PARIS, Feb 12 (Reuters) - Major aircraft lessor Avolon and its peers stand to benefit from the coronavirus outbreak as airlines shore up cash by refinancing their planes, the Dublin-based firm said on Wednesday.
A sale-and-leaseback trend among airlines “will unquestionably be accentuated now with the coronavirus”, Chief Executive Domhnal Slattery told Reuters after Avolon posted $718 million in net income for 2019.
“The phone hasn’t stopped ringing,” Slattery said.
Privately-held Avolon, the world’s third-biggest lessor of commercial jets, is 70%-owned by a subsidiary of Chinese conglomerate Hainan Group.
Plane refinancing tends to pick up when airlines are buffeted by global crises such as the 1990-1 Gulf War, the Sept. 11 terror attacks a decade later or 2003 SARS virus epidemic.
“If we look at the past as a guide it typically has allowed us to outperform,” Slattery said, adding that sale-and-leaseback interest had already risen on trade tensions and economic uncertainty, and would get a further boost from the virus.
“We never set out to exploit or anything like that in a scenario like this, but obviously the risk profile is changed as a consequence of (the virus) so they tend to be strong transactions from our perspective.”
Slattery acknowledged a refinancing surge would also benefit rivals - which include listed firms Aercap and Air Lease Corp - but said Avolon’s cash resources and 2.2 debt-to-equity ratio made it particularly well placed.
“With $6 billion of cash available to us now, I think we’re in the strongest position of any of our lessor competitors to be proactive and supportive,” he said. (Reporting by Laurence Frost; additional reporting by Conor Humphries in Dublin; editing by Mark Potter)