Quarterly report 3Q 2012

Transcription

1 Quarterly report

2 Quarterly report Introduction Introduction 2 Feature The future of aviation 3 Assets Orders Introduction 5 Widebody 7 Narrowbody 8 Regional 9 Customer lists 10 Deliveries Introduction 16 Widebody 18 Narrowbody Regional 22 Turboprop 23 Deals Structures Remarks Introduction 25 Banks 29 Final remarks 30

3 INTRODUCTION Introduction Introduction I am very glad to present this new feature for Airfinance Deals Database subscribers. All our efforts for this new product aim to give the industry the required insight to knowing not only what is going on in the aviation market, but also who are the key players and regions, now and in the future, and where are the business opportunities. This report aims to be useful for all the industry s players, including lessors, financiers, airlines, and law firms. We have made a huge effort to compile and interpret all the data, and connect everything with the news, to give our subscribers a panoramic view of the industry on a quarterly basis. This is going to be a regular feature for Airfinance Deals Database subscribers. In these pages you will find a detailed analysis of the latest order books from manufacturers, sorted by customer and aircraft size, in which you will find the top customers in every market. We will also provide an insight of the deliveries, with figures sorted by aircraft size and customer profile. The final part of the report analyzes the behaviour and evolution of the financial structures which ones are increasing in popularity and where the market is more active. You will also find an analysis of the most active banks in the market, according to the data collected in the Airfinance Deals Database. I hope you will find it useful. ALFONSO OLIVAS, Manager, Airfinance Deals Database This report is distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular strategy. This article contains opinions of the author but not necessarily those of Airfinance Journal. The information contained is a result of the research in different sources, and desipte the efforts made, there could be inaccuracies or typological errors in the content. No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission of the publisher. 2

4 FEATURE Feature The future of aviation On September 6 Airbus invited the press to get an insight into the new ideas the manufacturer is developing for future aircraft types. All of them are brilliant, but the most surprising aspect was that none of them seemed to deal with increasing the cruise speed of aircraft. Manufacturers vision Manufacturers are focusing their efforts on saving fuel, and they all proudly claim a fuel save improvement against their competitors. There has been a huge improvement in this in the past 50 years. The fuel consumption of aircraft has decreased dramatically, but the cruise speed of a Comet 4 (one of the first production jet airliners, in the 1950s) was mach 0.78, the same as the current generation of aircraft. The new generation promises about 15% of fuel savings compared with current models. So, assuming that carriers spend, on average, 3 on fuel, the potential savings for a carrier are 5.25% (0.35 times 0.15). However, the impact of the aircraft on the operating costs of a carrier is about 15%, and the extra cost of the new-generation aircraft should be deducted: about 1 more according to list prices; either leased or financed, which means that they are going to see their costs increased by 1.5%. The new generation of aircraft should give carriers savings of 3.75% of total costs. Flying next-generation aircraft is profitable. The savings in fuel justify the price increase, so why don t they consider a 180-seat turboprop? They burn less fuel, and for short distances the speed is not a big concern. The answer is obvious: it is a step back in terms of technology. Most passengers associate propellers with a lack of safety, and airlines would struggle to sell tickets. Time is money The economical advantages of super fast aircraft are solid for long routes a notable increase in available seat kilometres with the same fleet, fewer crew and lower inflight costs. The traditional concern about speed is that it is not fuel efficient, but the latest technology in supersonic airliners is from more than 30 years ago. The record for a transatlantic flight from New York to London is just under two hours, and it was achieved in We should not forget that this happened before the massive application of the microchip, so the technology available nowadays is completely different. A flight from London to New York takes about eight hours on a normal jet, adding about two hours for each cycle (landing, taking off, on-ground operations, etc), meaning that each flight takes about 10 hours on average. Developing an aircraft capable of doing the same trip in half the time means the cycle could be made in about six hours, 4 less. It is clear that the longer the route, the bigger the savings, so it would make sense for routes of more than five or six hours. Carriers spend, on average, about 15% on aircraft and 1 on crew. Cutting the duration of the flight by two and burning the same fuel per mile, the savings would increase by up to 1, which is more than 5.25% of fuel savings. The main advantage is, however, that carriers cannot justify a dramatic increase in fares just because they are flying on a more fuel-efficient aircraft, whereas there is a reason for increasing the speed people will pay more. It happened in Europe with highspeed train services not only do passengers pay more, but also in some cases the new rolling stock completely replaces the traditional train service. Tickets for long distances are often more expensive per mile than for short distances, and customers assume that they have to pay more for them business travellers would demand this service. The big question is: would you pay more to travel faster? Aircraft 15% Average operating costs for airlines Comet 3. Farnborough By RuthAS. Crew 1 Rest 4 Fuel 35% 3

