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Fri, Oct 13, 2017

Study: Demand For Business Aircraft Finance Set To Increase

Large Majority Say Segment Will Grow Over The Next Five Years

Business aviation finance is on the upswing, with new research from Global Jet Capital revealing that over 77% of business aviation professionals recently surveyed expect demand for business aviation finance to increase over the next five years, with more than one in six of those expecting the increase to be “dramatic”. Only 6% anticipate a fall in demand between now and 2022.

The main reason identified for the growing demand for finance is that in the current economic climate, there is a growing trend for potential buyers to use less of their own capital, a fact cited by 62% of the professionals interviewed. Two in five (40%) respondents said the overall level of sales of business aircraft will grow and thus result in increased demand for finance.
 
Another 21% also pointed to the fact that operating leases are currently very attractively priced, and thus are a financing option which more buyers are likely to consider over the coming five-year period.
 
The research suggests the industry is set to meet this growing demand as 57% of the business aviation professionals questioned think the overall amount of finance made available to this market will increase in the coming year. 25% said this was because more specialist lenders have recently come into the market, while 34% said they expect to see more specialist lenders entering the sector in the future. 33% think traditional lenders will want to increase their exposure to the business aviation market.
 
Overall, 32% of those interviewed believe that the growing size of the business aviation market over the next twelve months will naturally lead to an increase in the amount of finance available.
 
In terms of finance rates offered, 51% of the study’s respondents think they will increase between now and 2020. Only 21% believe they will stay the same as today, while 18% think they will decrease. With such an overwhelming majority predicting either stable or increasing rates, it indicates that now may be the best time to take out an operating lease and secure guaranteed rates for the longer term.
 
“We are seeing slow but steady improvement in market fundamentals, largely the result of the OEMs making difficult but necessary decisions related to production rates, and emerging strength in the global financial markets," said Shawn Vick, chief executive officer at Global Jet Capital. "From our perspective, we experienced a solid increase in business over 2016 and see strong demand heading into 2018 for both new and used aircraft financing. Looking forward, we are confident that our wide range of financing solutions and industry experience will position us well to respond to a full industry recovery.”
 
Global Jet Capital is capitalized by three global investment firms – GSO Capital Partners, a Blackstone company in partnership with Franklin Square Capital Partners; The Carlyle Group; and AE Industrial Partners. In January 2016, Global Jet Capital completed the purchase of GE’s corporate aircraft lease and loan book in the Americas.
 
Global Jet Capital currently has approximately $2.5 billion in assets under management.

(Source: Global Jet Capital news release)

FMI: www.globaljetcapital.com

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