new aircraft and there is less likelihood of an overcapacity situation as seen in some other parts of the world. It may not be the largest of the emerging markets for investors or financiers, but Mexico provides a fairly stable environment with good market fundamentals, steady growth and reasonable airline credits.
Footnote: The Golden Eagle is one of Mexicos national birds.

Where have all the leases gone?

Part 1 - Narrowbodies Chris Seymour, Head of Market Analysis, examines where used and new narrowbodies have gone on lease this year
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The focus of interest in the narrowbody leasing market has been on new aircraft in the past few years not least because the lessors have also become a key source of nancing for new aircraft. However, there is still a very active leasing market for used narrowbodies.

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Issue 41 4th Quarter 2013

Used leases
As of early October (effectively the first three quarters of the year), operating lessors had leased out almost 250 used narrowbodies compared with 180 new aircraft delivered on lease. There were 112 different operators from 59 countries taking used aircraft, which shows the breadth of the secondary leasing market. Russia, Turkey and Ukraine are the leading countries taking used jets on lease.

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NARROWBODY LEASES IN Q1 TO Q3 2013

No of aircraft 120 100 80 60 40 20 0 Africa
SOURCE: Ascend Online Fleets

Used Leases

New Leases

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Asia Pacific

CIS

Europe

Latin America

Middle East

North America

ross orders ross orders ross orders

A key difference between the new and used leasing markets is that European airlines have been the largest takers this year of used aircraft (35% of the total), while Asia-Pacific has been the leading market for new deliveries from lessors (63% of new leases). Of the 86 used aircraft leased into Europe, over 60 have been to secondary carriers in the low-cost, charter and ACMI sectors. This has proven to be fertile ground for some of the older aircraft which lessors have available. The oldest Boeing 737-800s are now 15-years old, but these and other types have found homes in the Turkish market. For example, 20-year-old Airbus A320s have been placed with ACMI specialists in the Baltic states (alongside others a decade younger), while even older 737 Classics have found lessees in central Europe. It has been a market mostly dominated by A320s and 737s, with just a few Boeing 717s to low-cost carrier Volotea differing from the norm. There have been 49 aircraft placed in the CIS, mostly to Russia and the Ukraine, with an average age of just 11 years. The 22 different CIS-based airlines taking aircraft show the increasing penetration of Western airliners into these markets. Indeed, over the past five years, around 300 Western types have been imported. Only six of the 2013 additions have not been A320 or 737NG family aircraft, showing that the CIS is not a dumping ground for the older-generation types. Asia-Pacific still accounts for almost a 20% share of used lease activity, with aircraft averaging at 14-years old. The region still has an appetite for 737 Classics, with 20 going to carriers in Pakistan, Indonesia and Thailand.

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Africa has seen very limited leasing activity in 2013, with most centred on Nigeria, South Africa and Rwanda the latter took the youngest aircraft, two six-year-old 737-700s. The Middle East has also been a small market, but by contrast, the used leases have been under five-years old most were A320s to Nas Air in Saudi Arabia. In Latin America, leases have ranged from five-year-old Pratt & Whitney-powered A318s placed in Brazil to a 24-yearold Boeing MD-83 in Venezuela. 737 Classics are still popular with 12 leases into Peru, Chile, Bolivia and Mexico. Younger A319/A320s have found homes in Chile and Ecuador and most demand has been driven by the secondary carriers and LCCs competing with the big pan-regional groups. North America has never been a large market for lessors, despite the size of its aviation industry. Just 15 used leases have been made, mainly to US LCCs and three of the last 737-300s built were placed with Canadian North.

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USED NARROWBODY LEASES IN Q1 TO Q3 2013 BY AGE

No of aircraft 30

24

18

12

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6 0

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er of aircraft

SOURCE: Ascend Online Fleets

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Age of aircraft (years)

ross orders ross orders ross orders

The difficulties of financing young aircraft have been well documented, but the age profile of used leases shows a broad span. The six-to-eight year old peak reflects the lease returns of aircraft leased in 2005-07, just prior to the oil crisis. Then, six-to-eight year leases were much more common lessors are now favouring longer lease terms in fact, for 85 new deliveries in 2013 with known lease terms, the average lease period is 12 years. Aircraft up to 15-years old (75% of the total) have been leased in significant numbers, but beyond that, it can be more challenging.The competitive nature of the used leasing business is shown by the 39 lessors active in this sector in 2013. ILFC and GECAS head the table with over 40 leases each, the third-largest being Aviation Capital Group and BBAM with 14 each. Looking at active used leasing types, the A320 family leads with 131 examples, of which 76 were for the A320 itself (six of these being the oldest, A-powered versions). Fifty two were 737NGs including 36 of the ever-popular -800 variant. Forty eight 737 Classic leases show that demand still exists for older generations, but the fact that just three MD-80s and two 757s were leased proves that not all older types will find a market.

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Summary of new leases

Of the 182 new aircraft from lessor orders delivered on lease in the first three quarters, 52 went to Chinese airlines. The next highest number (19) went to Japan, where the developing LCC sector saw Skymark, Peach, Solaseed and Star Flyer among the recipients. The total figure for the three-quarters period is already ahead of the 178 total deliveries on lease in 2012. Asia-Pacifics 63% share of new deliveries this year is above the past five-year average of 45%, while Europe is maintaining a share of around 20%. More Asian leases are also replacing aircraft placed in the Middle East and Latin American markets in the 2008-12 period. Overall, 50 carriers in 28 countries have taken new aircraft this year, with a 60:40 split between legacy carriers and the low-cost/leisure sector. China Eastern and Southern Airlines received 25 between them and this indicates that the strong Chinese growth requires a mix of both ordered and leased aircraft. American Airlines also took its first 10 A319s on lease, from Avolon and CIT, to replace MD-80s. The LCC/leisure sector airlines were mainly in Asian or European markets, with Citilink in Indonesia and Vueling in Spain being the top two recipients with nine aircraft each. GECAS was the leading lessor with 37 new deliveries, followed by AWAS with 24 and Aviation Capital Group with 20. Growing Chinese lessor ICBC leased out 11 aircraft. The A320 family led the new leases with 112 versus 70 for the 737NG; the A320 itself was the leading type with 83, followed by 67 for the 737-800. Part 2, which will focus on the widebodies, will appear in a future V1ewPoint.

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The information contained in our databases and used in this publication has been assembled from many sources, and while reasonable care has been taken to ensure accuracy, the information is supplied on the understanding that no legal liability whatsoever shall attach to Ascend part of Flightglobal, Reed Business Information Limited, its offices, or employess in respect of any error or omission that may have occurred. 2013 Reed Business Information Ltd

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