5 MANUFACTURERS ORDERS

6 MANUFACTURERS Orders July 12 was a busy month for manufacturers. They signed 611 new orders and 46 options at the Farnborough Airshow. Furthermore, 43% of these orders were for aircraft in production. It seems that the industry will continue lining the strategy for the next four or five years. This year has been the turn of lessors, which filled about 4 of the new orders at the air show. Orders from lessors have been focused on next-generation aircraft, which comprise 75% of total orders. The leasing community is preparing the transition to next generation, so is likely to see big orders during the next year. Some of the lessors want to have a fleet of different aircraft. That is definitely the case for Gecas; it has orders for Airbus, Boeing, Comac and Embraer aircraft. Some western lessors said at the air show that one of the advantages they have over Chinese lessors is their availability of new aircraft through their order books. But looking at the order books it seems that this situation can change with the next generation of aircraft. Although Airbus and Boeing are achieving a good level of orders in Asia, Comac has 12% of the global orders for the next generation of narrowbody aircraft and 3 of the regional market, 45% of these orders placed by Chinese lessors. In terms of the regional breakdown, Asia is the biggest with 35% of the market share, 7% less than the actual deliveries breakdown. The second most active region is North America, with 26% of the market. ASSET CLASS BREAKDOWN 3Q widebody 23% Narrowb 64% Regional 11% Turboprop 2% ORDERS BY REGION AND MANUFACTURER Airbus Boeing Bombardier COMAC Embraer Irkut MRJ Sukhoi Total Asia % % % % 50.7% 11.8% % % Europe % % % % % % North America % % % % % % % % Mid East % % % Lat Am % % % % % Africa % % % % Not Disclosed % % % % Total % of orders will take place in Asia of unfilled global orders have been placed by lessors Asia Europe North America Mid East Lat Am Africa MRJ Irkut Airbus Boeing Bombardier COMAC Embraer The price of fuel is stimulating the sales of next generation aircraft Sukhoi Not Disclosed 5

7 MANUFACTURERS Orders 3 of the deals for aircraft in production will take place in Asia Airbus is the favored manufacturer of aircraft lessors, with 919 unfilled orders Aggregating all the orders placed to date, about 6 are for aircraft in production. Deliveries in the near future are going to be concentrated in Asia (3), North America (28%) and Europe (2). However, the situation will change soon as new models come to the market; Latin America will figure more prominently, filling about 9% of the market to the detriment of Europe and the Middle East. Analyzing the customer profile breakdown for the whole market, about 2 of the orders have been placed by lessors, 8% more than the current figures. However, this changes dramatically depending on the manufacturer from 3% for MRJ to 74% for Irkut. Chinese lessors have accumulated 265 orders for Comac, and airlines booked another 305. Despite the success of the western manufacturers in the region, if these orders are delivered the market is going to become increasingly domestic. ORDERS BACKLOG BY REGION AND MARKET STATUS IP NIP TOTAL No % No % No % Asia % % % Europe % % North America % % % Mid East % % Lat Am % % Africa % % % Not Disclosed % % % Total % % IP NIP The big question is whether these deliveries are going to need foreign finance and how they are going to attract capital. The answer seems straightforward: export credit. However, it is a competitive source for the industry now, but not necessarily in the future, and the asset reputation is going to be the key factor Asia Europe North America Mid East Lat Am Africa Not Disclosed ORDERS BACKLOG BY CUSTOMER PROFILE Profile Airbus Boeing Bombardier COMAC Embraer Irkut MRJ Sukhoi TOTAL No % No % No % No % No % No % No % No % No % Lessor % % % % % % % % Airline % % % % % % % % % Other % % 9 1.6% % % Other 1% AIRBUS BOEING BOMBARDIER Other 1% COMAC Other 2% EMBRAER IRKUT Other MRJ Lessor 3% Other SUKHOI Lessor 21% Other 7% Lessor 15% Other 14% Lessor 21% Lessor 46% Lessor 18% Lessor 74% Lessor 35% Airline 78% Airline 78% Airline 65% Airline 53% Airline 8 Other Airline 26% Airline 97% Airline 65% 6

8 MANUFACTURERS Orders Widebody The market for widebodies represents 24% of the global orders for aircraft, and the deliveries are going up. The production of the first A350 is going forward, despite Airbus s announcement of a three-month delay because of technical issues. They only widebody aircraft ordered at Farnborough this year were 24 Airbus jets. Boeing leads the market with 1,299 orders (55%), and both major manufacturers agree the same customer profile market share, about 85% for airlines and an additional 12% for lessors. ORDERS BY REGION AND MANUFACTURER IN PRODUCTION NOT IN PRODUCTION No (%) No (%) Airbus Boeing Airbus Boeing Airbus Boeing Airbus Boeing Asia % 27.1% % 35.9% Europe % 14.5% % 18.1% North America % 25.3% % Mid East % % Lat Am % % 1.9% Africa % 3.3% % 2.2% Not disclosed % % 4.1% Total Asia (32%) and the Middle East (23%) are the leading regions demanding this aircraft type, but Europe and North America are not far behind. It is perhaps the aircraft type with the most balanced regional breakdown. Another interesting fact is the not-inproduction market is absolutely concentrated on Airbus. The reason for that is mainly the A350; while Boeing is producing one of the 787 versions, Airbus is still developing the A Total orders by region Older generation twin-engined jets are still seeing fair demand. There are 317 unfilled orders of A330s and s, with about four more years of production for both manufacturers at the current production rates. It is interesting to note that, despite the upcoming new models, there will be current-generation widebodies still flying in 30 years time Asia Europe North America Mid East Lat Am Africa Not disclosed Airbus Boeing MARKET SHARE BY MANUFACTURER Airbus Boeing TOTAL Asia % % % Europe % % % North America % % 472.1% Mid East % % % Lat Am % % % Africa % % Not disclosed 2 0.2% % % Total % % 2349 ORDERS BY CUSTOMER PROFILE Profile Airbus Boeing TOTAL No % No % No % Lessor % % % Airline % % % Other 2 0.2% % % Boeing 67% IN PRODUCTION Airbus 33% NOT IN PRODUCTION Boeing 36% Airbus 64% 7

