SMBC Aviation Capital Foresees Aircraft Shortage and Rising Lease Rates Until 2026

Peter Barrett, the CEO of SMBC Aviation Capital, the world's second-largest aircraft leasing company, predicts that the shortage of new aircraft will persist until at least 2026, if not longer. The struggle to ramp up production after COVID-19 lockdowns has been further complicated by recent engine issues, particularly those affecting RTX's Pratt & Whitney Geared Turbofan (GTF) engines.


SMBC, a major buyer of aircraft and part of a consortium that includes Japan's Sumitomo Corp and Sumitomo Mitsui Financial Group, recently ordered 60 Airbus planes, expanding its fleet to nearly 1,000. Barrett has expressed for the past 12 to 18 months that this challenge will likely continue for several years, possibly extending beyond 2026. 


Regarding the GTF engine problems, Barrett hopes and believes that the extent of the issue is now understood. He anticipates that 2024 and possibly early 2025 will be challenging for operators as they grapple with the practical implications of these issues. 

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The limited supply, coupled with increased travel demand and higher interest rates, has led to a 20%-30% increase in lease rates over the past year. Barrett also predicts a more modest growth rate for airline travel in 2024, following a strong performance in 2023.

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