In January 2020, Airline Economics in partnership with KPMG, published its annual Aviation Industry Global Leaders Report, which took a general state of the industry based on interviews with a variety of industry leaders.
At that time, the industry was focused on the impact of the grounding of the 737 MAX as well as a general slowing in growth and the rise of the climate change agenda. The novel coronavirus, COVID-19, was only just beginning to make headlines and despite the downturn, the market was still awash with liquidity and the future looked positive. Even those with a more pessimistic outlook that were predicting a shock to the system could never have envisaged such a significant exogeneous shock as the current pandemic.
With many countries in Europe and the US on total lockdown to slow the spread of the disease, the aviation industry has been hit particularly hard. Most of the world’s airlines have the majority of their fleet grounded. And with the virus setting the timetable, the aviation industry is taking stock of its options to ride out this crisis to survive intact by the time the recovery surely comes.
As an addenda to the Aviation Industry Global Leaders project, Airline Economics, once more supported by KPMG, has launched the next in a series of podcast interviews with industry leaders to assess their reaction to the current crisis.
In this podcast, Joe O'Mara KPMG's Head of Aviation Finance, speaks to Ted O’Byrne, Managing Director, Co-Head of Aviation at Carlyle Aviation Partners, about the current crisis weighing on his decades of experience in the aviation industry through many downturns working at AerCap and Airbus before joining Carlyle Aviation.
O’Byrne speaks about his refusal to accept that this crisis will change travel forever and that although this is a deeper crisis for sure, current actions echo those of previous crises: parking older equipment in favour of new aircraft; defaulting airlines probably leading to consolidation – this time most likely in Europe rather than the US which occurred after 9/11, that could be viewed as a positive. O’Byrne points to the positive bounce back in traffic in China, which gives the rest of the world a reason to be optimistic, but drawing on his manufacturer background experience, he also predicts more pain for the OEMs as airlines defer and cancel deliveries. One positive he highlights from the slowdown in OEM production and R&D is a more stable environment for aircraft investors. As a lessor and asset manager, O’Byrne further describes how Carlyle Aviation Partners is working with its lessees to negotiate longer leases rather than rent deferrals, which works well for investors and the airlines, as well as managing the company’s capital position and relationships with its equity investors and bond holders.