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CIT Releases 2014 Commercial Aerospace Outlook

March 13, 2014, 06:42 AM
Filed Under: Aerospace

The airline industry, and with it, air traffic, is expected to increase in 2014, with Asia and Latin America representing the fastest growing markets, according to Tony Diaz, President of CIT Aerospace at CIT Group. These views and others are presented in the “2014 Commercial Aerospace Outlook”, the latest in a series of in-depth executive video Q&As featured in the award-winning CIT Executive Insights video series.

Opportunity to Re-Fleet in the United States

After several years of major airline consolidations, the United States is ripe for growth. According to Diaz, “It’s a market where for the last ten years airlines have been more involved in fixing their balance sheets. It’s time for those airlines to re-fleet, so we see a great opportunity to add aircraft in the United States.”

Consolidation and Consumers

Although consolidation in the United States is all but over, international consolidation is still expected, which may ultimately benefit consumers. “However, near-term concerns about higher fares will be moderated because there is sufficient competition. Low-cost carriers have penetrated virtually every market and can step in if the large airlines increase fares.”

The Order Book and Beyond

CIT’s current order book focuses on new modern technology aircraft, which includes Boeing’s 787 and 737 Max, Airbus’s A350 and the A320 Neo. On the horizon for the industry is the E2 version of Embraer’s E-Jet and Boeing’s 777x. “The triple seven-x is going to be a large wide-body, long-haul aircraft, which we think will be very successful in the marketplace,” said Diaz.

Evolving Aircraft Financing

Aircraft financing has changed over the years. Approximately 40% of aircraft today are financed through the operating lease, which continues to gain popularity. “The operating lease allows airlines to free up cash and their balance sheet,” said Diaz. “Our expectation is that number will grow to about 50% over the next ten years.”

Leading the Way in Aerospace Financing

As one of the largest aircraft lessors with approximately $10 billion in assets and approximately 150 aircraft on order, CIT strives to be relevant with airline customers as well as with original equipment manufacturers (OEMs). “When OEMs are discussing new products, engines or airframes, CIT is at the table putting our knowledge to work by providing our opinions on what works and what doesn’t work for our customers,” said Diaz. “It’s also important that the airlines understand that we have the products that fit their needs, whether it’s brand new aircraft, bank debt or a sale-lease back of their existing portfolio.”

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