Key members from Walkers' Global offices across the Cayman
Islands, Guernsey and Ireland were delighted to attend the Airline
Economics Growth Frontiers Conference in Dublin recently. Emerging
from a very challenging two years for the aviation industry, the
event signalled renewed optimism and provided key insights into the
industry's collective road to recovery.
Core themes considered throughout the conference included:
- Recovery fuelled by resilience – despite the enormous challenges the COVID-19 pandemic presented to the aviation industry, the industry has once again proven its resilience and ability to innovate. Lessors and financiers have dynamically supported their airline customers by utilising the leasing model to provide sustainable cash flow solutions including renegotiating leases, sale-leasebacks, order and rent deferrals and power-by-the-hour contracts.
- Alternative financing – the attractiveness of alternative financing through private equity investment and the unsecured bond markets continues to grow beyond filling the asset-backed securitisation (ABS) vacuum sparked by the pandemic. Notwithstanding this, with increasing market stability, ABS looks set to make a strong and welcome return in the near future.
- Thinking green – fuel efficiency and new technology propel the climate change demands being sought by shareholders and investors. A net zero emission commitment by 2050 across the global air transport industry will certainly be challenging, however, the ambitious goal is a progressive move towards protecting the industry long-term through innovative greener infrastructure including carbon offsets, sustainable fuel, alternative technologies and improving energy efficiencies.
- Consumer driven cargo – the pandemic imposed a paradigm shift in consumer behaviour with e-commerce emerging as one of few winners driven by the sheer necessity of online shopping during lockdowns. As a consequence, air cargo demand soared in parallel with the decline of air passenger flights. The need for freight provided airlines and industry investors alike with the opportunity to quickly pivot and recover revenue lost elsewhere. As we continue to emerge from restrictions, cargo demand may have softened but e-commerce behaviours look set to stay.
The key take away from the conference was one of cautious
optimism. Renewed appetite for air travel demonstrates the
remarkable resilience of the aviation industry. Whilst current
market volatility, inflation, rising interest rates and lagging
lease rates present certain challenges for the industry, there is
confidence that this robust and forward-looking industry will
continue to prevail.
How can Walkers help?
At Walkers, our integrated global legal and professional services offering has advised on a number of market-leading and award-winning deals including United's pathfinding Airline Loyalty Scheme-backed financing, the PIMCO/AerCap JV (known as Gilead), a carbon-offset repackaging programme involving Tramontana Asset Management and the establishment of the ST Engineering/Temasek cargo conversion platform (known as Juniper). Our extensive experience together with our global network makes Walkers perfectly placed to provide the specialist teams required as the market recovery continues
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.