9 MANUFACTURERS Orders Narrowbody Narrowbody orders are in an interesting situation. There was a lot of activity concerning the 737Max at Farnborough, with sales increasing and Boeing continuing to disclose more features of the new aircraft. We could see the innovative winglets, which are going to be mounted on the Max. Also interesting were the new models coming up from new original equipment manufacturers, such as the Irkut and the Comac narrowbodies. The levels of orders are modest, but they are retaining 19% of the market. ORDERS BY REGION AND MANUFACTURER IN PRODUCTION NOT IN PRODUCTION No (%) No (%) Airbus Boeing Airbus Boeing Airbus Boeing Comac Irkut Airbus Boeing Comac Irkut Asia % 25.6% % 96.3%.7% Europe % % 15.6% % North America % 33.2% % 54.1% 3.7% 0. Mid East % 1.8% Lat Am % % Africa % Not disclosed % 11.3% Total % 28.6% 10.4% 9.3% These new manufacturers are aware of the challenges they face. The biggest is to build a reputation; customers need finance, and banks need to see a good risk-benefit relationship in the deal. It is unlikely a bank will see a brand new aircraft from a new manufacturer as a safe investment. But the situation could change dramatically if they achieve good track records. Orders for aircraft in production are equally divided, with some regional differences depending on the manufacturer Asia is the biggest market for Airbus (36%) and North America is Boeing s strongest region (33.2%) Total orders by region Airbus Boeing Comac Irkut The new-generation orders are dominated by Airbus, with 52% of the share. This is a normal situation given that the A3 neo is in a later stage of production than the other new models. To meet the requirements of future demand, Airbus announced in July that it is to open a new factory for the A3 in the US. With this new facility it expects to increase production by 40 to 50 aircraft by 18, an increase of about 8% of total production, and an increase of 1 in its narrowbody production capacity Asia Europe North America Mid East Lat Am Africa Not disclosed Boeing 51% IN PRODUCTION Airbus 49% Comac 1 NOT IN PRODUCTION Boeing 29% Irkut 9% Airbus 52% ORDERS BY REGION AND MANUFACTURER. OVERALL Airbus Boeing Comac Irkut TOTAL Asia % % 50.7% % Europe % % % % North America % % % % Mid East % % Lat Am % % % Africa % % Not disclosed % % % Total % % % 67 ORDERS BY CUSTOMER PROFILE Profile Airbus Boeing Comac Irkut TOTAL No % No % No % No % No % Lessor % % % % % Airline % % % % % Other % % % Total

10 MANUFACTURERS Orders Regional The regional market represents 12% of the aircraft delivered this year so far, so it is a perfect match with the market share of the asset class in the orders backlog. Sukhoi (49%) heads the league table for aircraft in production, followed by Embraer (42%) and Bombardier (14%). Looking at the overall backlog, Comac has the longest queue, with 35% of the market share and 75% in Asia. It has a strong order book, but the programme is suffering constant delays. The latest news is that it expects to deliver the first unit in 13, almost three years later than originally proposed. Despite these issues, if it demonstrates reliability it is going to be a successful model, although it will suffer the same problems as the other Comac jets all the orders are focused in the Chinese market. Embraer is the regional aircraft manufacturer with the most diversified portfolio of customers, with a presence in all the regions. Bombardier continues to develop the CSeries, which will have its maiden flight at the end of next year. There have not been orders this quarter for the model, but it retains a strong order book, with 138 aircraft. ORDERS BY REGION AND MANUFACTURER 3Q IN PRODUCTION NOT IN PRODUCTION No (%) No Bomb. Embr. Sukhoi Bomb. Embr. Sukhoi Bomb. COMAC Embr. MRJ Sukhoi Asia % 14.6% 30.2% Europe %.8% North America % 15.3% Mid East % 7.3% Lat Am % 8.5% Africa % Not disclosed % Total Total orders by region Sukhoi MRJ Embraer COMAC Bombardier IN PRODUCTION 0 Asia Europe North America Mid East Lat Am Africa Not disclosed Sukhoi 49% Bomb. 14% Embr. 37% Embraer NOT IN PRODUCTION MRJ 28% Sukhoi Bombardier 22% COMAC 5 ORDERS BY REGION AND MANUFACTURER. OVERALL Bombardier COMAC MRJ Embraer Sukhoi TOTAL Asia 9.8% % 11.8% % % % Europe % % % North America % 5 1.6% % % % % Mid East % % % Lat Am % 8.5% % Africa % % Not disclosed % % % Total % % % % % 1097 ORDERS BY CUSTOMER PROFILE Profile Bombardier COMAC MRJ Embraer Sukhoi TOTAL No % No % No % No % No % No % Lessor 42.5% % 5 2.9% % % % Airline % % % % % % Other % 9 2.9% % % 9

11 MANUFACTURERS Orders CUSTOMER LISTS Over the next pages there is a compilation of the top orders sorted by aircraft size, manufacturer, and production status. The turboprop market is not included because ATR does not disclose their backlog on a quarterly basis, but it is likely to be available in the next issue. 10

12 MANUFACTURERS Orders Customer lists The first table on the right shows the 15 top customers for the whole industry, including all aircraft types, from the order books of all the manufacturers. The second table shows the top customers for aircraft in production, excluding the Max, Neo, CSeries, and A350 aircraft, and therefore the most active in the near future. TOP ORDERS. OVERALL TOP ORDERS. AIRCRAFT IN PRODUCTION CUSTOMER No CUSTOMER No 1 Lion Air 340 Southwest Airlines Southwest Airlines 330 United Air Lines United Air Lines 310 Emirates Gecas 292 Lion Air Norwegian 273 American Airlines Airasia 270 Delta Air Lines Air Lease Corporation 245 China Eastern ILFC 226 China Southern Airlines 96 9 INot disclosedigo 212 GOL Airlines Emirates 210 ALC Qantas 174 Air China CIT Leasing Corporation 142 Wizz Air American Airlines 138 Norwegian ICBC Leasing 137 Gecas Aviation Capital Group 133 ILFC 65 The table on the right shows the 15 top customers for both Airbus and Boeing, including singleand twin-aisle aircraft, airlines and lessors, and orders for aircraft in production and those still under development. TOP ORDERS. OVERALL AIRBUS BOEING 1 AirAsia 270 Lion Air INot disclosedigo 212 Southwest Airlines Qantas 149 United Air Lines Qatar Airways 143 Norwegian Emirates 137 ALC Gecas 122 GECAS ILFC 1 American Airlines Spirit Airlines 101 Delta Air Lines Norwegian 100 ILFC Tam 100 GOL Airlines ALAFCO 97 Emirates ICBC 92 Air China Jetblue Airways 88 Virgin Australia CIT 88 ANA Lan 82 Air Berlin 55 AIRBUS BOEING 11

