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Lease Connexion Profile

It wasn’t that long ago that leasing a business jet was nearly as commonplace as financing one, according to Ed Rothen, Director of IntelliJet International’s Lease Connection. “Leasing made sense from a tax standpoint and the predictable aircraft residual values resulted in attractive lease rates. Then in 2008, the global financial crisis toppled values of just about everything, including aircraft, and changed the way assets are leased.”

AvBuyer   |   1st January 2011
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It wasn’t that long ago that leasing a business jet was nearly as commonplace as financing one, according to Ed Rothen, Director of IntelliJet International’s Lease Connection. “Leasing made sense from a tax standpoint and the predictable aircraft residual values resulted in attractive lease rates. Then in 2008, the global financial crisis toppled values of just about everything, including aircraft, and changed the way assets are leased.”

Ed Rothen’s views were in response to the broad-brush question, “What effect did the global recession of 2008-2009 have on the jet-leasing industry?” According to Rothen, the aircraft leasing landscape is markedly different now, with tighter reins on capital and greatly reduced aircraft values. There are new players in the lease market, including an increasing number of owners seeking revenue from their aircraft and a host of cost-conscience companies and individuals wanting to benefit from the advantages of leasing.

Lease Connexion is the aircraft leasing arm of IntelliJet Group, which also includes IntelliJet International, the Sales & Acquisition division, and IntelliJet Management, the company’s aircraft management division. Lease Connexion offers a pool of aircraft available for lease drawing on IntelliJet Group’s comprehensive resources, reach, and expertise that are readily available to clients.

“Lease Connexion provides turn-key solutions for lessors and lessees that include not only lease inception and administration, but also aircraft management, operations and even sales consultation,” Rothen continues. “These resources work well together and enable us to provide leasing solutions that cover much more than merely the lease”.

In particular, IntelliJet Management is providing a large comfort factor for U.S. owners interested in placing an aircraft on a lease abroad. “We’ve packaged leasing and management for a number of clients. They not only feel confident in the manner in which the aircraft is being operated, but the lease can also create an opportunity for the sale of the aircraft.

“This is a boon to many owners, since they are often offering their aircraft for lease in lieu of finding a suitable buyer and/or sale price anyway.”

Sales continue to lag in a number of pre-owned aircraft markets. One effect of this, Rothen notes, is a growing number of owners opting to lease their aircraft in an effort to create revenue while awaiting market conditions that will allow them to realize the sale price they need, or want for their aircraft. Not only does this allow owners to minimize their holding costs and/or maximize their cash flow until they are able to sell the aircraft, but they can also benefit from the tax advantages of leasing their aircraft.

The same financial cloud that dampened the mid-sized jet pre-owned market, for example, also has created a silver lining for some owners: Increasing numbers of buyers that cannot obtain aircraft financing in this new environment are turning to leasing. Compared with a purchase, leasing offers lift scenarios that can be tailored to a company’s specific needs and budget.

This is an emerging segment of Lease Connexion’s clientele, which already includes operators awaiting delivery of a new aircraft and those with an aircraft that will be out of service for extended maintenance. In particular, Rothen observes that leasing is gaining popularity worldwide. “Until recently, leasing business aircraft was not as popular overseas as it was in the United States - primarily because those who could afford an aircraft had access to financing, and many buyers in Russia, the Middle East and Asia could pay cash for an aircraft. That is beginning to change now as purchase financing is not as readily available as it was prior to the recession and those with cash are looking elsewhere to invest.”

The recession has caused an upheaval in the business aircraft market with steep declines in values of most pre-owned aircraft and a significant decline in the availability of financing to purchase those aircraft. Qualifying for available financing has also become a much more stringent process. Every detail, ranging from the buyer’s credit-worthiness, to the type and age of aircraft is carefully weighed, and many would-be purchasers are turning to leasing as a means of getting into the aircraft they desire.

Lease Connexion is seeing more inquiries from Asia and Eastern Europe, in particular China, Kazakhstan, Russia, Bulgaria and Ukraine. “The number of business aircraft entering service in these countries is soaring, and the demand for leasing will likewise increase,” Rothen adds, concluding that Lease Connexion provides great advantages for both lessors and lessees.

“We designed this company to directly effect solutions for clients in the current market conditions, and we’re seeing a flux of clients wanting to learn about - and take advantage of - the benefits of leasing a jet, from both sides of the table.” Ed Rothen can be contacted at Lease Connexion’s Headquarters at Jacksonville International Airport, Florida, USA.

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