As airlines and aircraft manufacturers appear to enter a recovery phase, aircraft leasing companies are also showing signs of emerging from the global economic crisis. A number of companies within the lease, charter and brokerage industry have reported strong 2010 financial results, citing stark increases in activity and revenue.

Recent reports for 2010 filed by Saab Aircraft Leasing made note of much improved business in comparison to the previous year, with new transactions doubling to 30 over the course of the year. These transactions consisted of 10 sales, 18 leases and two third party placements, of which 23 were of the Saab 340 aircraft.

Growth on common ground

Similar growth was reported by AerCap. In 2010, net income rose from $165.2m to $207.6m, while full year income excluding the impact of market-to-market interest rate caps and share based compensation stood at $223.9m, an increase of 49% over 2009 levels of $150.2m. These increases were caused by the company’s transaction involving Genesis Leasing, as well as the deliveries of forward order aircraft.

The company’s margin earned on lease assets reached $665.6m, equating to a 43% increase over 2009 figures, while basic lease rents for the year witnessed a 51% increase to $878.2m. Sales revenue equated to $850m, a 150% rise, while total aviation assets purchased and delivered reach $2.6bn.

“Another company to report an increase in demand is Flexjet.”

Another company to report an increase in demand is Flexjet, a business unit of the Canada-based manufacturing giant Bombardier. The company offers access to fractional jet ownership as well as charter brokerage services.

We spoke to President Fred Reid to find out why he believes that the industry can continue to show continued recovery.

Aerospace-Technology: Were the company’s business interests hampered at all by the global economical crisis?

Fred Reid: Yes, along with the rest of the fractional jet ownership industry, we did experience a drop off in new customers along with a number of early exits from the program due to challenging economic conditions.

AT: With some economies in the midst of a slow, but steady recovery, how do you currently see the aircraft leasing industry?

FR: I think we can expect to see a continued recovery of the market for fractional ownership and jet card sales, building on the modest but distinctly growing rate of new demand in 2010. As halting as economic recovery has been, there are many more good signs than bad ones. For example, between 2009 and 2010, business is up about 10% in the industry. So we’re well below the 2008 peak, but we have emerged from the 2009 bottom. In addition, JP Morgan reported in January that global corporate profits were up an estimated 46% in 2010, which has historically been correlated directly with business jet deliveries.

At Flexjet, we saw a very distinct, consistent upturn in demand throughout 2010. In fact, our fractional share sales were up 48% and the number of hours flown by owners is up 6%. What’s more, we’ve already seen a great start to the New Year with flying levels on 2 January almost matching our all-time-record days in 2007 and 2008.

“At Flexjet, we saw a very distinct, consistent upturn in demand throughout 2010.”

AT: What are the current challenges facing the industry?

FR: Over the past couple of years, providers have come to the understanding that as compelling as fractional jet ownership is, it may not satisfy every private jet solution.

Many are moving towards offering a full suite of solutions to best serve the needs of their customers, and providers who aren’t adapting to this new model will be challenged in their ability to grow their business.

Flexjet is unique in the industry for offering access to the largest portfolio of products, ranging from whole aircraft and fractional jet ownership to jet cards and charter brokerage services.

AT: What do you consider as future challenges facing the industry?

FR: It will be critical for providers to consistently evaluate their aircraft mix and be knowledgeable of new planes coming into the market to make sure their fleet best serves the varied missions of its customers. Additionally, the expanding global economy has resulted in more business travel to emerging markets.

There is a significant opportunity for growth in China – where they currently only have 100 business jets for a population of 1.3bn – whose government has made a strong commitment to invest in the country’s infrastructure over the next decade. India is also one of the world’s fastest growing economies, but penetration in this market remains low with an installed base of 125 aircraft. As a result, it will be important to monitor growth in these markets to ensure we have solutions for those customers who have a need to travel internationally to elevate their businesses.

“We have the youngest fleet in the fractional jet industry.”

AT: What distinguishes Flexjet from its competitors?

FR: Flexjet offers access to the most comprehensive portfolio of products in the private aviation industry. As part of Bombardier, the world’s largest business aviation manufacturer, our legacy goes back more than 100 years to the Wright Brothers.

We have the youngest fleet in the fractional jet industry – averaging 3.9-years of age – made up exclusively of Learjet and Challenger aircraft built by Bombardier.

We offer unparalleled operational efficiency through Flexjet’s proprietary Optimizer system. Lastly, Flexjet is the only provider to receive the FAA Diamond award for maintenance training 12 years in a row, and the first fractional aircraft program manager in the world to be recognised as achieving the Air Charter Safety Foundation’s Industry Audit Standard.