TY - JOUR T1 - Divergence of Aviation Finance Markets: Lulls Before the Storm or Growth? JF - The Journal of Structured Finance DO - 10.3905/jsf.2021.1.124 SP - jsf.2021.1.124 AU - David Yu Y1 - 2021/06/12 UR - https://pm-research.com/content/early/2021/06/12/jsf.2021.1.124.abstract N2 - The aviation industry is undergoing a series of layered dynamic effects to the entire business model value chain including aviation finance, leasing, and its associated structured products. COVID has caused a historical exogenous demand shock and global airlines have suffered greatly; recovery is varied and uneven. There is a divergence of what has occurred since COVID and outlook geographically between the airlines (end-users), their lessors, and all of the various stakeholders in financing structures such as aircraft asset backed securities (ABS) and enhanced equipment trust certificates (EETCs) that make up the capital structure. Debt funding has been robust for airlines with access to the capital markets, but others are finding it more difficult and are less fortunate. Financing options are diverse but are restricted between the players, given the effects of COVID. Pricing and structuring characteristics are all affected by these updated conditions.TOPICS: Fixed income and structured finance, asset-backed securities (ABS), credit risk management, financial crises and financial market historyKey Findings▪ COVID has changed the structure of demand for aircraft, and it has impacted both financing of aircraft lessors and the airlines with different effects geographically. ▪ Airlines face a bifurcation of opportunity, between larger or state-supported airlines with access to the public debt capital markets or government subsidy and smaller airlines, which have had to fall back on private capital in a challenging environment.▪ Aircraft ABS and EETC financing environment continue to have pressures from downward aircraft pricing and 2 EETC issuance windowns cases. ER -