Jeff Wieand tells of turbulent times for Business Jet lessors

These are currently hard times for business jet manufacturers. Rumors circulate of “white tails” (unsold completed jets) secreted away in locked hangars by manufacturers trying to maintain an atmosphere of healthy demand and business as usual.

Jeff Wieand tells of turbulent times for Business Jet lessors

Feb 08, 2017

These are currently hard times for business jet manufacturers. Rumors circulate of “white tails” (unsold completed jets) secreted away in locked hangars by manufacturers trying to maintain an atmosphere of healthy demand and business as usual.

Global aircraft leasing growing on low rates and rising air traffic

Aircraft lessors around the world continue to benefit from increased air travel, strong airline profitability, low interest rates and generally accessible funding markets. Fitch Ratings' latest Aircraft Leasing Sector Review reports, however, these variables are cyclical in nature or prone to temporary disruption, limiting the potential for accompanying positive rating actions.

Global aircraft leasing growing on low rates and rising air traffic

Sep 26, 2016

Aircraft lessors around the world continue to benefit from increased air travel, strong airline profitability, low interest rates and generally accessible funding markets. Fitch Ratings' latest Aircraft Leasing Sector Review reports, however, these variables are cyclical in nature or prone to temporary disruption, limiting the potential for accompanying positive rating actions.

News in brief

“Donald Trump effect” keeps market confidence high

Mar 24, 2017

Confidence in the equipment finance market remains at historic highs, despite dipping slightly since the start of the year, according to new research. The latest monthly confidence index for the equipment finance industry (MCI-EFI) produced by the Equipment Leasing and Finance Foundation, shows overall market confidence during March is 71.1, easing from the February index of 72.2, but remaining among the highest levels of the last two years. The index is based on leadership data from a panel of executives, Survey respondent Thomas Jaschik, president of BB&T Equipment Finance, said: “The ‘Trump Effect’ appears to be having a positive impact on the equipment finance market. Customer demand has increased over 2016 levels. “A positive outlook on taxes and regulation seems to have been the catalyst for increased capital expenditures. If the promises come to life it could be a banner year for the US economy and the equipment finance industry.” Improvement ahead When asked to assess their business conditions over the next four months, 70% of executives said they believed these will improve. This is similar to the survey in February (69.2%). One-in-five (20%) respondents believed business conditions will remain the same over the period, a decrease from 26.9% in February as the proportion expecting conditions to get worse has risen to 10% from 3.8%. There was an increase in respondents who said demand for leases and loans to fund capital expenditure will increase over the next four months, which now stands at 70% compared to 53.8% in February. As in previous monthly surveys, 100% of the leadership evaluate the current US economy as ‘fair’ and none evaluate it as ‘poor’. Nearly two-thirds of respondents (60%) believed that US economic conditions will get better over the next six months, a decrease from 73.1% in February. Frank Campagna, group vice president, line of business manager, M&T Bank Commercial Equipment Finance, said: “We are encouraged by continued loan/lease demand for equipment spends by our core client base, especially in the heavy equipment, marine and renewable energy sectors. “Looking beyond the current softness of the rail sector, we feel demand will increase later in the year and beyond as older cars are retired.”

Auto dealers to pay $3.6m over disputed deception claims

Mar 24, 2017

A group of auto dealers have agreed to return $3.6 million to consumers to settle a legal row with authorities, although they continue to dispute the allegations.  The Sage Automotive Group, comprising nine Los Angeles-based auto dealerships, plus their holding and management companies, and two individuals, have agreed to return the money to settle Federal Trade Commission (FTC) charges. These allege that it used deceptive and unfair sales and financing practices, deceptive advertising, and deceptive online reviews. The proposed settlement order will prohibit the defendants from making misrepresentations relating to their advertising, add-on products, financing, and endorsements or testimonials. It will also bar the defendants from engaging in other unlawful conduct when a sale is cancelled, such as failing to return any down payment or trade-in or seeking legal action, arrest, repossession or debt collection unless the action is lawful. The order relates to the FTC’s first-ever legal action aimed at tackling so-called ‘yo-yo’ financing tactics, which it claims are unfair and coercive. The label relates to alleged attempts to make customers accept a different deal after they have signed contracts and driven off the forecourt. The FTC alleges the auto dealerships enticed consumers, particularly financially distressed and non-English speaking buyers, into their dealerships with adverts that made an array of misleading claims. These included allegedly stating consumers were buying a car, when in fact they were lease offers, and that the dealership would pay-off consumers’ trade-in vehicles, despite the fact that consumers are ultimately responsible for paying off any amount owed on the trade-in. In a statement, Sage said: “Sage fully co-operated with the FTC over the course of many years and the review of thousands of pages of advertising and other documents. “Though Sage considered the FTC’s allegations to be without merit and over-reaching, to avoid the overwhelming cost of protracted litigation, Sage agreed to settle the action with an agreement to stand by the company's commitment to follow the law and to pay, to consumers and not to the government, approximately $276,000 per named entity, which amount is consistent with FTC settlements reached with other targeted auto sector enterprises throughout the country. “Despite the FTC's allegations, Sage Automotive Group believes that it has always met its regulatory responsibilities and looks forward to continuing to provide outstanding sales and service to its customers.”

