Making fund of leasing...

With the exception of the pandemic period, the region has been an important source of business for ABL Aviation, one of the first aircraft asset management platforms in the Middle East and North Africa region (MENA) with the opening of its Casablanca office in 2017.

“The Middle East and Africa remain attractive due to large fleet orders, fleet modernisation initiatives, and high-demand growth across both travel and cargo sectors. New attitudes about travel and the continued surge of e-commerce have also given rise to a regional air mobility renaissance across MENA, driving increased demand for narrow-body jets”, Ali Ben Lmadani, CEO ABL Corporation, told Arabian Aerospace.

The industry has been facing significant challenges like soaring interest rates, which has increased the cost of capital, therefore placing pressure on airlines, especially those with weaker financial positions.

According to ABL Aviation, the leading global independent aircraft leasing and asset management firm, lessors are essential to the aviation industry, providing flexible financing solutions that help airlines manage capital expenditures without substantial upfront investments.

“We expect to see these trends continue and for airlines to continue relying on leases to capitalise on them. We also expect to see growing reliance on leasing to provide cost-efficient solutions to airlines and flexibility that better equips them to respond to changes and disruptions in demand,” said Lmadani.

The company offers tailored leasing solutions to airlines in the region and beyond.

ABL Aviation is the leading provider of Japanese Operating Leases (JOL) and Japanese Operating Leases with Call Options (JOLCO). ABL relies on these products to help to bring more diverse and cost-effective funding options to the aircraft sector, while affording our airline partners the ability to fund 100 per cent of their asset costs”, he explained.

He underlined that JOLs and JOLCOs are particularly attractive in a high-interest rate environment. With US rates expected to slowly decrease, there’s a growing interest in innovative debt structures, including the combination of traditional JOLCOs with sustainability-linked financing or with Aircraft Finance Insurance Consortium (AFIC) products.

JOLCOs also offer significant sustainability advantages, including tax benefits and flexible leasing terms, which are especially beneficial for airlines aiming to align long-term ESG and commercial goals while also achieving current sustainability targets affordably.

According to Lmadani, these can be powerful tools in the industry's transformation because they are appropriate and equally advantageous to both global and regional carriers.

“As with other regions, we see MENA airlines moving towards more eco-friendly and fuel-efficient aircraft. Sustainability-linked leasing and financing terms offer incentives for airlines to lower their carbon emissions, particularly by using sustainable aviation fuels (SAF). ABL Aviation is at the forefront of this movement within the leasing industry in the Middle East, exemplified by our delivery of a Boeing 787-8 Dreamliner to EL AL Airlines in August 2023, which utilised 30 per cent SAF on its delivery flight.”

The leasing landscape is evolving rapidly in the region. In Saudi Arabia, AviLease, launched by the Public Investment Fund (PIF) in 2022 and headquartered in Riyadh, is supporting the aviation ecosystem in line with Vision 2030, a nationwide initiative that, besides increasing non-oil international trade, also seeks to develop tourism and reinforce economic and investment activities within the Kingdom. According to the company, with strong local carriers such as Saudia, flyadeal, and flynas, more elements needed to be thrown into the mix.

The company's portfolio consists of the latest generation of narrow-body and wide-body aircraft from the world's leading manufacturers. “AviLease aims to become one of the world's top 10 aircraft leasing companies by 2030,” said AviLease CEO, Edward O'Byrne.

Last September, AviLease, announced that it had successfully raised USD2.5 billion five-years unsecured term facility to fully refinance a bridge facility the company raised in 2023.

The global aircraft leasing market size was valued at USD 172.88 billion in 2023 and is projected to grow from USD 183.23 billion in 2024 to USD 401.67 billion by 2032. In accord with market analysts the increasing number of next-generation aircraft fleets in the United Arab Emirates, Saudi Arabia, and Qatar is the major reason for investments in the Middle East aircraft leasing market.