Aircraft leasing faces shake-up as risks cloud recovery

Global aircraft leasing faces a new shake-up this week after SMBC Aviation Capital’s deal to buy smaller rival Goshawk Aviation for $6.7b. The move comes as firms report a stronger than expected US-led recovery -- but one increasingly overshadowed by inflation, rising borrowing costs and the effects of the conflict in Ukraine. SMBC’s deal puts it in the no.2 industry spot globally, leapfrogging Dublin-based rival Avolon, behind AerCap. The long-awaited agreed takeover of Goshawk, which was confirmed by the company on Monday after a Reuters report last week, could increase pressure on smaller rivals to follow suit as funding costs rise with higher interest rates, analysts said. “It means only the biggest and strongest lessors can compete at the levels you need to compete at to win,” said consultant Paul O’Driscoll of advisory firm Ishka. Leasing companies now control more than half the world’s fleet of aircraft and bankers say private equity firms are also hovering over at least one lessor as the industry matures. SMBC CE Peter Barrett, among the crop of leaders that emerged to run the Dublin-led aircraft leasing industry from the roller-coaster empire of Irish tycoon Tony Ryan, has said he expects the industry’s growth to continue.<br/>