13 MANUFACTURERS Orders Customer list-widebodies The table on the right shows the 15 top customers for both Airbus and Boeing for twin-aisle aircraft, including airlines and lessors, and orders for aircraft in production and those still on the design table. The second table shows only the twin-aisle aircraft in production. The second one shows just the twin-aisle aircraft in production. TOP ORDERS. WIDE BODY AIRCRAFT AIRBUS BOEING 1 Emirates 137 ILFC 74 2 Qatar Airways 90 Emirates 73 3 Cathay Pacific 62 All Nippon Airways 54 4 Asiana Airlines 36 FedEx 53 5 Hong Kong Airlines 32 Etihad Airways 50 6 US Airways 30 United Air Lines 49 7 Singapore Airlines 30 Air Canada 42 8 Airasia X 29 Qatar Airways 41 9 Tam 27 Japan Airlines Kingfisher 25 Aeroflot United Airlines 25 LAN Airlines Etihad 24 Cathay Pacific Airways Aeroflot 24 Air China Garuda Indonesia 21 Korean Air Air China 21 Air India 28 TOP ORDERS. AIRCRAFT IN PRODUCTION AIRBUS BOEING 1 Emirates 67 Emirates 73 2 Garuda Indonesia 21 FedEx 53 3 Philippine Airlines Air Canada 42 4 Kingfisher Airlines Qatar Airways 41 5 Gulf Air Aeroflot 38 6 Airasia X 19 United Air Lines 35 7 Intrepid aviation 18 ILFC 33 8 Hong Kong Airlines 17 Cathay Pacific Airways 32 9 Cathay Pacific 16 LAN Airlines CIT 15 Air India Hawaiian Airlines 12 All Nippon Airways Etihad Airways 12 Unidentified Customer(s) 13 British Airways 12 Japan Airlines Korean Air 12 Korean Air Air China 11 Gecas 19 Airbus Widebodies Airbus Narrowbodies

14 Airasia INot disclosedigo Qantas Gecas Spirit Airlines ILFC Norwegian ICBC JetBlue Airways ALAFCO LAN Airlines Republic Airways Go Air Tam Aviation Capital / ALC Lion Air Southwest Airlines United Air Lines Norwegian ALC GECAS American Airlines Delta Air Lines GOL Airlines Virgin Australia Airlines Aviation Capital Group China Eastern Russian Technologies Air Berlin CCB Financial Leasing ICBC Leasing ABC Financial Leasing BOCOMM Leasing CALC Sichuan Airlines BOC Aviation CDB Leasing Gecas Air China China Eastern China Southern Hainan Airlines MANUFACTURERS Orders Customer lists-narrowbodies The first three tables on the right show the top customers for the three manufacturers of single-aisle aircraft, and the one below indicates the leading orders, excluding the C919, Max and Neo aircraft. TOP ORDERS. OVERALL AIRBUS BOEING COMAC 1 Airasia 270 Lion Air 335 CCB Financial Leasing 50 2 INot disclosedigo 212 Southwest Airlines 330 ICBC Leasing 45 3 Qantas 141 United Air Lines 194 ABC Financial Leasing 45 4 Gecas 112 Norwegian 170 BOCOMM Leasing 30 5 Spirit Airlines 101 ALC 152 CALC 6 ILFC 100 GECAS 128 Sichuan Airlines 7 Norwegian 100 American Airlines 1 BOC Aviation 8 ICBC 92 Delta Air Lines 100 CDB Leasing 10 9 JetBlue Airways 88 GOL Airlines 88 Gecas ALAFCO 85 Virgin Australia Airlines 66 Air China 5 11 LAN Airlines 82 Aviation Capital Group 58 China Eastern 5 12 Republic Airways 80 China Eastern 54 China Southern 5 13 Go Air 79 Russian Technologies 50 Hainan Airlines 5 14 Tam 73 Air Berlin Aviation Capital / ALC 70 AIRBUS BOEING COMAC TOP ORDERS. AIRCRAFT IN PRODUCTION AIRBUS BOEING 1 ICBC 72 Southwest Airlines Airasia 70 Lion Air Qantas Airways 63 Unidentified Customer(s) INot disclosedigo 62 American Airlines 1 5 LAN Airlines 62 Delta Air Lines Spirit Airlines 56 United Air Lines 94 7 Gecas 52 GOL Airlines 88 8 TAM Lineas Aereas 51 ALC 77 9 JetBlue Airways 48 Norwegian Aviation Capital group 40 Aviation Capital Group Air Lease Corporation 34 China Eastern Philippine Airlines 34 Gecas Virgin America 30 Russian Technologies Lufthansa 28 Virgin Australia Airlines Volaris 25 Air Berlin 40 13

