The U.S. airline industry has been rocked by high fuel prices and decreased demand from business and pleasure travelers who are cutting back on spending during the recession.
Just this week, Delta Air Lines Inc. announced it would cut seating capacity by as much as 8 percent next year.
The airline industry’s woes, however, haven’t completely iced the market for the acquisition and leasing of new aircraft. Smith, Gambrell & Russell partner Don Mitchell last month advised a subsidiary of CIT Group Inc. on leasing two new aircraft to Compañía Mexicana de Aviación SA de CV, better known as the airline Mexicana.
Mexicana will lease from CIT Aerospace two Airbus A330-200s for 10 years each. Financial terms of the leases weren’t disclosed. The new planes will enable Mexicana to launch a new daily flight to Madrid from its hub airport in Mexico City, Mitchell said.
The two Airbus aircraft had originally been ordered by British carrier XL Airways. But that airline went bust in September, freeing up the two Airbus planes for another airline to lease. There was “significant interest” from other airlines in addition to Mexicana in leasing the planes, Mitchell said.
“The market is not robust, but there are opportunities,” Mitchell said.
While many U.S. airlines are shrinking their fleets, international airlines continue to take new deliveries, Mitchell said. Middle East airlines, such as Emirates Airline, are especially active in taking new deliveries, he said.
CIT Aerospace is leasing the planes to Mexicana through operating leases, an increasingly popular method of aircraft finance, Mitchell said. Before the market crash this fall, most airlines acquired planes aircraft through debt financing. But with financing now more difficult to obtain, operating leases are gaining in popularity, although primarily outside the U.S., Mitchell said.