Investment firm targets older aircraft leasing amid market shifts post COVID

The aircraft leasing market is emerging as a compelling investment opportunity in the wake of COVID-19, according to discussions at the recent OHA ILM Committee on Investment and Land Management meeting. As airlines grappled with a sudden drop in air travel, many found themselves with idle planes and dwindling revenue. This shift has prompted airlines to seek liquidity by leasing back aircraft, allowing them to transition from an asset-heavy model to a more flexible, asset-light approach.

The strategy involves purchasing planes from airlines and leasing them back, providing immediate cash flow for the airlines while generating steady lease payments for investors. This model has gained traction over the past five years, particularly during periods of market instability, including global conflicts and supply chain challenges affecting new aircraft production.

Investors are particularly focused on older aircraft, which typically have a lifespan of 20 to 30 years. The current market dynamics suggest that these planes are not only stable in value but also present opportunities for multiple leasing cycles, enhancing profitability. With the average lease term around ten years, investors can now anticipate a third leasing cycle for many aircraft, further increasing their return on investment.

Despite recent crashes raising concerns, the meeting highlighted that the maintenance and operational history of older planes are well understood, making them a safer bet for investors. The discussion underscored a growing confidence in the aircraft leasing sector, with participants optimistic about the long-term viability of investing in this space. As the global fleet ages, the demand for reliable, well-maintained aircraft is expected to remain strong, positioning investors favorably in the evolving market landscape.