15 MANUFACTURERS Orders Customer lists-regional jets The compilation on the right shows the top customers for regional aircraft sorted by manufacturer, overall and in production. TOP ORDERS. AIRCRAFT IN PRODUCTION BOMBARDIER EMBRAER SUKHOI 1 Air Nostrum 25 1 JetBlue 32 1 Kartika Airlines 30 2 Nordic Aviation Capital 12 2 Flybe 27 2 Pearl Aircraft Corp 30 3 Felix Airways 6 3 Azul 24 3 VEB Leasing 24 4 Garuda Indonesia 6 4 BOC Aviation 14 4 Aeroflot 5 China Express 4 5 GECAS 8 5 Interjet 6 Iraq, Government of 4 6 Kenya Airways 8 6 Orient Thai Airlines 12 7 Tatarstan 4 7 Virgin Nigeria 8 7 Sky Aviation 12 8 RwandAir 2 8 Nasair 7 8 Kuban Airlines 12 9 Undisclosed 2 9 CIT 6 9 Aviotech Adria Airways 1 10 ETA Star Aviation 5 10 Finance Leasing Co BritAir 1 11 Lufthansa 5 11 Gazpromavia Conviasa 4 12 Yamal Airlines Air Lease 3 13 Blue Panorama Airlines China Southern 3 14 Transaero Dniproavia 3 15 Willis Lease Finance 6 BOMBARDIER EMBRAER SUKHOI TOP ORDERS BOMBARDIER EMBRAER SUKHOI 1 Republic Airways 40 1 JetBlue 32 1 Kartika Airlines 30 2 Lufthansa 30 2 Flybe 27 2 Pearl Aircraft Corp 30 3 Iberia 25 3 Azul 24 3 VEB Leasing 24 4 Undisclosed 23 4 BOC Aviation 14 4 Aeroflot 5 Lease Corp Internat. 5 GECAS 8 5 Interjet 6 Nordic Aviation Capital 12 6 Kenya Airways 8 6 Orient Thai Airlines 12 7 Braathens Aviation 10 7 Virgin Nigeria 8 7 Sky Aviation 12 8 Korean Air 10 8 Nasair 7 8 Kuban Airlines 12 9 felix airways 6 9 CIT 6 9 Aviotech Garuda Indonesia 6 10 ETA Star Aviation 5 10 Finance Leasing Co PrivatAir 5 11 Lufthansa 5 11 Gazpromavia China Express 4 12 Conviasa 4 12 Yamal Airlines goverment of Iraq 4 13 Air Lease 3 13 Blue Panorama Airlines 8 14 Tartastan 4 14 China Southern 3 14 Transaero 6 15 Rwandair 2 15 Dniproavia 3 15 Willis Lease Finance 6 14

16 MANUFACTURERS DELIVERIES

17 MANUFACTURERS Deliveries The market is showing that, despite the crisis which is affecting some regions, the demand for new aircraft is still strong, and there has been an increase in deliveries during 12. The figures started weakly in the first quarter, but the market has achieved good results during the latter part of the year. Latin America secures 9.4 % market share in Q3 WB 23% The turboprop market is experiencing fast growth deliveries have increased by more than 10 in the past two periods in a row, reaching 7% of the share. The market for twin-aisle aircraft also remains stable, claiming 23% of the market in terms of delivered assets. Boeing was the best performing manufacturer during this period, collecting 45% of the total deliveries, followed by Airbus (38%) and Embraer (8%). Analyzing the customer profile, we see that 13% of the deliveries have been for leasing companies, while 85% were for airlines. Deliveries' rate keeps growing since Q1. Turboprop market consolidates to7% market share this quarter TP 7% RG 9% According to the data analysis, Boeing was the favoured manufacturer for lessors, delivering 16 aircraft, but Bombardier delivered about 45% of its production to lessors. Regional jets seem popular among the lessors this quarter; Embraer reached an 18% lessor share. NB 61% The regional breakdown during the last period has shown that Asia received 43% of all deliveries, followed by Europe (19.1%) and North America (18.5%). Latin America collected an impressive 9.4% of the deliveries, 2.4% more than the Middle East. DELIVERIES BY ASSET CLASS 1Q 2Q 3Q Turboprop Regional Narrowbody Widebody Total MARKET SHARE BY MANUFACTURER 3Q Sukhoi, 1 Boeing, 149 Airbus, 126 Bombardier, 12 Embraer, 27 ATR, 15 16

18 MANUFACTURERS Deliveries DELIVERIES BY REGION AND MANUFACTURER. 3Q TOTAL Airbus ATR Boeing Bombardier Embraer Sukhoi No. Share Asia % Europe % No.rth America % Mid East Lat Am % Africa % ND % Total GLOBAL 2% 13% Airbus ATR Boeing Bombardier Embraer Sukhoi Asia Europe No.rth America Mid East Lat Am Africa ND 85% DELIVERIES BY CUSTOMER PROFILE. 3Q Profile Airbus ATR Boeing Bombardier Embraer Sukhoi Total No. % No. % No. % No. % No. % No. % No. % Lessor % % % % % Airline % % % ND 3 2.4% 1 6.7% 4 2.7% % Avg.last quarter Lessor Airline ND AIRBUS ATR BOEING BOMBARDIER EMBRAER Lessor ND SUKHOI 2% 3% 1 7% 13% 11% 19% 45% 55% 88% 8 86% 81% Airline 10 Lessor Airline ND 17

