Jetrader - September/October 2013 - 17

With such a large order backlog, and more than
half requiring some sort of financing, the role of
ECAs and capital markets will continue for the
foreseeable future.
wide variation, the average reduction in
trafﬁc (passenger km) among reporting ERA
carriers has been 10 percent with capacity
(seat km) cut by 13 percent year-on-year.
Simon McNamara, director general of ERA
said, “ERA members continue to show their
resilience and commitment to intra-European
air travel in extremely trying circumstances.
ERA is working harder than ever on behalf
of its members to ensure that the EU’s
legislators increase their partnership with
the intra-European transport industry and
that new legislative proposals help, rather
than hinder, growth and development of
the industry.”
Industry charges, fuel fees and taxation continue to remain the biggest challenges facing European airlines. Progress
on Single European Dky has stalled due to
resistance from participating states. The
cost-efﬁciencies realized in European air
trafﬁc control will result in more efﬁcient
trafﬁc management in the sky and fuel

savings for airlines. Airport charges and
higher taxes on passengers and airlines
is another factor that is hampering the
progress of European airlines.

Fleet Status
Europe accounts for 27.3 percent of
the worldwide ﬂeet of aircraft and almost
40 percent of the worldwide operators
(see Chart 2: Worldwide Aircraft Fleet
Distribution). Narrowbody aircraft accounts
for 58 percent of the European ﬂeet, with
more than 3,800 aircraft, followed by 1,183
widebody aircraft, 1,127 regional jets and
507 turboprops.
So far this year, airlines in Europe have
ordered up to 797 aircraft, more than any
other region (see Chart 3: Aircraft Orders
YTD – 2013). The backlog for European
airlines stands at 1,883 aircraft, which is
22 percent of the total worldwide backlog.
Orders are perhaps an indication that
European airlines have returned to the

market and expecting things to improve
over the long term.

Finance and Leasing Market
The volatility in the ﬁnancing sector
opened up other avenues for ﬁnancing the
aircraft. While the commercial banks were
seceding from ﬁnancing large tranches of
aircraft, for all sorts of airlines around the
world, export credit agency (ECA) and capital
market funding was on the up. With such
a large order backlog, and more than half
requiring some sort of ﬁnancing, the role
of ECAs and capital markets will continue
for the foreseeable future. In addition, commercial banks in other parts of the world
not previously engaged in aviation ﬁnancing
are showing increasing appetite for funding
aircraft for European airlines. Basel III and
other regulations that will come into force
will increase the cost of ﬁnance, but at the
same time, it will reduce the risk associated
with less credit-worthy airlines for banks.
The new deliveries are still ﬁnding ﬁnance,
but there may be short-term funding gaps
for higher risk airlines within Europe.
Financing in the used aircraft market
has dried out. For example, ﬁnancing 737
Classics pre-recession was very common, but
it seems impossible in the current market.

Chart 2: Worldwide Aircraft Fleet Distribution

Jetrader • September/October 2013 17

Jetrader - September/October 2013

Table of Contents for the Digital Edition of Jetrader - September/October 2013