Thoughts from ISTAT Americas and ISHKA Investing in Aviation Conferences

During the first week of March 2024, over 2000 aviation professionals gathered in Austin, Texas for the annual ISTAT Americas conference. The mood at the conference was very positive in relation to lease rates and values of commercial passenger aircraft. Trading of aircraft is also increasing with most regions of the globe above 2019 passenger traffic levels, combined with the ongoing struggles of aircraft manufacturers has led to increased demand for aircraft in the secondary market. The mid-life aircraft are said to be in a sweet spot currently and benefiting the most from this positive mood.

In relation to the discussions on trading, the aviation ABS market was discussed. The cautious optimism from the Dublin conference that this market would return was reinforced here with participants anticipating aviation ABS deals will come to market in 2024.

The struggles of Boeing and the GTF engine issues also featured prominently during the conference sessions and networking receptions. Most commentators foresee these issues persevering for the next 2 years at least.

The following week, the ISHKA Investing in Aviation: Europe conference took place in London, England. This conference was more investor focused and the program was tailored expertly to that audience. Investors on panels discussed the ‘relative value’ that aviation, as a sector, can provide to them. Investors added that as returns from other sectors for investment tighten up, the relative value of the aviation sector will become much more attractive to them. Private Equity is also expected to be more active in 2024 looking for investments in aviation with one Lessor CEO noting there is more of an appetite there from Private Equity firms.

The trading panel reiterated the thoughts on trading from ISTAT Americas. All the panelists have seen an uptick in trading already in 2024 compared with 2023. It was noted that the biggest issue regarding trading in 2023 was [the execution of deals]. One panelist summarized 2023 as there being approximately 500 aircraft available for sale but only approx. 15-20% of those sales concluding. In short, the buyers and sellers of these aircraft were too far apart. The panelists see this gap closing in 2024 which as a result should see trading levels increase.

The sentiment in the sessions and the halls of the conference was that the aviation capital markets would continue to recover with there definitely being aviation ABS deals in 2024. This echoes what has been discussed in other conferences so far this year.

Overall it was a great few weeks and at Phoenix American we came away from both conferences with an optimistic outlook for the investment in the aviation industry along with the relative value that it can offer to investors. While the manufacturing struggles continue, this has helped the mid life aircraft enter a sweet spot which will help bridge the gap until new aircraft deliveries get back on track.