![]() ![]() ![]() While lower than in the past, that is still above returns on staple investments such as 10-year German government bonds, which yield about 1.5 percent.Īirlines are highly sensitive to economic swings, but the order books of planemakers like Airbus EAD.PA and Boeing BA.N remain filled on hopes for future demand from emerging markets. Sector bankers said interest rates on secured aircraft loans were now between 2.5 percent and 3.5 percent, and for unsecured loans, rates may approach 10 percent. Airlines offer that because the industry is seen as a bit more risky than others," Michael Nosbuesch, global head of aviation and rail at German state development bank KfW KFW.UL, told Reuters. "With interest rates low, everyone is looking for investments with relatively high returns. The extra competition is helping to keep financing costs at record lows, welcome news for airlines as they spend billions of euros on new aircraft to replace ageing jets with more fuel-efficient, modern planes. ![]() PARIS (Reuters) - The only way to make a small fortune in the airline industry is to start with a big fortune, so the joke goes.īut in a low interest rate world, the returns on offer for taking a bit more risk are exactly what’s driving new players such as private equity firms and Asian banks into the $100 billion market for aircraft financing. ![]()
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