19 Airbus-Boeing deliveries MANUFACTURERS Deliveries Widewbodies Delivery rate has been constantly grown for the last six months in the widebody market A380 Body. Courtesy of EADS. The widebody market brought some interesting news during the summer of 12. This quarter the production rate of the 787 has doubled from 6% to 12%, but in July some of the fleet was grounded because of issues with the Rolls-Royce engine, followed by additional complications with the GE engine in September Total deliveries Total Airbus Boeing Linear (Total) Brand new technology usually needs some improvements and amendments, and this is a collateral damage for launch costumers. Qatar Airways received its first Dreamliner six weeks late because it hesitated to take delivery of the model until the GE engine problems were resolved. GE has inspected the whole fleet without finding any problems, and it has improved the quality of the troublesome part. Qatar experienced some issues with the Rolls-Royce engines also, which forced it to ground some of its aircraft. The widebody market is still dominated by Boeing: the US manufacturer delivered 14.5 jets on average in the past six months, while Airbus delivered 10.2 units. The current generation of aircraft still keeps a strong presence in the market. Airbus announced in July that it is to release an extended-range A330 with improved fuel efficiency and more load capacity, perhaps to fill the two-year gap until the first delivery of the A350. Boeing still keeps on production the 767 model and it delivered seven units during the present quarter, so it seems that the model still maintains the interest of some carriers. The market for widebodies shows a small but constant growth in terms of deliveries during the past six months, which means that the demand for long routes is still there and the market is requiring more widebody aircraft Apr May Jun Jul Aug Sep WIDEBODY DELIVERIES Apr May Jun Jul Aug Sep Avg % Var Var (%)* Airbus % % Boeing % % Total % *Last vs. Avg Total deliveries 18

20 MANUFACTURERS Deliveries Widewbodies Airbus 6M Boeing 6M Global widebody aircraft market grows by 2.7% during the third quarter 2% 2% 2% 15% 3% 1 8% 33% 45% of deliveries in this period went to Asia 44% 28% 34% 19% Asia Europe North America Mid east Lat Am Africa ND Deliveries by region. 2Q vs 3Q 2Q 3Q Asia Europe North America Mid east Lat Am Africa ND Widebody deliveries have increased by 2.7% this quarter, and the regional breakdown is showing a couple of interesting facts: Asia has 45% of the market share, 7% more than the previous quarter, followed by Europe (15%) and North America (13%). The Middle East and Latin America are not far behind, each with 12% of deliveries. In terms of manufacturer presence over the past six months, Airbus made 10.2 deliveries a month, while Boeing delivered Airbus is more popular than Boeing in Europe (3.5 versus 1.8) but Boeing is ahead in North America (2.8 versus 1.5). The most demanding region has claimed more jets from the US manufacturer. It delivered 1.3 a month on average more aircraft in Asia than the European brand, although the market share for Airbus (44.3%) is higher than Boeing s (40.2%) for the same region. The Middle East keeps 1 of the deliveries, but Boeing aircraft are definitely more popular in the region (2.3 versus 0.3). Latin America retains just 6.8% of the market share, and the American original equipment manufacturer performs better here as well (1.5 versus 0.2). DELIVERIES BY REGION AND MANUFACTURER. WIDEBODY AIRCRAFT DELIVERIES 2nd QUARTER DELIVERIES 3nd QUARTER Avg 6 M Avg 6 M (%) 2Q 3Q Airbus Boeing Total Airbus Boeing Total Apr May Jun Tot % Jul Aug Sep Tot % Asia % 33.3% 38.1% Asia % % Europe % % Europe % % North America % 27.6% 23.3% North America % % Mid east % 10.5% 7.9% Mid east % % Lat Am % 7.6% 5.3% Lat Am % % Africa % 1.1% Africa % ND % % ND % Total deliveries Total deliveries

21 Airbus-Boeing deliveries MANUFACTURERS Deliveries Narrowbodies Industry is reporting soften lease rates and disminuating residual values for narrowbody aircraft Airbus Factory. Courtesy of EADS. Total deliveries The narrowbody market represents about 6 of total jet deliveries, being by far the biggest market. However, in the past few months the industry has reported that lease rates and residual values for narrowbodies are falling below expectations Total Airbus Boeing Linear (Total) The cause is not clear, although the market believes it could be because of oversupply, cheap access to export credit agency-backed financing for brand new aircraft or an excessively competitive environment for leasing companies. The industry claims that cheap and easy access to financing is damaging the second-hand market, meaning that traditional second-hand customers are buying brand new aircraft, producing a lack of demand for older jets Total deliveries Accordingly, this situation could impact the value of new aircraft in the long term. In 10 to 12 years time all these aircraft will go to the used market, leading to more oversupply. However, this is a situation that could affect lessors more, because airlines could always avoid losses by keeping the aircraft until the end of their economic life. The fact is that the trends on the supply of narrowbodies for both the major manufacturers combined are pointing to a slight decrease in deliveries during the past six months, as is shown on the chart Apr May Jun Jul Aug Sep 10 0 NARROWBODY DELIVERIES Apr May Jun Jul Aug Sep Avg % Var Var (%)* Airbus % Boeing % % Total % *Last VS Avg.

22 MANUFACTURERS Deliveries Narrowbodies Airbus 6 month 11% 1% Boeing 6 month 1% 4% 2% THere has been an 11% downturn in deliveries during the third quarter 6% 34% 43% 15% 37% 24% 22% Asia Europe North America Mid east Lat Am Africa ND Deliveries by region. 2Q vs 3Q 2Q 3Q Asia Europe No.rth America Mid east Lat Am Africa ND During the third quarter, 0 jets have been delivered almost 11% fewer than the previous period. Asia, again, dominates the narrowbody market with a 45.5% share. Airbus has performed better, with 15.3 deliveries a month on average in the past six months, with Boeing achieving North America is in second place, with almost 2 of the total deliveries. It is clearly the strongest market for Boeing, accumulating 13 deliveries a month on average in the six-month period; Airbus achieved 5.3. The Middle East is not particularly active within the narrowbody market, claiming just 5%, and Latin America received 8.5% of the deliveries during this period. DELIVERIES BY REGION AND MANUFACTURER. NARROWBODY AIRCRAFT Avg 6 M Avg 6 M (%) 2Q 3Q Airbus Boeing Total Airbus Boeing Total Apr May Jun Tot % Jul Aug Sep Tot % Asia % 33.6% 38.4% Asia % % Europe % 22.3% 23.1% Europe % % No.rth America % No.rth America % Mid east % 0.9% 3.3% Mid east % Lat Am % 3.8% 7.3% Lat Am % % Africa % 2.4% 1.4% Africa % ND % % ND % % Total deliveries Total deliveries

