AIRLINES and aircraft leasing companies will have to pay more to buy their planes in the year ahead, according to a report published today.
Orders for aeroplanes have hit record highs, but cash-strapped European banks are pulling out of the aircraft leasing market, a study by accountancy firm PwC said.
Lenders from China, Japan and the United States are filling the gaps in the market, but the financing costs for airlines and companies that lease aircraft are taking off, the report concluded.
Neil Hampson, PwC’s global head of aerospace and defence, said: “The industry is experiencing unprecedented levels of orders for aircraft that are more fuel efficient. Our research highlights that, whilst financing will be available, it will be at a higher price.
“As competition to secure financing intensifies, the question remains as to who will be picking up the cost.”
PwC financial services partner Shamshad Ali added: “There are a number of headwinds in the aircraft finance market that may make these orders more difficult to finance and more expensive.
“With the cloud of economic uncertainty still hovering around Europe, we are seeing banks there retreating from the market, and interest from Asian investors is increasing.
“We are already seeing banks from China and Japan snapping up aviation assets and we think this trend will only accelerate.”
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