Chinese airlines rush to refinance fleets because of coronavirus

Chinese airlines are rushing to refinance their fleets as they struggle with the impact of the coronavirus outbreak, according to the head of Avolon, one of the world’s largest aviation leasing companies. “When the airline industry is impacted, it tends to move quickly to preserve cash. That is what we are seeing here. The phones have started ringing. We’ve seen a dramatic step up of airlines reaching out to do sale and lease back transactions,” said Domhnal Slattery, CE of the company. Slattery was speaking on Wednesday after the company posted $718m in net profit for 2019, up marginally from $717m in the previous year and a record for the 10-year old business. Slattery added that the fleets of Chinese and surrounding countries’ airlines are sitting on the ground in China, forward bookings “have dropped off the cliff” and their cash positions have dramatically deteriorated. Avolon had close to $6bn in capital available to deploy. “We can be long and strong with our airline customers in China. We have a cash-preservation mindset,” Slattery added. Meanwhile, the Avolon boss expects some smaller carriers to be tipped over the edge by coronavirus and go bust. “There are some thinly capitalised, over leveraged airlines and a number of them would be at real risk,” he said, adding that bankruptcies from major Chinese carriers is unlikely “because the Chinese government will step in, no doubt”.<br/>