23 Airbus-Boeing deliveries MANUFACTURERS Deliveries Regional Jets Deliveries fell by 3 compared to the average in the previous three quarters REGIONAL DELIVERIES 65 Total deliveries Total Bombardier** Embraer Sukhoi Linear (Bombardier**) Sukhoi SSJ100 returned to service with Armavia Q 12 2Q 12 0 The regional market has had 30 deliveries during this period, about 5 fewer than the previous quarter, but still better than the first quarter of the year. The trends stay flat in terms of deliveries growth. Asia keeps 4 of the market, with Europe and North America even at 2. It looks like Middle Eastern carriers are not very interested in regional jets, keeping just 3.3% of the deliveries during this quarter. Embraer is the most popular manufacturer with 8 of the deliveries. The deliveries for Sukhoi have reduced from two aircraft to just one during this quarter, perhaps because of the repairs needed on the Armavia unit. The aircraft was returned to the manufacturer in August because of some technical difficulties, and it restarted operations at the beginning of October. REGIONAL DELIVERIES 1Q 12 2Q 12 Avg % Var (%)* Bombardier** % % Embraer % % Sukhoi % Total *Last VS Avg. **Regional market DELIVERIES BY REGION AND MANUFACTURER Bombardier Embraer Sukhoi Total No % No % No % No % Asia Europe % No.rth America % Mid east % % Lat Am % Africa % % ND Total deliveries

24 Airbus-Boeing deliveries MANUFACTURERS Deliveries Turboprops Top regions are Europe (4) and Latin America (27%). ATR 3Q 5% 11% Bombardier 3Q 4% DELIVERIES BY REGION AND MANUFACTURER Jul-Sep Avg 3xQ ATR Bombardier Total ATR Bombardier Total No. % No. % No. % No. % No. % No. % Asia % % 4.3.3% Europe % % % No.rth America % % Mid east Lat Am % % % Africa % % % ND Total deliveries % 33% 46% 38% 18 Total deliveries Total ATR Embraer Linear (ATR) % Asia Europe North America Mid east Lat Am Africa ND The regional breakdown of the turboprop market looks different than the rest of the sectors; quarterly deliveries during the past three periods show that the strongest markets are Europe, collecting almost 4, and Latin America with an impressive 27% of the market share. On the other hand, Asia has a tiny 17.5% share The trend shows clearly that the turboprop market is growing, and the particular features of this aircraft fuel burn and operating costs could boost the demand in the near future, mainly in Latin America and Africa Q 12 2Q 12 0 In September all the attendees to the Airfinance Latin American Conference agreed that there is an increasing demand for transport within the region, and the lack of a decent road network is making even short routes profitable and successful. Turboprops are the perfect vehicles to cover these routes, and this might be driving the growth trend. Lessors seem quite happy with turboprops; they ve taken delivery of 25% of the new units produced this quarter. Despite the traditional lack of demand in this asset type for lessors, it seems that some of them are taking advantage of this opportunity. TURBOPROP DELIVERIES 1Q 12 2Q 12 Avg % Var (%)* ATR % % Bombardier % % Total *Last VS Avg. 23

25 STRUCTURES

26 DEALS Structures It is no secret that the latest trend among airlines is to keep a balance of about half of the fleet leased and the other half owned, using different types of financing. An analysis of the trends in financing structures shows that this balance could change in the near future. There has been a spectacular increase in operating leases over the past couple of months. Also, lessors are tapping the regional and turboprop market, which was not traditionally an attractive market for most of them, presumably because of the specific cost of managing the assets virtually the same paperwork for much less income. Another reason that might explain this trend is the change of aircraft generation. An increasing number of carriers prefer to acquire the last of production aircraft under any sort of lease, removing the risk of the over-depreciation of the asset and giving them 12 years to see the evolution of the market (the average life of an operating lease). Operating leases increased by 13% during the third quarter Structed operating leases fell by 12% All of these leases would mature in 24, when there will be enough Max and Neo aircraft in the market to see the impact on the value of currentgeneration aircraft. It will be the perfect timing for the carriers to negotiate in case they want to buy the aircraft. On the other hand, this trend could push up lease rates because of demand, and make the leasing market inaccessible or too expensive, so the evolution of this trend would depend on the lessors. Tax and structured operating lease markets were quiet in the last period, with just four deals, but still it is not a clear sign of a lack of appetite. Capital markets are experiencing growth in the US, with decreasing interest rates and oversubscribed bond issues. The spectrum of products goes from ECA-backed bonds to unsecured bonds, with coupon rates ranging from 1.69% to 5.87%, and there is a lot of oversubscription. However, European markets are still not too interested in some capital markets structures, which can be seen by the cancelled issuing of the IAG slotbacked bond because of the lack of demand. The question is whether the market was not willing to invest in such a different product or the demand just remains low. There have been only four bond issues from September 21 11, all of them unsecured, with coupons ranging from 11.5% (Air Berlin) to 6.37% (AerCap), totalling $1.3 billion. The market expects a first Coface-guaranteed bond by the end of the year, which would increase the popularity of the structure. DEALS BREAKDOWN 3 25% 2 15% 1 1 Y* 3Q DEALS BREAKDOWN 1 Y* 3Q DIF No % No % % Commercial Loan % 14 11% -13.1% Export credit 95 23% 31 25% 2.1% St. operating lease 55 14% 2 2% -11.9% Sale leaseback 56 14% % DCM 33 8% 8 7% -1.6% Operating lease % 17.2% Tax lease 11 3% 2 2% -1.1% Other 17 4% 7 6% 1.6% *From 21/09/11 to 21/09/12.Airfinance research. 5% Commercial Loan Export credit St. operating lease Sale leaseback DCM Operating lease Tax lease Other 25

