Fuel issues

Dino D'Amore
By Dino D'Amore December 4, 2014 21:51

Fuel issues

As fuel prices continue to drop and the likelihood of crude prices falling below the $50 mark within the next few years increases, one must ask – who on earth needs a Neo or Max in this market? Obviously the bottom line is that some of the new generation aircraft now in production have very good ranges and thus they offer great new options: the A321Neo is a safe bet, as is the Max9 but for the next three years at least it looks like the current A320s and 737NGs over eight years old are going to have a renaissance. This is great news for lessors! A huge number of aircraft are coming off lease in 2018 and far from being millstones, if oil prices stay low, they will be a hot ticket for low-cost airlines looking for great economics.

So should lessors keep hold of those older aircraft in the hope of a strong market or better prices? It looks like those lessors who have purchased older aircraft from their peers have had a real result in the medium term. Engine investors too are going to see their portfolios increase in value.

Then there is another side to all this, however. Some investors are arguing that Delta has dropped a clanger by purchasing a refinery. This is not true and could not be further from the truth. Look to the long game where Delta is concerned and especially think about the new fuel technologies that are in testing at the moment. In the future it is likely that Delta will be able to dedicate part of its facility to refining new specialist aviation fuels.

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Dino D'Amore
By Dino D'Amore December 4, 2014 21:51