CAPITAL AVIATION 2017 ANIMATED VIDEO
Animated Explainer Video
CAPITAL AVIATION 2017 ANIMATED VIDEO
Air travel has grown at 5% per annum for over 30 years. This growth has continued despite war’s, 911, SARS, financial crises, and recessions. As a result of the sustained and steady growth, air travel has doubled every 15 years, and will double again in the next 15 years.
Boeing forecast that the amount of commercial aircraft will double over the next 20 years, with 35,280 new commercial aircraft delivered in between 2013 and 2032 worth a total of $4.8t. That’s 147 new aircraft per month for the next 20 years.
Airbus predict 29,200 new aircraft will be required between 2013-2032, worth a total of $4.4t. Which equates to 122 new aircraft per month for 20 years. All regions are forecast to grow, even the mature European and American markets will continue to grow between 2 and 4%. Emerging markets are driving the growth, with 55% growth in available seat kilometres over the last 5 years.
Traditionally the wait for new aircraft was 3-4 years, but the current backlog of 11,415 aircraft at Boeing and Airbus equates to over 9 years of production. The majority of the backlog belongs to Asia Pacific. The need for new aircraft in Europe and America is still strong, as they replace their ageing fleets. As the demand for aircraft increases, so does the need for aircraft finance. From $77billion in aircraft deliveries in 2011, to $112billion this year. An additional $528billion is required over the next 4 years.
As the need for aircraft increases, so does the market for leasing. From just 17 leased aircraft in 1970, to approximately 11,000 aircraft in 2014. As aircraft leasing is growing in market share towards 50%, leasing companies are required to fund more than half of new aircraft deliveries. As a result, Lessors will need to fund over half of the $528billion required over the next 4 years. This year alone it expected Lessors will source $30billion or 48% of their financing requirements from the capital markets, up from just 9% in 2012.
Why do airlines lease? Leasing provides access to the latest technologies and fuel efficient aircraft with lower capital outlay compared to purchasing. Leasing provides flexibility on lease expiry to airlines. Airlines can access aircraft faster through lessors. Airlines aren’t exposed to aircraft residual value risks. Almost every airline leases. For example Emirates fleet is 43% leased.
A typical lease is between 6 and 12 years, with rent paid monthly in advance. Security deposits are paid by the airline on lease commencement. Lease agreements require the operator to pay for everything. All expenses including Maintenance, Insurance, delivery and redeployment are paid by the lessee. With such strong demand for commercial aircraft, and growing demand for leasing, aircraft are proven to be good investments.
Why invest in Aircraft?
-Our product is in demand and almost every airline leases
-It efficiently deploys large amounts of capital
-Aircraft provides stable cash flow, backed by long term contracts, with predictable long term returns
-Aviation is a highly regulated industry, protecting the asset
-Assets are secured through international laws and treaties
-Aircraft are truly global and mobile assets with low volatility compared to listed equities
-Aircraft are a vital part of infrastructure in the global economy
-Introducing Blessing Love Story. Blessing Love Story is an interactive web platform where wedding couples and guests are able to share every pieces of moment with it.
Aircraft backed investments are growing in popularity. Here are some recent investors. It shows the diversity and the appeal aircraft as investments have. Attracting governments, insurance companies, private equity, investment companies, pension funds including Australian superannuation funds.
Aircraft leasing is a stable investment. We have a highly experienced management team, our costs are fixed, our returns are stable and locked in long term, our future asset values are predictable, and our product is in demand.
Visit www.capitalaviation.net to find out more.