At what time would lessors step in and repossess aircraft??
Under normal circumstances, if an airline is late on making payments for leased planes, the leasing company would come and repossess the airplane. As the COVID-19 crisis has drastically affected airlines’ pockets, aircraft spent months sitting on the ground, while air carriers turned to leasing companies trying to renegotiate their contracts. Yet so far, there have been no high profile aircraft repossessions. Industry experts explain why.
“The simple answer would be that they have not done it yet because there is nowhere to place them at the moment,” observed Rob Watts, the Director of Advisory at ACC Aviation, speaking at AIR Convention Digital Week on June 17, 2020. However, the situation cannot continue forever.
As the world is slowly starting to ease restrictions, physical obstacles for aircraft lessors to exercise their rights are opening up. However, industry experts believe that aircraft repossessions would begin later in 2020.
“Lessors will start exercising their rights once it is obvious which airlines will survive and which ones will not,” says Pistik. In Europe, he expects this time to come at the end of the summer season 2020. “At the end of the summer we will see the collapse of airlines that depend on summer traffic”. Then, aircraft will be returned to lessors “‘whether they like it or not”.