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Implications of the 2008-2009 Crisis on the Air Finance Market
Sylvain Gloux MSc Air Transport Management Air Transport Department, University of Cranfield
167 pages
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About the Author: This work is the professional thesis achieved by Sylvain GLOUX as part of his double-graduation in Management of International Affairs at the University of Lyon III Jean Moulin and Management of International Risks Management at HEC Paris Business School. Prior to that, Sylvain has studied Business Administration and Corporate Finance at IPAG Paris and worked with Air France, Olympic Airways, Air France/KLM Cargo, BNP Paribas Aviation Finance Group, Fortis Bank Aviation Finance and COFACE Air Transport Department. Sylvain also holds a Certificate of Airline Finance and Accountig Management from the International Air Transport Association (IATA) and International Risks Insurance from ENASS Paris. He is now completing a degree in Air Transport Management in Cranfield University. He is a member of the Royal Aeronautical Society and the European Aviation Club.
Index
Acknowledgment 5
Index 7
Table of figures 9
Introduction 13
Chapter I: State of the Air Transport Industry 15 I. 2007: Record growth & Profitability; toward sustainable Air Transport growth 17 I.1. A cyclical industry: observation 17 I.2. A cyclical industry: explanatory factors 20 I.3. The recovery to long term growth 25 II. 2008: Act I, the energy crisis 35 II.1. Jet Fuel Prices Development 35 II.2. Implication for the Air Transport Industry 38 III. 2009: Act II, the financial & economic crisis 47 III.1. The fincial crisis 47 III.2. Implication for the Air Transport Industry: traffic trend reversal 52 III.3. Industry results and forecast 60
Chapter II: State of the Aircraft Finance Industry 65 I. Defining the need for new aircraft 67 II. Identifying the risks in aircraft financing 83 II.1. The Credit Risk 83 II.2. The Asset Risk 100 II.3. The Repossession Risk 116 III. The aircraft finance market: actors and products 122 III.1. Aviation finance background 122 III.2. Banks & Commercial Debt 125 III.3. Capital Markets 129 III.4. Operating Leasing 130 III.5. Export Credit 134 III.6. Manufacturers’ Support 140 III.5. New Sources of Finance 143 III.5. The Funding Gap 145