Chinese firm aims for autonomous cars on US roads by 2020

Mar 24, 2017

China-based NIO, a next-generation car company, has announced plans to have autonomous electric vehicles in the US market within three years. The company gave consumers a preview of its NIO Eve vehicle at a technology event in Texas. Padmasree Warrior, US CEO of the company, unveiled the company’s vision for the car of the future, which would feature cutting-edge software. She said: “We are excited about having autonomous electric cars for US consumers in 2020. “In 2015, commuters in the US spent over eight billion hours in their cars commuting. NIO's autonomous electric cars will make your journey safe, productive and enjoyable. ur cars will be your companion and will know your needs. They will be a welcoming living space that moves you.” Artificial intelligence NIO Eve uses technology to constantly learn about its occupants and their preferences, and is described by the company as a “digital companion”. At Eve's heart lies NOMI, its artificial intelligence software. Passengers will be able to control the car through speech or using standard controls, while they can also use a smart windscreen, which extends from the dashboard across the roof, forming an interactive canopy. The active glass overlays important information on the windscreen including entertainment for users who no longer have to drive. The car’s interior is designed more like a living room than a vehicle and includes reclining seats and folding tables. In October, NIO USA announced that it had been issued an autonomous vehicle testing permit by the California Department of Motor Vehicles and it would begin testing on public roads.

Willis Lease flying high with $200m-plus revenues

Mar 24, 2017

Aircraft engine and parts leasing specialist Willis Lease Finance Corporation has reported pre-tax earnings for 2016 of $23.9 million, up 87.4% compared to 2015, on record revenue of $207.3 million. Charles Willis, chairman and CEO, said: “I am very pleased that on a pre-tax basis our financial performance in 2016 was our most profitable since 2009.” “Our fourth quarter and full-year results reflect a combination of improved utilization, growth in the lease portfolio and the continued effective management of our assets. “We also broadened our sources of equity through the issuance of preferred equity, which will serve our growth plans well.” The record results follow the October 2016 purchase of the consultancy business of Total Engine Support when its parent company went into liquidation. The acquisition was designed to expand Willis’s asset management service offering and grow the company's owned and managed portfolio of engines, aircraft and equipment by more than 500 assets. Future position Brian Hole, president, said that in addition to delivering solid financial results, the company achieved a number of objectives in 2016 that position it well for the future. He said: “We amended both of our principal debt facilities, improving the flexibility and capacity of our ability to borrow and to manage our portfolio. “We also formed Willis Asset Management to purchase the consultancy business of Total Engine Support and we now own and manage almost 800 engines, making us the largest independent owner and manager of engines in the world. “We expect that the capabilities of the people and systems at WAM will help us develop and deliver cutting edge programs for our customers. “[We have a] full complement of products and services combined with our decades-long track record of delivering on promises. We will continue to emphasize creativity and reliability as we grow the business going forward.” At the end of 2016, Willis Lease had 208 commercial aircraft engines, 11 aircraft and five aircraft parts packages and other engine-related equipment in its lease portfolio, with a net book value of $1.137 billion. This compares to 201 commercial aircraft engines, 10 aircraft and five aircraft parts packages and other engine-related equipment with a net book value of $1.109 billion, a year ago.

CIT names origination team recruits

Mar 24, 2017

CIT Capital Equipment Financing, a leading provider of equipment financing, has added several new members to its team as part of moves to increase its market presence. Eric Miller, group head and managing director of the company, said: “We continue to build our team to be a best-in-class originations group in the capital equipment sector. “We increased direct originations 400% in 2016. These additional hires with regional expertise should position us well to continue to provide financing solutions to meet the needs of our valued middle market customers. We expect to continue to grow in 2017.” New recruits include Robert Haynes who joins as director of originations, mountain region, based in Denver. Before joining CIT, Haynes held positions at NHB Bank, Bank of the West and Transamerica Finance Corporation where he focused on direct originations and relationship management. David Hicks joins as director of originations, Mid-South region, based in Nashville, Tennessee. Hicks has held origination roles at GE Capital, Macquarie Equipment Capital, and the former Banc One Leasing (JPMorgan Chase), as well as, managerial roles at Fifth Third Bank and Cadence Bank. Tim McNeely joins as director of originations, Pacific Northwest region, based in Sacramento, California, having held roles with GE Capital, Siemens Financial Services, Capital One, AIG, and Rabbank. Michael Ollio joins as director of indirect originations, based in Pittsburgh, Pennsylvania where he will cover banks, captives, and independents. Before joining CIT, Ollio held roles at PNC Bank and PNC Equipment Finance, as well as Siemens Financial Services. Jason Sullivan joins as director of originations, south-east region, based in Charleston, South Carolina, having previously held positions at Bank of America Merrill Lynch and GE Commercial Finance where he focused on direct originations and relationship management.

CIT sells aviation business to Tokyo Century Corporation

Mar 16, 2017

CIT Group has reached an agreement to sell its 30% ownership stake in the commercial aircraft leasing joint ventures TC-CIT Aviation Ireland and TC-CIT Aviation US to its joint venture partner Tokyo Century Corporation (TC), as part of its strategy to focus on its middle-market offerings. The deal is expected to close by the end of March, subject to the satisfaction of customary closing conditions. Following this transaction, TC will be the sole owner. Ellen Alemany, CIT chairwoman and chief executive officer, said: “Last year we made the strategic decision to exit the commercial aircraft leasing business and focus CIT on our leading middle-market and small business lending platforms that can be supported by our growing banking franchises. This transaction to exit the aviation joint ventures is another point of progress in that plan.” She added: “We remain focused on completing the strategic actions to exit the joint ventures, as well as the previously announced sale of CIT Commercial Air, and returning capital to our shareholders.” In October 2016, the company announced a definitive agreement to sell CIT Commercial Air, its commercial aircraft leasing business, to Avolon Holdings (Avolon), the international aircraft leasing company and a wholly-owned subsidiary of Bohai Capital Holding Co. The TC-CIT joint ventures were established in October 2014 through a 70% equity contribution by TC and 30% equity contribution by CIT. They were excluded from the sale to Avolon.