Airlines’ Expansion Aided by Cash-Rich Investors
Experts are predicting growth in the aviation industry for 2016 to be record breaking. The falling fuel prices are one of the key factors to help deliver this growth. Brian Pearce, Chief Economist at IATA, has indicated that the net income of the industry should total $33 billion for 2015. This is a large increase from the $17.4 billion achieved in 2014 and has really caught the eye of the investment community. With this outstanding growth within the industry and with interest rates threatening to rise, but are currently at some of the lowest points worldwide, now is the time to achieve any expansion plans, refinancing, purchase/lease of additional aircraft or enter into a M&A situation.
The growth of the aviation sector has attracted investors and companies looking at consolidating. The trend will continue to be carried out through 2016 in every aspect of the aviation industry; MRO facilities, airlines, aerospace, manufacturing and component parts. The upcoming year will see a steady stream of companies trying to take advantage of their strong balance sheets and strong cash positions, which will give way to the industry seeing a significant role for mergers and acquisitions to expand overseas or for regional consolidation. Todd Skaggs, VP Strategic Partnerships at Brookfield, said “Joint ventures and partnerships are being forged by international companies and I think we will start to see a large number of mergers between cross-continental airline companies from 2016 onward”.
Currently there is a large amount of aircraft available for sale, lease, ACMI or lease to purchase. Companies looking to renew their fleet or companies that are expanding their fleet have a good range of aircraft to choose from that have flexible financial solutions attached. Gennaro Tocci, VP Aircraft Sales & Leasing for Brookfield said “The current appetite for fleet growth, combined with access to low interest rates do represent an unique opportunity for airlines to develop and expand their businesses”.
As part of Brookfield’s long term expansion plan, we have strategic partnerships with private equity investment groups with substantial financial resources and committed industry expertise to support airlines in realising their growth ambitions.
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