Published on January 24th, 2021 | by Mark Dwyer0
Avolon Publish 2021 Outlook Paper ‘Looking to Recovery’
2020 ended with domestic air travel around 60% of 2019 levels and international at a dismal 12%, resulting in around 30% across all markets. Domestic markets in China and Russia recovered strongly in 2020 but other large markets, such as the U.S., India, and Brazil, are recuperating more gradually.
In this paper, published by leasing company Avolon, the author looks at the effect COVID-19 has had on the global aviation industry and forecasts how and when it will recover. The Outlook makes six bold predictions for 2021:
- Recovery will be quicker than currently anticipated.
- Major airlines survive, LCCs thrive.
- There will be more start-up airlines in 2021 than failures in 2020.
- Two-thirds of new passenger aircraft deliveries will be financed by lessors.
- A decade without a new clean-sheet aircraft.
- The environment re-surfaces as the major challenge of the decade.
The full paper is available to read here.
In its Q4 2020 statement, Dómhnal Slattery, CEO Avolon, commented: “2020 was the most challenging year the commercial aviation industry has ever faced. The level of airline distress truly tested the resilience of the leasing sector business model. Through Avolon’s decisive actions to reduce our capital commitments, strengthen our liquidity and reduce our future obligations, the business is now well positioned to benefit from the recovery. We steadfastly supported our airline partners through temporary deferrals during the year and have seen cash flows improve in the second half of the year from a low in the second quarter.
It will take time for the aviation industry to recover. The pace and scale of recovery will not just be determined by the roll-out of vaccines, but also by rapid testing programmes and the depth of co-ordination between Governments. Air travel will drive economic recovery. It is clear there is a strong desire to travel and latent demand in markets across the world. It is incumbent on Governments to provide appropriate policies to facilitate that demand and drive recovery.
We are well positioned and looking forward to building on continued positive momentum as the recovery takes hold through 2021.”
Some of the highlights from 2020 in the Q4 statement include:
- Owned and managed fleet of 572 aircraft at year-end, with total orders and commitments for 270 new technology aircraft;
- Total of 142 airline customers operating in 61 countries;
- Delivered a total of 57 new aircraft and transitioned 10 aircraft to a total of 26 customers;
- Further reduced aircraft purchase commitments in the 2020-2023 timeframe by a net 100 aircraft through a combination of cancellations and deferrals;
- Entered into sale and leaseback commitments for 44 aircraft;
- Sold 29 aircraft in 2020, 3 of which were managed; and
- Executed 28 sale agreements; and a total of 141 lease transactions comprising new aircraft leases, follow-on leases, and lease extensions.