27 DEALS Structures Sale/leasebacks are increasing in popularity. One of the highlights of the last quarter is the sale/leaseback closed by Thomas Cook for 19 aircraft (11 757s and eight 767s), generating $294 million for the carrier. In terms of regional distribution, the market continues to move to the emerging economies, mostly in Asia and Latin America. The Middle East lost some market share, registering less activity than Latin America during the year to date. Recent news from Boeing Capital pointed out that the deliveries funded without financing increased massively during this year; they expect it could reach 6 of the region s total. Emerging economies continue to increase in market share The recent news about Etihad s new routes to Latin America surprised some, but opening a new niche of business could be a smart strategy. The main advantage for airlines is that they can compete from both sides of a route London-Rio de Janeiro can be flown by Brazilian and English carriers and change their flights to the most popular routes Y 3Q* Africa Asia Europe Lat Am North America Middle East REGION BREAKDOWN BY No OF DEALS. 1Y % REGION BREAKDOWN 1 Y 3Q* DIF No % No % % Africa % 6 4.9% 1.7% Asia % % 5.3% Europe % % -6.2% Lat Am % % 3.6% North America % -3.7% Middle East % 9 7.4% -0.7% *From 29/02 to 29/05 Airfinance research 8.1% 34.9% 3.2% 10.3% Asia North America Europe Africa Lat Am Mid East 26

28 DEALS BREAKDOWN BY STRUCTURE AND BODY TYPE Turboprop Regional Narrowbody Widebody No % No % No % No % Commercial Loan 1 7.7% % % Sale Leaseback % % % Export credit % % % % Structured operating lease 1 7.7% % % DCM % 3 2.3% Operating lease % % % Data from one year back to date. 35% of the signed deals for regional and turboprop aircraft were operating leases Turboprop Regional Narrowbody Widebody Export credit-backed structures are still the main source of liquidity within the widebody market Coface may offer ECA support to ATR and Sukhoi in the near future Commercial Loan Sale Leaseback Export credit Structured operating lease DCM Operating lease Sorting the structures by asset type, there are clear differences in terms of trends and most popular deal financing: commercial loans are still a good source of financing both for narrowbodies and widebodies, despite the apparent lack of liquidity in the commercial market. Commercial banks are looking for safer deals, so a good part of regular commercial debt is moving to export credit agency-guaranteed structures. This is being particularly successful for the widebody market, with a 33% market share; structured operating leases are popular in the regional aircraft market, where they accumulate about one-third of the market share. We ve seen that both KG structures and Japanese operating leases are very successful in Europe for this asset class. The news that might drive a change in the trend is the announcement from Coface of the new 95% guarantee support for the Superjet, while Exiar, the Russian export credit agency, is completely functional; not all lessors feel comfortable in the widebody market. It has 16% of the market share for new deals closed by lessors in the last year to date, which is much lower than the 28% of operating leases in the narrowbody market. Export credit-backed deals are the most popular, with 33% of the market share. Widebody deals often surprise the industry with new combinations of different structures, especially for the A380; and some carriers are increasingly using their own funds to pay for new aircraft. This trend is improving dramatically in the Middle East market. According to Boeing Capital, 6 of deliveries in 12 could come from an airline s own reserves. A400 PROPELLERS. Courtesy of EADS. 27

29 Air China Etihad Etihad Lion Air Air China Air India Emirates Atlas Air Emirates LAN Atlas Air Latam Ryanair Emirates Aviation Capital Group LAN DEALS Structures Most of the Airbus Aircraft are financed through commercial debt, while the favorite structure to finance Boeing aircraft is export credit FINANCING STRUCTURES BY MANUFACTURER 1Y Airbus Boeing No % No % Commercial Loan % % Sale Leaseback % % Export credit % % St. operating lease % % Tax lease 9 4.5% 1 0.7% DCM % Operating lease % % Ex-Im backed bonds have increased by 25 in the past year 35. Airbus Boeing Commercial Loan Sale Leaseback Export credit St. operating lease Tax lease DCM Operating lease Aircraft are being financed in very different ways depending on the manufacturer. Some 3 of Boeing deals involve export cre dit, while Airbus s main source of liquidity tends to be the commercial market. Operating leases have been more popular for Airbus than for Boeing, not only in relative market share by manufacturer, but also in direct comparison of their figures Structured operating leases are more or less equally divided between both manufacturers, and represent about 12% of the marke t share. Despite this figure there is a bigger market of Japanese operating leases and Japanese operating leases with call options, bu t there is still a big amount of undisclosed deals One of the highlights of the period is the tremendous increase in export credit agency -guaranteed financing. Airfinance Deals Database has detected 95 deals, both backed loans and bond issues, although the most interesting piece of data is the 16 Ex -Im-guaranteed bonds, which represents a 25 increase. There is a stabilization of the coupon at about 1.7%, after a year of continuous descent fr om 2.73% (Air China, October 11). This popularity is as a result of the introduction of the export credit agency prefunded bonds last June. The main advantage of this new structure lies in the ability of paying the asset with investors money, rendering the deal much simpler. It is no longer nec essary to ask for a bank loan to fund the delivery of the asset, and then repay it using the bond s raised capital Coupon Power (Coupon) Despite the success of the structure in the US market, there has not been huge activity in European markets. This is likely t o change soon, and there could be growth in Europe in the next couple of months. The main issue in Europe seems to be currency risk, but for airlines which receive part of their revenues in euros, a debt is sue in this currency could be a way of mitigating the risk. 28